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Last Updated: Wednesday, 15 February 2006, 00:27 GMT
Ambitious Tesco gazes far afield
By Gavin Stamp
BBC News business reporter at Tesco's headquarters in Cheshunt

Philip Clarke, Tesco international and IT director
Philip Clarke has his hands full opening new stores
Philip Clarke is looking remarkably chipper for a man who not long ago stepped off a plane from Malaysia and is about to get on another bound for the Czech Republic.

But it is little wonder that the Tesco executive responsible for its business outside the UK has a spring in his step.

The UK's largest retailer recently revealed plans to set up shop in the United States, the latest in a series of overseas forays designed to establish Tesco as a truly international retailer.

"My hands are full," he says and with a swathe of new stores also opening across central Europe and Asia, it is no surprise to hear that he spent 160 days abroad last year.

The US move - in which Tesco will spend at least 250m ($436m) a year on opening convenience store chains starting on the West Coast - caught some analysts by surprise.

Last year Tesco seemed to rule out a venture into the world's largest economy as too expensive but, all along, it had been quietly and rigorously researching the retail market there.

MOVING ABROAD-MARKETS BY SIZE (FEBRUARY 2006)
Tesco logo
Thailand-139 stores
Japan-103
Poland-80
Republic of Ireland-89
Hungary-71
South Korea-55
China-33
Slovakia-31
Czech Republic-27
Turkey-6
Taiwan-6

It believes its chosen format, modelled on the successful Tesco Express concept, provides the most cost-effective mode of entry while offering the best prospects of long-term growth.

"We will open some stores and we won't say much about them until we do," says Mr Clarke, understandably tight-lipped about the details.

"Then the customers will walk in and decide," he adds.

Despite this apparent caution, there is no mistaking Tesco's bullishness about the move, coming as it does on the back of its increasing success in other overseas markets.

Proof of success

Tesco now operates more than 600 stores in 12 countries, more floorspace than in the UK, and foreign sales are rising by more than 20%.

It has put its foot on the accelerator over the past eighteen months, moving into China, significantly expanding in Thailand and Japan and consolidating an already strong position in central Europe.

And this may only be the tip of the iceberg as Tesco sees non-UK business as an increasing engine of its overall growth.

Tesco-Samsung store in South Korea
South Korea is one of Tesco's fastest growing markets

"We needed to prove to ourselves as well as to the investment community that we could do it and do it successfully," Clarke says of Tesco's international strategy.

"We are able to now and we are confident now we are able to do more.

"By entering Japan, China and the US, I think we have shown our ambition."

This rapid pace of growth has, inevitably, not pleased everybody.

Competition concerns

Market leader in five countries and a growing force in others, some critics have accused Tesco of a scatter-gun approach to its overseas expansion.

Others are uncomfortable about Tesco's commercial power - arguments which have become familiar in the UK - and the impact this could have on competition and product diversity in emerging markets.

PHILIP CLARKE BIOGRAPHY
International operations director since 2004
Tesco board director since 1998
Joined Tesco in 1981 as a graduate trainee
Work experience student for seven years up to 1981

Philip Clarke - who started stacking shelves for Tesco as a 14 year old in 1974 - is emphatic on both points.

He says Tesco's track record for job creation and competitive pricing, its role in improving nutritional standards and its support for local businesses stands up to scrutiny in all markets.

He also believes Tesco's strategy is highly focused and that the retailer will only enter a market after painstaking research.

"We do not have a wanderlust," he says.

"We don't go round the world planting flags. What we do is look for an opportunity to create value for shareholders and where we have some certainty about that."

The list of countries that Tesco is sizing up for future development - known to include India - is "very short".

While further expansion is definitely on the cards, improving sales at Tesco's existing stores from Pilzen to Phuket remains just as important.




SEE ALSO:
Tesco plans foray into US market
09 Feb 06 |  Business
Tesco's market share still rising
08 Feb 06 |  Business
Strong Christmas sales at Tesco
17 Jan 06 |  Business
Tesco boss 'eyes Indian market'
15 Nov 05 |  Business
Tesco and Carrefour to swap shops
30 Sep 05 |  Business
Why Tesco is betting on China
15 Jul 04 |  Business
Tesco may expand Japanese empire
27 Apr 04 |  Business


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