Thursday, November 8, 2007

Tesco Fresh & Easy Update: They're Open

Southern California Fresh & Easy Neighborhood Markets Open This Morning to Long Lines

The Fresh & Easy Neighborhood Market in Anaheim above has a "simple upscale" exterior design. (Courtesy OC Register.)

Tesco opened five Fresh & Easy Neighborhood Markets in Southern California this morning (a sixth, in Hemet, CA, opened about a week ago), kicking off the day with grand opening events at each of the six convenience-type grocery and fresh foods markets.

The six stores officially opening today are located in Los Angeles, Anaheim, West Covina, Upland, Arcadia and Hemet. The addresses of the stores are:

  • 4211 Eagle Rock Blvd., Los Angeles
  • 3170 West Lincoln Ave., Anaheim
  • 100 W. Covina Parkway, West Covina
  • 176 South Mountain Blvd., Upland
  • 133 E. Foothill Blvd., Arcadia
  • 1709 W. Florida Ave., Hemet
When the stores opened at 10:AM this morning, hundreds of shoppers were already waiting in line. In addition to the shoppers waiting outside the stores for the doors to open, there was an eclectic mix of Southern Californians' there as well. The group included protesters, street performers and the simply curious. A throng of local, national and international reporters and camera people added to the crown outside the stores, especially at the Los Angeles store in the Glassel Park neighborhood.

Among the protesters outside each store were members of a Southern California community coalition which is asking Tesco to sign a compact in which the retailer would agree to follow certain labor, environmental and other guidelines for its Southern California operations. (You can read more here.) Informational pickets from the United Food & Commercial Workers union also were outside each of the six stores.

Representatives from the union, which represents workers at Southern California's retail food stores, were passing out information about organizing a union to Fresh & Easy store employees and shoppers. Unlike the majority of supermarkets in Southern California (Ralph's, Von's, Stater Bros. and most larger independents for example), Tesco's Fresh & Easy stores aren't a union shop. Whole Foods, Wal-Mart and all of the conventional convenience stores in the region aren't union either.

However, despite the protest groups, the overall impression of shoppers at the six Fresh & Easy convenience-style grocery markets was positive. We talked with many of them, and nearly all said they welcomed the fresh food-oriented neighborhood grocery stores to their communities. Many first-day shoppers said they would make shopping at the stores a regular habit. Others told us they would supplement their supermarket and specialty store shopping with trips to the Fresh & Easy stores.

We asked numerous shoppers for their overall first-day impressions of the stores. We received many comments that the Fresh & Easy markets reminded them of Trader Joe's. Most mentioned the focus on fresh, prepared foods as a major reason they would return to the Fresh & Easy grocery markets to shop.

A green color scheme, combined with natural wood, creates a basic neighborhood market feel in the stores, with just a touch of upscale flavor.

Most of the shoppers we talked to said they liked the look and style of the stores. Some mentioned they thought there would be more natural and organic items, like at Trader Joe's. However, we expect that will happen as Tesco fine-tunes the stores' grocery and perishable product mix over time. The stores also are taking a wine note from Trader Joe's. Fresh & Easy stores offer a $1.99 bottle wine similar to Trader Joe's famous "two-buck chuck" variety. The Fresh & Easy wine, Big Kahuna brand, is Australian however, while "two-buck-chuck is produced wine-maker Bronco Wine Co., using grapes grown in California.

The Fresh & Easy grocery markets are different from Trader Joe's in a major way though. Unlike Trader Joe's, which only offers specialty-oriented grocery products, Fresh & Easy stores offer a fairly extensive selection of basic items. These grocery basics include numerous products branded under the Fresh & Easy label, along with national brand items like Colgate toothpaste, Tide laundry detergent, Best Food mayonnaise, Heinz Ketchup and others. Milk, eggs, butter and other Fresh & Easy branded products are priced in line with the region's major supermarkets and discount stores. The national brand grocery items are priced on-par with the major supermarket chains, and Tesco is offering weekly specials on these everyday goods.
Shoppers gave the combination of basic groceries, prepared foods and specialty, natural and organic items high marks overall. A number of shoppers remarked they like being able to get quality prepared meals and basic groceries in the same store, allowing them to get in and out faster than at a conventional supermarket. The Fresh & Easy stores average about 10,000 to 13,000 square-feet.

Fresh, prepared foods put the "fresh" in Fresh & Easy as seen here in the Los Angeles store. (courtesy LA Times.)

In addition to extensive prepared foods offerings and the combination of basic and specialty groceries, the stores also offer fresh produce. The produce is all packaged, either in plastic tubs or in clear bags. Tesco says the plastic tubs and bags are 100% recyclable. The stores also offer a selection of fresh, packaged meats (hormone-free) and a large selection of cheeses from around the world.

Fresh, prepared foods clearly are the centerpiece of the stores though, reinforcing the "fresh" name in Fresh & Easy. the prepared foods items range from basics like mac & cheese, chicken fajitas and chicken salad, to more upscale items like Indian Chicken Makhani, Blue Cheese Cheese Burgers, Field Greens with Balsamic Dressing, and numerous other upscale entrees and side dishes. We estimate it's about a 50%-50% mix in terms of the combination of basic prepared foods items and the more upscale ones.

Refrigerated end-aisle displays feature grab-and-go convenience items like sandwiches and sushi in the Southern California Fresh & Easy stores.

All six Fresh & Easy stores have the same essential format. All have metal, warehouse-type grocery shelves (similar to Trader Joe's) and upright refrigerated cases with multiple shelves for prepared foods items. The interior look is clean and attractive overall--what we're calling a"simple upscale" design. Each store also has a full-service kiosk in-store called "The Kitchen," where a store clerk offers samples of Fresh & Easy prepared foods to shoppers.

Following today's opening of the first six stores in Southern California, Tesco will open five Fresh & Easy Neighborhood markets in Las Vegas, Nevada on Wednesday, November 14. The grocer plans grand opening day events for the Las Vegas stores just like those today in Southern California.

Tim Mason, CEO of Tesco's U.S. operations, says the company's current plan is to have at least 122 Fresh & Easy stores open by the end of 2008 in California, Nevada and Arizona. More stores are planned after that, he says.

Tesco enters a very competitive Southern California market with the debut of its stores in the region. Major supermarket chains like Ralph's and Von's compete with regional powerhouse grocers like Stater Bros. and others for market share. Whole Foods Market, Inc. and Trader Joe's have stores throughout the region, and both grocers are currently building numerous new stores in Southern California. Many upscale regional chains and independents also have stores throughout Southern California. Gelson's, Bristol Farms, Sprouts and many other grocers offer extensive in-store fresh prepared foods as does Whole Foods, Von's Pavilions specialty supermarkets and others.

Tesco will need to clearly differentiate its Fresh & Easy format in the region, especially once the initial excitement and newness wears off. It will be a challenge. But it's one CEO Mason says the UK-based international grocer is up for. We'll see. Stay tuned.

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