Based in the United Kingdom, Tesco is the world’s third largest grocer, operating more than 7,817 stores and franchises in 12 countries. More than 60 percent of Tesco’s sales space is now located outside the United Kingdom. The company made its first move abroad in 1994, when it set up in Hungary, followed by Poland, Slovakia, and the Czech Republic. In addition to becoming a clear winner in Eastern Europe, the company is now the market leader in Malaysia. Tesco also planned to double the number of Tesco Express stores in Turkey in 2008 and more than doubled its online grocery sales in South Korea – its second most profitable market – since 2007.
Tesco set out a strategy to grow the core business and diversify with new products and services in existing and new markets. Some of their tactics included:
- Partner with local players in emerging new markets – Tesco entered the US$270 billion a year grocery market in China in 2004 through a joint venture with Taiwan’s Hymall, which it now owns 90 percent. Today, Tesco operates 135 stores in China and has recently closed a deal with the state-run China Resources Enterprise. Tesco has its international sourcing headquarters based in Hong Kong, from where it sources more than 50 per cent of all clothing and 40 per cent of other non-food items. It buys about US$3 billion worth of goods and services from China annually.
- Cater to local shopping preferences – Tesco is highly flexible in its retailing format to respond to different customer norms and tastes. The company’s stores in Thailand seek to replicate the product selection experience of traditional street markets, with less emphasis on the neatly packaged portions found in many Western markets. Tesco sells live toads and turtles in its Chinese stores, catering to consumers’ preference for shopping in “wet” markets.
- Source talent globally, staff locally – The company has filled 80 percent of managerial posts in China with people hired locally, consistent with its strategy of acclimatizing to each country and keeping down the number of expatriate employees. At the same time, Tesco has recruited MBA degree holders from Indian consulting firms to staff its global function charged with deploying its global operations around the world.
This is an excerpt from the book by: Michael R. Czinkota, Ilkka A. Ronkainen. International Marketing 10th Ed (USA: Cengage, 2013), pg 503.