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Tesco Hitches Up the Brandwagon

Posted by Barry Silverstein on May 31, 2011 03:00 PM

Tesco, one of the world's top three grocery retailers, is looking to create more global retail brands, according to new CEO Philip Clarke.

Clarke's new seven-part strategy makes the case that Tesco needs to become more aspirational and give consumers new reasons to shop at Tesco stores — and that means creating new brands, and "highly valued" brands at that.

Consumers, said Clarke, "do not want to just buy Tesco Value shower gel. They want to have something sat in their bathroom that looks like it is a brand. So you create brands." He feels there's ample reason for Tesco to create addtional new brands, since the UK chain is underperforming on its home turf — and the company's Fresh & Easy chain of grocery stores in the US is losing money, too.

That's why he's anxious to add "highly valued brands" to existing private labels such as F&F (its clothing line formerly known as Florence & Fred), and Technika, a consumer electronics brand, both of which are sold globally.

In addition to the brand push, Clarke said Tesco plans to make online selling a big part of Tesco's strategy going forward, establishing e-commerce operations in its 15 global markets in the next ten years. The intent is for Tesco to become adept at selling a broad range of products online, not just groceries.

Tesco is nothing if not creative in its expansion into areas that stretch the boundaries of a grocery chain. In recent years, it has sold everything from its own line of videos to real estate. The company has also tested new delivery methods, such as its drive-through supermarket. Of course, not everyone has been happy with Tesco's aggressive plan for business growth, which tends to muscle out smaller retailers, as a recent protest has demonstrated and RTE, the Irish broadcaster, recently highlighted.

Still, if Tesco is to grow, it needs to go beyond its traditional roots, from grocery store shelves to an Amazon-like seller of all things to all consumers. As it looks at its primary competitor Walmart, Tesco no doubt sees the giant retailer's success at moving in the other direction, from retail goods to opening superstores with fully-stocked grocery items. That has to be a concern going forward.

It seems like Philip Clarke gets the message, and he is only too happy to push the company to new and different heights.

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