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Perishable Thoughts — Tesco’s Missed Mark: American Consumer Complexity

Jim Prevor’s Perishable Pundit, February 27, 2009

As we reflected on Tesco’s recent admission that it had profoundly misunderstood the American consumer, we thought about the difficulty that a foreigner has in doing business in another country.

Though the difficulty is multiplied if the challenge is working with consumers, that is not the only challenge. For example, we ran a piece pointing out that Tesco had elected to alienate many suppliers when it broke the produce trade’s cultural pattern by refusing to join trade associations, such as the Fresh Produce & Floral Council in California or PMA and United Fresh nationally.

What is interesting about this type of decision is that, doubtless, if Tesco is opening a store in China and is advised that it must practice Feng Shui in the location of its windows and doors, it would instantly indulge local practice. If in Thailand it was told it must have a Buddhist Monk give a blessing over a store before it opens, the Monks would be brought in. The British, confronted by cultures so alien as to be virtually beyond understanding, would rush to accommodate.

In America, a land with filial ties to the mother country expressed in our shared language, the British think they understand. That is what we were talking about when we said that the biggest problem Tesco executives were having in America was the fact that both nations speak English.

In the case of Tesco, this natural and problematic tendency to think that people who share the same language are really just like ourselves was compounded by an even worse problem — an unparalleled track record of success both in the UK and overseas. So Tesco went under the premise that if Americans don’t eat ready meals or watercress salad, it must be because nobody sells any good ones.

Until very recently, we found in our dealings in the UK that most in the industry — even people who hoped Tesco would fail — found it impossible to believe they would not succeed. All through the process, as we wrote article after article, we were warned by British suppliers and competitors that Tesco would succeed brilliantly… that even if it looked bad, Tesco would turn around one day and would stand triumphant.

The Tesco team had internalized this sense of infallibility and it showed. A very top executive at a very large vendor sent us this note when some had challenged us about the degree of attention we were paying to Tesco:

I think one reason everyone is so interested in Tesco’s adventures is because of the way they treated the potential US suppliers and the market place.

When suppliers were interviewed, there was a level of arrogance and bullying that most of us hadn’t seen since we were on the playground in grammar school.

Most people don’t want to see that type of treatment rewarded with success.

Tesco is going to spend a lot of money to find out the fresh industry may not be the most sophisticated bunch, but we do know a little bit about how our industry works.

Perhaps this alienation from the trade would have been worth it if it was necessary to create a new paradigm of service to American consumers.

Yet the Fresh & Easy concept has not been embraced by consumers, and the new strategy — “down & dirty on price” — hardly requires any innovations in retailing.

The truth is there is something a little comical about this image of British executives poking around people’s refrigerators trying to “study Americans” much like Jane Goodall studying apes in Africa. Now they acknowledge missing storage freezers in basements and garages, but the truth is that they have missed so much more.

This is why people hire locals, because you can’t internalize a culture in a month or two of observation.

It was this thought that brought us to today’s Perishable Thought, a brief snipet from a much longer work.

See, the real problem is not that the Tesco executives were incomplete in their research. It is that the research should start the day one is born. In that sense, the problem is that the British schoolchildren don’t read much Walt Whitman, known as America’s “poet of democracy” for his ability to write in a manner reflective of the country.

If Tesco had hired Americans to head up the US division, even Americans who have never read a word of Whitman would have been so conditioned by Whitman’s influence on the culture as to realize instinctively that Tesco’s search to define what American’s want is bound to be in vain. For they would hear deep in their subconscious Whitman’s famous lines in Song of Myself:

Do I contradict myself?
Very well then I contradict myself,
(I am large, I contain multitudes.)

Excerpted from Song of Myself, which was originally published as part of the larger Leaves of Grass

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It is not solely that America is large, nor that it is diverse, though it is both. To a degree not fully appreciated in Britain, America is a Schumpterian society — abubble with creative destruction. Indeed it is wise to see the current financial crisis as a test not of our Democrat or Republican inclinations but, rather, as a test of whether Americans will still accept the pain of creative destruction.

As long as we do, the Tesco executives peering through the pantry were seeking Americans who will never exist. The moment a fix is put upon an American, that model is — poof — into dust and a new American is created.

One of the few constants is that nobody will feel an obligation to apologize to our British visitors for failing to stay still long enough to give them a fix on the market.

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