Tesco PLC, the UK’s #1 retailer, is invading the US starting with Phoenix, Los Angeles, and Las Vegas. The British chain, which operates 2,800 stores in a dozen countries in Europe and Asia, claims to have carefully tailored its new store concept — called Fresh & Easy Neighborhood Market — to match American tastes. (I gather that means no Cornish pasties or crisps drenched with vinegar.)
Tesco has cherry picked some of the fastest-growing counties – Maricopa County, which includes Phoenix, and Clark County, home to Las Vegas – to launch its US venture.
Tesco’s plan, details of which have until recently been a closely guarded secret to avoid alerting competitors such as Wal-Mart, calls for stores to measure roughly 10,000 sq ft (about three times the size of a 7-Eleven but smaller than a typical supermarket) and stock plenty of fresh and organic produce and upscale ready-to-eat foods. Sound familiar, Trader Joe’s? The smaller size is designed to make shopping easier and avoid zoning hassles.
Reportedly, Tesco’s first trial store in a warehouse in LA was passed off as a film set. The launch date is also a secret but is expected to come in the second half of this year, with the first 20 Fresh & Easy markets slated to open in Phoenix before rolling out across the West Coast.
To date, foreign retailers have met with mixed results in the US. While both Marks & Spencer (Brooks Brothers and Kings Super Markets) and J Sainsbury (Shaw’s Supermarkets) have made unsuccessful forays into the American market, two of the leading convenience store operators in the US are foreign owned. Seven-Eleven Japan owns the ubiquitous 7-Eleven chain here, and Canada’s Alimentation Couche-Tard (that’s French for “food for those who go to bed late”) owns the Circle K chain of c-stores.
The Fresh & Easy concept is modeled on the successful Tesco Express format, which boasts more than 1,000 stores in seven countries.
Patriots opposed to Tesco’s arrival on American shores include, not surprisingly, retailers — Wal-Mart has reportedly hired a former Tesco exec to scuttle the launch — and union members opposed to Tesco’s non-union business model. UFCW efforts to thwart Tesco include legal opposition to its new grocery distribution center in Riverside, California and a door-to-door smear campaign in Arizona, citing incidents in which Tesco stores in the UK have sold alcohol to minors, urging Arizona residents to oppose Tesco’s applications to sell liquor at its stores.
Despite some pretty high hurdles Tesco is investing about $490 million in America this year — that’s almost twice what footballer David Beckham got to emigrate. Whether the two, who are slated to make their US debut at about the same time, ultimately succeed here remains to be seen. But it will be interesting to watch.
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