Tesco International operations

Tesco PLC
Public limited company
Traded as LSE: TSCO ISEQ: TCO
Industry Retailing
Founded 1919 (1919) - Hackney, London, England
Founder Jack Cohen
Headquarters

Tesco House
Delamere Road
Cheshunt
Hertfordshire
EN8 9SL

England
Number of locations
 Increase6,784 stores (As of March 2014) (see table below)
Area served
 Worldwide
Key people
Products Cash & Carry/warehouse club, convenience/forecourt store, department store, discount department store, discount store, hypermarket/supercenter/superstore, other speciality, supermarket
Number of employees
 Increase597,784 (2013)[1]
Website www.tesco.com

Tesco has expanded its operations outside the UK to 11 other countries in the world. Tesco pulled out of the USA in 2013, but continues to see growth elsewhere. Tesco's international expansion strategy has responded to the need to be sensitive to local expectations in other countries by entering into joint ventures with local partners, such as Samsung Group in South Korea (Samsung-Tesco Home plus), and Charoen Pokphand in Thailand (Tesco Lotus), appointing a very high proportion of local personnel to management positions. It also makes small acquisitions as part of its strategy: for example, in its 2005/2006 financial year it made acquisitions in South Korea, one in Poland and one in Japan.[2]

In late 2004 the amount of floorspace Tesco operated outside the United Kingdom surpassed the amount it had in its home market for the first time, although the United Kingdom still accounted for more than 75% of group revenue due to lower sales per unit area outside the UK.

In September 2005 Tesco announced that it was selling its operations in Taiwan to Carrefour and purchasing Carrefour's stores in the Czech Republic and Slovakia. Both companies stated that they were concentrating their efforts in countries where they had strong market positions.

The following table shows the number of stores, total store size in area and sales for Tesco's international operations. The store numbers and floor area figures are as at 18 April 2012.[3]

Overview of operations

Country Entered Stores Area (m² (sq ft)) Mean store area (m² (sq ft)) +/- Stores
2011/12
China Mainland China 2004 124 893,913 (9,622,000) 7,209 (77,476) Increase 19
Czech Republic Czech Republic 1996 322 538,559 (5,797,000) 1,673 (18,003) Increase 61
Hungary Hungary 1994 213 678,285 (7,301,000) 3,202 (34,439) Increase 7
Republic of Ireland Ireland 1997 137 319,586 (3,440,000) 2,333 (25,109) Increase 7
Japan Japan 2003 121 36,790 (396,000) 304 (3,273) Decrease 19
Malaysia Malaysia 2002 57 350,988 (3,778,000) 7,800 (83,956) Increase 9
Poland Poland 1995 460 827,394 (8,906,000) 2,008 (21,617) Increase 41
Slovakia Slovakia 1996 160 336,959 (3,627,000) 2,808 (30,225) Increase 23
Thailand Thailand 1998 1,092 1,192,039 (12,831,000) 1,092 (11,750) Increase 310
United Kingdom United Kingdom 1919 2,975 3,585,314 (38,592,000) 1,205 (12,972) Increase 260
Total (not including UK) 3,376 6,851,321 (73,747,000) Mean: 2,029 (21,844) Increase 565
Total (including UK) 6,351

10,436,635 (112,339,000) Mean: 1,643 (17,688) Increase 823

Former operations

Country Entered Exited Stores Area (m² (sq ft)) Mean store area (m² (sq ft))
France France 1993 2010 92 at peak, 1 from 1997-2010 173,279 (1,870,000) 937 (10,108)
South Korea South Korea 1999 2015 458 1,166,026 (12,551,000) 2,546 (27,404)
Turkey Turkey 2003 2016 191 337,052 (3,628,000) 2,277 (24,514)
United States United States 2007 2013 185 173,279 (1,870,000) 937 (10,108)

Europe

Czech Republic

Tesco Express, Belehradska Street, Prague, Czech Republic

Tesco opened its first store in the Czech Republic in 1996 and now has over 84 stores, with further planned.[4] Tesco opened its first stores in the Czech Republic by buying US corporation Kmart's operations in the country and converting them into Tesco stores. Tesco is also keen to expand non-food items and has already opened petrol stations and offers personal finance services in the Czech Republic.[5] There are currently three Tesco Extra stores in the Czech Republic – one in Prague and Brno, two in Plzeň.

