Tesco shifts focus as foreign business booms
applying a "local" approach to the six million sq. feet of new
foreign retail space it opens in a bid to boost sales.
Britain's largest retailer said Wednesday that international sales were up 15.1 per cent, while overall domestic sales rose 9 per cent for the 12 weeks ending 27 May.
Domestic like-for-like sales excluding petrol showed signs of slowing - rising 4.5 per cent compared to 4.9 per cent at the end of last quarter and nearly 7 per cent this time last year.
CEO Terry Leahy asserted the group had made "solid progress" in the UK "on top of two years of exceptional performance" and will plough on with the plan for 150 new British stores.
But the retailer will also deliver a whopping six million sq. feet of new selling space in the 12 foreign countries it now operates, as the company cements its position further afield.
The retailer is now market leader in five countries - Britain, Hungary, Poland, Slovakia and Thailand - and has big ambitions for Thailand, Turkey and China.
Tesco's international operations director Philip Clarke said the expansion drive will utilise 11 years experience operating in markets across Central and Eastern Europe (CEE) and Asia.
Speaking at the IGD Global Retailing conference in London this week, Clarke said: "We're relatively new to operating in foreign markets. But we've taken lessons from our experience.
"We need to be flexible - each market is unique and requires a different approach. That means entering the market in different ways, through joint ventures, stand alone businesses, buying established players, and start-ups."
Clarke said adaptable store presentation is also essential to connect with local consumers.
In a Bangkok hypermarket the firm adopted a "wet market" fruit and vegetable section to mimic the hundreds of stalls across the city that supply consumers.
By improving the local market-style offering, providing a chilled space and higher quality product, the store grew in popularity. Now Tesco has rolled the idea out across all Asian stores, with repeated success.
Although the company has a single international operating plan governing store sizes, marketing and supply, each country's offering is tailored to suit market conditions by local staff.
"A telling sign is that only 100 out of my 100,000 international staff are British," Clarke said.
"The best local operators tend to be the ones that win, and what Tesco is trying to do is to be local wherever it is. Not to bring our western prejudices to the business - bring our knowhow by all means - but let the locals tell us what really matters to their customers."
Last year international sales hit £9.2bn, contributing a total of 23 per cent of overall sales figures, but the company hopes to swell figures this year.
