Last Updated: 11:07pm BST 17/08/2008
Tesco's chain faces serious obstacles in its bid to crack California. James Quinn checks out the reasons why
For Jan Perry, the recent ground-breaking at a near-barren construction site in the depressed southside area of Los Angeles was a turning point. After years of campaigning in her role as an LA councilwoman, fresh food was finally coming to the area, in the form of Tesco's Fresh & Easy, the British retailer's US convenience store venture.
"Having Tesco come along was a great opportunity," admits Perry. "Here in south LA, we have a plethora of liquor stores and fast-food restaurants, but what's frustrating is that the need is there for fresh produce and yet we haven't been able to get our own domestic grocery chains into the area."
A recent study showed that $400m a year leaks out of the area as residents go in search of fresh food, groceries and entertainment, and Perry estimates that 45pc of the area's 900 restaurants serve some form of fast food. "It will be very interesting to see if people will gravitate towards it," she says of the new store, which will open early next year.
Her positive perspective is everything that Tesco wanted to achieve when it launched F&E in southern California, Nevada and Arizona to much fanfare last autumn.
The new venture promised affordable, fresh produce for local communities, providing decent jobs and strong integration into local communities.
The business, run by Tesco's former marketing director Tim Mason, has now grown to 71 stores, with a move into northern California - taking in San Francisco and the Bay Area - planned early next year.
But not everyone sees F&E in such a positive light. The Los Angeles Alliance for a New Economy is suspicious of F&E's practices.
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The Alliance, a citywide coalition of church, community and other interested groups, is concerned, among other things, about the impact stores such as F&E have on the city.
"When Tesco first came to America, we were pleasantly surprised. They were saying they wanted to do things differently," says Elliott Petty, the alliance's senior retail analyst from his office in downtown LA. "But, today, almost a year later, we've found they're a lot like others in the industry, opening stores in the exact same locations, neglecting others."
Petty rejects F&E's move to the southside of LA, saying the store is in an area going through "revitalisation with condos and lofts and a bunch of high-end developments".
"They didn't show up in the heart of south-central," he points out, suggesting that Tesco is favouring only wealthy communities.
An F&E spokesman rejects this claim, pointing out that as well as its southside store, it recently opened a store in LA's Compton, which has one of the highest murder rates in the whole of the US.
Petty is also dismissive of the company's pay incentives and opportunities for career progression - likening F&E to that pariah of the socially responsible, Wal-Mart.
"We want them to engage in the community, and talk to us," he pleads, saying the alliance has requested discussions on various occasions.
F&E has given no reason as to why the retailer doesn't seem able to speak to the alliance, but nevertheless rejects its claims.
"We have developed a very competitive pay and benefits package for all of our employees," the spokesman says, pointing out that more than 50pc of employees already live within four miles of their store, and stressing the retailer's career progression policies.
Unconvinced, Petty says the company's lack of willingness to talk to his or other community groups creates a potentially harmful "cloud of suspicion".
A few miles to the south and the west of Petty's office, in a tranquil area on the edge of the mid-market Manhattan Beach, lies an F&E store that boasted the retailer's largest launch to date - with almost 2,600 customers on its first day - when it opened in early July.
But on the mid-week morning when I arrive, all is quiet. The 2,000 sq ft store, very similar in feel to a large Tesco Express, does not look busy. At the back of the store is what is heralded by my F&E guide as the heart of the store - the "Kitchen Table", essentially a demonstration area run by a member of staff who chooses what items to display.
It's a nice idea, but far from original, as can be seen across the car park at rival retailer Trader Joe's whose "Snack Shack" concept looks very similar.
As we wander further around the store, in spite of the clearly fresh produce, it feels a little cold - and not just in temperature - despite a recent revamp by F&E.
There are nice, localised features - a small, child-height poster encourages youngsters to locate a hidden cuddly toy within the store in return for a prize - but they are few and far between. By and large, this is very much a store that has been designed to be rolled out, rather than one designed to entice customers.
At Trader Joe's the opposite is true. With a strong smell of cooking out front - coming from some beef being grilled at the Snack Shack - the shop is positively buzzing with customers. Gregarious staff chat away in a relaxed environment designed with a tropical surf shack in mind.
It's then that it becomes clear: the cheery staff-led atmosphere is what's missing in F&E. Because F&E's tills are entirely self check-out, there is little interaction between the retailer and the customer. Given the outgoing nature of most Americans - and in particular Californians - F&E might have just missed the point.
One block away, at larger rival Bristol Farms, a woman offering free samples of the latest oxygenated water pounces almost before customers get through the doors.
Although it's much larger than F&E it also has much more to offer shoppers. Like the nearby Whole Foods, which is just a two-minute drive away, it offers seating for people to eat their purchases from the deli, creating a sense of belonging to the shop that F&E does not.
By now it's lunchtime, which should be good news for F&E and its three neighbouring retailers.
As the other supermarkets fill up, I grab some food from a small Chinese eatery and, as I wait, I count the number of customers eating at outside tables: 32.
Keen to see how F&E is coping with the lunchtime rush, I wander back to the store to count the customers: 32.
Given this is a busy area with thousands of office workers within five minutes' driving distance of the shop, that seems incredibly low.
"This is a great store," says an elderly female customer who approaches me. "The problem is that around here - with all the competition - I'm just not sure if it's going to take off."
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