Tesco has admitted it needs to meet discount retailers head on, acknowledging the threat that is posed by the sector to its global growth.
Speaking at this week’s IGD Global Retailing 2005 conference, international operations director Philip Clarke said Britain’s number one retailer needed to be as good on the 1,100 lines stocked by discounters globally, but go beyond that to “become a wide-range discounter”.
The comments represent the first time that the retailer has put itself on a level with the discount sector, emphasising its obsession with offering the lowest prices.
Clarke also hinted that Tesco, currently the subject of heated speculation over a move into the US, could enter its 13th market this year, describing it as a “maybe”. “We are looking
everywhere,” he added. India is a critical market for Tesco, but despite having a research base in Bangalore and with Tesco executives visiting twice a year, the Indian market looked tough, said Clarke. “We first went there in 1997 and it’s still very underdeveloped. One day we’ll be in India, but it looks difficult.”
Its criteria for entry into any new market, he added, was to identify a country with an underdeveloped retail sector, where it had the opportunity to become the number one or second-biggest player, enabling it to shape its growth. The country also needed to offer the potential for rapid growth.
Nonetheless, Clarke told The Grocer that there was no risk of Tesco taking its eye off the ball in its home market, as it was “fundamentally a UK company” and had a strong management team driving domestic growth.
Tesco will also “guard against globalisation in favour of localisation”. Although it would benefit from implementing its own back office systems and procedures, each market had to be treated in a unique, flexible way. This would be done by focusing on the needs of locals in terms of product and traditions around food.
“In Korea, for example, the Tesco stores are the only place to offer a cultural centre, which acts like a village hall offering adult classes in painting and looking after children. People gravitate to it and we have up to 4,000 people who go to the stores because they are going to our centres,” said Clarke.
Clarke also said China would be a priority, with plans to open 105 stores by 2008.
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Rachel Barnes