Friday, October 22, 2010

Who is Tesco and why should we care?

Tesco (LSE: TSCO), based in England, is the world's third largest retailer, with stores in 14 countries across Asia, Europe and North America. With market share of approximately 30%, it's the clear grocery leader in the UK.

Tesco introduced Fresh & Easy Neighborhood (grocery) Markets to the Western U.S. in 2007, and there are already 168 stores in California, Arizona and Nevada. The stores are typically in the 15,000 SF range, making them much smaller than the average U.S. supermarket (and similar in overall philosophy to Aldi). Although the stores aren't exactly turning profits for Tesco yet, it looks as though they're here in the U.S. to stay.

And that's why we should care. Tesco has the cash to buy an existing U.S. grocery operation and expand beyond it's three-state footprint. With some big American grocery players struggling, the opportunity exists for Tesco to step in. Perhaps Safeway (Genuardi's, Vons, Tom Thumb, Carrs, Randalls), which is California-based as Tesco's U.S. operations are, is a prime suspect.

www.freshandeasy.com

2 comments:

  1. David

    Why would you think that Tesco would go after a chain like Genuardi's on the East Coast and when the size of their stores are on average 48,000 sq.ft.?

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  2. It's a good question. I have no reason to think Tesco would or should do this, but there's no doubt they can. And if they wanted to expand quickly by buying all or some of Safeway's brands, they would have to make the strategic decision to "go big."

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