retail news in context, analysis with attitude

In the UK, the Guardian reports that even as Tesco continues to face questions about the performance of its US Fresh & Easy Neighborhood Market stores, “its core UK business is being battered by the economy and losing ground to rivals.”

This latter comment is based on recent market share figures that indicated that Tesco is growing less than competitors William Morrison Supermarkets and Wal-Mart’s Asda Group. The entire UK grocery sector is said to be under pressure both from inflation and a rollback in consumer spending.

In the Times, there are reports that about a third of Tesco’s chilled foods team “has gone to America to help to develop the fresh food lines sold in Fresh & Easy,” which may be serving as a distraction that is hurting its UK business.

Tesco has responded to the criticisms by saying that the shifts in the UK market are cyclical and nothing to worry about, and that it remains bewildered by the “baseless” criticisms of its Fresh & Easy Stores, which it says are “growing rapidly.”

KC's View:
The late, great Bob Murphy used to refer to severely challenged baseball teams as “looking at nine miles of bad road,” but while Tesco almost certainly is facing challenges, I’m not sure it is quite that bad.

After all, the global economy is in tough shape…which is creating problems for retailers big and small. And Tesco is trying to develop a new kind of grocery store in an entirely new market…which has its own share of challenges. So to expect that things would go completely smoothly would be to expect too much.

I still wouldn’t bet against Tesco. The company has too much money, too much intelligence, too much bench strength and too much ambition. If there are problems, the folks at Tesco are a pretty good bet to fix them.