Tesco's push into the United States with the launch of a new convenience format is fraught with more pitfalls than opportunities, according to a leading analyst

Stuart Whitwell, joint managing director of brand evaluation experts, Intangible Business, wished the UK's top grocer every success in its latest venture but cautioned: "My take on it is that it's the toughest market to crack and no British company in retail has succeeded in my experience - they've all come back with losses."

Tesco plans to make its foray on the west coast of the United States with a format modelled on its Tesco Express business. It is spending an initial £250m and plans to open the first stores next year.
But Whitwell told Checkout there were a number of factors that made the US, "such a tricky market," not least a different culture and its geographical spread.

"There are also very complex rules, particularly for food and drink products and they vary state by state," he said. "Shopping malls offer the best retail position but they are expensive," he said, and previous failed entrants have come away with long leaseholds to close up. The American market also posed challenges for the supply chain and logistics, Whitwell added.

"There's no particular differentiation which Tesco brings other than good management - the brand does not mean anything in the States," he said. Tesco's marketing and property director, Tim Mason, will move to the US to the run the business, which the retailer plans to grow organically. According to Whitwell, that will be another hurdle to jump."It's the toughest job of all to have to start from scratch," he said. "Tesco will have to have a lot of patience with the management team."

Like other observers, Whitwell said Tesco's decision to take its convenience, rather than other formats, across the pond was unexpected. "I'm surprised they have come up with convenience when they've gone elsewhere with a big format they know so well. You need scale in the States - it's about big malls and big volumes, and a good supply chain.
"However, I think Tesco has to make the effort to go to America - Europe is a closed shop. But I have great reservations as to whether they can bring anything to the market."