MARIN & SONOMA COUNTIES -Tesco, the world's fourth-largest retailer, is scouting North Bay locations as part of a forthcoming Northern California expansion of its new small-size Fresh & Easy Neighborhood Market chain.

The United Kingdom-based company, which has 2,600 stores and 370,000 employees in 12 countries, is interested in expansion opportunities in the Sacramento and San Francisco Bay areas, according to a spokesman.

"There's nothing formalized in Northern California, but the company is exploring," said Brendan Wonnacott.

Tesco brought its corner-market concept - already in a dozen countries in Europe, Turkey and Asia - to the U.S. early this year. Early in 2007, Tesco opened a U.S. headquarters in El Segundo and planted an 820,000-square-foot distribution facility in Riverside. In mid-July the company announced dozens of locations in the Los Angeles, San Diego and Las Vegas areas.

The company is rumored to be laying the groundwork for a $450 million-a-year store rollout of stores in the U.S. Food and nonfood sales for Tesco in fiscal 2006 were $87.4 billion.

The Fresh & Easy format offers produce, gourmet foods, selected groceries and alcoholic beverages in locations of 10,000 to 15,000 square feet, rather than the common 30,000- to 50,000-square-foot size of U.S. supermarkets. The company's stated goal is to allow shoppers to get in and out of stores as quickly as possible.

"It's a lot easier to look for 10,000 to 15,000 square feet than 30,000 to 50,000 square feet," said Mark Koenig, a retail real estate broker with NAI BT Commercial.

He's working on a deal to bring a Fresh & Easy store into part of a 34,500-square-foot former Albertsons store in San Leandro.

Tesco also has been interested in locations along the Highway 101 corridor in Marin and Sonoma counties, according to Mr. Koenig and Brad Yust, a retail brokerage specialist with Colliers International in Santa Rosa.

"It's a good niche market," Mr. Yust said.

Former Santa Rosa City Councilman and discount grocer Mike Runyan is aiming for the same size range for his Village Markets upscale grocery and gourmet foods store concept, the first of which has opened in a small new retail center in east Santa Rosa.

"Tesco is somewhat comparable to what we're doing, but not quite," he said.

Mr. Runyan and his partners believe the Village Markets take the fresh-food, "lifestyle" business model to a new level with gourmet-to-go food selections.

"There is opportunity for 10,000-square-foot stores, where there weren't a few years back," Mr. Runyan recalled. "It had to be a conventional size, and if not, you could not do it. Now California dirt is so expensive."

Another Village Market was slated to be the 8,000-square-foot anchor for the Fountaingrove Village mixed-use development under construction.

However, Mr. Runyan said delays of a year past the planned opening date of the Skyhawk Village store and other unexpected costs have caused him to scrap the Fountaingrove market.

A Village Market is still in the works to anchor the Shiloh Sustainable Village project planned next to the Shiloh Center shopping venue because that store opening likely will be a year or more away.

The status of a possible store at Codding Enterprises' 175-acre Sonoma Mountain Village project in Rohnert Park is still to be determined, according to Mr. Runyan.

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