It has yet to open a store in the United States. Nevertheless, Tesco’s plan for a new convenience store concept in California, Nevada and Arizona has created more interest in American retail circles than almost any other foreign-company invasion in recent memory, excitement at least on a par with the first IKEA in Plymouth Meeting, Pa., Carrefour’s adventure in Philadelphia and H&M’s debut in New York City.
IKEA took almost two decades to perfect its hold on U.S. consumers. It has no rival, not just here but worldwide. Carrefour imploded in the City of Brotherly Love, a victim of timing, labor troubles, location and format indifference. It left U.S. soil, as did Auchan, another French hypermarket operator that planted its flag in Houston and Chicago. H&M, on the other hand, has exploded, opening the way for other fast-fashion stores such as Spain’s Zara and Japan’s Uniqlo.
But it is Tesco that has generated more ink than all the others combined. Tesco, after all, is the world’s fifth-largest retailer, with operations in 13 countries. Tesco has stood tall against Wal-Mart on its home turf in the United Kingdom, so much so that Wal-Mart’s Asda division has asked the government to curb Tesco’s growth because it is so dominant. How delicious, to find the world’s largest retailer—a company harangued for allegedly stomping out large and small retailers in the United States, a company beset by opponents seeking to restrain its growth—in such a public paradoxical predicament.
There’s no certainty Tesco’s brand of convenience, to be called Fresh & Easy Neighborhood Market (another not-so-subtle swipe at Wal-Mart, which runs a none-too-robust Neighborhood Market supermarket concept), will succeed. But at the recent World Retail Congress in Barcelona, Spain, Sir Terry Leahy, Tesco’s highly regarded CEO, provided his views on key trends that will go into the concept’s planning, as well as all other Tesco ventures.
To uncomplicate their stressful lives and save themselves time, consumers want simple solutions, often work done for them, such as ready-to-serve or prepared meals, said Leahy, quipping that people today should be referred to not as “human beings” but as “human doings,” as in “do it for me.”
Leahy sees an increasing concern for health, so foods will be more organic, with less sodium, less fat. “Green” consumption is another trend, with smart retailers providing tools to allow customers to make their own contributions to saving the planet.
Globalization means more choice of resale products, as well as outsourcing from an operational perspective. Tesco outsources IT functions to India.
When he started with Tesco in 1979, the company in total had but one computer, said Leahy. Today, each store has several hundred, he noted. Companies, as well as consumers, have become information elites.
In a shrinking world with infinite, instantaneous information, customers will increasingly navigate by trust. A retailer will have to localize offerings while showcasing more global brands. Any misstep could be catastrophic. The bigger a company becomes, cautioned Leahy, the more vulnerable it is to a loss of trust because mistakes cannot be localized. They are broadcast and magnified because of the Internet and the 24/7/365 availability of information.
Challenging thoughts on the eve of another British invasion.
To the Editor:
Mr. Berman asks, “Why pay more?” for employees who are functionally illiterate and cannot perform basic arithmetic.
He assumes that is who we are hiring. Are we retailers really hiring this group of employees to run our cash registers, perform inventory, etc.? An intelligent retailer knows that we seek to hire employees with adequate skills to do the job…at an adequate wage.
Mr. Berman and retailers in general offer no solutions to the problem of inadequately skilled work force.
He is basically stating we want to have our cake (lowest-cost employees) and eat it, too (offer no means for this group to learn/improve skills).
Martin Vrieze, marketing manager, Harbor Freight Tools Camarillo, Calif.
To the Editor:
The lost Ahold PC mentioned in “Data-Breach Dilemma—Retailers need a United Front,” (RTQ, January 2007) was actually the result of a third-party service provider who required access to Ahold pension Data.
As your readers look at this incident they might want to consider the challenge of securing confidential company information beyond their enterprise security control perimeter.
We strongly agree with the need to protect confidential and sensitive information, including the information of our customers and employees.
At Ahold we currently have many initiatives to continually assess and improve our capabilities.
John Kirkwood, CISSP, CISM, global information security officer, Ahold Global Braintree, Mass.