(May 16, 12:11 p.m.) LAS VEGAS — Chris Harris said he doesn’t care what the critics say about Tesco’s Fresh & Easy stores — just as long as those critics aren’t his consumers.

“If consumers are upset by anything, then I would be upset,” said Harris on May 4 at a Fresh & Easy store in a western suburb of Las Vegas.

Harris, Southern California-based produce category manager for Tesco’s U.S. division, Fresh & Easy, said one enduring truth he clings to is that the consumer is right.

“The consumer was right in the United Kingdom, and, at the end of the day, the consumer is right here.”

Harris gave five Packer staff members a tour of the produce department on May 4 before the start of the United Fresh Produce Association Fresh Market Place show.

“The general concept of the store is to be very fresh,” he said of El Segundo, Calif.-based Tesco’s USA format. “We want to be pumping stuff in every single day.”

Harris didn’t reveal what share of the store’s sales the produce department represents but said the overall performance of the chain’s produce departments are above expectations.

The typical Fresh & Easy produce department has about 200 stock-keeping units — and organic produce items account for roughly 10% of that number.

Harris said Fresh & Easy is expanding the number of organic SKUs. However, with a limited assortment to begin with, the chain wants to avoid adding anything the consumer doesn’t ask for.

TRYING FOR A VEGAS JACKPOT

Fresh & Easy plans to grow in the Las Vegas market. Previously, the company indicated 15 stores would be open by the end of 2009, and plans for 10 more stores above that number are on the drawing board.

As of early May, Fresh & Easy had a total of more than 60 stores open in Southern California, Las Vegas and Phoenix, according to media reports.

The stores, which average about 10,000 square feet each, feature nearly all private-label offerings.

The single exception in the produce department in the Las Vegas store appeared to be a display of 5-pound poly bags of apples from Columbia Marketing International of Wenatchee, Wash., featuring a price of $3.99.

At least in this store, consumers who were asked said they believe Fresh & Easy is on the mark with its produce department.

At one point, one consumer who recognized Harris was with management approached him to talk about blueberries.

“They are so fresh. Everywhere else, they get mushy in two days,” she said. “Here, after five days, they are great.”

When asked what she likes about the store, that woman used the word “fresh” several times.

“The roma tomatoes are better than other roma tomatoes, and when you buy their greens (they) are fresher than anywhere,” she said. “Their lemons are much better than any other place. It’s fresh, and it’s so much better.”

Fresh & Easy attracts consumers for more than just the produce department, the shopper said.

Friends visiting from Europe came to the store, she said, just to buy the tomato, basil and mozzarella sandwiches offered by Tesco’s U.S. chain.

Harris said he is proud but not complacent about the quality of the fresh produce in the store.

“(My pride in the product) doesn’t mean I … don’t give hell to suppliers every single week,” he said. “I’m just that kind of person, I guess. I always want to be better.”

Strolling to the refrigerated vegetable case, he picked a head of snow white cauliflower.

“Look how fresh it is,” he said. “It is always great.”

For cauliflower, Harris praised supplier Bonipak Produce Inc., Santa Maria, Calif.

“I’m proud of the quality, and I’m proud of the quality of (our) growers,” Harris said.

DUKING IT OUT WITH WAL-MART

If “fresh” and “easy” are part of Tesco’s formula to success, “price” may not be far behind.

Fresh & Easy benchmarks about 120 of its produce SKUs against most of the chain’s competitors, and Harris said Fresh & Easy comes in at around the cheapest of all the “big guys.”

Fresh & Easy is not quite as competitive price-wise as Superior (a warehouse discount chain targeted at Hispanic consumers with about 30 stores in Southern California), but Harris said the chain is “toe-to-toe” with Wal-Mart.

He cited an entry-level salad at Fresh & Easy at 96 cents, and a head of iceberg lettuce for under a dollar — a price he said never moves.

“There are some items that people look at and really care about,” he said.

Another merchandising practice Fresh & Easy employs involves putting a tight code date on fresh-cut produce, and discounting an item near the end of the code date.

“We never recode and leave it there another day,” Harris said.

If the item doesn’t sell at the discounted price, the chain allocates the item for food banks, he noted.

On May 4, one cut-fruit package had been $2.73 but was discount priced at $1.27.

“We have been playing with the (discount) a little bit, what the right amount is,” he said. One option may be putting the discount on a little earlier to allow more consumers to try a value added pack.

Fresh & Easy has about 10 suppliers who ship produce to Fresh & Easy directly, and about 35 more who supply Wild Rocket Foods, the Riverside, Calif.-based fresh produce processing and packing partner, Harris said.

CONSUMER APPEAL

Fresh & Easy relies only on self-service checkout, and virtually all of its produce except bananas are packaged with the Fresh & Easy label. Harris claimed that is not a liability.

He noted surveys show consumers appreciate that Fresh & Easy takes corporate responsibility for products by putting their “stamp” or label on the goods.

What’s more, consumers have not objected to the absence of bulk produce displays.

“One lady said, ‘I don’t look at the tomatoes anymore. I just pick them up and take them home. I know they have been hand-graded, and I know they will be good,’” Harris said.

Except for a typical brief period of cautiousness after a store opens, self-service checkout also has been embraced, he said.

QUESTIONS REMAIN

Still, questions remain for Fresh & Easy.

Some critics have said some stores struggle with out of stock items. Others have said Fresh & Easy hasn’t adjusted quickly enough to ethnic tastes in the neighborhoods where it has opened units.

When asked how Fresh & Easy appeals to Hispanic consumers — a big part of the Southwest market in the U.S. — Harris said there are differences in appeal based on individual consumers.

“If the consumer is looking for loose produce, and Spanish signage, we possibly are not the store for that person, “he said. “But if that person has lived in the U.S. for a few years or is second-generation, we have seen some good customers come for that group.”

Where Fresh & Easy’s market share ends up is anybody’s guess at this stage, but it appears Tesco is prepared to battle its competition and its critics over an extended period of time.