Tesco is breaking with tradition by moving into the hard-discount market in an effort to build a US convenience chain that could hit 1,000 stores within the next five years. Financial Times

It has never tried this type of format in any of its 13 overseas ventures but is betting £250m a year – and its reputation – that the Lidl-style stores will work.

Tesco said it had to roll out Fresh & Easy quickly to make the low margin business model work.

It will open stores from San Diego to San Francisco, with 50 stores by the end of its financial year in February 2008, and a further 200 by the end of 2009.

However, Tesco has put together a blueprint for a far bigger chain. A second distribution centre in Stockton, northern California, will give it distribution capacity for a further 500 stores, taking the potential network of 1,000 stores of 5,000 sq ft.