• by Nina Lentini  @Nina_Lentini, April 1, 2008

Retail experts were not surprised on Monday to learn that the British invasion of Tesco's Fresh & Easy chain is being halted as the marketer takes what it calls a "three-month break from openings simply to allow the business we've created to settle down."

Rubbish, says David J. Livingston, a supermarket consultant in Pewaukee, Wisc., who says he would not be surprised if Tesco decides to leave the U.S. altogether. "They are not just underperforming," he declares, "they are drastically underperforming. They're not even close. They're not even on the board."

Still, says Simon Uwins, Fresh & Easy marketing director, in a release: "In a little over four months we've gone from a business with no stores to one with 59--with hundreds more in the pipeline ... so we've given ourselves a little bit of time to kick the tires, smooth out any wrinkles, and make some improvements that customers have asked for."

Several retail consultants and analysts echoed Livingston's bet that the British retail giant took this measure in order to regroup before the Food Marketing Institute convention in early May in Las Vegas.

"This announced regrouping is a wise choice for a format that will surely come under the industry's microscope during FMI," posted James Tenser, Principal, VSN Strategies, at retailwire.com. "This may one day be regarded as one of the most courageous and successful experiments ever undertaken in the U.S. grocery business, but right now it appears the volumes are not materializing in every store, which has to hurt performance of the finely tuned merchandising and distribution system that Tesco is trying to introduce."

The latest move comes after analysts downgraded their forecasts for Tesco over Fresh & Easy concerns. Supplier feedback, said one, suggested that sales could be as little as $30 million against the anticipated $100 million.

Tesco opened its first units in California's Bay Area, with the rest in Southern California, Nevada and Arizona.