Fresh & Easy is over and out.
Coverage from Produce Retailer/The Packer
From the Guardian: Tesco pays out to rid itself of U.S. chain Fresh & Easy
From the Telegraph: Tesco sale of Fresh & Easy wins city backing
Meanwhile, word is trickling out about the Fresh & Easy store closings.
From: Phoenix Business Journal
It is interesting what the news release about the purchase said about the future of the stores. From the release:
Ron Burkle, Managing Partner of Yucaipa said, “Fresh & Easy is a tremendous foundation. Tesco should be applauded for giving their customers an affordable, healthy, convenient shopping experience. Its dedicated employees and great base of customers give us a solid starting point to complete Tesco's vision with some changes that we think will make it even more relevant to today's consumer. We plan on continuing to build Fresh & Easy into a "next-generation convenience retail experience," providing busy consumers with more local and healthy access for their daily needs."
What does that paragraph actually mean? I don’t think the Fresh & Easy banner will be long for the world after the sale is finalized.
California-based retail analyst Ed Odron said he believes that Yucaipa Group will make headway with the stores. They will have a better understanding of what customers in those areas want,” Odron said. While some store locations may be spun off to Subway or similar franchises, Odron believes most of the Fresh & Easy stores will remain food outlets, though not under the F&E banner.
“Customers won’t understand ‘under new ownership,’ “he said. “It would be wise to change the banner.”
Odron was surprised Aldi didn’t show much interest in the Fresh & Easy stores. Dollar General also may have also gained from acquiring the stores, he said.
Speculation that the Yucaipa Group would revive the Wild Oats banner with the Fresh & Easy stories seems unlikely, Odron told me.
“I don’t see (Wild Oats) in those neighborhoods,” he said. “It doesn’t seem conducive to Wild Oats type operation” he said.
Of course, those neighborhoods in the Southwest U.S. wasn’t conducive to Fresh & Easy, either. Check out this way back when June 2007 editorial from The Packer about the British invasion:
Brace for the Tesco wave
Tesco's upcoming entry into the U.S. Southwest certainly has retail analysts' attention. Story, Page A1
The latest observation, a recent report by JPMorgan Securities Inc., predicts major changes in the retail scene, led by the British supermarket company and the growth of Target Corp. As in so many other trends of late, the losers will be traditional retailers, the report says.
Tesco's Fresh & Easy Neighborhood Markets, scheduled to open this year in the Las Vegas, Phoenix, San Diego and Los Angeles metro areas, promise to be heavy on several trendy grocery themes:
* providing high-quality fresh and prepared items;
* emphasis on local product;
* smaller stores;
* addressing environmental concerns; and
* avoiding of union labor.
Calling Tesco "possibly the best food retailer in the world," the JPMorgan report predicts up to 250 stores in the U.S. by late next year and annual sales of up to $4 billion by 2012.
The report also predicts strong growth from Target, but its market differentiation appears less obvious.
The Southwest is a saturated grocery market, so there will be winners and losers. Expect fresh produce to play a major role in the shakeout, but don't expect the upcoming battle for consumers to be easy.
Fast foward to 2013 and it turns out the biggest loser from Tesco’s invasion of the U.S. was Tesco itself.