The principle of not losing face is deeply ingrained in Japanese culture. Luckily for Tesco it’s not such a problem for the Brits, as it announced it was pulling out of the country today.
The decision to pull the plug after eight years comes as CEO Philip Clarke admitted it “cannot build a sufficiently scalable business” there. The move has inevitably fuelled speculation that it might come to a similar conclusion over its Fresh & Easy operation in the US.
But in many ways this would be the classic case of putting two and two together and getting five. Tesco’s operations in Japan and the US are very different and the retailer has clearly placed a much higher priority on cracking America and getting one over on Walmart in its own backyard.
Its Japan operation, its smallest overseas business, has not received anywhere near the same investment as Fresh & Easy. Before this year’s earthquake and devastating tsunami in March, like-for-like sales were down 8.1%.
In its latest annual results it revealed it would not make any further major investment and in June recalled the head of the Japanese business – Michael Fleming – to the UK so he could take on a new global strategy role.
China and Korea are much more vital markets for Tesco. As is the US. Tim Mason, one of the retailer’s biggest hitters, remains in charge Stateside, despite being promoted to deputy group CEO and getting a global marketing role as part of the Leahy succession plan. Store openings also continue apace there.
That’s not to say anyone is hailing Fresh & Easy a success just yet. But it would be a major surprise and an even bigger blow to Tesco if it were to follow the Japanese model.
That really would constitute a loss of face. And in the tradition of great samurai warriors of old, would lead to more than one senior exec falling on his sword.
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