Tesco has finally admitted defeat in its attempt to make it in Japan by selling 50 percent of its stake in Tesco Japan for a price thought to be less than one penny.
Furthermore, the world’s third largest grocery store has even paid the new owners, Aeon £40 million to take the flailing arm of its global empire of its hands.
Philip Clarke, the Tesco boss, signaled his intentions last year to offload the Japanese sector following nearly a decade of hard work and £250 million of investment to try and infiltrate the market. In all that time though, a market share of only 0.1 percent was achieved, compared to its 30 percent back in the UK.
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“We are very pleased to announce this deal with Aeon and are confident this will deliver the best outcome for our staff and for our shareholders," Clarke has said.
As part of the deal, Aeon have been urged to maintain the current 1,000 strong workforce employed within the stores in Japan, but this isn’t the first time Aeon have taken advantage of a failed western store’s attempts to make it in the far east.
Behind China and the US, Japan is the third largest grocery store market, hence the intense push by Tesco to make a name for itself there back in 2003. However, just like Tesco, Carrefour also had to abandon its push into Japan, leading to Aeon picking up the pieces then too.
Clarke can now turn his attentions back towards problems closer to home as he continues to steady the ship which received a surprising profit warning earlier in the year. A large part of the neglect and disregard for the company’s UK stores was attributed to the store’s focus being placed too heavily overseas. And ironically enough, the latest pull-back may lend itself to a more concerted effort at revamping its domestic branches.