Wal-Mart to fend off Tesco in Arizona

Wal-Mart Stores Inc. is working to open its first small-scale grocery stores in Arizona, according to city planning officials, as the world’s largest retailer looks to fend off competition from British supermarket rival Tesco.

Tesco entered the U.S. marketplace last year, opening 37 Fresh & Easy Neighborhood Market stores in California, Arizona and Nevada. The company is seeking to woo U.S. shoppers with small grocery stores that feature ready-to-eat meals and fresh produce.

Bentonville, Ark.-based Wal-Mart, whose No. 2 British supermarket chain Asda competes with No. 1 Tesco in the United Kingdom, has long been rumored to be planning a small-store concept that would rival Tesco’s stores in the U.S.

According to planning officials in Arizona, Wal-Mart is refining plans it submitted to launch the small grocery markets -- some close to recently opened Tesco stores -- in four cities southeast of Phoenix. It is not known when Wal-Mart will open the stores in the suburban communities of Gilbert, Chandler, Mesa and Tempe. No name for the new markets was submitted.

“What they want to do is make tenant improvements so they can put in this new, smaller version of their grocery stores,” said Lisa Collins, Tempe’s planning director.

The application plans call for the Wal-Mart stores to occupy roughly 15,000 square feet, which is less than half the average size of Tesco’s grocery stores and a fraction of the size of Wal-Mart’s Supercenters.

Arizona officials said they had been told the new markets would offer similar goods to Fresh & Easy stores.

A Tesco spokesman would not comment on Wal-Mart’s plans.