Losses More Than Double at Fresh & Easy

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Alpha8472
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Losses More Than Double at Fresh & Easy

Post by Alpha8472 »

http://supermarketnews.com/retail_finan ... easy_0422/

Fresh & Easy says that they will continue to lose more money until the economy recovers. It will take years for the economy to turn around. Even then, I don't think there is such a thing as a recovery. People from now on, will be very frugal about what they buy. I believe people will abandon regular grocery stores and shop at discount stores like Walmart or Dollar Stores.

All Fresh & Easy is doing is losing money. Their little stores are taking business away from other supermarket chains that are barely surviving. Lots of Albertsons stores are closing in Southern California. Fresh & Easy is taking business away from many of the weaker supermarkets that are doing poorly.

When Fresh & Easy opens up in Northern California, many marginal supermarkets will being closing. I suspect many of the Lucky stores will close, since they are the weakest in the area.

Fresh & Easy should give up now. They will eventually go out of business, but before they close they will cause many more classic supermarkets to close.
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Re: Losses More Than Double at Fresh & Easy

Post by submariner »

Even though F&E is losing money, Tesco recorded a record £3 Billion profit for the annum, up 13%.

http://www.businessweek.com/globalbiz/c ... op+stories

Tesco is the world's #3 retailer, behind #1 Walmart (U.S.) and #2 Carrefour (France).

I have a feeling Tesco is going to stick it out through the recession.
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Re: Losses More Than Double at Fresh & Easy

Post by Alpha8472 »

Tesco is sort of like the Walmart of supermarkets in the UK. They make a lot of money in the UK, because they have a monopoly over there.

They can use the profits from their UK operations to cover the money they lose from Fresh & Easy.

However, Fresh & Easy is never going to become as big as Tesco is is the UK. In order for Fresh & Easy to be successful, they would have to start opening stores on every street corner like Starbucks. Starbucks opened up tons of stores and forced their competitors to go out of business. The cost of opening up Fresh & Easy stores on every corner and forcing all the other supermarkets to close, would be extremely costly and nearly impossible.

Tesco has underestimated their popularity. They thought that people would flock to their stores like they were the second coming. In the UK, people don't have a choice, because they are a monopoly. In the US, people have other choices such as Trader Joe's. In the UK, many people don't have cars and have to shop at their local tiny limited selection Tesco markets. Here in the US, people have cars and can go to Costco and other big box places to stock up on a full selection.

Tesco's business model is not a good fit for the US. They might do well as a monopoly in the UK, but here they are out of their comfort zone.
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Re: Losses More Than Double at Fresh & Easy

Post by storewanderer »

There is only one way Fresh and Easy is going to make it: every conventional grocery will need to close, every convenience store will need to close, and every drugstore will need to eliminate its food department.

This format is so poor, I can't even get started. I was floored at how poor they were in Las Vegas back in 1/2008 when I first saw them. Then, I went to SoCal in 12/2008 and saw the same lousy store, though with fewer perishables, fewer employees, and sloppy presentation. Then I went to one in AZ in 1/2009. The AZ one actually had some customers; perhaps 8 or so total in the entire place, which was impressive, but it was rush hour. The AZ location had in-stock issues, produce and prepared foods that did not look overly fresh, and was in general not great, but had customers.

The problem with Tesco has been a near refusal to make changes to these stores. I know they've made a few changes, such as honoring AmEx, and doing more price specific advertising. But, what they have done is far from what they need to do.

It has also become evident that they did not do proper research prior to opening the stores. I would also venture a guess that the volume projections they made for these stores were far, far off base from logical assumptions.

In studying the locations they have selected, it appeared they were signing on to any vacant building a commercial real estate broker would throw their way, regardless of how good or bad the location was.

The thing is Tesco COULD have gotten this right. They have proven an inability to make changes to this format, as if they expect to cram it down everyone's throat as it is. Clearly, the customers do not like these stores as they are. Perhaps if they remerchandised and added in a complete mix of items and some service departments, or reworked the perishables, they could build volume. It is great to have a store that is cheap to run with a limited mix of products, no service anywhere (not even checkout service), and all prepackaged items, but if the customers don't want to shop in that type of environment, what good does it do you. You need to spend money to make money.

