April 26, 2006

Tesco - the new Wal-Mart?

Tesco is a UK-based retailer that has beaten Wal-Mart in its own game. It also has bold plans to expand to the US.

Today's London Times offers a cautionary commentary with an article titled "How Tesco Will Crumble and Fall." It lays out a rationale for the size and speed of this superstore's growth also being the seeds of its destruction.

The Times says:

"Over the years it has grown from being a simple, if enormous, grocer, into selling over-the-counter medicines, providing finance and banking services, running post offices and garages, selling clothing and hi-tech equipment, always undercutting the opposition. If there is a vacuum to fill, it will fill it."

Sound familiar?

That's the good news. The Times then goes on to observe:

"All this suggests that Tesco is unstoppable. And yet, like the alien invader in The War of the Worlds, its very size and the speed of its expansion may contain the seeds of its own demise. Consumers do not, in the end, take kindly to an overweening monopoly, especially when it squeezes out competition and dictates its own terms. In towns that face the massive intrusion of new superstores, opposition is mounting. A network of websites offers hostile evidence about Tesco’s tactics, its methods and its ambitions."

"Tesco is a formidable enterprise. But if it continues to ride roughshod over all opposition, to stifle competition, and to ignore the sensitivities of long-established communities, then, like so many imperial dynasties of the past, it too will crumble and fall."

The History of the Decline and Fall of the Roman Empire was written by an Englishman, which might be why they appreciate this dynamic better than some Americans. It should be required reading for all business strategists. That which the gods want to destroy they first make real big.


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