Speculating about Tesco

Nobody knows exactly what Tesco is going to do in the US, but a lot of people are spending a lot of time thinking about it.

Wal-Mart, Kroger, Safeway, 7-Eleven -- be warned.

U.K.'s largest grocer Tesco is readying an assault on your home turf with a new "mystery" format that analysts say could leave its U.S. competitors "shaking in their boots."

CNN/Money ran an article with some interesting speculation. Tesco has said that the format they will introduce next year will be modeled on their Tesco Express stores -- large convenience stores.

Merrill Lynch analyst Patricia Baker said Tesco's arrival could only be viewed as a "negative" for the conventional supermarket channel.

"The coming of Tesco represents not only a new player but one that is a quite accomplished retail entity with the ability to attack this market in a much more meaningful fashion over the long term, should it choose to do so," she wrote in a recent research note.

CNN/Money seems to think the US stores will be a hybrid:

"I think these [Tesco stores] will almost be a cross between a grocery store and a convenience store, like a small format grocery store of about 5,000 sq. feet that sells plenty of fresh foods," Longo said.

Langdoc agreed. "This type of a small-format grocery store doesn't exist right now in the U.S. This will be Tesco advantage here. Fresh produce like fruits and vegetables, and high quality private-label goods will be a significantly greater proportion of their merchandise mix versus packaged goods."