Thursday, February 09, 2006

Tesco to enter US

Tesco announced today that it is finally entering the US market, in a convenience store format. According to their press release:

Tesco PLC today announces that it intends to enter the United States through the development of a new convenience format, beginning on the West Coast in 2007.

The development of the business will be through organic growth, with initial planned capital expenditure of up to £250 million per year, which will be funded from existing resources, with break-even expected by the end of the second full year of operation. Tim Mason, currently our Marketing and Property Director, will move to the US to run the business, remaining on the PLC Board.

The new format is designed for the American market, following extensive consumer research and modelled on Tesco’s highly successful and innovative Express concept, which we now operate in five countries, with over 800 stores serving around eight million customers every week.

The Express stores, I understand, are bigger than a typical US c-store, and carry about 40% more SKUs. I'd say c-stores are already at the saturation point, but perhaps this format could create a new niche.

It will be interesting to see if this is just a precursor to a wider Tesco entry into the market; they have passed up several opportunities to buy their way in -- most recently, Albertson's.

Here's an AP article with a bit of background and commentary.

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