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LOS ANGELES -- British supermarket giant Tesco PLC plans to capitalize on the critical need for grocery stores in Southern Los Angeles by opening a Fresh & Easy Neighborhood Market in the economically-depressed area, The Associated Press reported.
The store will be one of about 50 locations the chain intends to open in three U.S. Western states by the end of this year.
Tesco expects to do good business in Los Angeles, an area that other retailers have abandoned as economic quicksand. Major domestic supermarket chains including Vans, Ralphs and Food 4 Less, promised to open more than 30 new stores in poor areas ravaged by the 1992 riots, but never followed through, according to the AP.
While the site of Tesco's South Los Angeles store has not been finalized, the company’s chief marketing officer, Simon Uwins, said he was confident it would open along with the others in San Diego, Phoenix and Las Vegas before 2008, the report stated.
Tesco's stores will offer gourmet-prepared foods, as well as such staples as milk, bread and organic meat and vegetables. The company's Web site said the stores will be environmentally friendly, using solar panels and specially-designed freezers to reduce emissions.
South Los Angeles residents, who overwhelmingly shop at smaller, more expensive corner markets and discount stores, have clamored for more mainstream supermarkets for decades, the AP report stated.
Don Spivack, deputy chief of operations for the city's Community Redevelopment Agency, said he's worked with several local supermarket chains that tried to open in the area, but couldn't find a large enough site to suit their needs. While most supermarkets demand up to 60,000 square feet, the Fresh & Easy stores will be roughly 10,000 square feet -- about the size of a Trader Joe's, the report stated.
"As far as we're concerned, [domestic chains] have stepped up to the plate, but found difficulties," Spivack said.
Amanda Shaffer, author of a 2002 report titled "The Persistence of L.A.'s Grocery Gap," pointed out that Tesco has a mixed record in poor communities abroad. Her research found that some large Tesco operations in other countries faced criticism similar to Wal-Mart in the U.S.
Such superstores on the outskirts of cities that offer discount goods have siphoned bargain-hunters from neighborhoods and forced the closure of smaller retailers unable to compete, she said.
Shaffer conceded that Tesco's smaller stores in low-income areas have brought inexpensive, fresh offerings to poor communities. However, the company has touted the strategy to fashion an unrealistic altruistic image, she said, adding, "It's part of a well-honed marketing message. For the amount they're doing, they get a lot of press."
Tesco has more than 1,800 stores in the U.K. But less than 20 are part of its Regeneration Partnership -- its campaign to open stores in low-income areas, according to the company Web site.
Tesco's Uwins said the company foray into South Los Angeles and other low-income areas in the U.S. is intended more as good business than as a good deed, according to the report. "We've found that if you offer people good quality food at prices you can afford in a good environment, then they'll shop there," he said.
Uwins also said Tesco conducted extensive market research in the communities where it plans to open to ensure food offerings meet local demand. For example, the company intends to offer more than 200 products in U.S. stores that cater to Hispanic customers.