Tesco plans US stores expansion

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Tesco, the UK's largest retailer, is planning to open a 1,000-strong chain of discount stores in the US, pitting it against rival retail giant Wal-Mart.

The supermarket has just opened 15 of its Fresh & Easy stores in Las Vegas, Los Angeles, San Diego and Phoenix.

It aims to open a further 200 outlets by 2009 with plans in place to expand the network.

The US retail market is the world's most competitive and has proved a tough nut to crack for many UK retailers.

Ready meals

The company is planning to open a second distribution centre in northern California.

Like the first one, located near Los Angeles, the centre could serve up to 500 stores.

"We want the stores to be no more than two miles apart so no one has to travel more than a mile to get to a Fresh & Easy," said Fresh & Easy Chief Executive Tim Mason.

Tesco is pursuing a hard-discount model in the US, with its rudimentary US stores having similarities to European discounters Aldi and Lidl.

The company is also hoping to pioneer ready meals - a concept well known to Brits but something of a novelty in the US.

Tesco chief executive Terry Leahy has said Fresh & Easy could one day rival the retailer's UK business.

The company plans to invest more than $250m (£120m) in its US business launch.

Tesco is targeting US grocers such as 7-Eleven and locally-run stores using a chain of convenience stores modelled on the Tesco Express blueprint.

Fresh & Easy stores are 75% smaller than most American supermarkets.

The US market is notoriously tough for UK businesses with Sainsbury's and Marks & Spencer both withdrawing back across the Atlantic after failing to win over the US consumer.