LONDON — A proposed law in California aimed at banning sales of alcohol at self-service checkstands could mark "the beginning of the end" for Tesco-owned Fresh & Easy Neighborhood Market, an analyst here wrote Friday.
Mike Dennis, an analyst with MF Global — who was described by Reuters News Service as a longstanding critic of Tesco's U.S. business venture — said 126 of Tesco's 175 U.S.-based stores are in California "and [it] is the only grocery chain that offers only self-service checkout. The implications are that Tesco ... will need to have manned checkouts by law in order to sell alcohol."
Given that "Tesco already has a high fixed-cost issue with very weak sales densities," Dennis said, a requirement to add extra staff to handle liquor sales would put more pressure on profit margins.
Reuters quoted a Tesco spokesman saying Fresh & Easy does not allow alcohol sales to be completed "without intervention from our well-trained staff. This bill ... is being pushed by the local union and is a rerun of a bill that was quashed last year."
That bill was approved by the California Assembly in 2010 but vetoed by then-Gov. Arnold Schwarzenegger, a Republican. "The difference this time is, we do not expect Gov. Jerry Brown, a Democrat, to veto the bill," Dennis wrote.