‘Wal-Mart’s Worst Nightmare’
British megaretailer Tesco is challenging Wal-Mart, the world’s largest retailer, on its home turf, the US—though Wal-Mart is fighting back using Tesco’s own tactics, writes BusinessWeek.
Wal-Mart countered Tesco’s Nov. 2007 launch of Fresh & Easy—a chain of 10,000 sq. ft. convenience stores in California, Nevada, and Arizona—with its own similar-format Marketside, in Arizona.
Still, “Tesco is Wal-Mart’s worst nightmare,” according to Burt P. Flickinger III, managing director of retail consultancy Strategic Resource Group.
In the UK, Tesco, the world’s No. 3 retailer, has nearly double the market share of Wal-Mart’s Asda chain. And British food industry group Institute of Grocery Distribution forecasts that Tesco will become the world’s No. 2 retailer by 2012, surpassing France’s Carrefour.
Tesco’s growing clout is in part due to its ability to manage overwhelming amounts of data, relying on Dunnhumby, a data-mining firm it majority-controls.
It has been able to turn that data into profits—by allowing it (1) to manage multiple retail formats, from convenience stores to a homegoods chain, and (2) to offer the broadest range of private-label goods of any retailer, including some that sell up to a 50% premium compared with established brands.
It also runs the world’s largest online grocery operation and is the UK’s biggest private-sector employer. Among it other businesses are telecom services, gas stations, personal finance, and online digital music and film downloads.