Competitive Strategies Case Study

Tesco vs Wal-Mart in US: The Format Wars

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Abstract:
This case study was primarily written to capture the format war between global retail giants – Wal-Mart and Tesco Corporation (Tesco) in the US. Unlike Wal-Mart, Tesco adopted a multiple format approach not only in its home market but also in its international operations. While Tesco managed to succeed in all the 12 different international markets it had entered, Wal-Mart was not so fortunate, as it failed to make a mark in several markets. After firmly establishing itself in the emerging markets, in 2007, Tesco entered into the US after conducting exhaustive groundwork. Tesco came out with a unique new convenience store format Fresh & Easy on the basis of its in-depth market research and within no time the format proved to be successful and gained wide acceptability among the US consumers. Threatened by Tesco’s small store format, Wal-Mart decided to join the fray, something that it had never done in its history. Should Wal-Mart follow the footprints of Tesco or bring changes to its existing business model? Has Tesco gained a first-mover advantage by coming out with a convenience store format, which satisfied the needs of the customers? Will Tesco be able to sustain and succeed against the stiff competition from a formidable competitor? Is this format war workable in the wake of the current economic crisis?

Pedagogical Objectives:

• To understand the dynamics and business model of retailing industry
• To analyse how Tesco achieved success in its home market as well as in international markets and to examine critically its US strategy of operating with different retail formats
• To examine the success factors of Wal-Mart in the US and analyse the reasons for its failure in other markets, especially Germany and Japan
• To analyse whether Wal-Mart should follow the footsteps of Tesco and come up with different retail formats.

Keywords : Retailing; Retailing Industry; Retailing Formats; Store Formats; Wal-Mart; Tesco; UK Retailing; USA Retailing Business Models; Market Entry Strategies; Discount Stores; Going Global; Global Retailing; Global Retailing Stores.

Contents : 
Tesco’s Globalisation Strategy
Tesco’s Brief Background
Tesco’s Steering Wheel Strategy
Tesco’s Global Operations
Tesco’s Four-Part Strategy
Top 250 Retailers by Sales and by Country
Wal-Mart’s Response to Tesco in US