EL SEGUNDO, Calif. -- Tesco's British invasion of the United States might be more ambitious than the company has so far let on, according to Fortune magazine. A search of public documents reveals that Tescowhich plans to open hundreds of grocery/convenience stores on the West Coast beginning later this yearhas designs on the Colorado market as well.
In May 2006, the name Tesco Stores West, a Tesco subsidiary, was registered with the Colorado Secretary of State. The name was also registered in California, Nevada and Arizona. Earlier this month, Tesco [image-nocss] changed the subsidiary's name to Fresh & Easy Neighborhood Market, a moniker it had reserved, but not registered, in October 2006, said the report.
A Tesco spokesperson told the publication that the company did not have any immediate plans for the Rocky Mountain region, but left open the possibility that something could happen sometime down the road. We have confirmed that we will be focusing on Los Angeles, Las Vegas and Phoenix, Tesco spokesperson Greg Sage told Fortune. We do not plan to open any stores in Colorado in the near future, but we never say never.
Tesco has committed upwards of $2 billion over the next five years to its U.S. foray. The Fresh & Easy Neighborhood Markets will be based on the retailers' own Express format: mini-supermarkets which are heavy on fresh foods and prepared meals. According to one analyst who covers the company, the Express stores have a higher return on investment than any other Tesco store format.
Tim Mason, a 25-year company veteran who earlier ran Tesco's successful Club Card loyalty program, is heading the U.S. launch. Industry observers said it is common for Tesco to not show all its cards when it enters a new market. Everything I know and see indicates that Tesco has much more in mind than they are publicly stating, Don Delzell, a partner at consultancy Retail Advantage, told the magazine.
Tesco kept tight wraps on its U.S. plans for much of last year. Tesco execs reportedly even went so far as to pass off their trial store in a Santa Monica, Calif., warehouse as a film set. To add another level of stealth, Tesco originally registered the fictitious name Buttoncable West with state authorities, but later changed that to Tesco Stores West, the report said.
Tesco's American excursion is risky, said Fortune. While the company is a household name in Britain, it's virtually unknown to Americans. But Tesco is known for its meticulous planning when it enters new regions. They go into a country and hit critical mass quickly, and have developed some world-beating tricks, David McCarthy, a Citigroup managing director who previously worked for Tesco, told the magazine.
They are pretty damn good when they decide to goand much more successful than our buddies in Bentonville [Ark., headquarters of Wal-Mart], added Ted Zittell, a retail consultant who works with many European firms.
Wal-Mart's presence in California is so limited that the state could qualify as a foreign country, as far as Bentonville is concerned. It has just 22 Supercenters in California, compared with 279 in Texas, the report said. Tesco is keenly aware of Wal-Mart's inability to saturate the nation's most populous state, and it is one of the many reasons why the Brits have targeted the West Coast, said Fortune. But once they establish a toehold there, Colorado may well be next.
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