Tesco Express To Raise The Bar For U.S. Convenience Retailers

British retailing powerhouse Tesco PLC is heading West — to develop small-format stores in Los Angeles, Las Vegas and Phoenix. Tesco’s debut on the West Coast is slated for mid-2007, the company confirmed.
Tesco’s retailing foray is a hot topic among U.S. industry watchers, but the British company isn’t talking a lot about its plans for the U.S. marketplace because it doesn’t want to tip off competitors, explains Greg Sage, international corporate affairs manager.
Sage did note, however, that the U.S. outlets will be based “on our convenience format, [Tesco] Express, which is trading in a number of countries very successfully.” In the United Kingdom, the Express format is typically about 3,000 square feet, says Sage, adding that the store footprint varies by country.
Tesco Finance Director Andrew Higginson was cited in a recent Reuter’s news story stating that the U.S. outlets will resemble the U.K. Tesco Express stores, which are bright, airy and well-stocked shops with a broad assortment of merchandise.
Bill Bishop, president of Willard Bishop Consulting, Barrington, Ill., predicts that the Tesco Express format will have more impact on take-home shopping and less impact on immediate consumption — although he cautions that “we won’t know for sure until we see the first stores.
“They’ve developed a retail concept that should have a unique appeal to North American shoppers,” Bishop continues, noting that “it’s positioned nicely between convenience and the modern supermarket, with a lot of practical advantages.”
In addition to its reputation for a masterful presentation of fresh-prepared foods, Tesco is noted for its supply-chain expertise. The company will be self-distributing in the United States, according to Sage. Work is expected to begin soon on a distribution center located east of Los Angeles.
No one can accuse the savvy Tesco team of rushing into the stateside venture. “We’ve been looking at the states for over 20 years,” says Sage, adding that the market research has been much more focused in the past 18 months.
Tesco will be a formidable retailing competitor potentially for both grocery and convenience retailers.  “Tesco is arguably one of the most sophisticated and financially successful food retailers in the world today,” says Bishop. He adds that the company has plenty of experience in building a profitable retail business as well as the capital to grow it. —Mary Ellen Kuhn
Stephany’s Makes a Comeback Courtesy of Enstrom Candies
Enstrom Candies Inc., Grand Junction, Colo., has resurrected the Stephany’s Chocolates business headquartered in Arvada, Colo.
Stephany’s, which specializes in upscale, handmade chocolates, was forced out of business this spring following the death of company president, Hal Strottman. Enstrom acquired Stephany’s in a bankruptcy sale in June.
 “We took a look at what the customer base was and determined that … it would be a good avenue for us to start a wholesale business without clouding our direct mail brand,” said Andrew Volkmann, Enstrom’s COO. Enstrom’s operates a flourishing direct mail business built around its signature toffee brand.
Production has resumed at the Stephany’s manufacturing facility, and most members of the former candy-making team are back at work, Volkmann reported. Enstrom, which operates five of its own retail outlets and seven or eight retail kiosks, does not plan to re-open the five Stephany’s candy shops, he added.
The acquisition presented some obvious synergies. “They made a lot of chocolate and dabbled in toffee,” said Volkmann. “We focused on toffee and made some chocolate.”  
Enstrom will begin selling Stephany’s chocolates in some of its retail outlets later this year, Volkmann reported.
While Enstrom’s does about 80 percent of its business in the fourth quarter, Stephany’s biggest season is Valentine’s Day, although sales are distributed more evenly throughout the year.
Private label products comprise a substantial portion of Stephany’s sales, which totaled $9 million last year, according to Volkmann. The company’s client roster includes Safeway Inc. supermarkets as well as an assortment of smaller retailers, many of them what Volkmann described as “boutique chocolate companies.”
Fans of Stephany’s products will be pleased to hear that Enstrom’s does not plan to tinker with formulations for the company’s confectionery treats, among the best known of which are The Denver Mint and Colorado Almond Toffee.
Sweet Exposure for Bubble Chocolate
The new aerated Bubble Wrap Chocolate from Bubble Chocolate (www.bubblechocolate.com) recently got some exposure in the premiere issue of Hallmark magazine.
The magazine selected Bubble Chocolate for inclusion in its “Sweet History” time line, describing it as a candy milestone and some of the “greatest news” for the category in recent history.
Guylian Goes Grassroots
Guylian Chocolate will devote six weeks of the holiday selling season to a grassroots marketing campaign in the metropolitan New York area.
The campaign will feature a sampling van adorned with Guylian graphics as well as a Guylian sampling crew of 16, who will take to the streets on foot and via Segway personal transporters in Manhattan.