By 2012 the company had 322 stores in the Czech Republic. It is a market leader in the country.[6]

France

Tesco owned a French food retailer called Catteau between 1993 and 1997, which operated a chain of 92 stores[7] in NE France under the Cedico, Hyper Cedico and Cedimarche banners. Tesco also operated a "Vin Plus" outlet in Calais, selling wine, beer and spirits, which closed on 30 August 2010.[8]

Hungary

Tesco store at Kőszeg, Hungary with Statue of Fire Salamander

Tesco launched in Hungary in 1994 after purchasing a small local supermarket group trading as S-Market based in the North West of Hungary. It opened its first hypermarket in Hungary at the Polus Centre in Budapest in 1996. Tesco operates through more than 200 stores in Hungary with further openings planned.[4] Tesco Hungary also offers a clothing line and personal finance services.[9] In August 2010 opened the first Tesco Extra in Budapest; its name is Tesco Extra Fogarasi and it is located in Zugló, Budapest. The second Tesco Extra opened in Debrecen in 2012.

Poland

A Tesco Hypermarket in Prokocim, Poland

Tesco entered the Polish market in 1995. It currently operates from 450 stores.[10] Tesco Poland sells various brands as well as its own branded line of products as well as regional produce, petrol, personal finance services and on-line photo processing. In August 2008 Tesco opened the first Extra store in Poland located in Częstochowa. Currently there are five Tesco Extra stores in Poland.

Slovakia

Tesco, Kamenné námestie, Bratislava, Slovakia

Tesco Slovakia opened in 1996 as part of Tesco's international expansion aims. It now operates from 123 stores. Tesco Slovakia has recently put great emphasis on organic products. However, Tesco Slovakia caused controversy amongst the Slovak government when it was found to have come foul of food safety laws in 2006.[11] In April 2010 the first Tesco Extra in Central Europe opened in Bratislava – Petrzalka, Slovakia as part of a pilot project for Tesco in the region, including the first self-service cash flow in Central Europe. There are currently seven Tesco Extra stores in Slovakia – three in Bratislava and one in Zvolen, Trnava, Banska Bystrica and Spišská Nová Ves.[12] [13] In 2010 first Tesco Express stores were opened in Bratislava with current number of 16 shops. Tesco also operates store called 'My' in Bratislava which accept Clubcard and share some branding, however, most promotions do not apply for My. Tesco in Slovakia operates mobile network "Tesco Mobile" and also petrol stations.

Ireland

Main article: Tesco Ireland

Tesco first operated in the Irish grocery market in the early eighties, selling its operations there in March 1986.[14] Tesco re-entered the Irish market in 1997 after the purchase of Power Supermarkets Ltd. It now operates from 101 stores across Ireland. Like Tesco stores in the UK, these offer a home delivery shopping service available to 80% of the Irish population as well as petrol, mobile telephone, personal finance, flower delivery service and a weight-loss programme.[15] Tesco's loyalty programme, Clubcard, is offered in the country.

Tesco is now the grocery market leader in Ireland, with a reported November 2005 share of 26.3%.[16] Tesco Ireland also claims to be the largest purchaser of Irish food with an estimated €1.5 billion annually. Tesco Ireland operates a small number of Tesco Extra hypermarkets in Ireland, with Clarehall Extra on the Malahide Road being the first to open in 2006. Tesco's largest hypermarket store in Europe, with a floorspace of 18,500 m², opened in Naas in Co Kildare in November 2010.[17]

The country's newspaper of record the Irish Times in April 2011 said that "Increasingly, Ireland is being viewed as a provincial backwater by the parent company – albeit a very profitable little backwater – and all the strategic decisions are being taken in the UK.[18]

In 2008 Tesco opened its first eco store in Tramore, Co. Waterford. It is expected to use 45% less energy than other Tesco supermarkets of similar size.[19]

