Tesco Fools U.S. by Opening First Store Early

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Tesco Fools U.S. by Opening First Store Early

EL SEGUNDO, Calif. -- Nov. 6, 2007 -- British retailer Tesco opened its first U.S. Fresh & Easy Neighborhood Market store one week ahead of its announced opening date, in Hemet, Calif., a city east of Los Angeles. The chain was not expected to open its stores until Thursday, the Telegraph.co.uk reported.

"We need to have live customers in order to test the systems in the store," a company spokeswoman told BBC.co.uk. "It is entirely logical to do this ahead of the grand opening on Nov. 8."

The stores have an "American feel," the report stated, citing a U.S. newspaper, The Press-Enterprise. The stock is "overwhelmingly private label," but the store still carries a number of national brands, the Telegraph.co.uk reported, citing the Press-Enterprise.

The store also features a self-serve checkout and "kitchen table," an area where staff members prepare meals such as chicken curry and pizza, the report stated.

The quiet store opening followed a Web-launch of the stores on the Fresh & Easy Web site, Reuters reported. A video tour of the store was posted on the company's blog through video hosting site YouTube -- www.freshandeasy.com/blog -- which showcased coolers filled with private-label chocolate ice cream, mango smoothies and packs of sushi, the report stated. Bags at the checkout read "Reusable, Replaced, For Free, Forever," according to the report.

However, the launch may not be problem free, as a coalition of community activists, church leaders and union organizers are planning to picket the stores, the Telegraph.co.uk reported.

One coalition, the Alliance for Healthy and Responsible Grocery Stores, has no objection to the company’s stated goals -- serving areas known as "food deserts," provide well-paying jobs with benefits and operate in an environmentally friendly way -- but is not sure to take the company at its word, the report stated.

Meanwhile, analysts are watching the retailer to see what impact it has on consumers’ shopping patterns, while retail competitors are reporting "business as usual," The Press-Enterprise reported.

"I don't think they'll take away a lot of customers from the supermarkets," George Whalin, president of Retail Management Consultants in San Marcos, told the paper, adding the approach could shift spending, but shopping habits usually take years to change. "They may take away some business, like heat-and-eat foods, but people will still go to the supermarkets for other things. People tend to go to a lot of different places to buy their groceries."

Consumers are also interested in the British retailer, but unsure of its ability to change their shopping habits.

Stater Bros. shopper, Ginger Gross of Riverside, Calif., will continue shopping there, as it is closer to her home, but is open to trying Fresh & Easy.

"It's not going to get me to change my shopping habits, but I might check it out," she told the paper.

In addition, representatives of the supermarket chains serving the region where Tesco opened its first store -- Albertsons, Ralphs and Vons -- told the paper they plan no changes in response to the debut of Fresh & Easy.

"It's business as usual for us," said Alison Mochizuki, spokeswoman for Monrovia-based Trader Joe's. "We don't comment on what other stores are doing."

Further, convenience store operators told the paper they are not worried about the British retailer grabbing a market share.

A 7-Eleven franchisee, Dilip Patel, owner of two 7-Eleven stores near future Fresh & Easy locations, told the paper the stores could have some long-term impact, but 7-Eleven has been adding its own fresh items in recent years, such as sandwiches and baked goods, the report stated.

"Once they get their distribution center up and running, it could make a difference," Patel said. "We'll have to see."

Additionally, Chris Wilson, marketing director for Circle K's West Coast operations, explained the difference between the chain's customer base -- 60 percent male -- and Tesco's customer base -- 70 percent female, the report stated.

"I'd much rather see a Tesco opening up across the street than an Arco am/pm or a new 7-Eleven," Wilson said.