Tesco has recently announced that their chain of American supermarkets, Fresh & Easy, will be closed entirely.
The reason for this? Unexpected cultural differences.
Five years ago, Tesco decided to give the American market a go. By opening a chain of supermarkets called Fresh & Easy, the British company tried to sell their products in the states of California, Nevada and Arizona.
However, the famous Great Britain brand didn’t catch on, probably because Tesco didn’t understand the Americans and the Americans didn’t understand Tesco.
This is why the company announced the closure of its US chain of supermarkets the closure of its US chain of supermarkets.
This situation is a great case study of business that failed to understand culture prior to expansion. Unforunately it happens all too often and Tesco certainly isn’t the first British-based company that had to give up on their American dream.
Even though some brands, such as Starbucks or Boots, have secured a comfortable position on the US market, there are also many companies that fail to do so. The crazy thing is that the company spent years considering their move across the pond but, according to some, ignored many of the findings which led them down the path to failure.
For example, although US shoppers prefer to buy in bulk to save money, Fresh & Easy offered small pack sizes. The stores also stocked British-style ready meals unfamiliar to US shoppers and initially relied heavily on self-service tills. This was a big turn-off to American customers.
According to Don DeLillo in White Noise, supermarkets can be described as a church; people go there every week and meet up with other people who practice the same rituals, often leaving them with a sense of order and wellbeing afterwards.
In that respect, British supermarket chains that try to set up shop in the US are like missionaries; they can build new churches, but predicting whether local consumers will actually visit them is virtually impossible.
Brands usually think that they will fit right in because we all speak the same English language, and a great deal of American culture has worked its way into the British one. However, nothing could be further away from the truth; Britain and the US might share the same language, they definitely do not share the same culture.
Many examples of this wrong assumptions can be found; Marks and Spencers tried to export to Canada, but their products didn’t catch on there. Or what about Dunkin’ Donuts, the American doughnut company that tried to conquer the British market but failed miserably? There are only a few companies that actually succeed in appealing to a variety of cultures; for the other businesses, some localization specialists might come in handy.
The cost of their American adventure? £1.5bn of investment bills and accumulated losses in five years. Who said cultural differences aren't important in today's business world?
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