Relentless growth for Tesco in Central Europe



There is little let up in Tesco’s quest for worldwide domination and this week saw yet more evidence that small OP retailers — this time in Central Europe — have even more cause for concern. Deputy CEO of Tesco’s Polish operation Czeslaw Grzesiak was quoted by Reuters as saying that the retailer is keen to protect its leading position in the Polish market by expanding its existing network by 50 new stores this year and exploring further takeover opportunities.


The opportunities for Tesco in Poland are enormous. There are usually three to four competing retail chains in developed markets; in Poland there are nine. And corner shops still generate 54 percent of food retail sales in the country, compared with around 40 percent in Hungary and just 24 percent in the Czech Republic.


Wal-Mart and Aldi are among other foreign retailers also eyeing up the market. And last month Casino revealed it was conducting a strategic review of its Polish operations, with Tesco seen as a potential buyer if the French retail chain decides to sell up.


But of course, Tesco is also hungry for other central European markets. The retailer’s international corporate affairs manager Greg Sage told OPI+: "Poland, like many of the central European countries, is a very competitive market with a huge number of retailers. There are good businesses in Poland and in order to grow we would consider local and foreign acquisitions, as well as traditional organic growth" he revealed. "We have built up a very strong base in Central Europe."


At the end of last year, Tesco handed over six hypermarkets and two sites in Taiwan to French supermarket chain Carrefour in return for 11 of its hypermarkets in the Czech Republic and four in Slovakia. The UK retailer is currently awaiting clearance from the anti-monopoly association.


More than half the company’s retail space is now outside the UK, a significant achievement. And in all of Tesco’s markets, office products, stationery and electronics form an important part of the product range and this, Sage claims, is growing across all markets.


But he is reluctant to forecast which markets were next on its wish list. It is no secret that India is one on top of the pile. The retailer continues to monitor the country as a possible market as it waits for the government to relax rules on foreign investment. At present, only single-brand retailers are permitted to set up stores. "We continue to study the Indian market although we don’t know when we can go in," he said.


Instead, Sage says, the main focus for this year is on the markets where Tesco is already present – namely China, Turkey and lastly the US, where the retailer plans to open its first store on the West Coast in 2007.


For the year ahead Sage told OPI+ that Tesco intends to open six million sq ft of space, made up of 112 new stores in Europe and 280 in Asia.