Wal-Mart CEO Thinks British Should Investigate Tesco
By George Anderson
There’s a new benchmark for determining what constitutes a surreal experience in the retail business.
Lee Scott, CEO and chairman of Wal-Mart, believes it is time the British government looked into Tesco’s business practices to determine if the company is engaging in anti-competitive activity.
Tesco has increased its leading share of the grocery market over the past three months to 30.5 percent based on figures from the market research firm TNS. Wal-Mart’s Asda division has a 16.7 percent share as the second largest grocer in the U.K.
“As you get over 30 percent and higher I am sure there is a point where government is compelled to intervene, particularly in the UK, where you have the planning laws that make it difficult to compete,” Mr. Scott told The Sunday Times.
“At some point the government has to look at it,” he added.
Lucy Neville-Rolfe, corporate and legal affairs director and company secretary at Tesco, said the government has investigated the company. “Previous Competition Commission inquiries have found that the market – and Tesco – operates in the consumer interest. It is a competitive market. The consumer is the winner.”
Tesco has faced challenges reminiscent of Wal-Mart’s experience in the U.S. The chain has been accused of using predatory pricing and promotions to lure shoppers away from other retailers. It has also faced opposition in a number of communities where it has planned to build new stores.
While Wal-Mart’s Scott does want the government to look into Tesco’s practices, he readily acknowledges his competitor has found other avenues to grow business not yet explored by his company’s Asda unit.
“A lot of Tesco’s growth has come from the small convenience chain. Andy (Bond, the chief executive of Asda) and his team have got to look and see where the opportunity
is for us with that kind of space,” said Mr. Scott.
Moderator’s Comment: What is your reaction to Lee Scott’s call for the British government to investigate how Tesco is achieving market share increases
in the U.K.? Why is Tesco as successful as it has been?
The Sunday Times piece said Wal-Mart has a 10 percent share of the retail market in America. While broadly speaking that may be true, the retailer
holds significantly larger share of the total market in specific categories. Should the U.S. government be “compelled to intervene” in product categories or perhaps geographical
area where the company has achieved market share in excess of 30 percent? We think not. –
George Anderson – Moderator