Thursday, 9 June 2011

Volitility in the most stable of markets

International retailers need to be conscious of how a market could change affecting the viability of their operation.  Tescos' operation in Thailand is an often used example of this given the significant threat to their Thai chain in the wake of the unexpected military coup in 2006.  To the outsider Thailand appeared a very stable nation...  And so we turn to what you might think to be one of the most stable countries in the world; America.  Now I'm not suggesting a coup d'état in America; I'm pretty sure that is unthinkable, but talked about legal changes that would really threaten the viability of Tescos American operations.  California is home to around 125 of 175 'Fresh and Easy' stores, and there is talk of an outright ban in the purchase of alcohol through self-service tills.  Tesco installs self service tills exclusively as an essential part of it's low cost strategy.  As the only grocer in the state to operate self-service tills it is clear that this law is specifically targeting the 'new kid on the block', and if it comes into effect will have a huge effect, forcing Tesco to rethink their strategy and presumably refitting their stores with at least some conventional cashier tills - all on top of a chain that is said to be underperforming and being challenged from a range of commentators.  So in even the most stable of nations it is best to have a plan B.

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