British Grocer Tesco Comes to America
RENEE MONTAGNE, host:
Attention, shoppers: The British are coming. The giant retailer Tesco plans to open several dozen grocery stores in California, Arizona and Nevada. And it's hoping to go nationwide in the US, as NPR's Scott Horsley reports.
(Soundbite of checkout scanner beeping)
SCOTT HORSLEY: Many American shoppers have never heard of Tesco, but it's one of the biggest grocery companies in the world, ringing up $85 billion in annual sales. It's by far the most popular supermarket in its home country, the U.K.
Unidentified Man: Just the variety of goods that are available, really.
Unidentified Woman #1: I guess in terms of supermarkets, it's just convenient. You just go to one shop and pick everything up.
Unidentified Woman #2: It's a variety of goods they have here and also the low prices that they can afford to have because they're such a big company.
HORSLEY: Now, Tesco's hoping to break into the fiercely competitive American market.
Mr. SIMON UWINS (Chief Marketing Officer, Tesco): This seems to be a place where, if you can get things right for customers, you'll be rewarded for it and you can actually grow your business quite fast.
HORSLEY: That's Simon Uwins, chief marketing officer for Tesco's U.S. venture. He says the company has worked very hard to get things right for American customers. Other European retailers have tried and failed to crack the market, but Tesco has done its homework.
Mr. UWINS: We went into people's homes and we talked to them about what they eat, where they get their shopping from. And then we went and poked around in their pantries and their refrigerators to find out what they actually had in there.
HORSLEY: Tesco also had customers keep diaries of what they ate and where they bought their groceries. What they've found was American's shopping habits have grown increasingly complex.
Retail consultant George Whalin says many people now visit two or three different stores to find all the items on their shopping list.
Mr. GEORGE WHALIN (President; CEO, Retail Management Consultants): It used to be that the average grocery shopper was very predictable. They shopped in a grocery store once a week. They went to the same grocery store, did the same things. As food stores, period, have broadened their offerings, it is not uncommon for a customer to shop at Costco, to shop at a Vons, and also stop at Trader Joe's for specific kinds of things.
HORSLEY: Tesco's audacious goal is to fill all those needs - fresh produce like a Whole Foods, low prices and packaged goods like a supermarket, and ready-to-eat meals like a take-out restaurant - all in a compact neighborhood store only about three times the size of a 7-Eleven.
Marketing professor Rajiv Lal of Harvard Business School says those ready-to-eat meals may be one of Tesco's biggest attractions. He says the company's U.K. stores offer a wider variety of prepared foods than most U.S. supermarkets, and that should do well with busy American shoppers.
Professor RAJIV LAL (Marketing, Harvard Business School): If you go to Tesco at 4 o'clock in the afternoon and ask yourself, you know, what can I eat tonight? You can pick up stuff that you would find appetizing, that you would find healthy and not cost you too much. In fact, there are people in the U.K. who probably live off Tesco-prepared foods for several days in the week.
HORSLEY: Tesco also offers a club card, like many American supermarkets. But retail consultant Whalin says Tesco is more sophisticated in using the card to study its customers' busying habits.
Mr. WHALIN: If you buy a certain brand of beer, you buy baby products or a cat food, they're going to target you with offers and coupons and things like that on a regular basis. And they've been very good at mining that database and targeting their customer with offers.
HORSLEY: Tesco plans to open its first 20 to 30 stores by year's end in San Diego, Los Angeles, Las Vegas and Phoenix. So far, though, Uwins says the company has built only one prototype, and it's shrouded in secrecy inside an L.A. warehouse.
Mr. UWINS: It's our customers who want to find out exactly what it's like rather than tip off our competitors or whatever beforehand. I mean, it's not as if we landed from Mars. It is a food store. But nevertheless, it is quite different from anything that's currently around.
HORSLEY: One savvy shopper is already sold. Billionaire investor Warren Buffet disclosed last year his Berkshire Hathaway company has bought a large block of Tesco stock.
Scott Horsley, NPR News, San Diego.
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