The British military of the early 19th century was the mightiest in the world. Officers were schooled and brave, and the fighting men well armed. When they sailed into the mouth of the Mississippi River in January 1815, there was little to stop them from conquering what was then the American West.
The British landed their ships and marched their well-dressed soldiers right into an ever-tightening funnel, with the river to the left of them and a swamp to the right. At the end of this funnel was a quickly built parapet. And waiting behind that wall was a small band of Andrew Jackson’s ragtag conscripts along with Jean Lafitte and his pirates, who brought their canons. What ensued was the Battle of New Orleans, one of the most lopsided defeats in British history.
The Brits may have been the best, but they failed to understand American terrain.
It kind of reminds you of Tesco. The British company is smart and bold. It has become the world’s third-largest grocery company because it is good at what it does.
And when it announced six years ago that it would step into the United States, there appeared little that could stop it from conquering the American West. The then-CEO reportedly boasted that his American stores will become as ubiquitous as Starbucks.
Tesco opened its American headquarters in El Segundo, confidently built a huge distribution warehouse – 1.4 million square feet – near Riverside, and busily set about opening what were to be hundreds of Fresh & Easy stores in Los Angeles and then the rest of Southern California, as well as parts of Arizona and Nevada.
Yet, Fresh & Easy stores haven’t really caught on with Americans. The company recently said the pace of store openings will slow. A profit for Fresh & Easy as a chain, already put off, was postponed again to the fiscal year that ends in February 2014. Of the 185 or so Fresh & Easy stores, only 30 are profitable now, the company said earlier this month.
What happened? The Brits, once again, failed to understand the American terrain.
Fresh & Easy stores did things that may work in Britain and Europe. But here? Not so much. They wrapped vegetables in plastic, but Americans prefer to inspect their veggies. They installed self-checkouts, which were great for efficiency, but some Americans were spooked by the lack of personnel. They made their stores clean and antiseptic; Americans found it soulless. They prefer the friendly and quirky Trader Joe’s, with its Hawaiian shirt-wearing clerks.
As a result of Fresh & Easy’s sour reception in the American Southwest, the parent company has got problems back in England. It issued an earnings warning in January, it’s first in 20 years. Tesco’s been slipping a bit in England; managers have been blamed for allegedly being distracted by Fresh & Easy. For much of this year, Tesco’s been the worst performing stock on Britain’s FTSE 100 index.
Investors have clamored for Tesco to cut Fresh & Easy off, but managers said a couple of weeks ago that they will soldier on.
A bad decision? Will this result in another 1815 for the Brits? Not necessarily.
The managers have made some changes that may work. For example, they’ve rolled out a discount card for regular customers, which Americans expect. They’ve staffed up their stores a bit and they’re doing things like installing wooden floors to make their places less sterile.
In any case, Tesco finally appears to be striving to do what it should have done six years ago and what its military ancestors should have done 200 years ago: understand the American terrain.
Charles Crumpley is editor of the Business Journal. He can be reached at [email protected].
