Monday, March 20, 2006

Another high-end c-store?

Tesco hasn't even arrived in the US, and already they have competition in their chosen niche -- from a group that crossed the Pacific before they could cross the Atlantic. FamilyMart, a Japanese company with 10,000 convenience stores in Japan, South Korea, China, and Thailand, has opened two "premium" c-stores in California and plans to have 250 by 2009.
The stores have been opened under the Famima banner and promise to bring a new community lifestyle experience to the west coast, offering a cross between delicatessen, quick-service restaurant and traditional convenience store.

The shops also provide a banking service, a stationary department, newsstand and internet terminals. And they stock fashionable Japanese delicacies, such as sushi, noodles and a selection of imported groceries to appeal to middle-income shoppers.
Tesco hasn't spelled out its own plans, but most analysts think they will be going for a similar high-end niche with stores of about 5000 square feet or less. Previous comments on Tesco's plans are here, here, and here.

Tesco's entry into the US already looked interesting -- this could make it more so. Are analysts correct in thinking this is the market Tesco is going after? And, if so, is it big enough to support two entrants, one of which has a good head-start on Tesco?

This will be fun to watch.

Tuesday Update: The Sunday Times ran an interesting piece outlining how Tesco approaches foreign markets. I suggest you read the whole thing -- there's too much info in it to adequately summarize it here. But the gist is that they initially use joint ventures to get to know the market (which they aren't doing in the US), they adapt to local customs and tastes, and they give local management great freedom.
“You cannot manage people on a day-to-day business. Leadership has to be in the hands of local people. You need strong leadership teams on the ground that carry the ethics and values of Tesco,” he said.

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