Tesco in the United States

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"What's the problem with Fresh & Easy? In our view, it is a sterile, small Costco, too quiet, not quirky, has a negative feel, too different or ahead of its time. Maybe all of the above, but Tesco seems to have over-engineered the concept."¹

- Mike Dennis, analyst, Piper Jaffray, in April 2008.

"This is a tremendously exciting move for Tesco which will add a new leg to our international expansion. The United States is the largest economy in the world with strong forecast growth and a sophisticated retail market. It is a market we have researched extensively for many years and over the last year we have committed serious resources to developing a format that we believe will be really popular with American consumers. We've put a strong team together, led by Tim Mason and drawing on the wealth of skills and experience within the group."²

- Terry Leahy, CEO, Tesco Group, in 2006.

"While the market, understandably enough, is giving Tesco the benefit of the doubt at this early stage, we see considerable risks associated with the US market and wonder whether the £250m a year would be better spent in existing territories or ones where dominance might be easier to achieve."³

- Sanjay Vidyarthi, Retail Analyst, Teather & Greenwood⁴, in 2006.

Introduction

On July 03, 2008, UK-based retailer Tesco plc (Tesco) opened its sixty second Fresh & Easy Neighborhood Market (Fresh & Easy) store in the US at Manhattan Beach, California. According to the company, the store opening was a major success, registering around 2,600 footfalls. The best-selling item on the opening day was the Grill Pack5, with customers buying 1,400 units of these. "[The] opening was fantastic, the neighborhood showed up in force to show its support. Based on what customers are buying at the Manhattan Beach store, there are going to be a lot of Fresh & Easy barbeques this 4th of July weekend,"6 said Tim Mason (Mason), CEO, Fresh & Easy.

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1] James Hall, "Fresh Idea from Tesco Turns Out to be Anything but Easy,"www.telegraph.co.uk, April 19, 2008.
2] "Tesco to Enter United States,"Press Release, www.tesco.com, February 09, 2006.
3] "Tesco Plans Foray into US Market,"www.bbc.co.uk, February 09, 2006.
4] Teather & Greenwood is an UK-based stockbroker which was acquired by Iceland-based investment bank, Landsbanki.
5] Fresh & Easy 'Grill Packs' include an assortment of high quality beef patties, mild pork sausage, and lightly chili-seasoned chicken.
6] Press Release, "Fresh & Easy Manhattan Beach Store Attracts 2,600 Customers on First Day,"www.freshandeasy.com, July 03, 2008.

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