Fresh & Easy, part of a wave of grocery stores that have invaded the Sacramento area in recent years, is beating a retreat.
The company's British parent, Tesco Plc, announced today it is likely to exit the U.S. market after concluding that the stores are too much of a financial drain.
Tesco said it is undertaking a "strategic review" of Fresh & Easy and will probably sell the stores.
The Fresh & Easy unit, based in El Segundo, has opened 199 stores, including five in greater Sacramento. Although it hasn't made much of a dent in Sacramento, it is part of the invasion of nonunion stores that has crippled traditional supermarket chains like Raley's and Save Mart Supermarkets. Both chains are losing money, and Raley's endured a ten-day strike last month over the company's demands for labor concessions. Raley's said it needed labor savings to compete with the nonunion stores.
At one point Fresh & Easy was going to open 17 stores in the Sacramento area. But store openings kept getting delayed, and the company never grew past its initial outlay of five locations.
Although Fresh & Easy "has many positives, its journey to scale and acceptable returns will take too long relative to other opportunities," said Philip Clarke, chief executive of Tesco, in a press release.
Bob Reynolds, an industry consultant in Moraga, said American shoppers weren't very interested in Tesco's small stores, which measure about 16,000 square feet.
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