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Business Comment

Simon English: Calamity that proved Tesco wasn't led by retail geniuses after all


Outlook It's easy and far from appealing to be wise after the event, but in the case of Tesco's belated admission that its American adventure is a failure, hindsight wasn't really needed.

The move into the US always looked hubristic, the last dart thrown by a management regime that had begun to think of itself as a group of retail geniuses who couldn't fail (that's what happens just before you do).

Even at the most basic, most obvious level, the notion that what America really needed was more food and more places to buy it looked absurd.

Had they ever visited?

Tesco claimed to have identified all sorts of areas in the giant plains of California that were cruelly under-shopped. Nothing for miles around.

It couldn't be true, critics mused right at the start, that there were no supermarkets in those places simply because there were no people. Tesco's executives must have done better research than that. It's now not clear that they had.

Any business getting fancy ideas about conquering America quickly runs into the truth that there's 300 million folk there, many of them entrepreneurial. If there is a gap in any market, one of them is far more likely to spot it than an outsider.

Tesco can take some comfort from being far from the only UK retailer to find America too tough to crack, but in truth it is not even as if they made a particularly good fist of it. They didn't fail by a narrow margin, they missed by miles. They took on expensive stores that look like they could never be profitable. They assumed that Americans would get as hooked on ready meals as we are – they didn't.

Moreover, it was never clear what Fresh & Easy's market position was – who its target audience was supposed to be.

That the American adventure coincided with a slump back home might just be coincidental, but it doesn't seem it. Perhaps if it hadn't been so distracted abroad, Tesco would at least still be on the front foot here.