Published on: February 22, 2008Tesco announced that it opened its 50th Fresh & Easy Neighborhood Market in the US this week, a rollout that began last November with the company’s first American store in Hemet, California.
“Opening our 50th Fresh & Easy is an important milestone for us,” said Fresh & Easy CEO Tim Mason. "We are very encouraged by the response from our customers and new neighbors. We are excited to continue bringing fresh, wholesome food at affordable prices to all types of neighborhoods."
In addition to Southern California, Tesco also has been opening the small-format (10,000-15,000 square foot) stores in Arizona and Nevada; it is slated to start opening stores in Northern California later this year or early in 2009.
- KC's View:
- It hasn’t been all fresh and easy for Tesco this week, with the announcement by one analyst that based on his research, most of the company’s US stores were doing just a fraction of the sales numbers that they needed to do in order to make money. This has added fuel to the fires being stoked by naysayers, many of whom believe that Tesco has finally bitten off more than it can chew in the US, and will in short order be forced from our shores.
To which I’d offer the following profound, concrete response: Maybe. But maybe not.
First of all, I think that Tesco is extremely good at managing the information released about its sales performance; the months leading up to the debut of the US stores were filled with all sorts of disinformation and misinformation, and I don't completely believe anyone. (And I almost never trust financial analysts, except of curse the ones who agree with me and/or read MNB.)
I also think that the US food industry has more than its share of cynicism. Many people believe that Tesco is an arrogant foreign interloper that cannot possibly succeed, and they are rooting for its demise.
My feeling is this.
It only has been four months. Tesco is actually trying to do something different in the US by challenging conventional wisdom about how people shop (especially with a store offering a limited assortment and a lot of private label)…and that isn’t always the best way to generate early and consistent sales numbers. Tesco also is extremely smart, and learns from its mistakes….it is unlikely that the stores it opens in late 2008 will simply replicate the stores it opened in late 2007.
Now, this creates its own challenges. To adapt its stores to what it learns from consumers, Tesco could be forced into being more conventional. But, if it is more conventional, some of the qualities that differentiates it from the competition could be diluted, which would make Fresh & Easy harder to justify.
Is this going to be easy? No. Was it ever going to be easy? Of course not.
But I’m rooting for Tesco to succeed, not because I have any dog in this hunt, but because I think new competition with fresh ideas pushes the industry ahead, forces other people to be innovative. We’re already seeing that, with Wal-Mart preparing to confront Tesco in Arizona with its own new small-store format.
The battle may be bloody, but it almost certainly will be illuminating. And no matter what segment of the business you are in, there is much to be learned by Tesco’s American adventure.