Innovation in retail internationalisation: Tesco in the USA

This paper examines the market entry of the UK’s largest retailer (Tesco) into the USA. Tesco’s launch of a new brand – Fresh & Easy Neighborhood Markets – in virgin territory is a bold move, notwithstanding the firm’s considerable success with its overseas investment strategy (which within ten years has resulted in more than 50% of the firm’s operating space being outside its ‘home’ market). The paper contextualises the study by taking a historical view of innovation in the retail industry, which reveals that generally - and certainly for the most part of the twentieth century – innovations have dominantly flowed from the US to the UK. The paper suggests that Tesco’s US experiment is unusual both in terms of the innovatory aspects of its market entry and the reversal in that conventional direction of knowledge transfer. The Fresh & Easy story is then examined in terms of ten ‘dimensions of innovation’ involved in the market entry. The paper concludes by drawing out from these ‘dimensions of innovation’ a number of important issues for management scholarship raised by the study, stressing the need to incorporate insights from a wider social science literature