Tesco is to pull out of Japan as it has failed to achieve economies of scale in the country.

The supermarket, which owns 129 small stores in the Greater Tokyo area, is to sell off its Japanese business after eight years attempting to enter the market.

Chief executive Philip Clarke said Tesco has “concluded that we cannot build a sufficiently scalable business”.

Clarke said business continues as usual in Japan until it undertakes a formal sale process in the coming months.

Half of its Japanese under the Tsurakame, Tesco and Tesco Express formats are profitable and it has developed a strong own label range, the retailer said.

Clarke said: “We have reviewed our portfolio in Asia and the performance of our business in Japan. Having made considerable efforts in Japan, we have concluded that we cannot build a sufficiently scalable business.

“We have decided to sell our operations there and focus on our larger businesses in the region, in line with our priority of driving growth and improving returns. I want to thank our colleagues in Japan for their continued dedication to the business.

He added: “With good stores in good locations across Greater Tokyo, we will be undertaking a formal sale process over the coming months and the business will continue to trade as usual in the meantime.”

Topics