Tesco Extends Push into Japan

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Tesco Extends Push into Japan

TOKYO -- Britain's Tesco Plc said it would open the first store under its own name in Japan later this month, as the world's fifth-largest retailer continues its push into overseas markets, including the United States, Reuters reported.

Tesco, which already operates some 100 supermarkets in Japan under the name "Tsurukame," plans to introduce its "Tesco Express" stores to the world's second-largest economy, where shoppers have often given foreign retailers a cool reception.

Japan's small-format retail industry is saturated by the country's omnipresent convenience stores. Outlets, such as Seven & I Holdings Co. Ltd.'s 7-Eleven stores, stock everything from food and snacks to alcohol, underwear and DVDs, said Reuters.

But the British company said it is aiming to carve out a new niche. "These aren't convenience stores," spokeswoman Shizuko Ota said. "The stores are in the format of a small supermarket." Also unlike Japanese convenience stores, Ota said the Tesco outlets won't operate 24 hours a day and will mainly carry groceries.

That emphasis could help Tesco find the success that has so far eluded foreigners here, Roy Larke, editor of industry newsletter Japan Consuming, told Reuters.

"There is nobody doing food in a small-format, convenience-store style, and this is exactly what Tesco does," Larke said. "As long as they can get the locations and as long as they can roll out stores at a reasonably high pace, I think they'll be very successful."

Tesco plans to open a total of 35 new stores in Japan by February of next year, under both the Tesco Express and Tsurukame banners. Tesco entered the Japanese market in 2003 when it purchased C Two-Network Co. Ltd., the operator of the Tsurukame chain.

The retailer is also set to take a big gamble on the U.S. later this year. Starting in autumn, it plans to open a chain of similar small stores in the world's largest retail market.

While Tesco still counts its home turf as its main market, the retailer has made advances overseas, according to Reuters. For the business year to February, the company posted an 18-percent increase in international sales, to $22.09 billion. Still, overseas accounted for around only 20 percent of profits.