WWD.com/globe-news/marketing-consumer-behavior/wal-mart-said-in-move-to-thwart-tesco-470593/
government-trade
government-trade

Wal-Mart Said in Move to Thwart Tesco

Wal-Mart Stores Inc. is said to be close to making a move to combat Tesco as the U.K. supermarket giant launches a convenience store chain on the West Coast.

Wal-Mart Stores Inc. is said to be close to making a move to combat Tesco as the U.K. supermarket giant launches a convenience store chain on the West Coast.

This story first appeared in the January 15, 2008 issue of WWD.  Subscribe Today.

The world’s largest retailer will be testing four small-format grocery stores in Arizona this year, according to The Financial Times. The 20,000-square-foot Marketside stores are to launch in the Phoenix area — in Mesa, Gilbert, Chandler and Tempe.

“We trial and test different ways to serve our customers all the time and this smaller neighborhood market is an example of that,” a Wal-Mart spokeswoman said.

The Marketside test comes after Tesco opened its first Fresh & Easy stores in Los Angeles, San Diego, Phoenix and Las Vegas.

Tesco plans to spend almost $500 million on its U.S. push and increase the number of stores to 150 in the next year.

Wal-Mart chief executive officer Lee Scott has said that Wal-Mart’s Asda was outmaneuvered by Tesco’s convenience format in the U.K. Wal-Mart acquired Asda in 1999.

Wal-Mart already operates a smaller retail format — neighborhood stores that sell food, pharmaceuticals and hard goods. They are about two or three times the size of a Marketside unit. The company is said to have applied for licenses to sell beer and wine in the Marketside stores.

Mark Lilien, a consultant at the Retail Technology Group, said Wal-Mart should take it slow with Marketside. “Wal-Mart should not let itself be pressured to roll out another significant new format until it knows it to be bulletproof,” he said. “If they do a substantial amount of testing, then it might be worthwhile to expand selectively.”

Lilien said Marketside could work in rural or urban markets, adding, “One thing, it’s a lot easier to find smaller locations than larger locations.”

Meanwhile, Wal-Mart on Monday said Vicente Trius, a rising star who headed Wal-Mart Brazil, will take on the new role of ceo of Wal-Mart Asia.

Trius will be responsible for Wal-Mart China, a fast-growing enterprise that is performing ahead of expectations, and Seiyu, the Bentonville, Ark.-based retailer’s troubled Japanese division, which has failed to turn a profit since 2000. He will report to Wal-Mart vice chairman Michael Duke.

Hector Nunez, chief operating officer of Wal-Mart Brazil, succeeds Trius as ceo.

The company’s partnership with Bharti Enterprises in India also falls under Trius’ purview, and will be one of Wal-Mart’s major growth opportunities in the next decade. No joint Bharti-Wal-Mart stores have opened. The deal is said to be structured with Wal-Mart providing logistics and distribution expertise to a series of wholesale club franchises Bharti wants to open to service India’s mom-and-pop businesses.

Trius will manage 394 stores in Japan and more than 200 stores in China, including 102 held through a minority stake in Chinese retailer Trust Mart.

December sales for Wal-Mart International rose 18.2 percent, to $12 billion.