In 2007, the United States of America welcomed the world’s third largest retailer into their market. Tesco entered the US market under the name, “Fresh, and Easy.” This was after researching and studying the US market, and peoples’ shopping habits for close to twenty years. Tesco does not create new strategies every year instead, it has a series of common strategy that it adds yearly. However, Tesco’s performance in its markets today is not as per the set standards. This paper will address Tesco’s adversities in both the UK and the US markets, while highlighting possible strategies in marketing management, which might recover these markets again.
In 1997, Tesco set out a strategy to expand its core business. This later resulted in the establishment of online marketing initiative. It also set out to diversify its products and services, in existing and new markets. This strategy helped Tesco to penetrate the newer UK markets successfully, as well as Europe, Asia, and recently, the United States of America. One of Tesco’s business strategies today is to expand its UK market. This is its biggest business and there are more growth opportunities here. From back in 1997, Tesco has wanted to be the most successful international retailer. In 1997, the international business generated 1.8% of Tesco’s profits. This later increased to 25%. If their business plans succeed in the UK, it is probable that the same will even apply to other markets. It is however worrying how the shoppers in UK have lost trust in Tesco and instead prefer to shop from their competitors. If Tesco does not win back trust in their markets, then it risks, more major loses, as UK has been its largest market (Duff, 2006).
Tesco needs new management, marketing, and business strategies, in order to revive its UK market. The fall of UK market has been growing gradually over the last five years, probably due to the founding of newer markets in the US and parts of China. In an Economist article, an anonymous author feels that, for Tesco to compensate the costs of running the new markets, it had to readjust their business operations in the UK. This involved reducing employee numbers, and lowering prices in order to attract more shoppers. The UK market was neglected as all efforts and attention were drawn on establishing the new overseas markets. Diversification is another problem that Tesco needs to address in order to regain root in UK. Apart from running food-and-drinks stores, it runs a law firm, a bank, among others. Therefore, Tesco should project equal attention and management to all these operations.
Since its entrance into the US market, Tesco is registering big loses, and this trend is expected to continue over the next few years. However, the strategies Tesco is taking to combat this situation might not bear much fruit. Establishing new chain stores in northern California is not a good move. Instead, Tesco should have concentrated on reviving the existing dwindling markets before establishing new ones. Restricting choice is another poor strategy for Tesco. In Britain, Tesco outlets employ 20 -30 workers, and the outlet sizes are much smaller as compared to those in the US. This will make them compete unfavorably in the market (Duff, 2006).
In conclusion, Tesco’s failure to crack the market in US is a major letdown, which might compromise its sustainability. The losses incurred in the US market have killed Tesco’s business ambitions, as targeted expansion has been restricted. It may take years before the market size in the US scales the heights of that in the UK. Tesco is on the verge of falling, if appropriate measures are not taken. Its US market continues to register loses, as well as its UK market that was once its biggest market. This situation calls for adoption of newer strategies, and management in order for Tesco to compete favorably in the market again.
Duff, M. (2006). Tesco to Make U.S. Debut on West Coast. DSN Retailing Today, 45(4), 3-3,48.
Retrieved from http://search.proquest.com/docview/228420022?accountid=45049
Supermarket Sweep; Tesco’s Travails. (2012, Apr 21). The Economist, 403, 33-33. Retrieved
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