Tesco, the world's third-largest retailer, has begun its long-awaited launch in the United States, opening its first store near Los Angeles.

Britain's most successful retailer opened its Fresh & Easy Neighborhood Market convenience chain in the small city of Hemet late last week prior to opening a further five stores in Los Angeles on Nov. 8, a Tesco spokeswoman said.

In the coming weeks Fresh & Easy, which is a new brand for Tesco, will roll out more than 120 stores offering fresh, local foods and ready meals across LA, Las Vegas, Phoenix and San Diego.

Tesco's U.S. launch has been widely trailed, with industry watchers predicting it could cause a shake-up of the world's largest and most competitive consumer market.

Entering the home territory of the most successful retailer, Wal-Mart Stores Inc., also presents a greater risk to Tesco than it has faced in the 12 countries where it already operates.

Tesco Chief Executive Terry Leahy, who has called cracking the United States the opportunity of a lifetime, has said Fresh & Easy could one day rival Tesco's British business.

Citigroup retail analyst James Anstead believes the U.S. market theoretically provides Tesco with a $100 billion opportunity -- about $20 billion more than the group's turnover last year. Tesco has earmarked 250 million pounds ($521 million) per year for the U.S. business going forward.

Fresh & Easy's focus on healthy, organic foods is expected to put it in direct competition with Whole Foods Market Inc, Trader Joe's and convenience chain 7-Eleven.


Tesco's entry could potentially go down as a genuine turning point in the industry, possibly comparable with Wal-Mart's decision to start opening Supercenters in the 1980s, Anstead told investors in a recent note.

Counting against Leahy is history.

The U.S. market is considered a graveyard for British retailers, having taken the scalps of such well-known brands as Marks & Spencer and J. Sainsbury.

Both staged ignominious exits in recent years having misjudged how much the U.S. consumer's focus on buying the cheapest product discouraged shopper loyalty.

Tesco has also raised the hackles of California's powerful unions by avoiding union membership among its employees, and of the local media as well due to secrecy surrounding the launch.

The Los Angeles Times in one article highlighted how the image Fresh & Easy was putting forward in California was at odds with Tesco's reputation in Britain as a behemoth with a 31 percent share of the grocery market and more akin to Wal-Mart.

But a slowing U.S. economy and growing environmental consciousness could play to Fresh & Easy's advantage.

Increased mortgages and high gasoline prices have put a premium on disposable income, and shoppers are moving away from out-of-town supercenters to local grocery stores, said Simon Hay, CEO of DunnhumbyUSA, a unit of the market research firm credited with helping Tesco secure its market dominance in Britain.

When times are tough then you want to get to a place where you can get the best offer closest to home, Hay said in a telephone interview.