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NEW YORK -- Health First, a group of citizens concerned about air quality, asked for a court block on construction of Tesco's grocery distribution center in Riverside, Calif., while the lawsuit the group filed against the company waits to go to trial. The block could cost the company upwards of $50 million if successful, Tesco stated in a report by the Financial Times.
The move is being handled by lawyers that work closely with the United Food and Commercial Workers union (UFCW) and its allies, prompting some analysts to believe the block is an attempt by the UFCW to put more pressure on the company to unionize.
On word of the company's potential union-free status in the U.S., Los Angeles-based UFCW stated it "will start a drive. We will let the public know that they are not going union and we will do what we can to stop them from developing stores here," Ricardo Icaza, the leader of the UFCW, said in January.
Health First is unknown to local environmentalists and published reports state the group was established solely to challenge the Tesco project. When Tesco requested information on the organization from its lawyers, Johnson & Sedlack, it received "blanket objections and refusals to provide information or documents," the company told the court.
The legal move is not the first effort being brought to block the international retailer. Earlier this month UCFW spokesman Mike Vespoli told The Arizona Republic the union is responsible for the mailing and distribution of anonymous fliers asking residents to protest the company's applications for liquor licenses at many of the 20 Fresh & Easy stores planned to open in the Phoenix area.
The one page flier states that the company's British stores have been caught selling alcohol to underage customers, making it an undesirable retailer for the area. It encourages residents to write to the Arizona Department of Liquor Licenses and Control. However, no organization or affiliation is mentioned on the flier, the report stated. Vespoli told the paper the union's name was purposely left off the flier. "We don't want to make this a union issue," he said. "This is a neighborhood issue."
However, if the company will "cooperate and recognize the rights of workers to organize, then we'll be friends," Vespoli told the paper. "If not, we're going to be there to challenge every step of the way."
Last week, the company successfully opposed a bid that would have secured a temporary restraining order to immediately halt work on the site. The court will rule on this second block in April.
In court documents, Tesco stated that it has secured leases for 71 sites to date, and that any delay in the facility's completion could cost the company more than $1.9 million each week. The facility will be the backbone of the company's distribution for its network of Fresh & Easy Neighborhood Markets.
The stores are expected to open in the second half of the year. A potential halt in construction from the end of February to the date of the trail in June could cost the company up to $60.9 million, with an additional $8.4 million each month the stoppage continues after June. In addition, if Tesco loses the case, it would be required to undo the work it had started on the site, the report stated.
A Market Shift
In other Tesco news, H.J. Heinz Co. CEO Bill Johnson predicted at the Reuters Food Summit in Chicago that the company's entrance into the U.S. market could cause a shift in the country's grocery industry. Possible affects include the way the competition stock their stores and the way that Americans shop for groceries, reported Reuters.
"We'll be very interested to see the Tesco experiment on the West Coast, very interested because I think Tesco is an outstanding retailer. It will be interesting to see how that plays out," he said at the conference. "It's going to be an evolution in the way that American consumers buy products and that the retail trade is going to have to address."
Heinz is working on some products for the Tesco stores, but "I'd rather not get into it at this point because they haven't been announced." He added: "We'll have products tailored for the chilled aisle in the perimeter that they are well known for."
As American retailers prepare for Tesco's entry, changes to their formats could be based on Tesco's performance.
"American retailing is in many ways the leader and in many ways a great adapter. I think American retailing has adapted quite well to the change in the environment over the last 10 years," he said, noting that retailers in urban areas will see more of an impact from Tesco than those in the middle of the country.