Tesco is trying to break into the American grocery store market, hoping to succeed where Sainsbury's and Marks & Spencer have previously tried and failed.
Starting this autumn, Tesco is planning to open hundreds of small to medium-sized outlets across southern California, as well as in Phoenix, Arizona, and Las Vegas, Nevada. The attempt is being planned with the precision of a military-style campaign. The locations for the stores, to be called Fresh & Easy, are not being disclosed yet. But at one site, in the industrial Los Angeles suburb of Hawthorne, Tesco has built a prototype shop where it has been testing products and consumer reaction.
This is being done behind closed doors in a nondescript, unmarked warehouse building. In another location, in the desert suburb of Riverside, east of LA, Tesco has started building an 820,000 square feet warehouse capable of supplying hundreds of stores. The warehouse has a freezer bigger than two football pitches and a fridge bigger than four, according to a report in yesterday's Los Angeles Times.
From the little information available, it seems Tesco is hoping to model the outlets on its Metro and Express shops - stocking a limited range of grocery products and ready-made meals aimed at challenging the existing big supermarkets and the fast-food chains that many Californians stop at for an instant meal. Tesco also said it intends to serve poor, inner-city areas that many other retailers have preferred to shun - the sort of areas blighted by the 1992 LA riots where it is now hard to find retail businesses of any kind.
The US food market is polarized between big supermarkets stocking products of dubious food value - jams and cookies made with hydrogenated corn oil, processed meats, sugarydrinks - and speciality stores where the food is often organic but expensive. Tesco has based its market research on 60 families as an extended focus group to try to determine what people want to eat, and how much they are prepared to pay for it. If successful, its campaign could help transform the way many Americans eat, and also shake up the big supermarket chains which have had a relatively cosy existence for several decades.
Outside the UK, Tesco currently has operations in 12 countries, employing a total of 100,000 employees. Its overseas stores service 15 million customers and generate £7.6 billion in sales. In Europe it already operates in the Czech Republic, Hungary, Ireland, Poland, Slovakia, Turkey. In Asia it has stores in China, Japan, Malaysia, South Korea, Taiwan, Thailand. Tesco has also said it is exploring a possible expansion into India. (news.independent.co.uk)