Fresh & Easy's Future Uncertain Says Next Tesco CEO

[Alpha8472]

"The future of Tesco's Fresh & Easy Neighborhood Market may be up in the air, according to comments by Philip Clarke, who will become Tesco's chief executive officer in March."

http://supermarketnews.com/news/fresh_easy_0920/

The new CEO seems like he has a fresh and realistic point of view. Tesco has let Fresh & Easy limp along with millions of dollars in losses for the past few years. They keep losing money, and they keep saying that they will make money one of these days. Fresh & Easy has done nothing to change their business to stop the losses.

The next CEO seems like he will put this chain out of its misery once and for all. He knows that the concept is broken as it is. It is losing money, and the only way to turn things around is to totally change how the store is run or shut it down and stop the losses.

A store format like Fresh & Easy might work in another country, but whatever Fresh & Easy is doing here, they are doing it wrong.

[storewanderer]

There are ways to fix this chain. Tesco has a lot invested in this and I think they will make it work. Or at least get it dressed up to a point that they can sell it to someone else. I don't think the chain will simply close down. Despite what Save Mart may be hoping for. I still think they may do better in Northern California than they have in SoCal, Las Vegas, and Arizona, due to the competition in Northern California being what it is. It is promising that the Fresno Fresh & Easy Stores are doing well; those are faced with similar competition to much of Northern California (Save Mart and Safeway Vons).

But they opened too many stores, too quickly, in the wrong locations. Significant merchandising changes need to be made to this format, with better tailoring to individual neighborhoods. If you want to be a neighborhood shop like they are trying to be the first thing to understand is not every neighborhood is the same. Maybe some neighborhoods love private label and others may want more brands. Tailor the mix accordingly. Use vendors or Unified to help if needed. It is better to fill with vendor items and use Unified than go out of business simply due to not having the right items.

They need to focus more on densely populated areas. I think that may work for them.

In the suburbs they need more of a "niche" factor to build up a following similar to Trader Joe's. Still, they will never get the penetration they were hoping for (10,000 stores ... really?) but I do think they can get the sales per square feet they are hoping for with some changes.

This chain as it WAS opening stores (in whatever empty space it could find) was/is a significant threat to the smaller weaker chains and low volume independents. Operators like Bashas, Save Mart, Holiday, Ray's, Scolaris, and similar are the types of chains running stores doing such low volumes that even a small drop in sales as a result of a Fresh & Easy opening will tank those low volume stores to the point of closure. Larger operators like Safeway, Raleys, Albertsons (both), and the various Kroger banners are in a much better position to hold on.

[krogerclerk]

Tesco's reliance on private label seems to be one quirk that would be an easy fix at Fresh and Easy. Also complete reliance on self checkout limits the customer service perception for an operation that markets itself as cheap chic eats. I don't have any personal experience with whether or not the F&E self checks are user friendly or not, but I doubt they are very user friendly, but a new player needs to put on a better face in regards to customer service and private label to gain customers.

[storewanderer]

The service in these stores is poor and unprofessional. Employees are dressed in wrinkled looking shirts that are not tucked in and baggy blue jeans. Ask the person at self checkout for help locating an item only to be told he cannot leave the front to help you find it. Walk around looking for more help and you are lucky to find one other employee. I've been in close to a dozen locations and only once did I see the sample table operating. I have visited locations in each state: CA, AZ, NV.

But the self checkouts are pretty user friendly. With everything being barcoded other than bananas, and there is a touch function right on the self checkout for "banana" on the front screen, it works fine. The self checkouts are NCR interface similar to that seen at Wal Mart, Save Mart, Home Depot, Lowes.

[klkla]

The incoming CEO's comments do seem to be sending a message to either a) the investment community that he plans to dump the operation and/or b) to management of the division to get their act together before he comes in because he does not consider this to be a pet project like his predecessor.

I've been into two of their stores and like one of the above posters found that the sloppy appearance of employees gives the stores a bad impression. I also found the stores to be poorly merchandised. On the other hand I did purchase some interesting items, all but one of them private label. I also found their self service to be one of the easiest I've seen. All the employees I came into contact with were very friendly and helpful. If there was a Fresh & Easy in my neighborhood I would probably shop there as a fill-in market when I was in a hurry.

My mom lives near one in Las Vegas and swears by the place. At her age she finds large big box stores to be a hassle and loves the smaller footrpint. The employees there treat her very well and most know her by name already.