My prediction is Tesco will either buy an existing US retailer of some kind and roll these stores into it, or shut these stores down within the next couple years. The thing is, as it stands, they continue to sign on new sites even in NorCal (though at a much slower clip than before). Once they stop signing on new sites, I will be positive it is the end.
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Re: Losses More Than Double at Fresh & Easy

Post by lvkewlkid »

Albertsons and Vons are definitely shutting down left and right here in Las Vegas...Fresh and Easy and the Hispanic markets are picking up where they left off, with Smith's, Food 4 Less, and Wal-Mart Neighborhood Markets taking the rest of the business...

Fresh and Easy here seems to be very convenient for many people, unlike the 4 Trader Joes locations that we have...
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Re: Losses More Than Double at Fresh & Easy

Post by storewanderer »

How are they doing in Las Vegas now, in terms of traffic?

Did another Vons close last month in Las Vegas? I heard something... couldn't find anything though.

Smiths has been making major changes to perimeter (adding more product) up here in Reno. I've wondered if this has something to do with F&E. F&E is not here, but Smiths up here is run very similar to Las Vegas.
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Re: Losses More Than Double at Fresh & Easy

Post by lvkewlkid »

The one at Silverado Ranch/Bermuda seems to be increasingly busy...
I have passed by the one at Las Vegas Blvd North and Lake Mead a few times and it even seems packed at noontime...

I dont know about some of the other locations as they have opened so many Fresh and Easy's here...

Another VONS closed at Pecos/Russell and it is rumored that the ones on either West Cheyenne or West Lone Mountain will be closed next, however, very strangely, they are opening a new one soon on Blue Diamond near Rainbow...

I believe another Albertsons closed in the last month, but I can't remember the location...

Yes, I have seen Smith's expanding their product line recently at a few of their stores, they are trying to take all the business from the Albertsons/Vons closures...
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Re: Losses More Than Double at Fresh & Easy

Post by ieguy441 »

I live in Hemet (where Fresh & Easy #1 opened), and while it took some time to get off the ground, both locations here in the valley are packed whenever I go in (which is about 2-3 times a week). Around lunchtime, the aisles are packed with workers from nearby businesses looking for a burrito, sushi, sandwich or pasta for lunch... the clearance food disappears a lot quicker than it used to. I would be hard pressed to do a complete shopping trip at Fresh & Easy, but for general food items or something quick for dinner, the prices are much better than Stater Bros or Vons.

I have a family friend who works at the F&E in Riverside, and she did say that Tesco would probably start to introduce a larger meat selection and full service deli in future stores.

I have the feeling F&E will be just fine.
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Re: Losses More Than Double at Fresh & Easy

Post by lvkewlkid »

lvkewlkid wrote:The one at Silverado Ranch/Bermuda seems to be increasingly busy...
I have passed by the one at Las Vegas Blvd North and Lake Mead a few times and it even seems packed at noontime...

I dont know about some of the other locations as they have opened so many Fresh and Easy's here...

Another VONS closed at Pecos/Russell and it is rumored that the ones on either West Cheyenne or West Lone Mountain will be closed next, however, very strangely, they are opening a new one soon on Blue Diamond near Rainbow...

I believe another Albertsons closed in the last month, but I can't remember the location...

Yes, I have seen Smith's expanding their product line recently at a few of their stores, they are trying to take all the business from the Albertsons/Vons closures...
The Albertsons that I was referencing to in the previous post that just closed was Jones/Lake Mead...
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Re: Losses More Than Double at Fresh & Easy

Post by storewanderer »

I'm still very skeptical about Fresh & Easy. It is interesting to hear that some of the stores are actually busy. However, even if they are busy, are they turning a profit? I find this to be very questionable, given the price structure. They shouldn't have much of any clearance food if the traffic is good, either.
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