Simon English: Tesco's not in crisis after profits slip but it must abandon American adventure
Thursday 04 October 2012
Outlook How much trouble is Tesco in? It's traditional to report each wobble at the "retail behemoth" (other clichés are available) as though it were some sort of national crisis. Profits down. Send for the Army.
The less exciting truth is that Tesco remains possibly the best-run company in Britain, and that its relatively mild difficulties, compared with recent global financial crises, are a function of its size and of the competitiveness of the grocery sector.
You might see your food bill going up and argue that this is not so, but every time the Competition Commission decides that our supermarkets are colluding to make our lives worse, it conducts a tediously lengthy investigation and decides, erm, no, not so much.
Food is getting more expensive, but that isn't Tesco's fault.
One certainty that comes from all of the Tesco sales and results figures since Sir Terry Leahy announced his departure in June 2010 is that the wily old fox could see the top of the market from a mile off and picked the exact right time to depart.
There's not much to suggest that his replacement Philip Clarke is any less of a clever grocer than Sir Terry, but following greatness is always going to be harder than building up a somewhat lost concern, which is what Tesco was when Sir Terry became the boss in 1997.
Mr Clarke's £1bn investment in the UK stores is much needed and shows that Sir Terry left him a far from easy hand to play.
But the continuing refusal to give up on the American adventure remains a source of mystery.
Even at the most basic level, it seems very hard to imagine that selling more food to Americans was ever going to be a likely easy win. They have enough already.
British business success stories in the US are thin on the ground for a reason. there are 300 million Americans, and if there's a gap in the market for something, one of them will spot it first. Mr Clarke should ditch this somewhat vain adventure sooner rather than later, and focus Tesco on being what the company remains: a UK success story.
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