'Tesco effect' causes U.S. grocery mega-stores to start shrinking

The U-turn in what is seen as a fundamental American characteristic - that bigger, whether it  be cars, portion sizes, or grocery stores, is better - has been called 'radical' by American media.

Grocery stores in the United States have been steadily growing for 20 years based on the idea that customers want as much choice as possible. Many are now larger than an American football field and stock up to 60,000 items.

Size DOES matter: Fresh & Easy, the (small) supermarket opened in the U.S. by Tesco that is changing the way Americans shop

Then Tesco opened up its first American stores just a year ago - and is already leaving its mark.

Wal-Mart - the store that arguably has had the most profound effect on American culture over the last 20 years with mega-stores that forced the closure of many smaller Mum-and-Dad stores - plans to open four smaller stores in Phoenix this autumn.

Meanwhile Safeway has now opened up a smaller store in California, Jewel-Osco is building one in Chicago, Giant Eagle opened an 'Express' that is one-sixth the size of its regular stores, and Whole Foods Market is considering the idea.

The smaller stores contain more fresh produce, ready-made deli items, and are found by customers to be easier and quicker to navigate.

Perhaps this is the secret to their success in America, where the desire for choice is often outweighed by just one other factor: the desire for speed.

Smaller Tescos are becoming increasingly popular

Tesco started the trend by opening a 10,000-square-foot Fresh & Easy Neighborhood Market in Las Vegas.

Since then, say reports, Tesco has opened 72 stores in Nevada, Arizona and Southern California.

Gary Smith, founder of Encore Associates, which advises the food and consumer goods industry, told the New York Times the smaller stores opened by other chains were “a loud message to Tesco that they are not going to be able to walk in and grab market share.”

Mr. Smith said: “It’s also a way for them to do some testing for if and when Tesco comes to their market. They are better able to counter it.”

Kevin Srigley, a senior vice president at Giant Eagle, whose stores are spread across western Pennsylvania, Ohio, West Virginia and Maryland, said the express store seeks to provide customers with a “smart stop to save you time on the things you need most,” in addition to offering fresh foods.

He said the idea for the express store came from Tesco stores  - his company has a longstanding relationship with the retailer - and from research that detailed the varying needs of consumers.