Competition from Abroad

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Competition from Abroad

As if the convenience channel wasn't facing enough competitive pressure from other retail sectors domestically, key players from overseas are now bringing variations of their successful concepts state-side and redefining the convenience store experience in the United States.

Known for its freshly-prepared packaged gourmet meals, Famima!!, the specialty Asian convenience food chain, already has nine upscale food stores in the Los Angeles area and is currently undertaking a pan-Pacific expansion from Asia to the U.S. Shiro Inoue, president and chief executive officer of Famima!! Corp., said the plan was to expand to 20 stores in California by the end of 2006 and more than 250 stores across the U.S. by 2009.

Also in California, all eyes are on British powerhouse Tesco, which last month publicly opened its U.S. headquarters in El Segundo, while announcing that it is prepared to spend as much as $2 billion over the next five years on its U.S. launch. The company is negotiating sites for 300 small grocery stores in Southern California, Las Vegas and Phoenix, although USA chief executive Tim Mason said "not all will get opened."

According to media reports, the first stores will debut the second half of this year, and the pace of development will pick up as Tesco's distribution network is operational. Many more stores could follow. "If this is successful, this is a very big country," Mason said.

The company plans to push into underserved urban areas that need to be "re-energized," and is looking for sites of about 15,000 square feet, with about two-thirds devoted to sales space for "a format that we call the 'neighborhood market,'" Mason told the Los Angeles Times.

These neighborhood markets will be "smaller, simpler grocery stores" that allow shoppers to quickly pick up what they need without having to make multiple trips to a variety of stores, including packaged goods and packaged prepared meals. "One of the things that we found unique about American consumers is that they shop frequently, and in a lot of different stores," said Simon Uwins, chief marketing officer for Tesco USA.

Whether grocers or c-stores feel the brunt of Tesco's invasion, othe thing's for sure: the U.K. retailer's operational expertise will raise the bar for all retailers.