Tesco - Making it in the U.S.

As a retailer, it may be better to be far from Tesco than its near neighbor. That's seem to be the gist of Tesco's Fresh & Easy will challenge Kroger, a story at Talkingretail.com. From the story, based on a Nielsen report:

Tesco's Fresh & Easy chain will threaten Kroger more than other US retailers, a new study by Nielsen has revealed.

The research company's latest Consumer Insight report – Retail Riot – Tesco has arrived in the US: a competitive retailer review – says Kroger stands to lose $6.7m a week to its new rival.

The findings are based on an analysis of the grocery stores near planned Tesco locations in the Los Angeles, Southern California, Phoenix and Las Vegas markets.

But other chains are vulnerable too, says the report.

SuperValu, Safeway, Bashas and Wal-Mart are also represented in those four markets. Nielsen estimates their potential weekly losses at $4.4m, $4.0m, $2.4m and $1.5m.

How close US rivals' stores are to Tesco's Fresh & Easy branches will also impact trade, says Nielsen.

In Arizona, California and Nevada, for example, Kroger has the highest number of stores within a five-mile radius of Tesco locations, followed by Wal-Mart.

The study also shows Tesco has chosen its sites very well. Stores closest to Fresh & Easy locations have been recording the biggest year-on-year sales growth across key categories including alcohol and tobacco, personal and home care, produce, grocery, frozen and chilled, bakery and deli, and meat and seafood.

TK: Further, here is the more detailed source report from Nielsen called Retail Riot – Tesco Has Arrived in the U.S.:A competitive retailer review Lots of talk here about what U.S. supermarket chains are most vulnerable, and the numbers behind those conclusions.





One excerpt:

Three words — follow the customer. Sounds simple, but it is what Tesco credits the secret to their turnaround and continued success. Their store and category performance are benchmarked on five components of the “Tesco Shopping Trip”:

1. The prices are good.
2. I can get what I want.
3. The staff is great.
4. I don’t queue. – (i.e.,I don’t have to wait in line)
5. Shopping is easy and enjoyable.

From the report's conclusion, about what competing retailers should do in response:

For competing retailers and their supplier partners, knowing what to expect is the first important step. Taking action is the next. There are several strategies that can be deployed to protect market share and your consumer base:

• Offer convenience-oriented solutions with an expanded selection of wholesome prepared foods.
• Increase the assortment of natural and organic foods.
• Take advantage of Fresh & Easy’s limited supply of health & beauty and non-food offerings by providing promotional tie-ins that drive larger shopping baskets and frequent trips.
• Create a welcoming environment with a friendly and helpful staff that caters to the unique demographic makeup of the market segment.

The bottom line is that Tesco is successful because they understand their consumers and they give them what they want. It is a lesson well learned!

TK: Everything was great about this report except the exclamation point at the end. Leave the exclamation points to the bloggers!