Safeway Can Go Store for Store With Tesco If it Has To: Burd

NEW YORK -- Investors aren't the only ones wondering how Pleasanton, Calif.-based Safeway plans to hold its ground against Tesco's Fresh & Easy concept, which will soon be launching on the West Coast -- Tesco is, too.

During the Goldman Sachs Annual Global Retailing Conference here yesterday, an executive of the U.K.-based retailer introduced himself to Safeway chairman and c.e.o. Steven A. Burd following Burd's talk on the possible impact of the newcomer's opening stores in Safeway's markets.

"Tesco is a well-respected player, and they have run small-store concepts like the ones they are bringing to the West," said Burd. "But they are new to our market, and since they are offering alcoholic beverages, we know where they are going because they have to apply for the liquor licenses. Anyway, we can't do anything until they go to market."

This includes opening a similar express concept, said Burd, in answer to an analyst's question on the possibility. "We've looked at similar formats but rejected them because we have too many opportunities to develop growth vehicles that are not as capital-intensive," he said.

Burd has yet to be convinced of the relevance of the smaller format in markets that don't have the population density of cities like New York or London. Still, if that changes, Safeway is prepared. "Small real estate is not hard to get," said Burd. "You don't have to tie it up for 50 or 100 years. If we wanted sites of 15,000 square feet, we're dealing with developers we've known for 50 years, so we can do it in a short time."
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