UFCW front group bedevils non-union giant

British retailer Tesco's U.S stores have started well, it said on Tuesday, as the chain faced new protests from community groups who fear its marketing promises are not being translated into reality.

Tim Mason, chief executive of Tesco's U.S. venture Fresh & Easy told more than 100 U.S. and European investors that customers have responded well since the chain launched in Los Angeles three weeks ago. Its fresh food - one area Fresh & Easy has targeted as a way to differentiate itself from local rivals like Trader Joe's - was "particularly well received," Mason said.

The comments, released to the media on Tuesday, are Tesco's first on the progress of the chain since stores opened on November 8 following months of speculation and high expectations from retail industry analysts. Citigroup has said Fresh & Easy's launch could cause a shake-up of U.S. retail not seen since Wal-Mart Stores Inc. rolled out its Supercenters in the 1990s. Credit Suisse expects Tesco's U.S. sales to exceed $7 billion by 2013. Fresh & Easy has 13 convenience-sized stores trading in LA, Las Vegas and San Diego with as many as 200 more expected to open in those cities and in Phoenix by the end of 2008.

But any hope Tesco, the world's third-largest retailer after Wal-Mart and France's Carrefour , would be able to start with an entirely clean slate have been dashed.


Community groups opposed to the way Britain's largest retailer has gone about launching stores in the United States staged their latest protest late on Monday, picketing the arrival of investors to the three-day store tour.

In scenes reminiscent of protests against Tesco's dominance in Britain, where one in every eight pounds are spent at its stores, more than 100 demonstrators including Jewish, Muslim and Christian community leaders, chanted, waved banners and handed out leaflets reading "Don't be fooled by Fresh & Easy."

The group - The Alliance for Healthy and Responsible Grocery Stores - want Tesco to sign a community agreement focused on labor, social and environmental issues. Tesco has so far resisted negotiations with community or union groups.

Credit Suisse and Deutsche Bank have flagged opposition from unions, and particularly the powerful United Food and Commercial Workers Union, as a potential risk to Fresh & Easy's success.

John Perez, a UFCW director of political affairs who was meeting Tesco investors, said Fresh & Easy executives had been "disrespectful" in some of the ways they had dealt with local groups and that could have longer term implications.

"Their willingness or lack of willingness (to negotiate) will impact their ability to roll out to the degree and at the rate they want to," Perez told Reuters.

Tesco spokesman Jonathan Church said Fresh & Easy's workers were free to join a union as it was a constitutional right.

"We have barely opened in the United States and all we ask is for people to give us the opportunity to demonstrate that we can live up to our promises," Church told reporters.


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