Tesco: a Carrierbag of Cash and Hollywood Film

By Rupert Steiner, The Business, London

Feb. 12–The extraordinary secrecy surrounding Tesco’s plans to launch in America and the bizarre lengths taken by executives to hide their activities can be revealed by The Business this weekend.

Company executives masqueraded as Hollywood film producers claiming they were making a film set in a supermarket as a cover for their research. They were desperate their plan to enter the American market as a convenience-store retailer on the west coast would remain secret until last week’s announcement by chief executive Sir Terry Leahy. They will spend £250m (E367m, $436m) a year buying 200 outlets.

Tesco executives secretly researched the concept. This included building a complete stand-alone store hidden inside an aircraft hanger-style warehouse. This “set” backed up their film-making story.

The store, as in Hollywood movies, had a working title and executives bought the shelving and hundreds of groceries using cash stuffed in carrier bags — not Tesco ones.

They feared if they used company credit cards it would raise questions as to why Tesco executives would be making a film. The American food retailing market is highly competitive and dominated by the giant Wal-Mart. European retailers have struggled to crack the American market, with mixed results by Sainsbury and Marks & Spencer.

Tesco has spent 20 years considering its entry into the US and a year ago decided its future lay in organic growth and abandoned its acquisition strategy. Marketing director Tim Mason, who will head the American push, told The Business: “We have been very careful not to mislead people and always left room in our recent pronouncements for an organic growth option.

“Earlier this year we built a trial store hidden in a warehouse which we have shown to consumers. This is the most thorough research we have ever done. We had to buy hundreds of yards of shelving, fridges and thousands of products to create this store.

“Some of these products were driven around America from where we bought them using carrier bags with cash. We told people we were making a movie about supermarkets.”

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