Thursday, February 09, 2006

Tesco Suicide?

Like hell am I going to post the Sneaker Pimps song of the same name as this post's title. I'm crass and newsy, but not that crass and newsy. Anyway, I don't like the song that much. I prefer the second to last one, ya know, with the cellos.

But the title? Definitely crass and newsy. For Tesco, the UK's largest retailer, has announced plans to enter the United States market. It will be spending £250 million (roughly $450 million - I did that in my head, but you knew that) on setting up convenience stores, initially on the west coast, and says that it can break even by 2007.

Tesco gets a little bit of stick in the UK for its attitudes to its suppliers, particularly farmers and other smaller businesses. But it is relentlessly consumer-focused, and treats its employees reasonably well. I base the last observation on a spell as a janitor in one of its stores outside of London. Flexible shifts, subsidised meals, and a collective bargaining agreement.

More importantly, it's been responsible for clearing the scalpers out of the central London grocery business. There used to be a bunch of chains like Europa and Harts that charged essentially what they liked to local residents and confused touristts and students. Tesco bought most of them out. Hooray.

I have very little in the way of an idea of what awaits tesco in the US, in terms of its relationships with suppliers, landlords and workers. What I can say is that they'd go down a treat in New York, which aside from the odd expensive Whole Foods or D'Agostino is saddled with a rash of pricey gourmet delis or scummy supermarkets.

My limited experience elsewhere in the US suggests that the big-box supermarkets like Wal-Mart or Publix or Albertson's don't need to be too worried by Tesco (I doubt it'll exercise enough pricing power to take them down like they did in the UK), but outfits like 7-Eleven and Wa Wa should. Tesco runs its stores very efficiently, and I like the food (particularly the preprepared stuff) a lot.

Big corporation, and all that, but good luck to them. I think they'll need it.


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