Tesco in Turkey

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Case Details:

Case Code : BSTR407
Case Length : 15 Pages
Period : 2002-2011
Pub Date : 2012
Teaching Note :Not Available
Organization : Tesco Plc.
Industry : Retail
Countries : UK, Turkey

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Tesco's Global Expansion

Tesco started to expand into markets outside Britain in 1979. It entered Ireland by acquiring a stake in a retail venture. It exited the market in 1986 as it found itself unable to sustain its operations. Again during the early 1990s, Tesco examined the options available in the European countries and entered France acquiring a major holding in Catteau Supermarkets. This venture was also unsuccessful and Tesco made an exit from France in 1997. In 1994, it ventured into Scotland by acquiring a retailer William Low. In the same year, it also acquired a 51% stake in Global Supermarkets, Hungary...

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Tesco Enters Turkey

In August 1992, Kipa was established in Izmir , Turkey, as a retail store through a partnership of hundred partners. In 1994, it opened its first hypermarket in Bornova . Kipa targeted the middle class and lower class consumers. In 2000, it introduced Kipa branded products and Kipa loyalty cards. As of 2003, Kipa had five stores in the country and was a leading retailer in the Aegean area. It employed around 1,000 people...

Expansion Strategies in Turkey

Tesco Kipa initially expanded within the Aegean region. It renovated the existing stores in Bornova and Cigli in 2005. It opened stores in smaller cities like Bodrum in the Aegean region. The store at Bodrum was designed by Tesco, and Tesco Kipa planned to expand the other stores based on this model. It was the first store where the new retail system was installed. Subsequently, the system was used in the other stores. The store was spread over an area of 5,000 sq meters and was opened in June 2005...

Reaching the Consumers

With operations across the country and plans to expand further, Tesco Kipa adapted itself to suit the needs of customers in the country. Most of the Tesco Express stores were modeled after the shophouses. These were small shops that opened on to the main street and sold several products, mainly fresh food. Tesco's supermarkets were modeled after the bakkals, small mom-and-pop stores that were found across densely populated areas in the country. Before opening any store, Tesco conducted market research to understand the preference of the local people there...

Tesco at Crossroads?

When it entered the country, Tesco intended to be among the top players in the market. In 2006, Stephen Hammett, the then CEO, Tesco Kipa, said the long-term target for Tesco Kipa was to become one of the top two players in the country. He said that though Turkey was a small market compared to its other international markets, its growth potential had attracted huge investments from the parent company. However, in spite of opening several stores in different formats, and expanding rapidly over the years, it failed to make an impact on the market...


Exhibit I: Tesco's Turnover and Operating Profit
Exhibit II: Tesco - Group Facts
Exhibit III: Tesco around the World - 2011
Exhibit IV: Retail in Turkey
Exhibit V: Number of Tesco Kipa Stores in Turkey

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