retail news in context, analysis with attitude

The Financial Times has an interview with Colin Smith, a former Tesco executive who worked on the company’s US research project that led to the opening of Fresh & Easy Neighborhood Markets in Southern California, Arizona and Nevada, in which he says that Tesco CEO Sir Terry Leahy originally wanted “to have 10,000 small convenience stores on every junction, in every major city in the USA.”

However, the company scaled back those ambitions considerably, in part because of the recession: “Tesco’s only pledge on the roll-out of Fresh & Easy stores was to have 200 outlets by the end of 2009. To date it has opened 168, and this month it expanded into northern California, a new market for the retailer.” And critics say that Tesco’s plans have been inhibited more by a misconceived format than by a tough economy, and that it may never be able to live up to expectations.

The other interesting note in the story is Philip Clarke, who will take over the CEO job from Leahy next year, has not committed to remaining in the US...though Leahy continues to say he believes that Fresh & Easy will be successful. Clarke says he will visit the stores next year after he takes over the company and will make up his own mind.
KC's View:
The oddsmakers probably would say that the change in CEOs gives Tesco the ability to pull out of the US without Leahy having to preside over the dismantling of his dream. And while that probably a pretty good bet, I’m still not convinced that this is going to happen. It probably is equally possible that the company will double down...but perhaps change its US management and bring in someone (like an American) with a better feel for how the US shopper acts.