Tesco

Table of Contents

1: 3:
Introduction of Tesco and Analysis/effective solutions
Fresh & Easy of the issues

2: 4:
Identification of the Main Questions
Issues/Problems
 1: Introduction of Tesco

a. Tesco, founded in 1919 by Jack Cohen who opened its first store in London in 1929, initially
started as a small market stall in London, England, selling surplus groceries.
b. Over the years, it evolved into one of the largest and most successful retailers globally, operating
in various formats and segments.
c. With a strong foothold in the United Kingdom, Tesco expanded its presence internationally,
making its mark in different continents and economies.
d. Tesco witnessed a significant transformation under the leadership of CEO Terry Leahy, who took
the reins in 1997.
e. Leading it to become the third-largest retailer globally, competing closely with industry giants
like Walmart and Carrefour.
f. In 2023, Tesco has 4,859 stores operating worldwide, including franchise stores.
 1: Introduction of Tesco

g. Expansion of Tesco's portfolio from traditional grocery stores to various retail formats, including
supercenters, supermarkets, and non-food discount stores.
h. Tesco's decision to enter the US market in 2007, focused on California, Arizona, and Nevada
initially.
i. Extensive research of the US market, including direct engagement with American families, and a
focus on understanding shopping habits and preferences.
Tesco's number of stores worldwide
from 2008 to 2023
 1: Introduction of
Fresh & Easy

a. Fresh & Easy, a subsidiary of Tesco, was designed as a distinct neighborhood-style store, catering
to the demand for fresh, convenient, and high-quality food products.
b. Positioned as an alternative between traditional convenience stores and large-scale supermarkets,
Fresh & Easy sought to offer a unique shopping concept to consumers.
c. Fresh & Easy's emphasis on providing fresh, ready-to-eat foods, and gourmet selections set it
apart from traditional big box retailers in the market.
d. By focusing on a curated selection of premium store-labeled products and popular brands, Fresh
& Easy aimed to create a unique niche for itself, drawing comparisons to successful retailers like
Trader Joe's.
 2: Identification of the Main
Issues/Problems

a. Market Entry Strategy

b. Consumer Understanding
c. Economic Challenges
d. Operational and Financial Performance
e. Positioning and Differentiation

These issues collectively highlight the complexity of Tesco's entry

into the U.S. market,
 3: Analysis/effective
solutions of the issues

a. Market Entry Strategy

Tesco's decision to enter the U.S. market was strategically significant, but the execution
faced challenges. The failure to fully grasp the dynamics of the U.S. retail landscape. The
assumption that the same model that succeeded in the UK and other countries would
automatically work in the U.S. was a miscalculationtion.

Solution: Understand what Americans really want and adapt the stores accordingly. Make
sure Fresh & Easy stands out from other stores by offering unique products and services
that people can't easily find elsewhere.
 3: Analysis/effective
solutions of the issues
b. Consumer Understanding
Although Tesco invested in comprehensive market research, the complexity of American
consumer behavior was underestimated. The company failed to fully understand the
diverse shopping habits and preferences of American families, resulting in a gap between
what Fresh & Easy offered and what customers actually wanted where they fell. So
Understanding consumer behavior is crucial for the success of any retail venture.

Solution: Talk to more American families/people to learn what they like and dislike about
the current stores. Then, make sure Fresh & Easy has exactly what they want, at prices that
make sense.
 3: Analysis/effective
solutions of the issues

c. Economic Challenges
The timing of Tesco's entry into the U.S. market was unfortunate, coinciding with the
subprime mortgage crisis and subsequent economic downturn. The resultant impact on
consumer spending created a challenging environment for the success of Fresh & Easy
stores.

Solution: Find ways to help people save money when they shop at Fresh & Easy. Offer
special discounts and deals that make it worth their while to choose Fresh & Easy over
other stores, especially during tough times.
 3: Analysis/effective
solutions of the issues

d. Operational and Financial Performance

Despite Tesco's initial ambitions to rapidly expand the Fresh & Easy chain, the company
faced difficulties in achieving profitability and sustaining its growth. The slow pace of
store openings, coupled with significant financial losses, and the high costs associated
with distribution raised concerns about the long-term commitment of Tesco to the U.S.
market.

Solution: Open more stores carefully in places where people really want them. Make sure
these stores are running efficiently to save money and bring in more customers. This might
mean finding smarter ways to get the products to the stores and using less energy to run
them.
 3: Analysis/effective
solutions of the issues

e. Positioning and Differentiation

Fresh & Easy's positioning as a smaller, neighborhood-style store with an emphasis on
sustainability was intended to differentiate it from existing competitors. However, the failure
to effectively communicate its value proposition and overcome the perception of higher prices
hindered its ability to attract and retain customers. The lack of a clear differentiator beyond
sustainability and convenience posed a significant challenge.

Solution: Clearly show why Fresh & Easy is better than other stores. Make it easy for
customers to see why they should choose Fresh & Easy for their everyday shopping needs.
Offer unique and sustainable products that customers feel good about buying.
 4: Questions For Discussion

Q.1. Describe Fresh & Easy according to the different types of retailers discussed in the chapter.

a. Convenience Store: Fresh & Easy shares some similarities with convenience stores due to its smaller size and
focus on providing quick and easy access to fresh and prepared foods. However, it offers a wider range of
products compared to traditional convenience stores.

b. Supermarket: While Fresh & Easy is smaller than traditional supermarkets, it aligns with the concept of a
neighborhood-style supermarket, offering a variety of grocery items including fresh produce, prepared foods,
and household essentials. Its emphasis on convenience and fresh products reflects aspects of a traditional
supermarket.

c. Grocery Store Chain: Fresh & Easy operates as a part of a larger grocery store chain, reflecting its
association with the Tesco brand. However, its smaller size and focus on fresh and convenient products set it
apart from traditional grocery store chains, emphasizing its niche as a neighborhood-style market.
 4: Questions For Discussion

Q.2. As a retail brand, assess the Fresh & Easy retail strategy with respect to segmentation, targeting, differentiation,
and positioning.
a. Segmentation: Fresh & Easy's segmentation strategy appears to target urban and suburban areas with a focus on
customers seeking fresh and convenient food options. It caters to consumers looking for healthier, sustainable, and
gourmet food choices, appealing particularly to those interested in organic and eco-friendly products.
b. Targeting: Fresh & Easy seems to target middle to upper-middle-class consumers who value convenience,
quality, and sustainability. It aims to attract busy individuals and families seeking quick and easy meal solutions
without compromising on freshness and nutritional value.
c. Differentiation: Fresh & Easy differentiates itself from competitors through its emphasis on sustainability, fresh
and gourmet food offerings, and a smaller, more convenient store format. By highlighting its commitment to eco-
friendly practices, providing unique product selections, and offering a neighborhood-style shopping experience, it
sets itself apart from conventional supermarkets and large retail chains.
 4: Questions For Discussion

d.Positioning: Fresh & Easy positions itself as a neighborhood market that provides a balance between the
convenience of a corner store and the product variety of a traditional supermarket. It aims to offer a sustainable and
fresh shopping experience, appealing to consumers who seek healthier and environmentally conscious choices
without compromising on convenience or quality. The brand positions itself as a destination for everyday grocery
needs, emphasizing its commitment to providing wholesome, affordable, and eco-friendly products.
 4: Questions For Discussion

Q.3. Evaluate Tesco's research efforts for the U.S. market. Did this research help or hurt?

Tesco's research efforts for the U.S. market showcased a comprehensive approach, involving both quantitative data
analysis and qualitative consumer insights. The research involved in-depth studies, including visits to American
households, discussions with consumers, and analyses of consumer shopping behavior.

However, the lack of complete alignment and the actual implementation of Fresh & Easy's strategy might have
contributed to the initial struggles and challenges faced by the brand in the competitive U.S. retail market.
 4: Questions For Discussion

Q.4. Will Fresh & Easy succeed or fail in the long term? Support your answer.

Given the current challenges and the dynamic nature of the U.S. retail industry, the long-term success of Fresh &
Easy will require strategic adjustments, effective management of operational costs, continuous innovation, and a
deep understanding of consumer behavior. If Fresh & Easy can successfully navigate these challenges and carve out
a distinct position in the market, it stands a chance to succeed. However, failure remains a possibility if it is unable
to overcome the existing hurdles and adapt to the ever-changing market landscape.
 4: Questions For Discussion

Q.5. What recommendations would you make to Tesco for Fresh & Easy?

Based on the challenges and issues faced by Fresh & Easy in the U.S. market, here are some
recommendations
a. to gain a deeper understanding of the evolving preferences and behaviors of American consumers
b. Enhance product differentiation by focusing on unique, high-quality, and locally sourced products, providing
to the specific needs and preferences of the target market.
c. Remain flexible and adaptable to changing market dynamics and consumer trends.
 Conclusion
Mixed Challenges Strategic Commitment to Need for
Performance Changes Growth Improvement

Tesco's entry into the U.S. market has encountered a mixed reception, facing
challenges such as financial losses, difficulties in meeting consumer
demands, and struggles to establish a strong market presence. Despite these
obstacles, Tesco has shown commitment to the long-term growth of Fresh &
Easy, indicating potential for expansion and development in the future.
Thank You