In 1994, Tesco was Britain’s second biggest grocer. That left it outside the list of the world’s top 10 grocery businesses. In 1995, it overtook Sainsbury’s and never looked back. Today, its 31% market share makes it twice as big as its nearest rival. Having grown so rapidly in Britain, Tesco looked overseas. After a costly mistake in France, it grew in Korea, Thailand, Poland and later, in China. Typically, it bought its way into markets by buying up a local supermarket chain, and expanding it.
By 2006, Tesco was the world’s third largest grocery business, and its ambitions were revealed by its remarkable decision to go into the mature, saturated, US grocery business. Boss Terry Leahy announced that Tesco would invest £250 million a year for 5 years to build the Fresh & Easy chain into a successful business. After opening in November 2007, Fresh & Easy made operating losses of £62 million in 2008, but assured investors that breakeven was possible in 2009. Actually it went on to lose £142 million in 2009. There remains no evidence that this business will ever be profitable, because Tesco has never found a real niche in America. Yet Terry Leahy seems determined to make Tesco grow — and he perhaps sees that the business can never be number one without cracking the US market. So far, he has thrown £1,250 million plus £204 million of operating losses at this target — all in pursuit of growth.
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