Tesco Plans Larger than Expected

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Tesco Plans Larger than Expected

GLASSELL PARK, Calif. -- Tesco has made plans to take over a closed Albertsons grocery store located here, a 32,500-square foot location that is nearly double the size that experts have predicted, the Los Angeles Times reported. The store will be the first of a group that is expected to open on the West Coast next year.

"It is a strategy of developing local scale. They want to build enough market share to matter," Darrell Rigby, head of the Boston-based consultant Bain & Co. told the LA Times.

Tesco would not discuss its plans with the newspaper for the store, which is about double the size of what analysts expected. CSNews Online has reported that the store size would average between 10,000 and 12,000 square feet, with parking for 70 cars and serving a local population of 15,000 people.

The size of the Glassell Park lease indicates that the British retailer most likely has a multifaceted approach to capturing a slice of the U.S. market, Rigby said.

The stores were to be based on its British Express format stores, being similar to the size and offerings of a Trader Joe's, with fresh produce, meat, packaged goods, prepared foods, wine and other beverages, the LA Times reported.

"Wherever we put in an Express store we take a read of the local demographics and put in the right product mix," David Cox, a Tesco spokesman in England told the LA Times.

In upscale neighborhoods, the stores typically carry more premium products, including a "decent collection of wine, spirits and beer," while locations in working-class areas carry more basic offerings, he said.

A person familiar with the company's plans told the paper that Tesco was designing stores for customers who want buy small amounts of groceries -- enough to make one meal or fill a gap in -- rather than a full-scale shopping trip.

Tesco has signed one other lease for its U.S. stores and it has real estate teams actively searching out locations, the newspaper reported.

Tesco stated that it would invest about $470 million to enter the West Coast with a store format designed for the American market, the newspaper reported

Tesco is expected to open nearly 150 stores in Southern California and the Las Vegas and Phoenix areas. Its U.S. headquarters have been set up in El Segundo and it has purchased an 88.4-acre site along Interstate 215 south of Riverside for a distribution center to service those regions, the newspaper reported.