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Tesco US Could See Sales of $10 Billion

British grocer Tesco could position its Fresh & Easy chain among the top 10 supermarket retailers in the United States by 2015, with U.S. sales of $10 billion, TNS Retail Forward said in a report on Thursday.

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Tesco made its U.S. debut earlier this month with the opening of a Fresh & Easy Neighborhood Market store in California. It now has 13 convenience-sized stores in LA, Las Vegas and San Diego, with as many as 200 more expected to open in those cities and in Phoenix by the end of 2008.

Fresh & Easy seeks to woo U.S. shoppers with smaller convenience stores of around 10,000 square feet emphasizing ready-to-eat meals and fresh produce in areas that are underserved by supermarket and grocery store chains.

The launch is being closely watched, with industry experts predicting it could cause a shake-up of the world's largest and most competitive consumer market.

TNS said its convenience-focused format could represent a "significant threat" to the U.S. food retailing industry.

"There is demand for this type of concept, and we expect other U.S. retailers to be watching Tesco closely for ideas on how to tap into this buoyant market," said Jennifer Halterman, senior consultant at TNS Retail Forward, in the report.

The research firm said rapid U.S. expansion will be a key sales driver for the grocer, and by 2011, Tesco could be a $4 billion retailer in the United States with 500 stores.

But Tesco will still be small compared with its competitors.

TNS estimates that by 2011, Wal-Mart Stores ill have total U.S. sales of $300 billion, including sales at its supercenters, discount stores and neighborhood markets.

It estimates Kroger will have sales of $83 billion by 2011, while Safeway will have sales of $47 billion.

TNS Retail Forward said Fresh & Easy could generate sales of $900 per square foot per store, nearly twice the supermarket average.

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