EL SEGUNDO, Calif. — Tesco is slowing its U.S. expansion plans for Fresh & Easy Neighborhood Market, the company's chief marketing officer told SN last week.
“We had plans to ramp up expansion right before the end of our fiscal year [in late February],” Simon Uwins said, “but in the current economic environment, we've decided to keep expanding at the same rate we have been.”
That rate would be an average of two stores a week, he said.
“We'll keep going at the same rate we've been going for the past 12 months, and as we see how the economy goes, we could speed up again,” Uwins said.
At one time Tesco had hoped to have 200 stores in operation by the end of February, Uwins said. It opened its 100th U.S. store in Fullerton, Calif., last week — just one year after it opened its first group of U.S. stores in mid-November 2007 — with two more openings scheduled for later in the week.
Fresh & Easy operates 50 stores in Southern California; 27 in Phoenix; and 25 in Las Vegas. Uwins said the decision not to ramp up expansion before the end of the fiscal year could affect plans to move into Northern California.
“We have stores in the pipeline there, but we've never committed to an opening date, because that will depend on developing an infrastructure, and although we're in the midst of building a distribution center for those stores, we're not quite sure when it will open.”
That facility will be located in Stockton, Calif., and is intended to serve stores exclusively in Northern California, Uwins said. “Given the freshness of the product, there's a limit to how far you can go with distribution from a given facility,” he explained.
“We're waiting to see when that facility comes through, and then we'll take a look to determine when to begin expanding there,” he added. “Until then, we are concentrating on getting sites for potential stores.”
That process has been slowed in some areas — particularly in Phoenix and Las Vegas, he noted — as developers have stopped moving forward on some sites “because of the economy and the potential financial environment,” Uwins told SN. “But on the plus side, broadly speaking, that could open up some property opportunities for us over the next few months.”
He declined to say how many stores Fresh & Easy has in its development pipeline, “but there are a lot of sites for next year and for the year after that,” he said.