Asia

China

Tesco acquired a 50% stake in the Hymall chain, from Ting Hsin in September 2004. In December 2006 it raised its stake to 90% in a £180 million deal.[20] Most of Tesco China's stores are based around Shanghai, but according to Tesco it plans to equip the business to expand more quickly and in different areas. Tesco has a large store in Weifang, Shandong province, and a further two floor store in Taizhou, Jiangsu province. The Tesco in Taizhou offers imported beers and spirits, some imported wines, and Australian, French, Italian and Dutch cheese products. A Tesco Express in the Shanghai Old Street area is no different from a typical Chinese convenience store in both style and products on display. Tesco has been increasing its own brand products into the Chinese market as well as introducing the Tesco Express format.[21]

In May 2014 Tesco made a deal with the state-run China Resources Enterprise (CRE) to create a joint venture, combining Tesco's 131 stores in the country with CRE's nearly 3000 outlets. With Tesco owning 20% of the business and CRE 80% this was now the largest food retailer in China.[22]

India

Tesco has had a limited presence in India with a service centre in Bangalore, and outsourcing.[23] In 2008 Tesco announced their intention to invest an initial £60m ($115m) to open a wholesale cash-and-carry business based in Mumbai with the assistance of the Tata Group.[24]

Japan

Tesco Japan first began operations in 2003.[25] It was brought about by a buy-out of C Two stores for £139 million in July 2003 and later Fre'c in April 2004.[26] Tesco has adopted an approach that focuses on small corner shops that operate similarly to its Express format, rather than opening hypermarkets. It has also launched its range of software in Japan.[4] In August 2011, Tesco announced that they would be selling off their Japanese stores to ÆON after revealing that only half of the stores in the Greater Tokyo Area were making a profit.[27] Market share in the country was never above 1 percent.[25]

Malaysia

Tesco opened its first store in Malaysia in May 2002 with the opening of its first hypermarket in Puchong, Selangor. Tesco Malaysia currently operates 49 Tesco and Tesco Extra stores. Tesco has partnered with local conglomerate Sime Darby Berhad, which holds 30% of the shares.[28]

In 2007, Tesco acquired the Malaysian operation of the wholesaler Makro, which was then rebranded as Tesco Extra and provides products for local retailers. There has been plans to relaunch all its stores in Malaysia to Tesco Extra. Besides giving the store a contemporary design and a brighter look, the new Tesco Extra brand features a shop-in-shop concept with an optic shop, pharmacy, bistro and phone shop. Till date, 7 out of the 52 outlets have been rebranded to the new format namely: Tesco Extra Mutiara Damansara, Tesco Extra Bandar Bukit Puchong, Tesco Extra Ara Damansara, Tesco Extra Seberang Jaya, Tesco Extra Desa Tebrau, Tesco Extra Bandar Bukit Tinggi in Klang, Tesco Extra Mutiara Rini and Tesco Extra Ipoh Garden.

Tesco Malaysia offers a value range, its own branded range, electronic goods, the loyalty clubcard and clothing. Tesco Malaysia's Clubcard introduced Green Clubcard Points in 2007 making Tesco Malaysia the first Tesco international business to introduce the Green Clubcard Points scheme.[29]

In April 2013, Tesco Malaysia launched the Grocery Home Shopping Service, where it delivers groceries ordered via the Internet to consumers, with no minimum purchase imposed. There will be a RM10 service charge for each delivery and online customers may choose a delivery time slot from 10 am to 10 pm daily. Payment is made via credit or debit card. The service is currently offered to customers living within the 20 km radius of Tesco Extra outlets.[30]

The Malaysian operation of Tesco also includes a convenience store, Tesco Pernama Ekspres, which began its operation in February 2015.[31]

South Korea

Main article: Homeplus

Tesco launched its South Korean operations as "Homeplus" in 1999 and partnered with Samsung, currently Tesco holds 94% of the shares in the venture.[32] It operates both hypermarkets and its express format as well as a home delivery shopping service. It is the second largest retailer in South Korea, just behind Shinsegae Group.[32]

