PHOENIX -- Call it "dueling Neighborhood Markets." Wal-Mart Stores Inc. is actively working to open its first small-scale grocery stores in Arizona, according to city planning officials, as the world's largest retailer looks to fend off competition from British supermarket rival Tesco, said Reuters.
Tesco entered the U.S marketplace last year, opening Fresh & Easy Neighborhood Market stores in Southern California, Arizona and Nevada. The company is seeking to woo U.S. shoppers with smaller "convenience stores" that emphasize ready-to-eat meals and fresh produce.
Bentonville, [image-nocss] Ark.-based Wal-Mart has long been rumored to be planning a new, smaller store concept that would rival the Tesco's stores in the United States.
According to planning officials for four different cities in Arizona, Wal-Mart is now refining plans it submitted to launch c-store-sized markets—some close to recently opened Tesco stores—in former drug stores in four cities southeast of Phoenix. It is not known when Wal-Mart will open the stores in the suburban communities of Gilbert, Chandler, Mesa and Tempe. No name for the new markets was submitted.
"What they want to do is make tenant improvements so they can put in this new, smaller version of their grocery stores," Lisa Collins, Tempe's planning director, told Reuters.
The application plans call for the stores to occupy roughly 15,000 square feet. That is less than half the average size of Wal-Mart's own Neighborhood Market grocery stores, and a fraction of the size of its Supercenters, which combine grocery stores with general merchandise and can be more than three times the size of a U.S. football field.
Officials said they have been told the new stores will offer similar merchandise to Fresh & Easy Neighborhood Markets.
"We do look at different ways to serve customers, and a smaller Neighborhood Market is certainly an example of that," a Wal-Mart spokesman told the news agency, but declined to comment further.
A Tesco spokesperson would not comment on Wal-Mart's plans. Tesco has opened 37 Fresh & Easy stores and invested $2 billion into the new venture.
Fresh & Easy, with U.S. headquarters in El Segundo, Calif., said it will have 50 stores open in the United States by the end of February. And it just announced plans to open its first 18 stores in Northern California, in the Bay Area, which will begin opening in 2009.
Mark Barratt, an Arizona State University professor who tracks the industry, told Reuters, "The one thing I know is that Tesco has done its homework; it's not as apparent that Wal-Mart has done the same."
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