Challenges in Retail InnovationTesco plc’s Market Entry.pdfVIP

Case Studies Challenges in Retail Innovation Aspects of Innovation in Tesco plc’s Market Entry into the USA Abstract This case examines the market entry of the UK’s largest retailer (Tesco) into the USA. Tesco’s launch of a new brand – Fresh Easy Neighborhood Markets – in virgin territory is a bold move, notwithstanding the firm’s considerable success with its overseas investment strategy (which within ten years has resulted in more than 50% of the firm’s operating space being outside its ‘home’ market). It contextualises the study by taking a historical view of innovation in the retail industry, which reveals that generally - and certainly for the most part of the 20th Century – innovations have dominantly flowed from the US to the UK. The paper suggests that Tesco’s US experiment is unusual both in terms of the innovatory aspects of its market entry and the reversal in that conventional direction of knowledge transfer. The Fresh Easy story is then examined in terms of ten ‘dimensions of innovation’ involved in the market entry. The paper concludes by drawing out from these ‘dimensions of innovation’ a number of important issues for management scholarship raised by the study, stressing the need to incorporate insights from a wider social science literature. This case is based on continuing research by Professor Michelle Lowe, Lead Innovation Fellow AIM (Advanced Institute of Management Research) and Professor of Retail Management, University of Surrey. If you have any questions or comments please contact her at: School of Management University of Surrey Guildford GU2 6XH m.lowe@surrey.ac.uk Introduction “When I was the chairman of Tesco we looked very carefully at the North American market, and found that there was a significant difference in cultural attitudes to shopping over there. In the UK the de