On 14 May 2008, Tesco agreed to purchase 36 hypermarkets with a combination of food and non-food products from E-Land for $1.9 billion (£976 million) in its biggest single acquisition, making Tesco the second largest in the country. The majority of the E-Land stores formerly belonged to French retailer Carrefour before 2006 and most of the stores will be converted to Home plus outlets. Tesco's South Korean discount store chain, Home Plus, currently has 66 outlets.[33][34]

In September 2015 the company was sold to MBK Partners, a South Korean buyout firm, which partnered with a Canadian pension fund and Singapore's Temasek Holdings in a transaction worth 4.2 billion pounds. The sale should be completed by the end of the year.[35]

Thailand

Tesco-Lotus superstore in Sakon Nakon, Thailand. Shoppers have to pass through a checkpoint before entering the premises.

Tesco entered Thailand in 1998 and operates through 380 stores as part of a joint venture with Charoen Pokphand and named the operation "Tesco Lotus". This partnership was dissolved in 2003 when Charoen Pokphand sold its shares to Tesco. Tesco Lotus sells a diverse range of products from value food products to electronics to personal finance services. The company is keen to promote its green values and has partnered with the UNEP. Tesco Lotus claims to serve 20 million customers every month and that 97% of its goods are sourced from Thailand.[36]

By March 2013, Thailand operations were generating £3 billion in revenues and were one of the company's largest businesses outside of the UK.[37]

Turkey

Tesco entered Turkey in 2003 and uses the trading name "Tesco Kipa". Tesco remains focused on building infrastructure in Turkey to complete its expansion plans and introduced the Tesco Express format into Turkey in 2006.[38] There are plans to increase the rate of expansion as basic infrastructure is built.[4] The first Tesco Extra in Turkey opened in Izmir, Turkey, Tesco Kipa Extra Balçova in September 2010. In June 2016, Tesco announced the sale of Tesco Kipa to a local rival, Migros Türk.[39]

United States

A Fresh & Easy store in Summerlin, Nevada, United States
Main article: Fresh & Easy

Tesco entered the United States grocery market in 2007 through the opening of a new chain of convenience stores, named Fresh & Easy, on the West Coast (Arizona, California and Nevada).[40] The company established its U.S. headquarters in El Segundo, California, and the first store opened in Hemet, California in November 2007, with 100 more planned in the first year; a store opening every two-and-a-half days. Although the planned rate of expansion was not maintained, largely because of the recession, as of August 2011 Fresh & Easy operated 182 stores across Arizona, California and Nevada. In April 2013, Tesco put the Fresh & Easy chain on sale, booking losses of £1.2bn. It announced the sale of 150 of the stores in the 200 strong chain to private equity firm Yucaipa Companies in September 2013.[41] The BBC reported that the remaining stores were expected to close.[41] The deal included Tesco loaning the venture £80m and retaining an option to buy back a stake in the business if Yucaipa succeeded in turning around the group's performance.[41]

