tesco distribution model requires several hundred us locations

New center costs will lead UK chain to plan more stores, analysts suggest.

During a conference in London organized by Piper Jaffray Cos., Tesco revealed that it must open “several hundred” U.S. stores to cover the expenses of opening its vast distribution center near Los Angeles, according to Bloomberg.com.

“We need a substantial number of stores in that area to recover the costs,” said Steve Webb, the Cheshunt, England-based company’s investor-relations representative. The planned distribution center will have the capacity to support hundreds of the chain’s Fresh & Easy Neighborhood Market stores within a radius that would include Phoenix.

During the conference, Tesco revealed that it plans to open 100 convenience stores in California, Arizona and Nevada under the Fresh and Easy name, each outlet will average about 10,000 square feet in size. The grocery chain’s U.S. expansion may eventually add $100 billion in sales, according to Citigroup Inc. analysts.

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