Fresh & Easy Retailer Reaction
As more stores open, retailers can see for themselves
LAS VEGAS -- Area c-store retailer David Crawford described Tesco's Fresh & Easy stores as offering a strong mix of upscale foods at value prices, but that the concept won't negate a customer's need to visit a c-store or even a supermarket—simply because the newly opened sites that he's seen don't offer everything people need for their fueling or weekend-grocery needs.
As the U.K. retailer pushes forward with its plans to open 200 Fresh & Easy mini-grocery stores on U.S. soil by the end of the year, more and more c-store operators like Crawford will get to see firsthand what [image-nocss] all the fuss is about.
"I think if one were next to [our stores], someone might go in there for a sandwich or a drink instead of coming to us," Crawford told CSP Daily News. "But even then, it's not going to compete with our stores."
Tesco, which has operations in 12 countries and holds a commanding place among global retailers, is committing what some estimates say is $2 billion to break into the highly desirable U.S. market. Media on all fronts—from convenience to food—have been following the Cheshunt, England-based retailer's moves for the past year, in an effort to assess the chain's competitive threat. So far, the chain has opened a handful of stores in markets such as Los Angeles, Phoenix and Las Vegas.
Having visited two sites, Crawford, who handles marketing and operations for Las Vegas-based Green Valley Grocery, is complimentary about the locations' produce, meat, bakery and dairy sections, saying they're a good mix of upscale offers at modest prices.
He made several additional observations:
Checkout can be a pain. At one of the two sites he visited, the conveyor weighed products. When turned on, the technology slowed lines to a crawl. At the second store he visited, staff had turned that device off, which sped up the process considerably. Dry goods—pet foods, cleaning supplies—were displayed and offered in a "warehouse" style, with things grouped in boxes and a sense of bulk options. Beer competition? Crawford felt that beer margins were not going to be an issue, in that he knew Tesco would not be able to beat his stores on price. His sense was that Fresh & Easy was going for premium brands. "My [customer] is the one who comes in for a 12-pack or he's buying beer for the weekend," he said. "It's not the same guy." More stores are coming. With a national drugstore chain having recently left the market, Crawford said 10 Fresh & Easy stores are scheduled to open. Store hours may be a challenge. The Tesco sites shut down at 10 p.m. and "look closed" at night. "This is a 24-hour town," he said. "I think they're going to have to tweak their operations."
In a Kraft/CSP Daily News poll conducted last November, only 19.9% of respondents considered Tesco's Fresh & Easy retail entry to have a "high" or "very high" threat level for the c-store channel. Most, 29%, considered it to be "medium." Another 20.6% believed it to be a threat to other channels, while 15.3% said it was "not even on our radar screen."
[Editor's Note: For reporter Angel Abcede's first-person account of Tesco's entry into U.S. retail, look for the January 2008 issue of CSP magazine. Also, be sure to click here to view the new CSPTV Feature of the Week segment on the U.K. retailer's first stores in the Los Angeles area in this issue of CSP Daily News or on CSPnet.com.]