U.S. retail scene proves not so easy for Tesco - The Packer

U.S. retail scene proves not so easy for Tesco

04/19/2013 09:56:00 AM
Pamela Riemenschneider

Pamela Riemenschneider, Retail EditorPamela Riemenschneider, Retail EditorSAN JOSE, Calif. — Like many retail industry observers, I’ve watched Tesco’s Fresh & Easy Neighborhood Market since it opened five years ago.

I’ve had several opportunities to visit stores in person, most recently on a trip to the San Francisco Bay Area.

I picked out a couple of Fresh & Easy stores to visit, since I heard they were circling the drain, despite assurances they were “Still Fighting the Good Fight.”

Well, even if it was a good fight, the stores — and their shoppers — appear to have lost.

Tesco issued a news release April 17 saying it planned to close its 200 Fresh & Easy stores.

“Based on our progress so far with our strategic review of Fresh & Easy, including the indications of interest received from third parties, we have confirmed that the outcome of the review will be an exit from the United States,” Tesco officials stated in the release.

“As such, Fresh & Easy has been treated as a discontinued operation within these results.”

Just about everyone who regularly reads my stuff knows I was an F&E cheerleader. I loved their concept and their offerings — I just didn’t love where they chose to put stores.

Not-so-fresh

I mapped out a Fresh & Easy on the way to the hotel for the Produce for Better Health Foundation Board Meeting in downtown San Francisco. You know what’s annoying? The stores didn’t open ’til 9 a.m.

Strike 1.

I had to sit and wait for a half hour for this location — which was in an urban area on the bottom floor of a newly built residential building — to open. This is prime real estate — except the neighborhood was not so great.

When the store finally opened, there were several people outside waiting. That’s a good sign, right?

Wrong.

They went straight for the mark-downs and bought a bunch of half-price bacon.

Well, that was pretty smart of them, but they didn’t really buy anything else.

The store’s shelves were Old Mother Hubbard stuff. There were a few employees on duty doing some stocking but at least half of the shelves were empty.

A few things I looked at were either expired or were expiring in the next two to three days. I picked up some water and snacks to have in my hotel room and left, feeling pretty bad for this store’s future.

Glimmer of hope

I hit up a store in Mountain View, Calif., on my way to the San Jose airport on the following Saturday morning.

I’d consider Mountain View to be a nice suburb, right near Silicon Valley, with a lot of trendy, upscale shoppers.

This Fresh & Easy had more stock on hand, fewer expired items and there were actually a few shoppers, one of whom had a cart half full.

Compare that, however, to The Milk Pail Market, an open-air farmers market-type store around the corner, and there’s no way this F&E would have made it.

The shoppers F&E hoped to attract packed the aisles at the Milk Pail. I could barely get in there, and it wasn’t like this was all local organic farmers market-type stuff.

A lot of what they had was sold straight out of bins, and it was obviously wholesale terminal market fare, but that place was packed. This was a case where F&E seemed to have a good location, but they just weren’t going to make it in comparison to what was available around the corner.

Who will fill the void?

There’s wide speculation about what or who will take over Fresh & Easy. It seems clear no one wants to preserve the chain as-is, which is sad, because I think it could work in the right area — namely, on college campuses.

Walgreens has been thrown around. The stores are similarly located and sized, and Walgreens would probably be interested in having a store with fresh food infrastructure built in, as they’re expanding fresh food offerings.

Aldi also comes up in conversations quite often, and I think that’s a likely candidate, too. Aldi announced plans to enter the Southern California market by 2013, and these stores are the right size and some of them are in the right locations for an Aldi consumer.

For now, we’ll have to wait and see.

I’ll miss Fresh & Easy.

pamelar@thepacker.com

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