And so another defeat by the yanks. Tesco's venture into US food retailing has come a cropper and cost the company a good few billion. Indeed, just to close the business int he US will cost them £1.2 billion. New CEO Philip Clarke has clearly had enough of the airmiles for this stuff as he has decided to sell underperfoming businesses in Japan and slow the growth in China too.
UK companies never make it in the US, the scale and level of competition is high and understanding such a complex market takes a lot of energy, effort and luck. Tesco had not enough of any of these. Although there is a nice meme here that Tesco tried to sell fresh food to areas of cities that were undeserved and failed, similarly Jamie Oliver (once of Sainsbury's) tried to repeat his school meals schtick in California and got nowhere with it.
Perhaps the people there are not interested in polenta-based food choices?
Not only this but the US is the home of Walmart and it was quite ambitious to think it could be challenged in its home territory. Let's consider the reverse, how has Walmart done in the UK, it bought ASDA, but how much market share has ASDA grabbed since it was bought - not much really, not even as much as Morrisons.
I wonder which will be the next UK company to try and conquer America - maybe it is M&S's turn again...
I had a chuckle when I heard about this. *Everyone* predicted Tesco would not conquer the supermarket market in the US. And so it came to pass. They thought they could start up from scratch without a local partner and have a profitable business within a few years?! Fools.
ReplyDeleteLeahy got out at the right time.
Either Tesco should have teamed up with a local incumbent (see Lotus in Thailand) or should have started small and worked up, not expecting to break even for quite a while.
Rome (Tesco's UK dominance) was not built in a day.
I wish they would try downunder, If Aldi can make it am sure Tesco can..
ReplyDeletethey need to came back to how they were in the past this is very important for more successful and to get a great and very important tools . more than that they need to look and having a spread look from the place of the mistakes.
ReplyDeleteM&S bailed out of their euro operations in 2001.
ReplyDeleteThen came back in 2010 in a small way.
Its very, very difficult to break into an already competitive market.But it can be done.
Mothercare overseas is more profitable than its UK operation.
As is to be expected Tesco are my first foray into long term dividend investing... Price has held up pretty well as most of this was known before the FY announcement. I fully expect to lose another 10-11p when the record date passes.
ReplyDeleteWas hoping to switch it all to Sainsburys in between divis, but not looking likely now :(
No why would a company that
ReplyDelete* abuses its suppliers,
* misleads it's customers with false 'savings'
* and sells horse meat as beef
... fail in the US? I thought they were supposed to be naieve over there.
Just saying
How can it cost them so much to shut it down?
ReplyDeleteEither the carpet is uneven or they are paying off other debt to make their figures look better next year. Just saying.
The big retailers squeeze their suppliers to death, often literally, just to get that bit extra profit (sudden death bidding anyone?).
ReplyDeleteThen again they lack common sense, for example: Asda's "smart price" (ie low cost) corned beef sourced from high wage France where their standard corned beef was from Brazil. What dopey buyer thought that would work? No wonder it was corned horse.
@budgie, Anon 3:21: Show me a large conglomerate with monopolistic tendencies that does not abuse its position in most of the ways you have stated...
ReplyDeleteIn Food, Telecoms, Energy, Housing, banking... In other words all the essentials!
(I am only investing in the essentials of life as in a correction/problem period all else is frippery)
Might it have done better if they called it Fresh 'n' Easy ?
ReplyDelete""" UK companies never make it in the US, the scale and level of competition is high and understanding such a complex market takes a lot of energy, effort and luck. Tesco had not enough of any of these. Although there is a nice meme here that Tesco tried to sell fresh food to areas of cities that were undeserved and failed, similarly Jamie Oliver (once of Sainsbury's) tried to repeat his school meals schtick in California and got nowhere with it. """"
ReplyDeleteinteresting topic "" And so another defeat by the yanks. Tesco's venture into US food retailing has come a cropper and cost the company a good few billion. Indeed, just to close the business int he US will cost them £1.2 billion. New CEO Philip Clarke has clearly had enough of the airmiles for this stuff as he has decided to sell underperfoming businesses in Japan and slow the growth in China too.
ReplyDeleteUK companies never make it in the US, the scale and level of competition is high and understanding such a complex market takes a lot of energy, effort and luck. Tesco had not enough of any of these. Although there is a nice meme here that Tesco tried to sell fresh food to areas of cities that were undeserved and failed, similarly Jamie Oliver (once of Sainsbury's) tried to repeat his school meals schtick in California and got nowhere with it.
""