Is the mighty Tesco the next British retailer to fall victim to curse of the United States?
The United States has been something of a necropolis for British retailers with overseas ambitions. Sainbury’s, Dixons (now DSG International) and Marks & Spencer are some of the biggest names to have succumbed to a curse that appears to stalk the fortunes of plucky UK companies trying to make it in the world’s biggest consumer market.
If you were to put money on one that might succeed where others have faltered, Tesco would seem a safe bet. When it comes to achieving bounteous growth, both at home in the UK or overseas, the supermarket-and-almost-everything-else giant has demonstrated over and over that it’s got what it takes.
Yet, it too may be coming under the same terrible spell. The marketing director of Fresh & Easy, Tesco’s US convenience store enterprise, has hinted on his blog that all is not well. Simon Unwins has revealed that three months of review will take place before any further expansion, with analysts saying that results have been less than was hoped.
While Fresh & Easy could well be proving problematic for its parent, Swelledhead would not yet put its equally distended neck on the line and say that Tesco in America is doomed. Though history does not bode well, the company has boomed under the leadership of CEO, Sir Terry Leahy. Much of the success under his tenure has been found outside of the UK, where Tesco has shown an ability to adapt to local markets – a failure of the same being the undoing of foreign ventures at many other British retailers.
The Sunday Telegraph, the British newspaper which broke this story, reports that Unwins claims Fresh & Easy is simply taking a breather from its rapid expansion and is bedding down its operations. A potentially worrying sign is the news that Tesco is moving the CEO of its thriving Thailand business, Jeff Adams, to “work alongside” Tim Mason, the CEO of Fresh & Easy.
While the hiatus may indeed be unintended, and a bit of an internal shake-up somewhat disconcerting, to summarise it as the beginning of the end does seem a little premature. The UK lacks overseas success stories and has this lack of confidence is evident not only through failed international expansion, but a willingness to roll over to almost any foreign takeover. Tesco appears to be making sensible choices to keep things on track, and an eventual triumph would be a welcome shot in the arm for all British retailers with an eye beyond Blighty.
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