Tesco, Wal-Mart Dig In Their Heels

It’s been more than a year since Tesco and Wal-Mart first scrawled their battle lines for a convenience-channel fight on the West Coast, and already analysts are predicting that retail Goliath Wal-Mart could have a fight on its hands.

A report by Business Week said that Tesco’s Fresh & Easy stores, launched in November 2007 in California, Arizona and Nevada, was quickly followed by Wal-Mart launching its Marketside stores. Both concepts are formatted as larger-size convenience stores with upscale but affordable offerings.

“It’s a direct message from Wal-Mart to Tesco saying, ‘Hey, we’re watching you,’" Neil Stern, senior retail consultant McMillan Doolittle in Chicago, told Business Week. “’And we’ll not only copy you; we will do it better.’"

Wal-Mart has good reason to be nervous.

Business Week reports that Tesco’s international momentum is expected to continue – some analysts estimate the chain will grow at an average of 11% annually through 2012 – though the retailer’s big advantage over major international rivals is its ability to manage vast reams of data and translate that knowledge into sales.

“While data crunching may sound dull,” Business Week reported, “it has given Tesco two major advantages: an unmatched ability to operate multiple retail formats—from convenience stores to hypermarkets—and the market knowledge to offer what many analysts say is the best and broadest range of house brands from any retailer.”

Tesco uses information gleaned from Dunnhumby, a British data mining firm in which it has majority control, to manage every its business, including creating new shop formats, arranging store layouts and developing private-label products and targeted sales promotions.

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