Tesco Plc
Proposed Market Entry Strategy – Indian Retail Food Market
Background
Britains retail market for food is highly competitive and extremely sophisticated. During
the past three decades the market has increasingly become to be dominated by the big four
of Sainsbury, Asda, Tesco and Morrisons at the expense of the independent sector and
smaller specialist grocers, butchers or bakers.
The major chains have led the market into out of town retail complexes and into bigger
and bigger stores with wider and wider product ranges. From essentially food retailers the
big four have become retailers of white goods, brown goods, home furnishing, IT
Equipment and much more. Home delivery is commonly available as is online shopping,
insurance services and clothing ranges.
Having done a great deal to damage the High Street by such tactics the major chains
subsequently diversified into convenience stores in town centres, at railway stations and
petrol stations further squeezing the small independent operator and expanding their share
of the market.
Today a clear market leader has emerged in the shape of Tesco Plc which has built a
commanding position in the UK. Already nearly twice the size of its nearest rival it
accounts for nearly 1 in every 7 spent by British shoppers. One consequence of this
sustained growth is that Tesco is increasingly encountering barriers to further expansion
within its home market.
As the UKs leading food retailer Tesco Plc has for some time been developing strategies to
address retailing opportunities consistent with its core competencies and business focus
beyond the boundaries of the UK.
These strategies have led the establishment of Tesco Stores in 12 countries outside the UK
including China, Japan, Hungary, Poland, South Korea and Thailand. This strategy has
seen Tesco built the business into the number three supermarket globally.
In 2007, Tesco opened its first stores in the United States of America in an ambitious
initiative. If you look at the scale of the opportunity here claims Tim Mason, Chief
Executive, it could be transformational for Tesco. If Fresh & Easy (the brand developed for
the US market by Tesco Plc) is successful it will be the most exciting thing in retail bar
none.
The first stores, near Los Angeles, are part of a vision to create circa 1,000 stores
generating nearly 4.9 billion of annual sales. The Fresh and Easy formula is for a chain of
convenience stores in urban areas served by 600,000 sq ft distribution centres. In line with
its traditional focus on price, quality and value Fresh and Easy claims to be 25% cheaper
