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Why did Britain's Tesco, the world's No.3 retailer, fail in its 9-year attempt to crack the Japanese market?

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was there ever any advertisements? did they carry interesting things? did people even know that the stores were Tesco?

3 ( +3 / -0 )

I saw one of their stores in Nakano ; seemed reasonable, like the mix of convini/supermkt that we are used to in the UK. I can only imagine that there were problem with distribution etc, or that they had a hard time breaking into the functions that can be found in a convini. On the other hand i didnt see ANY advertisements at all.... so maybe also the effort was ever so lack luster.

3 ( +3 / -0 )

Well England/Tesco isn't exactly renowned for good quality food.

-3 ( +7 / -10 )

Marketing aside (and Japanese think of TEPCO as 東電 so that association in itself wouldn't have been an issue--Tesco wasn't targeting the tiny foreign resident market anyway), some of the reasons have been well-documented, including Tesco's attempts to reduce up-front capital costs by buying out existing stores. This resulted in a mishmash of store sizes, styles, and even customer bases, which the minimal renovations done to unify them by brand name, if nothing else, did little to resolve. Given that lack of uniformity, they should have kept purchasing decisions local as well, but no, those were driven by a central office, which in turn got its instructions from global headquarters. Small-scale (in terms of store size) retail grocery in Japan (and anywhere else, you'd think) really depends on understanding and catering to the local customer, and Tesco just didn't seem to learn that lesson...

3 ( +4 / -1 )

Never heard of them here in Japan so I'd say they didn't advertise their brand (enough)? If you want to make it in Japan you need to jump on the "hype" wagon. That means getting your name in the papers, on tv and of course on Twitter etc. It would help even more if you get some geinoujin (celebrities) to talk about how they use your product/shop at your establlishment. Yes, Costco, Dyson, IKEA, and H&M (also from Sweden) are good examples of how things should be done. Blockbuster, Sports Authority, Office Depot and obviously Tesco didn't have a clue. Now there is Elecrolux trying to get a share of the vacuum cleaner market. One look at there Legoblock-shaped product tells me that just isn't going to happen eventhough they're seem to try hard re: advertising.

-1 ( +2 / -3 )

It also helps if you can get your product known to (and bought by) the Japanese consumers BEFORE actually marketing it IN Japan. Abercrombie & Fitch is a good example of this. Japanese could and would only buy their clothing products in Hawai/Guam/Saipan. This is where the Internet came into play... Online ordering for those who had no problem using their credit card but most of all Yahoo! Auction. Lots of people (including me) would buy e.g. an A&F t-shirt abroad or from their website for 1,000yen and sell it for 5,000yen on Yahoo! Auction. The Japanese just LOVE the "non-available/sold out" and "limited item" concept. The harder it is to get (think also the hour-long lines at Disneyland attractions) the more they NEED to have it.

1 ( +4 / -3 )

Never heard of them and where is the article?

-2 ( +0 / -2 )

They didn't have a store in the gaijin ghetto in SW Tokyo. That would have been a good start. They didn't advertise at all. They had no local advantage like size or cultural awareness or supplier relationships. If Nissin and National can make it, Tesco should have cleaned up.

0 ( +2 / -2 )

Because they did what every other supermarket in Japan does, offer the same things at the same prices, why would you go to one place over another?

They shouldn't have listened to the local Japanese "experts" who say "this is Japan you must do it this way" because it is only correct 50% of the time...

Case and point Ikea and Costco

1 ( +2 / -1 )

Tesco failed because it failed to adapt, replicating what every other super market does is not going to attract the customers you want.

To be honest didnt even know they were here so no greta loss at all.

Carrefour started out selling foreign goods but slowly ended up selling 90% japanese goods, then quit.

I think selling foriegn goods here could work well if done properly, costco, Ikea, meat guy, foreign buyers club etc seem to manage but i still think there is a gap in the market,

0 ( +1 / -1 )

England/food ...enough said! A failed business plan from the outset!

-4 ( +4 / -8 )

They should have done what they do here... huge superstores where they can sell most of their stock during the weekly shop. Clothes, entertainment, electronics, their own mobiles, and food... and despite what a couple of people have said, British food isn't as bad as you appear to think.

I saw a Maruya in Nagareyama and all it stocked was food. Around it was a Seven & I, a Mos Burger, a chemist and a book shop... a Tesco here would have cleaned up had they had the usual stock found in a UK branch as well as Japanese stock.

Still prefer ASDA ^_^

-1 ( +1 / -2 )

Because it's a supermarket? A big box that exchanges food for money? Who cares about the name of the box?

1 ( +2 / -1 )

No different from a local Japanese shop, apart from one small shelf of British products. They even had a small boombox playing shouted advertisements on a loop. Couldn't stand being in there for more than 10 minutes. No wonder they failed.

