Setback for Tesco’s ambitious west coast plans

Supermarket giant, Tesco, recently announced it was to embark on ambitious expansion plans in America but has suffered a legal setback after a California court ruled that its main warehouse did not comply with environmental planning law.

Tesco, the biggest player in the British grocery market with a 30% share, planned to have at least 50 Fresh & Easy stores in the US by the end of the financial year. The company has said it will spend £250 million a year over 5 years on its US expansion.

The case was brought in Riverside County Court by Health First, a previously unknown group set-up with the support of the United Food and Commercial Workers union. The UFCW, which represents workers at the big 3 traditional supermarkets, has sought unsuccessfully to negotiate with Tesco over union representation. The union has used tactics like those used to block the expansion of Wal-Mart in California.

Chiefs at Tesco acknowledged that the ruling could lead to the closure of the depot, the logistical backbone of its US operation but said this was doubtful as similar disputes had been settled without the closure of operations.

In a statement, the supermarket chain said, we will review the ruling to understand what further compliance might be necessary but there is nothing in the ruling handed down that we believe will affect the operation or further roll-out of the business.

Simon Uwins, marketing director of Tesco’s US Fresh & Easy subsidiary, said it is just the latest round in an ongoing court case but said Tesco had put contingency planning in place to deal with any potential distribution difficulties.

Tesco recently opened the first Fresh & Easy Neighbourhood Market in the city of Hemet which is about 75 miles east of Los Angeles and the ruling came as the supermarket proposed plans for a second warehouse complex at Stockton in Northern California.

One of Tesco’s UK suppliers, 2 Sisters Food Group, is facing a similar lawsuit.

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