TESCO EXECUTIVE TARGETS MID-2007 FOR DEBUT OF U.S. STORES

EL SEGUNDO, Calif. - Tesco expects to begin opening stores in Southern California and the Phoenix area sometime around mid-2007, Simon Uwins, chief marketing officer for Tesco USA here, told SN last week.The store openings will be "part and parcel" of the completion of the 1.4 million-square-foot distribution center Tesco plans to build in Riverside, Calif., Uwins said.While acknowledging the stores

EL SEGUNDO, Calif. - Tesco expects to begin opening stores in Southern California and the Phoenix area sometime around mid-2007, Simon Uwins, chief marketing officer for Tesco USA here, told SN last week.

The store openings will be "part and parcel" of the completion of the 1.4 million-square-foot distribution center Tesco plans to build in Riverside, Calif., Uwins said.

While acknowledging the stores will run in the range of 10,000-12,000 square feet, Uwins declined to indicate how many stores the company expects to open next year - though trade reports put the number around 50 locations in the Greater Phoenix area and at least as many, if not more, in Southern California.

He also declined to pinpoint exactly what the stores' format will be and the name under which the stores will operate.

He said "Fresh & Easy," the banner some reports have indicated will be on the stores, "is just one of the names being considered. You'll just have to wait and see."

Uwins confirmed Tesco plans to spend $420 million a year developing stores in these two areas. Sources have estimated store sites could cost between $1 million and $5 million, depending on whether they are built from the ground up or involve remodeling existing buildings.

Uwins said the stores will be based on Tesco's U.K.-based Express format - which features a mix of freshly prepared foods and private-label groceries - "but the U.S. stores will not actually be the same," he explained. "People's needs vary from market to market, and these stores will be a unique format developed specifically for this country."

He told SN the format will be unique, "geared to what American consumers are telling us they want. As has always been our custom, we listen first, then try to come up with something that fills consumers' needs."

Tesco's initial efforts to determine what U.S. consumers want, Uwins said, involved spending time talking with Southern California families - visiting their homes "to see what was in their pantries and accompanying them on grocery shopping trips," and reading blogs they kept for the company that talked about their general spending habits.

"Then we decided to build the test store, so consumers had something they could see and experience," Uwins said.

"The way Tesco does business is, we don't just take one format and put it around the world. We listen to people in individual countries and then deliver what they tell us they want. That's why we built a prototype store here - because there was nothing like it."

That facility, located in Santa Monica, Calif., was designed as a research facility that was initially opened a year ago to select consumer groups in an enclosed facility that was not open to the general public, Uwins said. Although Tesco is no longer doing consumer research at the facility, it is still being used to tweak marketing concepts, he noted.

Tesco purposely opted to enter the U.S. market in the West. "The Western U.S. has a vibrant economy that's growing," Uwins said.

Separately, at the Goldman Sachs Global Retailing Conference in New York last week, a Tesco executive said the U.S. has room for innovation.

"Just being convenient is not enough - there are retail stores everywhere you turn in the U.S.," said Andrew Higginson, director of finance and strategy. "We do feel we've got something a little different.

"There's no gimmick - it's just a food shop. There's nothing really unique about it, but if you have something consumers like and you execute it well, you could do all right."