Fresh, but far from easy

The Economist: Fresh, but far from easy

Armed with powerful retailing science, Britain's most successful supermarket is making an audacious bid to change the way America shops and eats.

A FORLORN shop facing a dusty car park in one of the poorest parts of Phoenix, Arizona, is an inauspicious place to start a closely watched experiment in global retailing. Yet this is where Tesco, Britain's biggest supermarket group, will seek to establish its beachhead in the world's richest grocery market.

Later this year Tesco will open at least 21 stores in this arid city and plenty more—it will not say how many—in Las Vegas, San Diego and Los Angeles. It plans to pepper some of America's fastest-growing states with Fresh & Easy local groceries at a rate of three a week. Tesco has identified as many as 100 sites to begin its £250m a year ($500m) campaign. Rumour has it that a new warehouse just east of Los Angeles could alone supply some 400 stores.

By American retailing standards, Tesco is merely dipping a toe in the ocean. Even so, the consequences could be enormous. Tesco is a formidable retailer, having transformed itself from Britain's third-ranked supermarket by sales to the third-largest in the world, after America's Wal-Mart and France's Carrefour (see table). As it has done so, Tesco's share of the grocery market in Britain has climbed above 30% and, like Wal-Mart in America, it has begun to face criticism of its market power.  …