Trading with the top five grocery retailers: Tesco

Date : 20 June 2013

We have assessed the leading global grocery retailers, their key markets and strategies for growth, and looked in more detail at the priorities and strategy of the top five. This week, we examine Tesco and its increasing focus on Asia.

Increasing focus on Asia for growth

The UK remains by some distance Tesco's largest market. However Asia is increasingly becoming its engine for growth, with 56% of sales outside of the UK now coming from the region via stores in South Korea, Thailand, China and Malaysia, and a joint venture presence in India. Over the last 12 months Tesco has exited its underperforming businesses in Japan and the US, allowing it to focus more on its key growth markets.

Poland to become fourth largest market by 2016

The importance of Asia is clear, as we expect faster growth in many Asian markets to continue offsetting slowing growth across Europe. Tesco's top three markets (UK, South Korea, Thailand) will remain unchanged, but by 2016 we forecast that Poland will have just about become Tesco's fourth largest market and China its sixth largest. China - where reports have just emerged of Carrefour's three year plan to open stores in 30 new cities - Thailand and Malaysia will be the key ones to watch, with significant future potential just waiting to be unlocked.

Refocusing strategy

Tesco has five strategic priorities:

  • Further investment in UK operations - strengthening the performance of its home market is still a top priority for group stability
  • More disciplined international growth - use investment to focus on the right markets, formats, channels and teams, based on their growth potential. Suppliers must ensure that joint business plans reflect the changing importance of markets, and that the plans are still relevant to deal with today's challenges and opportunities
  • Become the best multichannel retailer where it trades - rolling out online grocery to all markets, plus a greater focus on smaller formats. Suppliers need to ensure that they are able to capitalise across all channels in all markets
  • Make existing formats fit for future needs - with a food-first policy for all formats, making Extra stores compelling destinations, and creating seamless retail experiences
  • Put the customer first - transferring best practice and using Clubcard to deliver customer insight that helps make Tesco a brand of choice. The retailer will increasingly look to re-embed Clubcard and dunnhumby at the heart of everything it does, so suppliers will have to ensure that their brands maximise the opportunity and focus on Tesco's most loyal customers

Find out more...

This article is taken from our new Special Analysis 'Trading with the top 5 grocery retailers'. In it, we look at the top 20 global grocery retailers to 2016. Find out more here. For a summary of trading priorities, latest developments and other commercial insights on Tesco, download our Snapshot.