In a surprise move, Tesco enters Pakistan – but not with physical stores, just yet.
The UK-headquartered supermarket and hypermarket operator has signed a deal with India’s Alpha Supermarket to range private-label products in four supermarkets and 50 Express convenience stores to test market reaction and demand. The deal is for three years initially and is exclusive in the Pakistan market.
The stores will stock Tesco’s private labels, including Tesco Goodness, Tesco Finest, and Tesco Everyday, products including fresh and frozen foods, shelf-stable packaged goods and non-food items.
Retail analyst IGD describes Alpha Supermarket as “a modern retailer in Pakistan, known for its customer service and loyalty programs”.
“It’s also one of the first retailers offering online shopping through an eCommerce platform.
The 50 c-stores will open progressively over the next three years,following on from three flagships in Karachi, Lahore and Islamabad. The company has already invested US$2 million mainly in its Karachi’s store and it is reported the investments will double in the next coming months.
“We intend to leverage this relationship by creating Alpha Express Stores across the country in short order,” Nadeem Hussain, chairman of Limestone, the parent company of Alpha Supermarkets, said in a statement.
According to IGD, Pakistan has a population of almost 200 million and is Asia’s eighth largest grocery market.
“We forecast the market to grow 8 per cent each year until 2020. Although modern trade is still in its infancy, as it takes off, retailers with first-mover advantage will be well placed. Pakistan’s middle class is growing fast and so are 3G services and smartphone penetration that are making the country an attractive market for the retailer.”
IGD says the partnership will allow Tesco to tap into the fast-growing Pakistan consumer market without taking too big a risk.
“The retailer has exited markets such as the US, Japan, South Korea and Turkey in recent history and partnered up with CR Vanguard in China. The move reiterates Tesco’s focus on Asia, particularly the sub-continent, where it already has a well-established partnership with Trent Hypermarkets, a Tata business, in India.”