Acting as an arm chair CEO I think this has been their major flaw: They tried to enter too many cities at one time. They should have started and stayed in So Cal for the first couple of years unti they built a large enough base of stores that would allow them to advertise on a large scale and get their brand known. A minimum of 100 stores in the greater L.A. area should have been built before they even considered Las Vegas or Phoenix.

A second major flaw has been execution. The stores are not well merchandised and stocked based on what I have seen. Keeping their initial stores concentrated in a smaller geographical area would have allowed management to spend more time in the stores so they could develop the systems and procedures needed to offer a consistant experience.

[submariner]

Interesting turn of events... looks like Fresh & Easy is going to be opening a new store, I passed it on my way to a relative's house on thanksgiving. It's located on the corner of Euclid and Broadway in Anaheim.

Edit: it looks like Northern California will FINALLY get their Fresh and Easy stores. Many sites are "Now Hiring"!

[storewanderer]

I'm not sure if it is a turn of events. They have been saying all along they will continue to open stores in CA albeit at a slower pace than originally planned. AZ and NV look to be big question marks at this point. They haven't done well at all in Las Vegas though there are some signs of success in AZ. Kroger is attempting to crush them in AZ.

They need to really re-consider their strategy. I'd focus on densely populated areas with decent incomes and work from there. Financial districts of larger cities or areas near large office parks, areas near colleges/universities, malls, maybe even heavy tourist locations. Locating these things in a high concentration in every type of neighborhood known just hasn't worked. Still, they can't even run the same exact store with the same exact merchandising even in the locations I just mentioned. And to this point, they have been completely unable to deviate from their same merchandising every location no exceptions "plan."

They are also in a trap of issuing large value coupons and it appears they cannot stop issuing those coupons. It will be interesting to see how they handle that in NorCal, as the coupon thing is a real problem for them. It appears if the $5 or $6 off $25 or $30 purchase goes away, so do the customers. The ironic thing is the prices at these stores were already very good, better than elsewhere... pricing was not their issue.

[wrallen99]

Fresh and Easy is finally going to start opening in the Bay Area, along with Sprouts and Henry's:

http://news.yahoo.com/s/yblog_localsfo/ ... food-fight

It also mentions that Safeway may take a look at their entry and open some more stores, also. I really like the Sprouts I've been to in Phoenix and Austin, but I hope they don't overexpand and end up going out of business.

[Alpha8472]

I visited a new Fresh & Easy store today in my city. I was not impressed.

The prices were not very good. In fact, many items were a little more expensive than the sale prices at the Safeway supermarket down the street.

The selection of the store was much less than a regular supermarket. You can't do all of your shopping at Fresh & Easy. You still have to make a stop at a regular supermarket to get everything that you need on your shopping list.

There was a very large section devoted to prepared meals. I assume that they are hoping that many people will stop by and buy heat and serve packaged meals for dinner.

The meals didn't really appeal to me. I saw some brand name items mixed alongside Fresh & Easy Generic Brand products.

Overall, I prefer Trader Joe's for a small limited assortment market. Trader Joe's has more gourmet products. I simply didn't like the selection at Fresh & Easy.

What really annoyed me was the self-checkout. Fresh & Easy forces everyone to use self-checkout. They don't have regular cashiers. However, just for the grand opening they had employees helping customers at the self checkout.

[storewanderer]

Yeah these stores are not very good. I'd probably shop a Save Mart over them most of the time and that really says something with how poor of an operator Save Mart is (but not all of the time), and I'd pick any other conventional grocer over Fresh & Easy given the choice all the time.

But we'll see how they do in NorCal. Maybe they can carve a niche but I don't see how. A 10% hit in sales to a Save Mart or Raleys could be enough of a blow to cause even more of their stores to need to shut down, and that is something a nearby Fresh & Easy even at the painfully low volumes they are doing in AZ/Las Vegas/SoCal could achieve. So they may cause problems in NorCal for the weak operators.

I noticed in the one I went to about five weeks ago the high prices, the odd brands, more private label than before, sloppy looking prepared meals that looked like overpriced slop that someone played catch with then threw back into the case(many have said the prepared meals taste good so maybe someday if I feel like microwaving my food I will try them, but I absolutely hate microwaved meat), brown meat... awful really. They seem to be trying to be Grocery Outlet these days.