It hasn’t been the best of times
for Tesco in recent months as its US venture Fresh & Easy has fallen flat
to the point that the Retail giant is considering cutting their losses by
either selling up to its immediate competitors or effectively “break-up…the
business”[1].
The sell-off has already started with Tesco selling “Fresh & Easy
refrigeration units” and looking for buyers for “220 East Coast stores and a
distribution centre (which) could be attractive to property developers”[2].
However Tesco’s woes in the US
bear no comparison to their fate of late in their bread and butter domestic
market. The horsemeat scandal which Gripped Britain last month outraged
consumer and the public in general with Tesco taking front and centre for most
of the flak.
The PR nightmare began when
Tesco, to their embarrassment, had to pull a number of their own brand meat
products as they were found to have traces of horsemeat[3].
Tesco took the biggest hit in the aftermath of the scandal as it saw its market
share take a tumble as it fell “below 30%-a level it fell below eight year ago…”[4].
Its rivals saw a boost in sales with Sainsbury’s, unblemished by the horsemeat
debacle, were the chief beneficiaries of Tesco’s misfortune reporting a notable
increase in sales[5].
However Tesco’s domestic
troubles have been in the making long before the horsemeat scandal stole headlines
as Tesco profits in the UK, while substantial, experienced a drop and have been
outperformed by other markets, notably by the retail giants’ Asia and banking
operations[6].
Seeing that Tesco may have reached its
highest rate of profit in the UK, its leadership looks to continue its
impressive growth in Asia by expanding its already impressive online operation
to cover its rapidly growing Asian demand with the company being able to “launch
in 50 cities across China” however, the retailer remains cautious[7].
Subject to an successful dry run in Shanghai, Tesco may expand its operation in
China as it tries to negotiate the niggling act that China is still largely a
cash economy[8].
In sum, Tesco have not had the
best of times in the last few months but with plans to expand their operations
in Asia in the near future, it could make for a fruitful future.
[1] G.Ruddick,
2013, Tesco explores options doe Fresh & Easy exit, http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9960166/Tesco-explores-options-for-Fresh-and-Easy-exit.html
[2]
Ibid
[3]
S.Neville, 2013, Tesco withdraws own-brand value meatloaf after finding horse
DNA, http://www.guardian.co.uk/uk/2013/mar/12/tesco-horse-dna-meatloaf-withdrawn
[4]
Tesco Market Share sticks below 30% after horsemeat revelations, http://www.guardian.co.uk/business/2013/mar/26/tesco-market-share-horsemeat-revelations
[5]
Ibid
[6]
Tesco PLC, 2012, Annual Report and Financial Statements 2012, http://www.tescoplc.com/files/pdf/reports/tesco_annual_report_2012.pdf
[7] G.
Ruddick, 2013, Tesco considers major online expansion in China, http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9952231/Tesco-considers-major-online-expansion-in-China.html
[8]
Ibid
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