By Amanda Mastrull
Tesco, the UK’s biggest retailer and the third largest in the world, is branching out. No, not with a new line of frozen veggies or biscuits. The global shop that sells everything from food to clothing and gasoline is going financial.
Tesco is branching out into the realm of insurance, credit cards and savings accounts, according to the March 1, 2010 issue of BusinessWeek magazine. They’ve been testing out the financial branches in six shops in Scotland and England since last spring, but plan to expand this year. By 2011, expectations are that they’ll also have mortgages and checking accounts.
The company already has Tesco Personal Finance, launched in 1997 to provide insurance and credit cards, but the in-store presence will be new. In many ways, the change is coming at just the right time.
Given the recent financial crisis and the widespread public disillusionment at the way banks are run, the established retailer will have a market.
In short, customers trust Tesco. With its own Tesco Value Brand line of products, the company markets itself as providing the greatest service it can for the cheapest price. It is among the cheaper grocery stores in the UK, with lower prices for most items than Waitrose or M&S. This will translate in some regard.
Tesco has backing to overcome one of its biggest challenges in that people rarely change banks. The extra push of a trusted retailer may influence people to switch. Its sheer presence in the UK especially will be beneficial as well. Though it will be a start-up bank, it already has millions of people that know and use the brand – Tesco sells nearly one-third of the UK’s groceries.
Whether this move into finance will prove lucrative for Tesco is up in the air. But it has a solid foundation and a trusted name, both of which will go a long way.