Tesco to open convenience stores in USA
The UK supermarket chain Tesco Plc has announced its intention to enter the United States through the development of a new convenience format, beginning with stores in the West Coast in 2007.
According to Tesco, the development of the business will be through organic growth, with initial planned capital expenditure of up to £250 million per year, funded from existing resources. Break-even is expected by the end of the second full year of operation. Tim Mason, currently the company's marketing and property director, will be moved to the USA to run the new business, and will remain on Tesco Plc's board of directors.
Built for Americans The new C-store format is designed for the American market, following extensive consumer research and modelled on Tesco's already-successful Express concept, which already operates in five countries (including the UK) with over 800 stores serving around 8 million customers per week. Through the US operation, Tesco hopes to build up its position in the world's largest markets. The expansion will bring the global population of the company's combined markets to some 2.1 billion people.
According to Tesco's chief executive, Sir Terry Leahy, "This is a tremendously exciting move for Tesco which will add a new leg to our international expansion. The United States is the largest economy in the world with strong forecast growth and a sophisticated retail market. It is a market we have researched extensively for many years and over the last year we have committed serious resources to developing a format that we believe will be really popular with American consumers."
International growth Tesco currently trades in 12 countries outside the UK (mainly in Asia and Central Europe), and more than half of the company's selling space is now outside the UK. But the announcement of a US-based initiative represents a strategic move into a highly developed market, which follows on from the company's entry into the emerging Chinese market in July 2004.
The Tesco Group reported turnover of £33,974 million (approx. US$59,454 million) with pre-tax profits of £2,029 million in the year up to February 2005. The company operates 2,467 stores. Countries of operation include the UK, Ireland, Hungary, Poland, Czech Republic, Slovakia, Turkey, Thailand, South Korea, Malaysia, Taiwan, Japan, and China.