Tesco, the United Kingdom's largest retailer and the fourth-largest in the world behind Wal-Mart and Home Depot in the U.S., and France's Carrefour, said it is going through with its plans to invest $2 billion in opening as many as 300 small grocery stores in Southern California, Las Vegas and Phoenix, according to a Los Angeles Times story.
Tesco first announced in September it would develop U.S. business through "organic growth" backed by a capital investment of $493.8 million per year, funded from existing resources.
The company originally said that, after conducting extensive consumer research, it would model the U.S. stores after its successful Express concept, 3,000-square-foot markets that sell 7,000 items, including fresh produce and wines, as well as an in-store bakery. In the Times story, however, Tesco USA chief executive officer, Tim Mason, said the company was looking for sites closer to 15,000 square feet, which would make them more comparable to an average Monrovia, Calif.-based Trader Joe's.
Mason said company management was negotiating for the sites, with the first store due to open in the second half of 2007.
As part of its strategy of self-sufficiency in having a network of stores and distribution
Mason said in the Los Angeles Times story that the stores will emphasize a speedy, efficient distribution system. He said the stores would be "smaller, simpler grocery stores" where shoppers could find what they need in a hurry, eliminating the need to make several trips to various stores.
"One of the problems of distribution in a place as vast as America is that most of the freshness is used up in trucks rather than in people's refrigerators," he said in the story.
"There's no question that convenience and freshness are the two driving forces for the consumer today," Degen said. "Everybody they will be going up against, whether it be Trader Joe's, Costco or even 7-Eleven, they will be competing on convenience. But the quality of the food is going to have to be high because they're also going to be competing for dollars Americans spend at restaurants and other foodservice outlets."