Tesco takes on California's supersizers by John Arlidge in Santa Monica Daily Telegraph
Retailer is praying that rich Americans desert their anodyne megamarkets for a store down the road selling strawberries
Larkin Davis does not look like a retail revolutionary. Wearing faded jeans and an LA Lakers sweatshirt, she walks to her local supermarket, buys wholegrain bread, milk, fruit and breakfast cereal and walks back to her three-bedroom detached home.
Davis, 33, does not know it but she holds the key to a crucial part of Britain's biggest food retailer's future. Tesco chief executive, Sir Terry Leahy, is betting hundreds of millions of pounds on consumers like her.
Last month Tesco revealed that it was expanding into the US, the world's biggest and most competitive food market with a £250m annual investment budget.
The company needs to expand abroad to find growth outside its core UK market where, among many other challenges, it now faces a probe by the Competition Commission after a referral of the whole grocery market by the Office of Fair Trading.
Tesco is set to open the first of dozens of US stores next year in Santa Monica. Executives chose the upmarket Pacific coast suburb of Los Angeles because they think wealthy shoppers will abandon giant low-price, low-quality US supermarkets in favour of upscale convenience stores, similar to Tesco Express, which sell high-quality fresh produce.
So will the locals abandon America's supersized supermarkets and SUVs and walk to a local Tesco Express? What do Californians think of a British food retailer carving itself a slice of American pie?
Davis, who lives on Santa Monica's Wilshire Boulevard, says consumers will welcome the men from Hertfordshire. "Fresh produce in the big supermarkets is cheap but it's often tasteless. Driving to a supermarket to buy what you don't really want is ridiculous. I'd rather walk somewhere where I know the food will be good, even if it is more expensive."
Avi Levy, 28, a lawyer who shopped in Tesco Express on a recent holiday in London, agrees.
"People here are crunchy, ethical types. They drive hybrid Toyota Priuses and recycle their trash. They'd much rather walk to a local store to buy their heirloom tomatoes but right now local stores only sell Coke and Doritos.
"If Tesco can fill the gap between 7-11 and Safeway with neighbourhood stores like they have in London, they've got a good chance."
Most Santa Monica consumers say they will visit Tesco when the first store opens. The company set up a mock store in a warehouse in the area last year to test customer reaction, which, Tesco says, was "very favourable".
"Americans will try anything once, says Carole McLain, an African American out shopping with her two grandsons. "Most of us are from somewhere else so we don't care who owns a store. It could be British, it could be Belgian,"
But some express doubts about "Briddish" food. "A grocery store from England? What is it going to sell? A roast, with mashed potato with gravy on it and peas?" asks Joel Hames, a 21-year-old mechanic. "It might work as a speciality store selling English tea but not English food."
Christopher Frati, an IT consultant, agrees. "If they want to succeed, they should change their name, so people don't realise they come from England and they should sell American food."
That is exactly what the first European supermarket chain to invest in California has already done. German food giant, Aldi, has taken over a local supermarket chain.
There are no Bavarian smoked sausages or sauerkraut on the shelves at the all-American-sounding Trader Joe's but the profits the chain generates make for very happy reading in Essen, Aldi's headquarters. Sales per square foot are twice those of local US rivals.
When Tesco announced its US expansion American grocery retailers pooh-poohed its convenience store strategy. The boss of one US chain told analysts: "Americans use convenience stores to buy cigarettes and sodas. They don't go for strawberries and soap powder."
However, recent developments in Santa Monica suggest that Tesco has rattled local operators. Many local supermarkets are revamping their stores and some are covering their options by dipping a toe in the convenience sector themselves.
Ralphs, a large local chain owned by US supermarket Kroger, has relaunched its existing supermarkets by introducing Starbucks coffee bars, florists and premium range products, notably fine wines.
The firm has also rolled out a range of new smaller stores, Ralphs Fresh Fare, which have their own butchers and fishmongers and sell more organic lines and high quality ready meals.
Trader Joe's has introduced more organic food and opened juice bars. Whole Foods Market, the fastest-growing and most popular US supermarket which is launching its first British branch in the former Barkers of Kensington building next year, has just opened a "neighbourhood store" on Wilshire Boulevard.
Just up the road, Albertsons is rumoured to be throwing in the towel before the men from Tesco arrive. Bosses want to sell the site to local organic chain, Bristol Farms.
If the retail giants are worried, what about the convenience store owners whom Tesco are targeting?
Bijan Moghaddam, 50, runs Sainsbury's on Wilshire Boulevard. The 50-year-old chose the name after shopping in Sainsbury's on a visit to Wolverhampton with his English wife 15 years ago. He is not worried, he says, and claims Tesco has misunderstood the local market.
"What Tesco doesn't realise is how lazy Americans are. The joke here is that the only people in LA who walk are hookers or British.
"People might come to my store at lunchtime for tacos and Coke and when they shop for their homes, they get into their cars and go to Costco. Sainsbury's and Marks & Spencer tried to expand here and they failed. It will be the same with Tesco. My store will be here long after Tesco has disappeared back to Britain."
He is too diplomatic to say so but when he opens his first store in Santa Monica next year Sir Terry Leahy would like nothing better than to put this version of Sainsbury's out of business.