With the smattering of details that have leaked out about Tesco's plans for the U.S., it's easy to come away thinking of it as being an approach to use fresh and higher quality prepared foods to convince affluent consumers to buy more of their groceries in the chain's small Fresh & Easy Neighborhood Market stores. Company plans have stores opening up in more than a few well-heeled neighborhoods in southern California, Nevada and Arizona. But, the company also appears to believe its apparently upscale approach will also work in neighborhoods where disposable income varies from severely limited to non-existent.
A case in point is Tesco's plan to open new stores in South Los Angeles. As many remember, a number of major supermarket chains agreed to open stores as part of the planned rebuilding of an area that was decimated by riots in 1992.
Amanda Shaffer, author of The Persistence of L.A.'s Grocery Gap and a researcher at Occidental College's Urban and Environmental Policy Institute, said actions such as those planned by Tesco are critically needed. She asserts that consumers in some urban neighborhoods are living in so-called food deserts with no convenient access to the quality and lower-priced groceries that most other Americans take for granted.
Ms. Shaffer told the International Herald Tribune that there are wide-ranging consequences for society that go beyond the perimeter of food deserts. "People suffering from diet-related illnesses because they don't have a healthy diet affect everyone's taxes and health care costs," she said.
"I think that's why Tesco has gotten such a warm welcome. People are just so excited and happy that some supermarket is coming in," she said.
Tesco's willingness to go into areas where others have not certainly gives it access to consumers in a less competitive environment. It also bears out a corporate approach that Sir Terry Leahy, Tesco CEO, talked about back in March at the World Retail Congress in Barcelona.
"If you follow customers - by which I mean if you really find out what they want and work very hard day and night to give it to them - then you will automatically find your way to the new opportunities that are out there," he told attendees at the conference.
Interestingly, while Tesco is getting kudos for looking at low income areas to open stores, Ms. Shaffer said the company has a mixed record in its home country of England. Tesco has more than 1,800 stores in the U.K., but less than 20 are in low-income markets despite the company's "Regeneration Partnership," which is focused on bringing stores to underserved areas.
Discussion Question: What do you make of Tesco's plan to open a store in South Los Angeles and possibly other low income areas? What are the challenges and opportunities in front of stores looking to open in American food deserts?