Published on: March 31, 2008In the UK, the Sunday Telegraph reports that Tesco has decided to call a three-month halt to the rollout of its Fresh & Easy Neighborhood Market stores in the western US. The company said that after a fast-paced initial rollout - 59 stores over four months in Southern California, Arizona and Nevada – it decided to "make improvements and allow the business to settle down".
In his blog on the Fresh & Easy website, Fresh & Easy’s chief marketing officer Simon Uwins wrote, in part:
“We've opened 31 stores in 66 days so far this year...now we're pausing for breath.
“We've been delighted with the openings. There's always been a line of customers waiting for each store to open. Indeed at some, such as Long Beach … the lines were almost too long, they took hours to clear - I'm sorry if anyone was inconvenienced.
“And every week, we attract more customers in our existing stores.
“However, after opening our first 50, we planned to have a 3 month break from openings, and other than a couple more in Phoenix, we're taking it (albeit, in our usual fashion, with 59 stores already open).
“Quite simply, to allow the business we've created to settle down.
“In 9 months, we've gone from a project team of 200 people to a business employing nearly 2500 people - and in another 9 months, it'll be over 5000. In a little over 4 months, we've gone from a business with no stores to one with 59 - with hundreds more in the pipeline.
“We've learnt a huge amount about running the operation, and talked to thousands of customers about what they like about fresh&easy, and where they'd like us to improve.
“So we've given ourselves a little bit of time to kick the tires, smooth out any wrinkles, and make some improvements that customers have asked for.”
Of course, there are considerable doubts in the marketplace about whether Tesco is seeing the kind of sales, traffic and return on investment that it expected from the Fresh & Easy chain.
Tesco has said that it plans to have about 200 Fresh & Easy US stores by February 2009, and already has laid out its plans to open units in Northern California.
- KC's View:
- I would be careful about drawing too many conclusions about this decision by Tesco, or speculating too much about what it might mean.
It seems obvious, from all the reports that I have seen, that not all the existing stores have lived up to expectations, and that there are some operational issues that need to be straightened out. But it actually speaks to Tesco’s strength of commitment, I think, that it makes a move like this. It would be much worse to keep moving in one direction without tweaking the concept…sort of like sailing without paying attention to the wind direction.
Besides, I’ve been saying this practically since the beginning – Fresh & Easy 2.0 is likely to be very different from the first stores…and that will be more of a measure of Tesco’s understand of and commitment to the US marketplace.