American grocers are nervously awaiting Tesco’s opening of their “Fresh & Easy Neighborhood Markets” in the U.S. Tesco’s plans include opening locations in Southern California, Arizona, Nevada and possibly Colorado. While initially billed by the retailer as a new type of convenience store, the format more closely resembles a hybrid that combines the best of two of America’s most profitable grocery chains.
While actually modeled after the highly successful “Express” format in the U.K., purportedly highest margin stores in the Tesco empire, folks in the U.S. have been stating that Tesco has taken the best of Trade Joe’s (size, convenience, good prices and products busy professionals like) and the best of Whole Foods (great prepared meals for folks who just don’t cook but want more than mediocre prepared food from the supermarket or takeout from a fast casual restaurant).
Furthermore while no one is actually willing to be quoted, folks from both chains are to wary of the British invasion. Given Tesco’s deep purse strings, and strong market savvy, both Trader Joes and Whole Foods stand to lose significant shopping dollars if Tesco hits a homer with their prepared meals. If they can even come close to the great taste of Whole Foods meals, or those say sold in a Bristol Farms store, look for rapid expansion in the States.
Whether or not the significant added cost in the opening of these stores has any impact is doubtful. And lest this story leaves readers wondering whether conventional retailers are worried you bet that they’re worried too. The only thing is that they have been struggling for so long now that the real news is that even Tesco stands to knock some fat off the two untouchables in a way that America’s leading grocers couldn’t.