Fresh & Easy, owner of five stores in greater Sacramento, is giving up its dream of persuading Americans to shop for groceries in small, European-size stores.
Parent company Tesco, a British grocery conglomerate, announced Wednesday it plans to sell all of its U.S. stores.
Tesco planned 17 stores in the Sacramento area but never got beyond the five that opened last spring. The company opened a total of 200 stores in California, Arizona and Nevada over the past few years.
With its small-store format most outlets are about 16,000 square feet Fresh & Easy has been part of the wave of competition that's moved into the Sacramento area, nibbling at the heels of traditional grocers such as Raley's and Safeway.
Yet the most serious competition has been big-store grocers such as Wal-Mart, whose success has disrupted labor relations at the unionized grocers and was a big factor in the 10-day strike at Raley's in November.
Bob Reynolds, a Bay Area supermarket consultant, said Fresh & Easy's small stores made little headway against big grocers.
"Consumers want to do all their shopping in one place," he said. "There wasn't anything to pull customers into those (Fresh & Easy) stores."
Still, Reynolds said there was little doubt someone would try to succeed where Fresh & Easy failed.
"We've never had a lack of innovation in the marketplace there's always somebody new coming in," he said.
Tesco's announcement about Fresh & Easy came several months after the British chain said it was conducting a "strategic review" of its failing U.S. subsidiary.
In a conference call Wednesday, Tesco Chief Financial Officer Laurie McIlwee said potential buyers have shown "a lot of interest in the Fresh & Easy business, and in the main people are interested in buying the entire business," according to the Wall Street Journal.
Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.