U.K.-based Tesco plc has announced the first 18 of its Bay Area locations for its new concept Fresh & Easy Neighborhood Markets; four of that total will be in the South Bay. All are expected to open in 2009.

But the 18 will not be the only new Nor-Cal outlets the firm has -- far from it.

"It's hard to quantify (how many more are being considered)," says Fresh & Easy spokesman Brendan Wonnacott. "But we are quite serious when we say these are supposed to be neighborhood stores."

That means the company assumes that they will serve only the homes and businesses within a one- to two-mile radius of each location, he says.

In a metropolitan region the size of the San Francisco Bay Area, or even the South Bay, that leaves a lot of territory to cover.

Silicon Valley appears a particularly ripe target, Wonnacott adds. "We are focused all over," he says, "but the South Bay just seems to have a lot of opportunity. Lots of neighborhoods."

The company's stock-in-trade is the marketing of cooked and prepared foods and grab-and-go meals aimed at people who want to eat wholesome but don't want to devote a lot of time to food preparation.

Fresh & Easy already has 37 stores in Southern California and the Las Vegas and Phoenix metropolitan areas, which it began opening in November. It plans at least 122 outlets in those three markets alone, with 80 proposed in Southern Cal. They were the first U.S. footholds by the United Kingdom's dominant food store. The Sacramento, Fresno and Bakersfield areas are also in the company's sights.

The company also is likely to build a production and distribution facility somewhere in Northern California to support the stores, though Wonnacott declined to name a specific location. Neil Stern, senior partner in the Chicago retail consulting firm McMillan-Doolittle LLP, said a similar facility opened by the company in Riverside, about 60 miles east of Los Angeles, is capable of providing products "to a few hundred stores."

Jon Stansbury, a retail specialist with Terranomics, a unit of NAI BT Commercial real estate brokerage, says he has negotiated with Fresh & Easy on behalf of landlords with properties in Hayward, Vallejo, San Jose and Seaside. Two of the locations were among those announced Jan. 30. The company is adamant about wanting no more than 14,500 square feet, 10,000 square feet of which is store space, he says, with the rest dedicated to receiving and storage. In some cases it has been forced to lease more, but it intends to sublease the extra, he says.

With regard to demographics and other factors typically vital to retailers, however, Fresh & Easy's tastes are far more eclectic.

"They don't care about being in a regional power center that is a destination. They want units right in the middle of neighborhoods that are on the way home or right near where people work," he says. "They want almost a convenience store" location, but with lots more parking -- somewhere between about 280 to 350 spaces a store.

That preference has often led them to favor "second-generation" space, he says, because it is often embedded in established neighborhoods.

"Tesco is probably trying to find the demographic group that Fresh & Easy most resonates with," says Ted Taft, partner in the retail consulting firm Meridian Consulting Group Inc. of Westport, Conn. "But it has a format that may prove popular for people from all backgrounds because all share the traits of having limited time, but with a desire for high-quality products."

Fresh & Easy sits right "in the center of the tug of war" between supermarkets and restaurants, Taft adds. "Restaurants were winning that battle for a long time by providing convenience, but supermarkets have been successful in fighting back. With its emphasis on convenience, Fresh & Easy is well-positioned to take advantage of this consumer trend."

Stern downplayed the chain having any immediate effect on local supermarkets like Safeway and Lucky, noting it will take about three Fresh & Easy stores to equal the sales volume of a single Safeway store.

But he added that Fresh & Easy will also stock a "quasi-Trader Joe's" mix of unusual products that should help set it apart from the competition.

Despite Stern's observations, it is evident that Safeway Inc., the dominant Northern California grocer, is well aware of Tesco's arrival in the marketplace. Commercial brokers have told the Business Journal that Safeway is exploring its own downsized locations in the South Bay measuring 20,000 square feet. Its typical store is closer to 60,000.

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