Tesco will overtake international rivals Metro and Ahold to gain third position in the global grocery retail league by 2010, according to a report from IGD.
If growth is maintained at an annual rate of 9.6%, Tesco’s global sales will soar from £30.8bn today to £58.9bn by 2010, when the UK will account for 71%, Asia 17% and the rest of Europe 12%, said IGD.
Russia, Indonesia, Vietnam and Romania are probably next on its shopping list over the next six to 10 years.
International sales should top £17bn by 2010, with China, Turkey and Japan likely to drive Tesco’s long-term international growth, predicts the report.
Tesco is concentrating on developing global relationships with 20 key suppliers and has identified a premiership of 10 suppliers with whom it will work closely during the next 12 months, says the report.
However, the retailer is not necessarily interested in developing global deals or promotions, but developing international frameworks with multinational suppliers and continuing to negotiate activities on a local basis.
Contrary to Tesco’s expectations, the enlargement of the European Union and falling duty rates have not led to a drop in prices in central Europe, claims the report.
“Tesco’s experience is that suppliers and distributors have absorbed duty rate savings. One explanation for this move is that it is a defensive measure to prevent increased parallel trading by western European retailers in central Europe.”
Tesco’s increasing global scale had also prompted suppliers to restructure their teams, adds the report: “To facilitate a cross-divisional and cross-market approach, suppliers are adapting their structures internally to provide Tesco with fewer points of contact within the supplier organisation.”