walmart prepared to compete with tesco

Top U.S. retailer undaunted, Tesco caps U.S. venture at $3 billion.

Tesco should do well when it enters the U.S. market later this year, but it should not have a significant impact on Wal-Mart Stores’ sales in the near term, Wal-Mart’s chief executive said.

“I would expect that we will learn things from them, what works and what doesn’t work,” Wal-Mart CEO Lee Scott said in a meeting with reporters after the company’s annual meeting, Reuters reported.

Tesco, Britain’s biggest retailer, plans to open Fresh & Easy Neighborhood market stores this year in California, Nevada and Arizona. Those stores will be smaller than traditional markets, focus on ready-to-eat meals and offer more fresh and environmentally friendly products than typical grocery and convenience stores.

“I don’t think you can look at Tesco in the next five years and ask if there is going to be some significant impact on Wal-Mart sales,” Scott said, noting the size of the stores Tesco plans to open. “Over the long run, 20 years, 25 years, what does that mean? That’s a different question.”

“We compete with them around the world, and we tend to not go out of business,” Scott said.

In other Tesco news, the UK’s top retailer, will retreat from the U.S. market quickly if its Fresh & Easy retail concept fails in the country, according to The Business magazine. The report added that Tesco has privately set a US $3 billion cap on the amount it is prepared to sacrifice if its plan to open 200 Fresh & Easy convenience stores in the USA fails.

In an interview with The Business, Andrew Higginson, Tesco’s finance and strategy director, said: “If it [Fresh & Easy] is a failure with consumers you have got to be prepared to pull the plug, and we would move fast, but you don’t go in with that view.

“This is a launch, not a trial. The way we see this is it is an investment — if we create a success it will be something we can roll out that will create billions of [dollars] in value. But if not, the business [Tesco] can sustain a loss of [$3 billion] in terms of failure; our careers might not, but the business would.”


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