What can we learn… global grocers
‘What can we learn…’ is the regular column that revisits some of the more interesting retail stories covered over the past 30 years by Glynn Davis for a variety of publications.
This period covers many seismic structural changes in the industry including the emergence of the internet. Alongside the actual stories Glynn will be adding commentary around each of the pieces that will seek to put the articles into context with today’s landscape.
Subscribe to TRBFrom World Business (June 2006)
Recent news around Tesco has been about it launching a tie-up with Deliveroo and Uber Eats to boost its quick-commerce capabilities and also reports that it is considering buying Majestic Wine.
This is all feels very small-scale, domestic stuff and reflects a very different Tesco to the one I wrote about in an article back in June 2006 when the grocer was in a battle with international rivals Walmart and Carrefour for dominance on a global scale. As I described it back then – the world’s leading grocery retailers recognised the fight was truly on to see which one becomes the dominant force on the world’s high streets.
Such objectives have now completely petered out as each of them has backed out of many countries and they all now predominantly focus on their domestic markets and those close to their homes. Consider that in 2006 Tesco had 2,365 stores in 13 markets and as it built up its global presence it expanded its portfolio to a peak 7,305 in 2014. From then it has not been a smooth retreat but the numbers do tell a stark story of a sell-off of many of its global businesses and its store numbers fell to only 4,613 in 2020, according to Statista.
Tesco’s European business is now its only operations of scale outside the UK and Ireland. The end of its empire days involved it offloading its disastrous foray into the US with its Fresh & Easy chain, and it South Korean operation that it sold for £4.2 billion, along with its presence in Thailand and Malaysia that went for £8 billion.
During its retreat Tesco’s global rivals also adopted the same strategy – as seen by Walmart pulling out of Germany, Japan and the UK (through the sale of the bulk of its stake in Asda) – as they all came to the realisation that the synergies of operating grocery businesses around the world were simply not there. Global buying also never really seemed to materialise to the extent they had envisaged. By 2014 the globalisation experiment had truly come to an end for each of these grocery powers and they have all increasingly focused on their home markets.
For Tesco this has also involved it concentrating specifically on food after it had for many years sought to become a major player in non-food. Its online Tesco Direct business gained some scale but ultimately proved a distraction to the core food operations.
Sainsbury’s came to the same conclusion as evidenced by its sale of Argos.This strategy has seen Tesco open more stores – on home soil – since the low point of its store count in 2020. By 2025 it had built its portfolio up to 5,040 outlets, of which 4,300 are within the UK and the rest located within Europe.
This focus on the domestic market has brought its own challenges though as seen by the recent questions about how much road there is left for Tesco. Has it reached peak grocery in the UK? With a near-30% share of its home market it is looking at various ways to eek out more revenues in the UK. Hence its recent tie-up with Deliveroo and Uber Eats to tap into their customer bases and grab more of the fast-growing quick-commerce market, and also the rumours of Tesco being a potential bidder for Majestic Wine.
This is all a world away from the market that Tesco was operating within back in 2006. My article at that time concluded that we were only at the early stages of the battle for domination of global grocery retailing and that we could not discount a tie-up between Tesco and Carrefour. Such talk truly is from an entirely different era.