1 ( +2 / -1 )

Because Tesco sucks

0 ( +2 / -2 )

It was the only place I could buy cheap Baked Beans and packets of biscuits with more than 10 biscuits in the pack. @Thunderbird2 dont take any notice of the Anglophobes on here, they have probably never been to the UK, and if they have they probably ate at MuckDonalds to remind them of home.

1 ( +2 / -1 )

Protectionism. Name me ONE store from gaikoku that has done well in Japan from the get go? Ikea came, left and came back. Walmart was bought out, Carrforre was bought out, ASDA has a few products but has never attempted (smart thinking)... These are ALL major stores that do well in their home country and in others. Japan? They flop. Why? I have no doubt business associations and the like make it very, very difficult. No ads? Wonder why. Anyone ever seen an ad for Ikea? I haven't but I see plenty for Japanese run companies like Nitori...

0 ( +2 / -2 )

Cracaphat: Tesco's, and indeed most of the UK's top supermarkets, have a range and quality of produce and foods which are beyond the wildest dreams of any Japanese equivalent.

5 ( +6 / -1 )

Tesco and Carrefour are very successful in China, perhaps because there is less protectionism.

3 ( +4 / -1 )

Protectionism.

-2 ( +0 / -2 )

tmarie - I agree but Costco stands out. I was disappointed about Carrefour in Chiba, maybe they should have carried more foreign affordable goods. I don't need Fauchon's jam on my toast. Tesco is a great supermarket in the UK but here in Japan I don't think it meets requirements of the Japanese. I have never been to one here in JP nor have I seen any. No advertising at all.

2 ( +2 / -0 )

ukguyjp:

Tesco's, and indeed most of the UK's top supermarkets, have a range and quality of produce and foods which are beyond the wildest dreams of any Japanese equivalent.

Too right! It's not just the prices, but the variety. The variety of fruit and vegetables in Japanese supermarkets is shocking - the same old stuff at the same old ridiculous prices - thank god more foreign stuff is coming in.

Hategabo:

It was the only place I could buy cheap Baked Beans and packets of biscuits with more than 10 biscuits in the pack.

Frankly, I wouldn't call 199 yen per can of baked beans cheap! Yes, I've seen them, taken them and put them right back on the shelf. The biscuits I agree. Although having doubled in price after arriving in Japan, still not bad when compared to local biscuits. And it's great to be able to pick up a packet of biscuits and not see shortening or hidden trans-fats in the ingredients. The Japanese have no clue as to what this is.

People here keep singing the praises of Costco. My old workplace gave me a free ticket to enter and check out the place. Came out after 15 minutes empty-handed. Nothing I wanted. And yes, people there did seem a bit fatter than average.

In short, foreign companies who come here to set up a supermarket don't offer anything new or different - the same old Japanese stuff, so why bother going there. And yet if they don't offer the same crap and conform with your local Daiei or Life, then your run the risk of losing customers. Damned if you do, damned if you don't. I'd say Tesco's are doing the right thing. They are earning big bucks in China. I've been to the one in Shanghai. It's big and offers a lot. Better than the average supermarkets here anyday.

0 ( +2 / -2 )

tmarie - I agree but Costco stands out.

Costco does stand out but where does Costco build? In cities with a large foreign population. Costco was pretty much carried by foreigners for the first few years and it wasn't until word got around that the locals started coming. Foreigners will, and do, drive hours for a monthly or biannual Costco trip. Not too many would do that for a regular grocery store - though I did take the train for an hour to get to Carreffor (sp) when it first opened. Costco is also a but different as it is bulk, not weekly food. My point is though, they build in foreign population heavy areas as they know 'we'll' go. Word has finally spread to the locals - shame as they are now so crowded it is a nightmare shopping in them!

0 ( +1 / -1 )

tmarie, this may be true in Tokyo but up here in Hokkaido we don't have a large foreign population. Most of the foreigners live in Sapporo here and even from there it takes a good 30 minutes to drive to Costco. The same goes with Fukuoka. I live almost 2 hours away and i go there every 2nd month to stock up my freezer. Anyway, most of the customers up here are Japanese and i would never dare to go there again during the weekend, it is just unbelievably crowded.

0 ( +0 / -0 )

tmaire: 7/11, McDonalds, Dunkin' Donuts, KFC not ringing any bells?

-1 ( +0 / -1 )

Foxie, Hokkaido is a rather large foreign population per capita. A 30 min drive is nothing. Most people commute longer in the major cities here. As you just said, you drive two hours every few weeks. I know many foreigners who will do that.

Jon, you might want to look into who runs 7/11, McDonald's.... Not foreigners. They are owned in Japan by the Japanese. The same can't be said for the examples I gave.

