Fresh & Easy raises white flag - The Packer

Fresh & Easy raises white flag

12/07/2012 09:24:00 AM
Tom Karst

National Editor Tom Karst Sitting here in a Starbucks coffee shop (nonfat latte, venti) , I'm plugging in one more blog post for the week even though this is technically a vacation day.

I enjoyed visiting with various retail analysts yesterday about the failing fortunes of Fresh & Easy in the U.S.  Look for expanded coverage on that topic today on The Packer's news page.

While some may see Tesco's white flag on the Fresh & Easy experiment as a "told you so" moment to throw back at the arrogant Brits,  one observer told me that he was sorry the Fresh & Easy chain didn't take hold. The U.S. could use a broader base of buyers.

“Innovation is the bleeding edge,” said Don Goodwin, president of Golden Sun Marketing, Minnetrista, Minn. “They tried to be innovative and they bled profusely.”

Fresh & Easy didn't exactly bowl people over.  Emphasis on prepackaged produce, especially at first, didn't mesh with West Coast consumer sensibilities.

The chain never nailed demographics and site selections for their stores, either.

For example, Bruce Peterson noted that the chain’s assortments appeared to be much the same but the neighborhoods they operated in were quite different.  Interestingly, Peterson said the Fresh & Easy struggles in that regard reminded him of the experience of Food Lion in the 1980s.

From my coverage this week:


Despite a tremendous investment in research by Tesco to find out the U.S. shopper wanted, the Fresh & Easy stores never hit the mark, said Bill Bishop, chairman of Willard Bishop LLC, Barrington, Ill.

“From the first time I went into the stores, they were very dull and whatever their value proposition was not clear,” he said. Bishop said Fresh & Easy never bridged the huge cultural gap between U.K. and U.S. retailing.

As opposed to beautiful wet rack and a stunning leaf lettuce display, prepackaged produce didn’t have the “fresh” appeal implied in the Fresh & Easy image, said Ed Odron, owner of Stockton, Calif.-based Ed Odron Produce Marketing Consulting. “In California the expectations were different than people saw when they walked in the store.”

 

TK: If Tesco is shopping the the Fresh & Easy stores, who will be in the market? Check out what our retail analysts think who might make sense for the stores when the expanded coverage is put online later today.

It is interesting to look back The Packer's initial coverage of Tesco's plan, published in December 2006. Here are excerpts from that story:

    Tesco, the United Kingdom's largest retailer and the fourth-largest in the world behind Wal-Mart and Home Depot in the U.S., and France's Carrefour, said it is going through with its plans to invest $2 billion in opening as many as 300 small grocery stores in Southern California, Las Vegas and Phoenix, according to a Los Angeles Times story.

    Tesco first announced in September it would develop U.S. business through "organic growth" backed by a capital investment of $493.8 million per year, funded from existing resources.

    The company originally said that, after conducting extensive consumer research, it would model the U.S. stores after its successful Express concept, 3,000-square-foot markets that sell 7,000 items, including fresh produce and wines, as well as an in-store bakery. In the Times story, however, Tesco USA chief executive officer, Tim Mason, said the company was looking for sites closer to 15,000 square feet, which would make them more comparable to an average Monrovia, Calif.-based Trader Joe's.

    Mason said company management was negotiating for the sites, with the first store due to open in the second half of 2007.

    As part of its strategy of self-sufficiency in having a network of stores and distribution

    Mason said in the Los Angeles Times story that the stores will emphasize a speedy, efficient distribution system. He said the stores would be "smaller, simpler grocery stores" where shoppers could find what they need in a hurry, eliminating the need to make several trips to various stores.

    "One of the problems of distribution in a place as vast as America is that most of the freshness is used up in trucks rather than in people's refrigerators," he said in the story.

    "There's no question that convenience and freshness are the two driving forces for the consumer today," Degen said. "Everybody they will be going up against, whether it be Trader Joe's, Costco or even 7-Eleven, they will be competing on convenience. But the quality of the food is going to have to be high because they're also going to be competing for dollars Americans spend at restaurants and other foodservice outlets."

 



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Carl Plasc    
The Narf  |  December, 08, 2012 at 07:38 PM

Aw, I love Fresh and Easy stores. They're literally easy. The store is small enough yet they keep a varied selection. I'm in then I'm out with what I need.

Chris Burnett    
Long Beach, CA  |  December, 08, 2012 at 09:50 PM

A lot of the analysis written about why Fresh and Easy failed seems to have been written by people who don't shop there. I shop there all the time and fit what loosely could be considered their target demographic, if there ever was such a thing -- a single professional who doesn't cook and likes bargains. I think their check out machines are easy to use and greatly prefer that to waiting in line for someone to bag my groceries and tell me to have a nice day. The idea that somehow Fresh and Easy would have succeeded had the stores been cool and trendy like Trader Joe's is cracy. Prices are a lot higher at Trader Joe's, which never has things like half gallon ice cream at two for $5. Fresh and Easy also isn't a full service grocery store where moms fill shopping carts with the week's groceries. The problem with Fresh and Easy is that there weren't enough Californians who want an unpretentious store and yet also have the disposable income. Californians like to think they're cool and trendy, something Fresh and Easy never was intended to be. I've been to parties where people talk about shopping at Whole Foods, Gelsen's, or Trader Joe's as if they're trying to impress people. Nobody would ever brag about buying cut flowers for $4 or inexpensive prepared meals for $2.50 at Fresh and Easy. The problem is Fresh and Easy got labeled as low class and frugal (though really the prices on a lot of things are quite high). I kind of hate to say it, but the stereotype is true. Greater LA is a land of upscale, or wannabe upscale, pretentious people. Fresh and Easy wasn't the import brand of choice.

