EL SEGUNDO, Calif. -- U.K. supermarket retailer Tesco plans to launch stores in the United States under the Fresh & Easy" banner when it makes its entrance there next year, according to The Financial Times. Job advertisements were posted on a U.S. recruitment company website, saying it was "preparing to launch an unprecedented retail food business in the Los Angeles and Phoenix areas.
Real estate consultants said Tesco is looking at sites of 15,000 square feet in Phoenixslightly smaller than the traditional U.K. supermarket, but far larger than the [image-nocss] typical 2,000-sq.-ft. Tesco Express convenience format or U.S. c-stores such as 7-Eleven and Circle K, the newspaper reported.
"They're looking around, they're kicking the tires," Bob Pearlstein of CB Richard Ellis real estate agents in Phoenix, told the paper. He said that the retailer was particularly interested in accessible corner locations. Both Los Angeles and Phoenix are highly competitive retail markets. In Phoenix, it would be competing directly Wal-Mart.
One employment listing seeks a human resources executive whose job would be to "develop and implement, and administer the Tesco Fresh & Easy culture. This would include identifying the stores as "a Fresh & Easy place to shop," where "we keep things simple.
Tesco also has acquired a 1.4-million-sq.-ft. distribution center in Riverside County, east of Los Angeles, and it has established U.S. corporate headquarters at El Segundo, Calif., south of Los Angeles International Airport. The job advertisements indicated that the retailer is also planning a second distribution center of about one million square feet in Phoenix.
Tesco said in February that it intended to spend 250 million ($472.6 million U.S.) developing a range of small stores, which it said would be modeled on its Tesco Express format. The stores, with the first due to open next year, will sell a range of fresh products and prepared meals alongside a selection of packaged goods.
Tesco told the Financial Times that the U.S. job ads had been put together by the recruitment agency and "there is a bit of a hotch-potch of information, much of which is not accurate.
As reported in CSP Daily News, last year Tesco dispatched an advance team of senior managers to the United States. Hoping to keep their plans secret from rivals, the Tesco executives posed as Hollywood film producers making a movie about supermarkets, according to BusinessWeek. The operatives set up a secret trial c-store in a West Coast warehouse. Loath to leave a paper trail that could tip off competitors, they reportedly used plastic bags of cash rather than corporate charge cards to buy goods for their mock store.
Tesco is a powerhouse in Britain, where it has blunted Wal-Mart's drive to dominate the retail scene, the report said. Wal-Mart's superstore format has been outflanked there by a swarm of Tesco stores of all sizes. It now controls more than 30% of the grocery market in Britain, a fact that has led Wal-Mart, which operates under the name of ASDA Group in Britain, to call for a government investigation.
Is Tesco itching to mix it up with Wal-Mart on the American retailer's home turf, asked BusinessWeek? The British actually are targeting an area where Wal-Marts are relatively scarce, it said. The Bentonville, Ark., company has only 266 stores in California, Oregon and Washington. Wal-Mart is experimenting with its smaller-format Neighborhood Markets, but these are more like supermarkets than c-stores.
"To grow, Wal-Mart needs to go beyond big stores," Frank Badillo, director of global research and senior economist at consultancy Retail Forward in Columbus, Ohio, told the magazine. "Tesco is beating them to the punch."
Separately, Warren Buffett's Berkshire Hathaway, Omaha, Neb., is paying $329 million to buy stock in Tesco, said UPI. The acquisition of a nearly 1% stake, or 57.6 million shares, in the company is consistent with Berkshire Hathaway's plans to diversify outside the United States.
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