Tesco Moves toward the Rockies

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Tesco Moves toward the Rockies

NEW YORK -- California, Arizona, Nevada and now Colorado are potential sites where Tesco will develop its Fresh & Easy Neighborhood Markets, according to a report in Fortune.

The magazine discovered the detail after searching public documents. In May, the name "Tesco Stores West," a subsidiary, was registered with the Colorado Secretary of State, in addition to California, Nevada and Arizona. This month, the company changed the subsidiary's name to Fresh & Easy Neighborhood Market, a name it had reserved, but not registered, in October.

However, a Tesco spokesman denied any immediate plans for the Rocky Mountain area. "We have confirmed that we will be focusing on Los Angeles, Las Vegas and Phoenix," Tesco spokesperson Greg Sage told Fortune. "We do not plan to open any stores in Colorado in the near future, but we never say never."

Tesco will commit more than $2 billion over the next five years to its U.S. venture. The stores, called "Fresh & Easy Neighborhood Market," will be based on the retailers' "Express" store format. The Express stores have a higher return on investment than any other Tesco store format, according to one analyst involved with the company.

Those familiar with Tesco told Fortune it is common for the retailer not to reveal its plans when entering a new market. "Everything I know and see indicates that Tesco has much more in mind than they are publicly stating," said Don Delzell, a partner at consultancy Retail Advantage.

Tesco was so secretive that the company passed off trial stores in warehouses as movie sets and originally registered the fictitious name "Buttoncable West" with state authorities, but later changed that to Tesco Stores West, the report stated.

While the venture has its risks, its detailed plans allow it to succeed. "They go into a country and hit critical mass quickly, and have developed some world-beating tricks," David McCarthy, a Citigroup managing director who previously worked for Tesco, told Fortune.

"They are pretty damn good when they decide to go -- and much more successful than our buddies in Bentonville," said Ted Zittell, a retail consultant who works with European firms, nodding towards Wal-Mart and its international Asda division.

Tesco is aware that Wal-Mart has been unable to saturate the nation's most populous state -- California, with only two Supercenters -- which is one of the reasons why Tesco targeted the West Coast. Once established there, Colorado could be next, the report stated.