Wal-Mart is to pilot a small-format store in Arizona to challenge Tesco's Fresh & Easy chain, which is being rolled out across the US.

The store will open under the banner “Marketside”, the retailer’s first new trade name for more than 20 years. The stores will be about 20,000 sq ft, a tenth of the size of Wal-Mart’s traditional Supercenters.

The new format, the Wal-Mart's first in a decade, is likely to be open by summer. The grocery giant has also slowed planned growth of its Supercentres.

Four properties to the southeast of Phoenix have also been signed, some only a mile away from Fresh & Easy sites. The smaller sites will not require public consultation, which could allow Wal-Mart to enter cities and states where growth had been slowed by union-backed political opposition.