Bloomberg News United Kingdom-based Tesco, the fifth-largest grocery chain in the world, plans to enter the United States market, opening stores in Southern California, Arizona and Las Vegas.

While the concept might seem, well, foreign, Tesco has grown into the world's fifth-largest grocery retailer by anticipating what consumers want in such diverse countries as Poland, Turkey and China.

With technological advances, top-notch supply chain management and an emphasis on customer service, the company has annual sales of more than $80 billion and about 2,800 stores in 13 countries.

Now the grocery giant has set its sights on the United States, with plans to open as many as 100 stores in Southern California, Arizona and Las Vegas by the end of the year.

Tim Mason, CEO of Tesco USA, said the company has looked at as many as 600 locations and is in the process of closing deals on a number of sites. At least two stores are slated for San Diego County – one on Ash Street in Escondido and another in Point Loma, at 955 Catalina, a former Albertsons site.

Getty Images A woman carried her shopping at a Tesco in London. For its U.S. stores, the company will offer fresh food in a smaller, more convenient format than in traditional grocery stores.

Although Tesco is considered the Wal-Mart of the United Kingdom in terms of its size and strong management, the company's foray into the United States will be decidedly un-Wal-Mart, with a concept that centers on small markets, rather than big boxes.

The smaller format is not completely new to Tesco, as the company has thrived in large part by offering a variety of different types of grocery stores and experiences, ranging from the megastores (a la Wal-Mart) to more traditional groceries, as well as smaller stores in urban areas and convenience stores.

Tesco said its concept for the United States will be based on its Express format, which has more than 1,000 stores around the world.

For its part, Tesco is being purposefully vague about its U.S. plans, saying it hasn't nailed down all the particulars – such as the name of the stores – and doesn't want to tip off competitors.

What Tesco will say is that it plans to spend $400 million annually over the next five years to launch its business in the United States. The company is building an 820,400-square-foot distribution center in Riverside.

JOHN GASTALDO / Union-Tribune A former Albertsons site in Point Loma will become a Tesco.

Mason said the stores will concentrate on fresh, nutritious foods and will be conveniently located in the heart of a neighborhood. Despite the planned stores' relatively small size – around 12,000 square feet – they will be places where “you can do all your shopping.” The stores will especially appeal to consumers with fast-paced lifestyles, with healthy prepared meals to go, he said.

Mason stressed that there is no particular type of neighborhood Tesco was going after in terms of affluence and that the company has a reputation of being able to appeal and attract all income levels.

“What we are in the business of doing is making fresh, high-quality food more accessible and more affordable,” said Simon Uwins, Tesco USA's chief marketing officer.

Although many analysts and industry watchers have compared the size and scope of Tesco's U.S. stores to Trader Joe's, especially with its emphasis on signature brands and fresh produce, Mason said the new store will be something entirely different.

“You shouldn't be thinking this is Trader Joe's because it isn't,” he said.

And Mason is careful to point out that Tesco has no intention of force-feeding traditional British fare to wary Americans, saying of the food choices: “I'm not sure they'll be Brit, but they'll be tasty.”

“Everywhere you go people say they want a smaller store that offers you everything. What happens is that stores keep getting bigger and bigger and bigger,” said David Livingston, a supermarket consultant based in Wisconsin.

“I don't think this is going to be a slam dunk for them.”

Still, other analysts point to Tesco's performance around the globe as proof that it typically gets the local market right.

Mike Griswold, a research director at AMR Research, said that if Tesco were a football team, they would have an 11-2 record, stumbling only in Taiwan, where a strong nationalistic streak favors local companies, and France.

“It could be as much an England-France thing as a Tesco thing,” he said of the company's struggles there.

Jack Brown, president and CEO of Stater Bros., a regional grocery store chain with 10 stores in San Diego County, said Tesco could be a formidable competitor.

Brown is intimately aware of Tesco's operations, as the two companies were part of a grocery retailers group that would share information to help bolster performances of member stores. As far as Brown is concerned, Tesco “is one of the most technologically advanced companies in the world,” with hourly scans that help it track its inventory and sales.

Griswold said Tesco's initial launch is a way to gain a toehold in the U.S. market. The selection of Southern California, Arizona and Las Vegas is due in part to the affluence of the areas and the growing populations in those markets.

Industry watchers also say it is no coincidence Tesco is picking areas where Wal-Mart has yet to secure a dominant position, as local zoning initiatives have made it difficult for the company to open its giant retail centers. Where California has a total of 21 Supercenters, which is Wal-Mart's largest store format, Tennessee has 90, Missouri has 83 and Texas has 273.

Aside from Wal-Mart, the British company's arrival also is sure to place further pressure on the increasingly competitive and fragmented grocery market, especially in the Southern California region that has yet to stabilize after the bitter grocery strike three years ago.

“I'm not sure that right now Tesco is concerned about Wal-Mart,” Griswold said. “They are concerned about small convenience stores and the traditional supermarkets.”

Hambleton said grocery stores should be worried about Tesco's stores as well. Increasingly, consumers' dollars are being spread out beyond traditional grocery stores. He estimated that less than 50 percent of a household's grocery budget is now being spent at the established chains, which could bode well for new stores and new concepts such as Tesco's.

“People are saying, 'I don't have to go to a traditional store. I can go to Costco. I can go to Whole Foods. I don't have to go to Vons, Ralphs or Albertsons,' ” Hambleton said. “There are just more players that consumers will accept.”

Stephanie Miller, spokeswoman for Albertsons, said that her company is convinced it can withstand the new competition. Still, she acknowledged that “at this point, we are definitely watching Tesco closely.”

Brown of Stater Bros. said that Tesco's format will face plenty of competition from stores such as Bristol Farms and Trader Joe's, as well as from small, locally owned grocery stores.

“That's where the game will be played,” he said, adding that Tesco will face a bigger challenge because it is entering a foreign market that has its own quirks.