The latest British invasion hit the West Coast last week, this time in the grocery aisle. Tesco, the U.K.'s biggest retailer, unveiled its Southern California beachhead: Six Fresh & Easy Neighborhood Markets began hawking basics like milk and eggs alongside organic coffee and pad thai. It's the start of a quick race to spread 30 stores as far inland as Phoenix and Las Vegas by year's end and shake up the stodgy U.S. grocery market.
Surveys show nearly half of U.S. shoppers dislike their current grocer. Tesco is betting that eventually hundreds of its midsize markets—a mix of 7-Eleven convenience and Whole Foods cachet—can take on entrenched rivals. Tesco is often touted as Wal-Mart across the pond, and the two giants may be gearing up for a Goliath-vs.-Goliath battle. CEO Terry Leahy promises to spend half a billion dollars a year on the U.S. venture, and despite Tesco shares trading near an all-time high, the opening could be a "major catalyst," notes Citigroup's James Anstead. That alone should put Bentonville, Ark., on notice.