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Editorial: Tesco's American adventure was fresh perhaps, but far from easy

The British supermarket behemoth was once all-triumphant at home and assertive abroad. Now it's returning home with its tail between its legs

And so the ever-tricksy American market sends another over-confident British retailer scuttling home with its tail between its legs. This time, it is Tesco. The supermarket behemoth was once all-triumphant at home and assertive abroad. Now, the company’s annual profits have fallen for the first time in 20 years, and it is winding up its enduringly loss-making US chain – Fresh & Easy – at a cost of £1.2bn.

In fairness, the stateside debacle is not chief executive Philip Clarke’s only difficulty. Tesco is also suffering in Britain, as squeezed consumer spending and online competition take their toll. The decision to concentrate less on giant, out-of-town shops, and more on smaller, local outlets and the internet, comes with an £800m property portfolio write-down of its own.

But it is the demise of Fresh & Easy, and with it the dream of conquering the US, that is the biggest blow. This is no strategic shift in response to changing market conditions; this is the humiliation of retreat.

Given that any number of British retailers have tried and failed to make it in the US, Tesco might have been expected to tread carefully. Yet even with the examples of The Body Shop, Sainsbury’s and Marks & Spencer (to name but three) before it, Tesco still committed such follies as focusing on fresh, rather than frozen, ready meals, and relying on self-service check-outs in a land of punctilious personal service.

Time and again, British businesses are tempted by a country ostensibly so similar to our own. But the shared language masks vast differences in lifestyles, in eating habits and in shopping preferences. Despite its exhaustive research, Tesco made the same mistake again.

For all the pain – and the sharp dip in the share price – Mr Clarke can be congratulated for one thing, at least. It takes some bravery to call time on so ambitious a venture – particularly when it was the brainchild of so fêted a predecessor as Sir Terry Leahy. Whether he will prove equally effective in his attempts to re-energise Tesco in Britain remains to be seen.