• November 30, 2007

Tesco's new Fresh & Easy Markets format, launched earlier this month in key Western markets, not only has legs, a new study predicts it will rapidly become a major force among U.S. retailers. Based on its analysis of the new stores, consulting firm TNS Retail Forward expects Tesco's U.S. business may reach $10 billion by 2015. That puts it in the Top 10, making it "a significant threat to the U.S. food retailing industry."

Current expansion potential means the Fresh & Easy format could roll out to 500 stores by 2011, generating $4 billion in sales. "Fresh & Easy's small-size advantage gives it the opportunity to almost double space productivity per square foot compared with supermarket industry averages," it says, adding that the stores could generate sales of $900 per square foot per store, nearly twice the supermarket average.

The chain's easy access, ready-made meals and 'grab-and-go' items also appeal to both value-driven and upscale shoppers, through its gourmet appeal. With Fresh & Easy stores dedicating a quarter of their floor space to the "fresh" areas, the emphasis is on high-quality take-out meals that will also compete with restaurants.

--Sarah Mahoney