Tesco's plans to expand into the US are this week facing another legal challenge in California, amid growing recognition among rivals of the potential threat the British supermarket group poses to their market share.
The retailer will tomorrow seek to block a court challenge that would immediately stop construction of its distribution and food processing centre in Riverside County, east of Los Angeles, pending a full trial of an environmental challenge in June.
Tesco has argued that the proposed 13-week stoppage could cost it more than $50 million (€37.6 million), with up to $2.6 million in costs for every additional week of delay.
Delays in winning approval have already pushed Tesco's plans back. It hoped to have the distribution centre completed by July, but it is now unlikely to be finished before the autumn, with the retailer possibly resorting to temporary facilities to launch its first stores later this year.
Despite the lawsuit, Tesco has won the backing of the leading local environmental activist group.
Analysts have been weighing the potential threat to traditional larger supermarkets - including Safeway, Albertson's and Kroger - from Tesco's "Fresh & Easy Neighborhood Market" stores.
Credit Suisse Securities estimates that Tesco could generate $1 billion (€750,000) in sales within three years and capture 2-6 per cent of local market share in five years. Its report said Tesco's entry could "redefine the mainstream grocery business" in the US.
Tesco, which will start opening stores later this year in southern California, Las Vegas and Phoenix, Arizona, says it has already secured 76 store leases. They will have just 3,000sq m (10,000sq ft) of selling space - about a quarter of the size of a typical US supermarket. - (Financial Times service)
