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Forbes.com carries an interesting piece by Mike Griswold of AMR Research in which he addresses what retailers need to do to do in order to prepare for the rival of Tesco in the Southern California, Arizona and Nevada markets later this year:

1. Understanding what your customers buy from you, whether through syndicated data or loyalty marketing programs. But Griswold also suggests that retailer executives need to be in the stores, seeing what customers are doing, hearing what they are saying, and doing whatever is necessary to get a sense of the customer experience. (And not just at their own stores; it also is critical to be in competitors’ stores.)

2. Protect the company’s key assets – store managers. “Savvy retailers should target high performers now and map a comprehensive career path for those individuals,” Griswold writes. “Communicate the value of these associates, make them feel appreciated, and engage in-store managers with focus groups to gain insight into what is happening in the stores.” Because if you don’t, Tesco will.

3. Review your assortment – especially because in most stores, five percent of the merchandise accounts for 85 percent of the sales.

4. Develop a “land bank.” One of Tesco’s biggest advantages in its home UK market is its “land bank,” secured but undeveloped sites that in essence shut out the competition. In markets where Tesco may be looking for sites, do the same thing to Tesco before it does it to you.

5. Griswold suggests that retailers need to “identify and develop an operational excellence model that will help differentiate” and “develop meaningful key performance indicators, and ensure not only robust reporting on performance but nimble processes for reacting to business demands.”

6. And finally, Griswold writes, “Tesco's entry into the U.S. will change the retailing paradigm by providing the look and feel of a full service grocery store in a compressed footprint. It is time to think outside the box and create new and innovative ways to service the customer” and perhaps even “revisit initiatives that may have been before their time.” One example – Internet shopping, which has been a huge strength for Tesco in the UK. Griswold writes: “You can be sure that Tesco will leverage its home shopping expertise to drive volume growth, leverage existing infrastructure and meet a latent customer need.”
KC's View:
We get emails every once in a while from folks in the MNB community who suggest that Tesco is overrated, and it can’t be very good because it is taking so long for the company to open stores and establish a presence. We concur with Griswold on this one – he notes that “Tesco's record for entering new markets is 11-to-2--it only stumbled in France and Taiwan.”

We’ve seen enough Tesco stores and know enough Tesco people to make us believe that it will be successful in the US, and that the worst thing people can do is underestimate its potential. (We guarantee you, by the way, that Wal-Mart isn’t underestimating Tesco…and if Wal-Mart is vigilant, you should be, too.)

Griswold quotes Teddy Roosevelt: "In any moment of decision the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing."

Both Griswold and Roosevelt are right. Doing nothing is not an option.

Or, as we like to say here on MNB: “Compete is a verb.”