Tesco vs. Wal-Mart

For the headline on its article about the British retail giant Tesco, BusinessWeek chose a hyperbolic quote from a retail consultant who said the chain is "Wal-Mart's worst nightmare."

At least for now, Tesco represents more of a mildly disturbing, recurring dream. Globally, Tesco has long been a major competitor to Wal-Mart, and it's growing fast. In several markets, such as Britain, it overwhelms Wal-Mart. In the U.S., though, Tesco is still just a blip on Wal-Mart's radar, though one that Wal-Mart is keeping its eye on.

The British chain entered the U.S. market just over a year ago, with its Fresh & Easy stores - 10,000-square-foot convenience shops that it has been opening in Nevada, California and Arizona. Wal-Mart has answered with its Marketside stores. BusinessWeek describes this as Wal-Mart being "on the defensive," but the limited tests of Marketside stores seems more like a warning: try to outdo us on our home turf, Wal-Mart is saying, and we will crush you.

Having established Wal-Mart's "nightmare" scenario, and accurately describing Tesco's global growth (it's expected to replace France's Carrefour as the world's No. 2 retailer in a few years) BusinessWeek finally gets around to describing Tesco's U.S. efforts in a less breathless way. Cracking the U.S. market "is proving tougher than Tesco anticipated," the article says. It will have 200 Fresh & Easy stores this time next year, which is 50 fewer and 10 months later than it had planned.