References

  1. ↑ Tesco PLC (2012). "Tesco PLC Annual Review and Summary Financial Statement 2012" (PDF). Tesco PLC Annual Review and Summary Financial Statement 2012. Tesco PLC. Retrieved 26 August 2012.
  2. ↑ "Tesco Preliminary Results 2006" (PDF). Tescocorporate.com. Retrieved 16 August 2011.
  3. ↑ "2011/12 Preliminary Results analyst pack" (PDF). (92 KB)
  4. 1 2 3 4 "Tesco Annual Review 2007" (PDF). Tesco PLC. 21 April 2008. Archived from the original (PDF) on 26 September 2013.
  5. ↑ "Tesco Services". Tesco Czech Republic. 21 April 2008.
  6. ↑ "Czech Republic". Retrieved 18 October 2014.
  7. ↑ http://www.theguardian.com/business/2014/oct/23/tesco-timeline-the-highs-and-lows
  8. ↑ "UK firms shut French stores as 'booze cruise' declines". BBC News. 19 June 2010. Retrieved 17 July 2010.
  9. ↑ "Tesco Services". Tesco Hungary. 21 April 2008. Archived from the original on 24 July 2012.
  10. ↑ "Tesco Poland – History". Retrieved 18 October 2014.
  11. ↑ "Tesco falls foul of Slovak government". cee food industry. 2 May 2006. Archived from the original on 25 June 2006.
  12. ↑ "The new format Tesco Extra comes to Slovakia". tesco slovakia.
  13. ↑ "First Tesco Extra in East of Slovakia". tesco slovakia. 22 February 2012.
  14. ↑ "Tesco withdraws from Ireland". The Guardian. Guardian Newspapers. 27 March 1986.
  15. ↑ "Food and Grocery Shopping, Tesco Ireland". Tesco Ireland. 21 April 2008. Archived from the original on 21 March 2009.
  16. ↑ "Tesco still commanding highest market share". RTÉ Business. 6 December 2006.
  17. ↑ "About Tesco Ireland". Tesco Ireland.
  18. ↑ The Irish Times (4 April 2011). "Every little helps Tesco improve its bottom line". The Irish Times. Retrieved 26 August 2012.
  19. ↑ "Tesco Ireland Media Centre". Tesco.ie. Retrieved 18 April 2013.
  20. ↑ "TESCO Extends Partnership in China". London Stock Exchange's Regulatory News Service. 12 December 2006.
  21. ↑ "Tescco Express rolls into China". The Times. UK. 21 April 2008.
  22. ↑ "Tesco and China Resources Enterprise reach retail deal". BBC News. Retrieved 18 October 2014.
  23. ↑ "Tesco raises sourcing from India to £230 m". The Financial Express. 17 November 2010. Retrieved 20 December 2010.
  24. ↑ "Tesco planning venture in India". BBC News. 12 August 2008. Retrieved 29 December 2010.
  25. 1 2 "Tesco pays £40m to exit Japan". Telegraph.co.uk. 18 June 2012. Retrieved 18 October 2014.
  26. ↑ McCurry, Justin (1 June 2004). "Tesco pedals cautious path in Japan". The Guardian. London: Guardian News and Media. Retrieved 31 August 2011.
  27. ↑ "Tesco bids sayonara to 'unscalable' Japan business". BBC News. British Broadcasting Corporation. 31 August 2011. Retrieved 31 August 2011.
  28. ↑ Sime Darby (2011). "Other Businesses". Sime Darby. Sime Darby. Retrieved 26 August 2012.
  29. ↑ "Tesco: Interactive map". Tesco PLC. Archived from the original on 17 April 2010. Retrieved 16 April 2010.
  30. ↑ "Tesco sees good returns from online service". News Straits Times. Retrieved 3 April 2013.
  31. ↑ "Mini Me Insights: Slowdown in Tesco Stores (Malaysia) revenue, focusing on two growth drivers". Mini Me Insights. 17 April 2016. Retrieved 13 June 2016.
  32. 1 2 "E-Land in talk to sell stores to Tesco South Korea unit". Reuters. 14 May 2008. Retrieved 16 April 2010.
  33. ↑ "Tesco to buy 36 S.Korean stores". Reuters. 14 May 2008.
  34. ↑ "Tesco set to grow in South Korea". BBC News. 14 May 2008. Retrieved 6 January 2010.
  35. ↑ "Tesco sells South Korea stores for £4bn". BBC News. 7 September 2015. Retrieved 7 September 2015.
  36. ↑ "Key facts about Tesco Lotus". Tesco Lotus. 21 April 2008. Archived from the original on 3 March 2009.
  37. ↑ "Tesco goes head-to-head with Thailand's wet markets". Telegraph.co.uk. 31 March 2013. Retrieved 18 October 2014.
  38. ↑ "Tesco PLC - About us - Our businesses - Tesco Kipa - Tesco in Turkey". Tesco plc. Retrieved 18 October 2014.
  39. ↑ "Tesco sells Giraffe restaurant chain and Turkish business". BBC News. Retrieved 10 June 2016.
  40. ↑ "Tesco to enter United States". Retrieved 13 March 2006.
  41. 1 2 3 "Tesco offloads loss making Fresh & Easy chain". BBC News. BBC. 10 September 2013. Retrieved 10 September 2013.
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