Tesco halts US store openings amid 'stock shortage' claim

Supermarket giant Tesco is to delay opening Fresh & Easy Neighbourhood Market stores in the US for three months as an expert claimed the retailer was experiencing huge stock shortages.

Tesco, the UK’s largest retailer with more than 2,800 stores in 12 countries, said it intended to use the pre-planned break to smooth out unspecified problems at existing US stores.

“It’s an opportunity to take a step back,” spokesman Brendan Wonnocott said. “We’ll be smoothing out any wrinkles that exist.”

Tesco has opened 59 Fresh & Easy stores in California, Nevada and Arizona since early November.

Mr Wonnocott said company sales and growth were going as planned, but retail consultant Jim Hertel said the stores had been riddled with inventory problems and probably were not meeting sales goals.

Stores visited by his researchers appeared to be logging about $50,000 (€32,000) a week in sales, well below the $200,000 (€128,000) investors had expected, he said.

“We weren’t alone in terms of questioning the prudence or maybe even the sanity of continuing to roll it out without the opportunity to fine-tune,” said Mr Hertel, who recently completed a report on the chain’s prospects in the Phoenix, Arizona, market.

Inventory at the shops is about 10% of the size of a traditional grocery store’s and includes gourmet-prepared foods along with staples such as milk, bread and vegetables.

Mr Hertel said Fresh & Easy would probably spend its hiatus bringing those offerings in line with customer expectations. One customer complaint involved prepared meals requiring too much cooking time.

Tesco seemed to be having trouble keeping some items in stock, Mr Hertel said, and that about 20% of shelves in stores he visited were empty.

Mr Wonnocott said the company had made changes to satisfy customers, such as deciding to accept American Express and other credit cards.