Tesco Plans to Open Three U.S. Stores per Week: Report

LONDON -- A Tesco executive recently sat down with a number of British publications to reveal more information about the company’s Fresh & Easy Neighborhood Markets venture, reported Convenience Store News. Among the information revealed were plans to open one Fresh & Easy store every two and a half days -- about three per week.

In the Sunday Telegraph, Tim Mason, the chief executive of Tesco USA, explained that the U.S. entry, 25 years in the making, is an attempt to become a truly global player. Mason -- the son-in-law of Tesco's former chairman Lord McLaurin -- is widely seen as a possible successor to Tesco chief Sir Terry Leahy. For Mason, the United States represents the biggest job interview in the world.

Sir Terry Leahy, Tesco's chief executive, believes its U.S. business could be as big as its U.K. one. At present Tesco's U.K. sales are 35.6 billion pounds, according to the report.

Of the 50 stores expected to open between the launch in late fall and February, 30 will be located in Phoenix and 14 in Las Vegas, according to the report. Initially, the chain will be limited to California, Arizona, and Nevada, although it's rumored it will be national.

In the medium term, 500 stores could be opened. While sales targets are not known, the division is expected to break even by the end of the second full year of operation.

"It is potentially of massive significance, as it positions Tesco for the 21st century, not the 20th century, and it is massively important for America and Americans," Mason told the Telegraph. "If we aresuccessful, it will consolidate Tesco's position as in international retailer. If it is not successful, it will be deeply embarrassing for me, but the business will be okay."

An interesting point Mason makes is the difference between the U.K. version of convenience stores vs. the U.S. variety. Tesco feels it has found a void in the U.S. market, where it will fill with its “convenience stores” -- described as small shops selling a wide range of fresh groceries -- that differ from the c-stores of the United States, which are described as having "beer, chips, cigarettes and gas, and they are not particularly welcomed by the community," said Mason.

While the venture is not a c-store, it is surely not a drug store either, said Mason. "America needs another drug store chain like Custer needed more Indians," he said.

The Fresh & Easy chain will offer high-quality healthy food, half of which will be the company’s private label goods, which feature no trans-fats, artificial colors, or flavors.

"American customers want food that is less mucked about with, less processed. They are desperately keen to feed their children better than they do. They are concerned about their kids and the fact that they are getting obese and they can't control it," said Mason.

At Tesco’s El Segundo, Calif. head office, 150 employees are working to launch the concept. Mason is the only board member in the company’s history to lead an overseas expansion. With him is Tony Eggs, who ran Tesco's property department in the United Kingdom and is fulfilling the same role in the United States, according to the report.

"There is a feeling we are at the beginning of something big. Every one sits within 20 feet of my office," Mason said. New employees are inducted with a "Magic Monday." Every Tuesday all staff gather in the "village square-type" center of the office and Mason updates them on developments, the report said.

"If you're the boss who doesn't make it a fun place to work, then it is a dereliction of duty," noted Mason.

But the chain will not enter the U.S. without some challenges. The company has yet to decide if it will recognize unions, although it will recognize employees' right to join a union.

And U.S. unions are responding. The United Food and Commercial Workers
(UFCW) union said it would stall the chain's debut with mass picketing if Tesco does not talk with them, reported the Observer.

"The market Tesco is entering is very heavily unionized," UFCW spokeswoman Jill Cashen told the paper. "It is in its financial best interests to enter into a union relationship. We have in the past successfully mobilized our community to turn business away from companies who are not offering union representation to employees."

Analysts expect the company to mimic nonunionized competitors such as Whole Foods and Wal-Mart. The company also promised to pay employees better than Wal-Mart, according to the report.

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