Outlook: Tesco's emigration
Wednesday 29 September 1999
Within three years, Tesco expects to be making about pounds 150m annually from the first 130 of its planned overseas megastores in markets like Poland, Hungary, Thailand and Taiwan. According to some City projections, overseas trading profits might be as high as pounds 450m two years thereafter, or about a quarter of the group total. The logic of this strategy is hard to fault. Tesco may be the dominant player in the UK, but it is nonetheless vulnerable for that to the present pressures on the industry than its smaller rivals. Constrained by strict planning laws, the domestic market is mature as mature can be, and a new shark has entered the waters in the shape of Wal-Mart.
By contrast, the market in Central Europe is both fragmented and undeveloped, while all these economies will benefit enormously from eventual entry into Euroland. As for Asia, the cost of entry is high but the rewards potentially higher still. So assuming Wal-Mart does not completely destroy UK margins, all would seem set fair for another five years of spectacular growth. That's the bull case for Tesco, anyway. As ever, you have to be an optimist wholly to buy into it. Tesco's management is generally regarded as a class act, but then so was that of Marks & Spencer just before the fall. Perhaps ominously, the first sign of trouble at M & S was when its aggressive overseas expansion strategy began to come unstuck. The list of high street retailers that have caught a bad case of flu overseas starts with Dixons and Laura Ashley, extends through Body Shop and runs on as far as the eye can see.
Even so, Tesco seems to have as credible a strategy as any. Certainly it is a better approach than Sainsbury's, whose decision to expand in North America, another mature market, looks ever more perplexing. If all goes according to plan, Tesco's will emerge at the other end as one of retailing's global elite with a stock market rating to match. But there's many a slip, and while one eye is focused on the long term potential of these underdeveloped markets, another will be firmly concentrated on the immediate game of growing consolidation in Europe's heartland
- 1 Disney heiress Abigail disowns her share of family profits in West Bank company
- 2 The secret report that helps Israel hide facts
- 3 'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
- 4 Israel's propaganda machine is finally starting to misfire
- 5 HSBC closes bank accounts belonging to Muslim clients in the UK
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK
Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
Disney heiress Abigail disowns her share of family profits in West Bank company
'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
HSBC closes bank accounts belonging to Muslim clients in the UK
The secret report that helps Israel hide facts
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
A day in the life of Vladimir Putin: The dictator in his labyrinth
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Boozy, ignorant, intolerant, but very polite – Britain as others see us
- < Previous
- Next >
iJobs Money & Business
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...
£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...
£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...
£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...