I could also counter that with Burger King, Dairy Queen and Wendy's with regards to those who do well abroad and horrible in Japan...

0 ( +0 / -0 )

Carrefour have pulled out of a lot of markets, not just Japan: Hong Kong, Thailand, Korea, Mexico, Chile, Russia, Czech Republic, Portugal, UK, Switzerland, and the United States.

-3 ( +0 / -3 )

Walmart went from 37% owners of Seiyu to 100% a couple of years ago, and the current CEO of Walmart Japan is American.

I wouldn't call that being "bought out", unless I was Seiyu.

-3 ( +1 / -4 )

I don't understand why people are attributing Tesco's demise down to a narrow variable. It is a combination of everything that could go wrong for a business. When you analyze Tesco's value proposition, if you can come up with something within five seconds which can immediately connect you with the brand, it means they did a good job with marketing, which in my case I just can't. For example, Apple=ipad and cool gadgets, McDonalds=cheap fast food, etc. Tesco is simply another generic food retailer service which failed to make the impact that Costco did in Japan and its lukewarm introduction and poor marketing really dug an early grave for the retailer. Second of all, what unique practices did the company bring for its customers? If the average obasan is used to shopping at the local grocer, Tesco needed to figure out what could incentivize her to making a switch, which they clearly failed. Arguably, there are also those who immediately point fingers at Japanese protectionism, which clearly is an issue, but as others noted, why do some multinational companies rake in the cash in Japan? It's because they have something the Japanese populace sees as uniquely valuable, an experience or product which cannot be matched by others. Tesco failed to highlight whatever unique benefits they could have offered to their customers from the start and ended up like the other failures who tried to open a business.

Side-note: the reason why large wholesale food retailers are booming in China is because the food safety standards while being improved domestically are still greatly mistrusted by the populace. Carrefour, etc. offers that badge of quality which is not easily matched in the mainland thus attracting a large group of Chinese customers.

1 ( +1 / -0 )

Wipeout, where are the walmarts?? There are none. They are Seiyu as those running the show know the Japanese won't buy/shop at Walmart - they proved that. Hence keeping the name Seiyu.

0 ( +0 / -0 )

Wipeout, where are the walmarts?? There are none. They are Seiyu as those running the show know the Japanese won't buy/shop at Walmart.

Who bought out Walmart? Do you acknowledge that in fact the opposite happened, and that you got it wrong?

Walmart owns Seiyu.

-3 ( +0 / -3 )

I know but my point is that they didn't change the name because they know Japanese consumers wouldn't shop there.

0 ( +0 / -0 )

I know but my point is that they didn't change the name because they know Japanese consumers wouldn't shop there.

That's also how they operate in other countries when it suits them: "Walmart operates under 69 different banners in 27 countries."

Walmart in Britain operates as Asda, which they bought in much the same way they bought Seiyu.

http://www.walmartstores.com/AboutUs/275.aspx?p=246

While it's easy to point to Walmart's success in China, in the rest of Asia, they are less visible. They operate no stores in Hong Kong, Taiwan, Singapore, the ultra-US-friendly Philippines, Malaysia, Vietnam, Cambodia, Thailand, Malaysia, or Indonesia. Need I go on?

They also crashed out of a few large markets, including Germany and Korea.

-3 ( +0 / -3 )

A couple more points: "protectionism" has a specific meaning that is unrelated to consumer resistance against a foreign brand or product. It would apply to rice, which is subject to protectionist policies in Japan, but not to Walmart's decision to use the Seiyu name, or to Costco's siting of stores in foreigner-heavy areas, or to Tesco's decision to leave Japan (they operated here for years, albeit invisibly).

And for a foreign retailer that does well in Japan, and provides a huge range of domestic and foreign goods, I would suggest Amazon.

-3 ( +0 / -3 )

I love Japanese food, and haven't found anything so far I couldn't eat - once it had stopped moving - but I wonder why the Japanese taste in food is so narrow.

Why do we have to pay an arm and a leg for real cheese? I mean something with some flavour in it, not the bland stuff they produce here, or the imitation American-style "Cheddar."

And why are there only three kinds of rice. hakumai, genmai and mochigome?

Tesco never was a gourmet paradise, I'd say it's a few points below Jusco, sorry, Aeon, but it would be so nice to have a foreign supermarket with high class food at reasonable prices. Something like Waitrose or Sainsbury's in the U.K.

This country has a huge population, but such a small variety of food.

On the positive side, I've learned to bake, because I can't stand the white polystyrene they call bread and my refrigerator is stocked with homemade pickles, including Branston pickle, which surprisingly you can make from local ingredients here, chutneys, pickled beets and all kinds of goodies.

Now I'm going to have to learn how to make cheese and brew real ale!

0 ( +0 / -0 )

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