Tesco takes a breather in its US growth strategy

There were rumours a few weeks ago, and now a management blog confirms that Tesco is pulling back on the growth reins as it takes on the grocery market in the US.

We blogged about Tesco’s entry into the US grocery market a little while ago.

An entry on the Fresh & Easy blog confirms that Tesco is taking a pause for breath whilst it consolidates the stores it has opened in the US so far.

Fresh & Easy marketing director Simon Uwins revealed on the company’s website, where he writes an occasional blog, that there would be “a three month break from openings ... simply to allow the business we’ve created to settle down”.

According to The Guardian, analysts at Goldman Sachs and US brokerage Piper Jaffray downgraded their forecasts for Tesco over concerns about Fresh & Easy.

Mike Dennis of Piper Jaffray said “very weak footfall” had become an issue for the new chain, adding supplier feedback suggested the sales could be as little as $30m, against the anticipated $100m.

It is interesting how a business manager’s blog can let the story slip out into the media - maybe it was planned that way.

All credit to Tesco though. There is no point pressing ahead with a rapid growth plan unless you’re happy that the retail format is working, so it makes sense to take a little time to refine the format before rolling out the new stores again. A real question of quality over quantity.