Tesco, the world's third-largest retailer, has begun its long-awaited launch in the United States, opening its first store near Los Angeles. Britain's most successful retailer opened its "Fresh & Easy Neighbourhood Market" convenience chain in the small city of Hemet late last week prior to opening a further five stores in Los Angeles on November 8, a Tesco spokeswoman said.
In the coming weeks Fresh & Easy, which is a new brand for Tesco, will roll out more than 120 stores offering fresh, local foods and ready meals across LA, Las Vegas, Phoenix and San Diego. Tesco's US launch has been widely trailed, with industry watchers predicting it could cause a shake-up of the world's largest and most competitive consumer market.
Entering the home territory of the most successful retailer, Wal-Mart Stores Inc, also presents a greater risk to Tesco than it has faced in the 12 countries where it already operates. Tesco Chief Executive Terry Leahy, who has called cracking the United States "the opportunity of a lifetime", has said Fresh & Easy could one day rival Tesco's British business.
Citigroup retail analyst James Anstead believes the US market theoretically provides Tesco with a $100 billion opportunity - about $20 billion more than the group's turnover last year. Tesco has earmarked 250 million pounds ($521 million) per year for the US business going forward.
Fresh & Easy's focus on healthy, organic foods is expected to put it in direct competition with Whole Foods Market Inc, Trader Joe's and convenience chain 7-Eleven. "Tesco's entry could potentially go down as a genuine turning point in the industry, possibly comparable with Wal-Mart's decision to start opening Supercenters in the 1980s," Anstead told investors in a recent note. Counting against Leahy is history.