Some say that pride comes before a fall, and in the world of brand expansion, the ultimate form of hubris is poor or non-existent market research.
Launching a brand in a new market is an exciting step for any business. Unfortunately, many have learned the hard way that expanding without doing their due diligence can lead to disastrous results. Too many companies have entered foreign markets assuming that what worked back home would translate seamlessly. However, cultural differences, local consumer behaviour, and unique competitive dynamics often require brands to adapt their strategies.
In this three-part series, I will explore brands that got it wrong, one that (eventually) got it right, and the key lessons we can learn from them. First up is the story of the UK’s favourite supermarket and its attempt to crack the US market.
Despite being a retail giant in the UK, Tesco’s launch of its US supermarket chain, Fresh & Easy, in 2007 did not go to plan and they ended up pulling out in 2013. So what went wrong?
While shopping habits in Tesco’s home market of the UK were diversifying, US consumers were still firmly committed to the traditional “big shop” routine. They preferred to shop infrequently, visit one store, and buy in bulk at large hypermarkets offering everything under one roof.
At an average of 3,000 square feet – compared to competitors’ 10,000 square – Tesco’s stores were much smaller and lacked the variety American consumers desired.
By making assumptions on how people shopped, rather than using research to properly quantify habits, Fresh & Easy was at odds with typical US shopper behaviour.
This failure to understand how US shoppers preferred to buy groceries was also demonstrated in what Tesco sold in their Fresh & Easy stores. A focus on fresh, pre-prepared goods was designed to support a “little and often” shopping routine which was not the trend in the US at the time.
Instead, American consumers preferred to buy in bulk and stock up on ambient cupboard staples, but they struggled to find these in Fresh & Easy stores.
Fresh & Easy was somewhat ahead of its time in introducing self-checkout options. However, in a very service-focussed culture like the US, these self-checkouts clashed with consumer expectations.
What was an efficiency-driven innovation in the UK ended up being a misstep in the US, where shoppers were accustomed to more personalised customer service.
These kinds of cultural differences can be subtle, but incorporating cultural research into your pre-market research can uncover powerful insights that are invaluable for unlocking success in new markets.
Of course, a retail giant like Tesco did their research using a programme of in-home observation and food diaries.
However, the research primarily focussed on consumers in California and a few other states. In a country the size of the US, a much broader view was needed to understand habits.
By not building a more representative sample and focussing on depth of insight, rather than breadth, Tesco created some blind spots in their knowledge of the US market.
In 2013, after losing $1.6 billion, Fresh & Easy left the US market. While their mistakes weren’t catastrophic, they could have easily been avoided with a more nuanced approach to market research.
The lesson here? Don’t underestimate the importance of thorough pre-launch research – it can be the difference between a brand’s success or failure on the global stage.
Our Market Map solution provides a comprehensive view of your market, helping you:
With a modular, flexible approach, Market Map delivers actionable insights – whether you’re entering new markets, refining strategies, or validating new ideas. Get in touch to learn more.
Liss Myers
Insight Director
Reading Time: < 1 minutes
