(Business 2.0) – The U.S. grocery business hardly seems ripe for new entrants. After all, the $600 billion industry is already ultracompetitive, with stores like Whole Foods and Trader Joe's dominating the premium segment, Wal-Mart ruling the low end, and traditional chains like Safeway and Winn-Dixie battling it out for the middle. Nevertheless, Britain's Tesco--the world's fifth-largest retailer, with 2005 sales of $65 billion--is about to jump in: It recently announced plans to open upscale convenience stores along the West Coast in 2007.

Tesco spokesman Richard Anderson says the new stores will be patterned after the more than 500 Tesco Express outlets in the United Kingdom. Express stores are small--about the size of a 7-Eleven in the United States--but offer a tempting selection of ready-to-eat items, fresh produce, and baked goods. In other words, microwave burritos and Ding Dongs make way for salmon en croute with gourmet lemon tarts for dessert. By mining the gap between typical convenience stores and supermarkets, Tesco could set the stage for a full-scale retail invasion. But first things first: Can Tesco gain a toehold in North America by catering to time-strapped, quality-conscious Californians?

WHAT DO YOU THINK?

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The Experts Sound Off

BARBARA KAHN Wharton School professor and coauthor of The Grocery Revolution

There could be a huge market for this--if it's done right. Today's convenience stores are good for milk and beef jerky, yet the prepared-food sections of supermarkets are expanding, and restaurants are seeing a lot of demand for take-out options.

SUSAN FISHER Moved to North London from San Mateo, Calif., in 2001

Tesco is great for us in London because I can pop down for something quick, but I wouldn't shop there if we were still in the States. Americans are used to one-stop shopping. Tesco will need to stick to urban centers--it won't work in the burbs.

7-ELEVEN CLERK San Francisco (name withheld in accordance with store policy)

It's not hard to be more upscale than 7-Eleven, though we're supposedly trying to upgrade. A store that sells a better selection of prepared food would probably do well, especially in California, where people go for that kind of thing.