British grocer Tesco made its U.S. debut on Wednesday by throwing open the doors of a sleek, modern Los Angeles store stocked with a larger helping of fresh, ready-to-eat meals than at traditional supermarkets.
Tesco will officially open six Fresh & Easy Neighborhood Market locations in Southern California on Thursday, but held a grand opening party at one store in L.A.'s Glassell Park neighborhood Wednesday evening.
At the event, reporters were given their first look at the much-anticipated Fresh & Easy, which industry experts have predicted could cause a shake-up of the world's largest and most competitive consumer market.
The company plans to have about 200 stores in the Western United States by the end of February of 2009, Fresh & Easy Chief Executive Tim Mason said. It plans to open in Las Vegas and Phoenix in the coming weeks.
Fresh & Easy's Glassell Park store, which is about a quarter of the size of a traditional U.S. grocery store, has an industrial look, with concrete floors and high ceilings.
Nearly half the store is stocked with refrigerated ready-to-eat meals, such as carne asada, wild mushroom risotto and beef lasagne, or other fresh fare.
About half of the store's products are private label.
London-based Californian Allyson Stewart-Allen, author of the business book Working with Americans, said Tesco's experience with producing ready meals could provide it with a strong advantage over local players.
Californians increasingly want ready meals. They are tired, it's 6 o'clock and they've been battling LA traffic for an hour, she said.
Fresh & Easy's prices are also competitive. A bottle of Australian Chardonnay was labeled at $1.99 and a pound of refrigerated pizza dough was labeled at 99 cents. On some branded products, prices at rivals Vons, a unit of Safeway Inc. and Ralphs, a unit of Kroger Co, were shown alongside Fresh & Easy's lower price.
Neighborhood retailing is successful when the prices are sharp. The reason (consumers) leave the neighborhood is because the value's not good enough, Mason said. What this brings back is great value to the neighborhood.
Low prices, competitive worker pay and wide access to fresh, healthy foods are key components of Tesco's U.S. strategy, and one way it has tried to distance itself from Wal-Mart Stores Inc., the world's largest retailer. Some, however, have questioned the company's ability to deliver on those promises.
About 75 people demonstrated outside the Glassell Park Fresh & Easy on Wednesday, saying they wanted Tesco to sign an agreement that its employees would work full-time shifts and that it would open stores in low-income communities such as South Los Angeles.
We're not asking them to do anything that we aren't asking other grocery stores, said Elliott Petty, a spokesman for the group, which calls itself the Alliance for Healthy and Responsible Grocery Stores. We want to see the standards in this industry increase.
Tesco representatives declined to meet with the activists, but Mason reiterated the company's commitment to entering neighborhoods that have been underserved by traditional grocers and to being a good employer.
He said Fresh & Easy would open in some of the area's lower-income communities, such as Compton, within the year. He also said all of its employees were working the minimum number of hours required to earn health benefits.