USA Retailer Invades the UK

As of June 2007, Whole Foods Market (WFM) has landed in the UK, becoming competition, even a threat to major players like Tesco and Sainsbury’s. Taking small steps, WFM bought the Fresh & Wild brand in 2004, which allowed the retailer to slip into the UK market and become known, and later come in full force–the Whole Foods Market’s first store in High Street Kensington covers 80,000 square feet making it the biggest of its kind in Europe and the largest food store in London. How do other retailers feel…is fear rippling through the air, or is it sheer excitement?

WFM Debuts in the UK

Whole Foods certainly has a presence in the US–known for its variety of fresh, organic and natural foods, and now it will probably become a household name in London. As there are few retailers in the UK that focus completely on natural and organic foods, and since we are in the day and age of these trends, retailers in the UK will have to step up their game in these categories. And while UK retailers may be shaking in their knickers, shoppers should have no reason to worry and will benefit from all of the new and exciting natural, organic and fairtrade products that other retailers will be rolling out in order to compete with Whole Foods Market. However, one feature of Whole Foods Market does work against it–its prices. Whole Foods Markets tend to be pricey, and although some shoppers are willing to pay the price for these niche foods, others will seek out less expensive similar lines at other retailers.
Whole Foods Market’s arrival in the UK raises several questions…will the retailer be able to make an impact on British soil, or will it have the same fate as Wal-Mart did in Germany and have to withdraw with its head hung low? How will WFM influence the UK market, and how will the British take to the retailer?

Tesco Takes to the US

Meanwhile, across the pond, Tesco is completing a similar transaction, and setting up shop on the US West Coast. Like Whole Foods, Tesco is tailoring its stores to assimilate into the US retailer culture.

However, Tesco has a slightly different approach than WFM: While WFM immediately introduced a giant of a store, the largest of its kind in Europe, Tesco seemed to prefer to slither inconspicuously into the US–the retailer didn’t even announce the location or format of its banners until fairly recently. Yet, because Tesco is such a powerhouse in the UK (the 4th largest retailer in the world after Wal-Mart 1st, Carrefour 2nd, and Metro 3rd), if its Fresh & Easy banners succeed, will the US see larger UK-formatted Tescos; does Wal-Mart have a reason to be concerned?

Tesco’s presence in the US also provokes question. How will retailers like Wal-Mart, Safeway and Kroger react? Will Tesco’s Fresh & Easy format prove not to be a threat, and only a fresh addition to the market? What lies ahead in the future of these retailers? Only time will tell.

For more information on Whole Foods Market in London, see Whole Foods story on page 28.