Published on: January 28, 2008The Sunday Telegraph reports that Tesco has decided not to release sales figures for its US-based Fresh & Easy Neighborhood Markets until 2009 at the earliest. The decision is said to be a hedge against skepticism in some quarters that the stores are being successful.
According to the story, it is believed that Tesco may not be living up to original sales projections at Fresh & Easy despite its public statements that sales are “encouraging”; the retailer also has said that the first 18 months worth of sales cannot be fairly evaluated because the company is working to establish brand equity.
- KC's View:
- The best I can tell - based on personal observations, discussions with people “in the know,” and all the email MNB has received from people who have shopped Fresh & Easy in various locales – it is way too early to be drawing any conclusions about Tesco’s US operations.
First of all, the stores don’t have to generate a lot of sales to move into profit – between $175,000 and $200,000 a week, according to one source, and there are a number of locations that reportedly are doing just fine. Other locations, not so much…but Tesco is starting from scratch here, which creates certain challenges but also allows them to start with a blank slate, which gives them all sorts of opportunities in terms of brand creation.
There is a certain logic, by the way, to the notion that brand creation takes time. Fresh & Easy is doing exactly that…which is why it has more than a dozen locations chosen in Northern California, and probably a bunch more that the company isn’t talking about. The more locations there are, the easier it is to start making an impact.
This isn’t going to be a short-term battle. Wal-Mart already has committed to a new small-store format that it will test head-to-head with Fresh & Easy in Arizona. There will be plenty of other small store formats created, I’d expect, to do battle with both Wal-Mart and Tesco. Which will drive both innovation and competition…which ultimately should be good for both the industry and consumers.