SHARYN    
Lawton Oklahoma  |  December, 09, 2012 at 11:21 AM

when i lived in newbury park california I went to the Fresh and Easy store almost everyday. I loved that store more than anyother stores around the area. I now live in the worst state and city, (Lawton, Oklahoma). Lawton has no grocery stores to speak of, but again they don't have sidewalks or green lawns either. Having no grocery store around I truly miss FRESH AND EASY ALL THE MORE.

Michael    
San Diego  |  December, 09, 2012 at 02:29 PM

I'm guessing the writer seldom, if ever, shopped at a Fresh & Easy. Their selection was decent, I remember hearing something about 95% of everything that the average person would need. In that respect they are spot on. The concept is good. While some people are b******g about the self checkouts, I LOVE IT! Those who have been around long enough to remember the old Lucky's remember the sticker on the register that mentioned "check stand chatter" as the number one customer complaint. And the big markets are that way. I don't need some checker yapping with the people in front of me. I prefer to get in and get out. Then there is the fact that most stores NEVER have enough checkers. And it's funny how the longer the lines get the yappier the checkers get! I've heard rumor that the grocery chains had a lot to do with the plight of Fresh & Easy. Some towns had pickets up when the stores opened...no surprise, really. I heard F&E was non-union. I thought their meat prices were a bit high, but otherwise it worked for me.

Tom K    
Lenexa  |  December, 09, 2012 at 03:43 PM

I wasn't a shopper at Fresh & Easy since I lived in the Midwest, but I'm impressed with the passion of comments from Fresh & Easy customers here. Still think the prepackaged produce probably hurt their appeal on the West Coast.

Ed    
Arizona  |  December, 09, 2012 at 05:15 PM

My wife and I never got these stores at all. What was their marketing plan? The Japanese came into the auto market years ago and succeeded initially with simple things like putting the radio, horn, and gear shift where people expected it to be. F&E was a weird concept. I have been in a large Tesco store in the suburbs of Budapest and would love having one of those stores here in Scottsdale. But the holy grail would be a Correfour. I have been in them in Argentina, France, and Spain and believe they would shut down most of the grocery stores in this area. Correfour knows how to make bread using flour where F&E had lousy bread using the same ingredients. It is sad to see anyone fail but they could have passed this by me initially and I could have saved them a fortune. My wife and I saw this coming from day one and were surprised that F&E lasted as long as it did. We were almost convinced that we were wrong initially. Does any one remember A&P (small stores and sore brands that were mediocre and over priced)? The few times I went into a F&E, I always found it odd that the clearance items were marked down to what the other large groceries in the area were charging for the non-clearance items.

susan    
gilbert  |  December, 09, 2012 at 08:57 PM

I love the Eat Well prepard section! I just bought my meals for the nexted five days, then I heard they may not be available soon. Services offered by F&E made my week Fresh & Easy to eat balanced meals and watch my waist line. I hope to see your continued services nexted year!

mike    
riverside ca  |  December, 10, 2012 at 05:31 AM

chris, you hit the nail on the head its so very true what you said about californians wanting to be hip. i like fresh and easy too. i hate going in trader joes or whole foods with the hipsters in skinny jeans holding star bucks coffe cups runnin around like theyve never seen organic cookies and silliness ....

Roger Henry    
SoCal  |  December, 10, 2012 at 01:08 PM

My local FE smells of formaldehyde every time I walk in the door---rotting, unsold "Fresh" produce most likely.... Regarding the "Easy" portion of the equation, when is NOT having what I want to buy "Easy".. Easy, is making one stop, at a single supermarket, and finding everything I need...and want. I don't like to shop, I only do it because I must. I don't want to shop at two stores, I want to shop at one store and get it over with. I will however, make an stop at at Trader Joe's because they have great beers at great prices. FE, not so much. FE will not be missed by this consumer.

GG    
Central California  |  December, 12, 2012 at 12:55 PM

In my opinion, F&E failed to be successful due to a number of reason. 1. To many hands in the cookie jar looking to profit off the new venture. 2. Negative feed back from many who never gave the format a chance. 2. Locations not designed or catering to the neighborhoods they opened in. i.e Hispanic communities etc. - SaveMart is having this same issue. 3. Profit margins set to high. ( i mean if you can go at the right time and go to the cleareance sections of the store , you would find items reduced to quick move prices. Sometimes as much as 50-75% off These are just a few examples from my experiance's with Fresh and Easy. Dont get me wrong i love the stores concept, format and the variety of items. Not to mention the quickness of getting in and out (this is one of my biggest pet peevs at the other major retail stores, plus -long slow moving lines, out of control children etc). The locations that they are in are not bad locations. They are in areas that do need a smaller grocery format. The problem is you need to cater to your potential customers and surroundings. If you are gonna go after high end customers then put yourself in those areas. The lower income areas need the stores... Solution, reformat the lower income area stores to Cheap & Easy, lower prices to appeal to customer base and bring in items the customer buys. I for one will miss them. I hope they restructure and look closer into the areas and customers they already have.

youthleadergina    
Southern Calif  |  December, 26, 2012 at 11:25 AM

I shop exclusively at Fresh and Easy for my weekly major grocery run. As a working mom, I love that I can stop in and pick up a family size meal with a 99 cent bag of lettuce and a 98 cent loaf of french bread. This year, I purchased their Holiday Box for both Thanksgiving and Christmas and it was delicious. I will be bummed if my local store closes. Fresh and Easy is the only store which "gets me" and fits so well with the way I live and meal plan.

Bill    
San Fernando Valley  |  December, 30, 2012 at 06:52 PM

Excellent points. A few I had not really thought about, until I read your posting.

Bill    
San Fernando Valley  |  December, 30, 2012 at 06:52 PM

Excellent points. A few I had not really thought about, until I read your posting.

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