Report Analyzes Tesco's Impact
Consumers and policymakers should question promises made by British food giant Tesco as it prepares to enter the U.S. market, according to a new analysis by the Occidental College Urban & Environmental Policy Institute released today.
With plans to open more than 100 stores during the next year under the name Fresh & Easy Neighborhood Markets in California, Arizona, and Nevada, Tesco intends to replicate its dominant presence in the United Kingdom, where it commands a 31 percent share of the grocery industry, according to the report. Tesco’s arrival in the United States has the potential to significantly influence the direction of the U.S. grocery business in such areas as labor, environment, health and the food system, the report says.
Tesco is the third largest food retailer in the world after Wal-Mart and Carrefour.
"Tesco has been especially adept at marketing itself as a socially responsible corporation," said Robert Gottlieb, Henry R. Luce Professor of Urban Environmental Studies. "However, our examination of Tesco’s track record shows significant gaps between what it has promised and how it has achieved its current position as one of the top multinational operations."
"Tesco’s move across the Atlantic comes at a moment when issues of food access in low-income communities, widening income gaps, environmental concerns, and changing demographics are all on the front burner," continued Gottlieb. "We are releasing this report before Tesco’s rollout to provide a comprehensive picture of how the company currently operates in 12 countries as well as its plans for the United States."
Key findings in the report include:
Global Position: Tesco is a sophisticated and successful corporation with strong marketing savvy. Tesco now challenges Wal-Mart as the most aggressive and dominant food retailer in many of the places it operates.
Food Access: Tesco has highlighted its commitment to increasing fresh food in low-income communities by promising to locate stores in those areas. However, only 10 of the first 98 Fresh & Easy sites are in what can be considered low-income, high-poverty areas. Of those 10, only one is located in an urban area that does not have another full-service grocery store. In some areas, such as Nevada’s Clark County, none of the stores will be located in high-poverty neighborhoods. Overall, more than half of the Fresh & Easy sites are in neighborhoods where the median income is higher than average.
Workplace Issues: While Tesco has promised that its U.S. stores will be a "great place to work," the company has decided to rely on part-time rather than full-time employees. This would seriously limit the ability of workers to achieve a living wage. Tesco executives say they are not currently considering engaging in discussions with local unions -- even though Tesco touts a model partnership with the union that represents the workers in the U.K.
Health & Environmental Concerns: While Tesco has promoted its environmental and health-related profile, it plans to duplicate only some of its U.K. initiatives in this area. For example, it has no plans to develop a local food sourcing approach nor eliminate genetically modified food for its house brands.
Supply Chain Issues: Tesco has a global supply chain that involves thousands of suppliers and subcontractors. Tesco exerts tremendous pressure on its suppliers to maximize cost savings and production flexibility. When supply chain abuses are documented, Tesco says that it tries to respond, but that it is difficult to monitor all the activities of its suppliers and subcontractors.
The report concludes that Tesco’s U.S. operations will utilize what Tesco has relied upon in its U.K. operations: a strong marketing capacity and a powerful influence over numerous entities from city councils to farmers and suppliers. The report presents the public with a series of recommendations for how Tesco can operate responsibly in its stores and supply chains.
"As it seeks to become one of the biggest, if not the biggest, grocery chain in the United States, Tesco needs to be held accountable for its actions," said Amanda Shaffer, the report’s lead researcher. "We have identified opportunities for policymakers and community, labor, and environmental groups to establish standards for Tesco and all supermarket chains. Tesco can choose to take the high road of healthy food access, quality jobs, and environmental change, or the low road of Wal-Mart, its main competitor."
The Occidental College Urban & Environmental Policy Institute (UEPI) is a community-oriented research and advocacy organization. UEPI serves as the umbrella for a variety of affiliated programs addressing work and industry, food and nutrition, housing, transportation, regional and community development, land use, and urban environmental issues.