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Do your research before going International – Tesco got it wrong
February 23rd, 2009
Yesterday’s Sunday Times ran an article which began ‘Tesco admits: we got it wrong in the US’.
Tesco. The one company that doesn’t make mistakes. The company that drove a customer loyalty program to beat all others, boasting that it knew every minutae of millions of shoppers’ habits in the UK. It knew its customers buying patterns so well that it could market product at the right time of the day and in the right part of the store.
So what went wrong in the US? It seems that they didn’t take enough time to find out about their customers in this new market. Maybe they just thought they could apply the same models again.
But that’s the key with International growth – it’s an old cliche but it really is a question of ‘Think Global, Act Local’. Make sure you get to know your target markets passionately.
So what went wrong with Tesco?
It seems that their US operation, Fresh and Easy got its early market research wrong. Marketing Director, Simon Uwins said ‘we went into people’s houses, talked to them about food and food shopping. We went into kitchens and poked around pantries’. This was all before the launch of 113 stores on the West Coast.
Unfortunately, he now admits, they didn’t go into the garage where they would have found huge chest freezers full of stockpiled meat bought on special offer. In the US, it seems, consumers are driven by the weekly ’special offer flyers’ so common in US food retailing. Tesco missed this and didnt realise the market was so driven on price and tactical manoeuvering – they have suffered and now have put the full roll out of 200 stores on hold for 6 months.
So the lesson is simple – make sure that every new market is researched fully. It doesn’t naturally follow that the same format will work in all.