retail news in context, analysis with attitude

Lots of reaction to yesterday’s report that Tim Mason, who is running Tesco’s Fresh & Easy operation in the United States, said in an interview that the company “got it wrong” in the US despite its much vaunted market research.

“We may have assumed that certain elements of the Fresh & Easy brand would do the work for us and we would not have to go down and dirty on price. That may have been a mistake,” Mason said.

MNB user Mike Griswold wrote:

As one of the “watch out for Tesco” people, I found this revelation very disappointing and frankly concerning relative to their (Tesco) ability to continue to grow. In their defense, at the time they launched in the US, customers where much more interested in product assortments, quality, and the shopping experience and less concerned about price. What I think Tesco is most guilty of is coming to the market without their strengths (customer intelligence) and being very slow to recognize and adapt to the pricing challenges which I found troubling given their reputation for being a nimble operator. I’ve always thought Tesco’s US effort would go as either Lord Nelson’s stunning victory at the battle of Trafalgar or Churchill’s embarrassing retreat from the beaches at Dunkirk. It appears they may be headed for the latter.

MNB user Debbie Wearn wrote:

I saw Fresh & Easy (Simon I believe) present at the Nielsen 360 conference last year. The focus of the presentation was around their research approach before entering the US market. During that presentation, he made a big point in saying how surprised they were to find out how much food Americans store in their garages! This was a key point of difference versus the UK. This seems a big contradiction to the information in your story today. Maybe they had the learning from that research after all, but just did not translate it to the importance of price/value in the US?

MNB user Dave D'Arezzo wrote:

What is most amazing is that Tesco is willing to admit that they may misjudged the US consumer, not that their research led them astray. The retail scene is littered with companies that ignored their consumers' buying habits changing, and kept their collective heads in the sand. The same companies can point to research that reinforced their go-to-market strategies while their customer counts and market share eroded.

Tesco appears humble (and savvy) enough to re-focus in a relatively short time frame. I wouldn't count them out of being a player in the California market just yet.

One MNB user wrote:

It just goes to show that old say the proof is in the pudding! One can do all the market research one wants and the truth is never know until it actually happens.

Another MNB user wrote:

Well, it’s about time they admitted what we all have been saying... All Tesco need to do was to go back and look at the list of UK companies that have come over to the US and have failed. From their site selection, to assortment they were DOA. Lets not allow them to use the "Starbucks" defense that the economic is the fall guy. Let’s be fair, 99.9% of us got the economic wrong, but in life you " pick yourself up, dust yourself off and move forward ". As for picking California, well here to there are many companies that will tell you that it is the wrong state to start a business in do to the labor laws, taxes, etc etc. (Nevada and Arizona not much better... )

What we have here is a company that miss calculated the market from just about every standpoint. Just like Food Lion, they knew their back yard well, but getting to far way from home just didn't work.

Don't get me wrong, I like Tesco and think in the UK they do well, but as many have found the US isn't the UK and the UK isn't the US. Too bad Tesco didn't listen to the so many of us, including ex associates, that this was not going to work before spending so much time and money.

MNB user Dave Stoll chimed in:

Interesting to note that a company who reveled in their strategy and operations didn’t see the downturn in the economy coming. I know for a fact a couple of retailers with dynamic operations and great leadership, did see this impact and planned accordingly. In hindsight, it’s easy to see the beginning of the demise with corn based subsidies, and the impact to food pricing, followed by the shaky investors and their own self-valuation of their mortgage futures. HEB, Publix…good for you seeing the crystal ball with 20/20 vision…the mark of a great marketer is evaluating the information and then have the courage to act.

MNB user Cliff Albertson wrote:

With all due respect to market researchers, if the meat industry followed market research as the primary indicator of products that will succeed, you would see shelves overflowing with low-salt bacon.

Another MNB user wrote:

What is also amazing about the Tesco “failure to date” is that others are following right behind with the same mistake – “just in case” thinking can cause great pain.

Two points.

One is that some of the headlines have suggested that Tesco “may” have to change the way it is doing business in the US. I’d be very surprised if it does not make major changes…and Tesco does have the reputation for being willing and able to do what is necessary to win.

Second, you will no doubt read revisionist history today, with some people suggesting that Mason was taken out of context by the Times of London.

Which reminds me of what journalist Michael Kinsley famously said: “A gaffe is when a politician tells the truth.”

KC's View: