Tesco's US expansion takes flak

01:43, Jan 31 2009

Britain's Tesco hasn't yet opened the doors of its US stores but a respected US college has published a report warning consumers of "significant gaps" between the retailer's promises and its actions.

Tesco, the world's third-largest retailer, has enjoyed a largely positive reaction in the United States, in contrast to the recent negative publicity faced by world leader Wal-Mart Stores Inc. on its home turf.

Los Angeles-based Occidental College said in its report it believed Tesco would have a decisive impact on the US retail and consumers needed to be aware of its record to pressure it to be an "agent for positive change."

Tesco's US rollout begins in November and it aims to open around 100 stores across in the four western US metropolitan areas of Los Angeles, San Diego, Phoenix and Las Vegas by next year. They wil be called "Fresh & Easy Neighborhood Market."

"Tesco has been especially adept at marketing itself as a socially responsible corporation," said Robert Gottlieb, director of Occidental's Urban and Environmental Policy Institute and one of the authors of the 72-page report.

"However, our examination of Tesco's policies shows that its track record has significant gaps between what it has promised and how it has achieved its current position as one of the top multinationals."


Tesco International Affairs spokesman Greg Sage played down the research and said such reports were "common in California." Tesco would be a good neighbour, a steward of the environment and treat its workers with respect, he said.

"We are very excited about our new business in the United States and we are working hard to ensure that we can provide our customers with fresh quality, affordable food," Sage said.

Gottlieb questioned whether Tesco's decision not to engage in talks with unions and take on only part-time workers, and to bring some British suppliers with it rather than focusing on locally sourced goods were at odds with its promises.

Tesco wants to set itself apart in the world's biggest consumer market by stressing its employment and environmental credentials, such as installing the world's largest solar panelled roof on its California distribution centre.

It has also promised to bring low-cost fresh food to poorer communities, helping people there to eat better.

The Urban & Environmental Policy Institute is funded by more than two dozen not-for-profit foundations and civil agencies.

While only starting small with stores covering just 10,000-15,000 square foot, Chief Executive Terry Leahy has said he would like the US business to become at least as big as Tesco in Britain where it has a third of the market.

Analysts are upbeat about its chances with Tesco expected to take advantage of an uncomfortable period for Wal-Mart, which built its business on worker loyalty, but has seen that eroded in the past year with employee lawsuits and negative press.

Back in Britain, Tesco also faces consumer group and media criticism centred on its dominance of a third of the British £125 billion ($NZ336.2 billion) grocery market.