Published on: April 22, 2009While it has been well known that Tesco’s Fresh & Easy Neighborhood Markets chain in the western United States has not been living up to the company’s early expectations, yesterday Tesco put numbers out there that demonstrated exactly how the store shave been performing.
Fresh & Easy generated $300 million during the past fiscal year, and lost $200 million – though the Los Angeles Times notes that some experts believe that those losses can be absorbed by Tesco, which generated a total of $87 billion in sales during the past year. Other experts say that they believe that Tesco’s withdrawal from the US is inevitable.
The $300 million in sales, divided by Fresh & Easy’s current 119 stores, works out to about $2.5 million per store for the year…or an average of about $49,000 per week per store. Tesco also is saying that same-store sales at Fresh & Easy are up 30 percent over last year.
The Times reports, “When Fresh & Easy first opened, executives said the Trader Joe's-sized stores -- heavily dependent on house-brand goods and prepared foods -- would shake up the local supermarket scene. Originally, the stores carried about 3,500 products, barely 10% of what's found in a traditional grocery store. But after sales failed to meet initial expectations, the company has had to tweak the format, offering more discounts and promotions. Fresh & Easy also is adding larger package sizes and more selection in frozen foods and branded grocery items.
“The company doesn't plan to change the basic concept of a stripped-down grocery store that people can get in and out of quickly. It doesn't accept coupons or checks or offer a loyalty or club card program. All check-out is self-service.”
And, the Times writes, Tesco seems intent on riding out the difficult times. It will open its 64th Southern California store today, and plans “to open stores at a pace of about one every two weeks this year.”
- KC's View:
- While Tesco’s US problems have been well-known, Michael Sansolo’s column yesterday, in which he assessed Walmart’s new small-store Marketside format, made it clear that cracking the code on small stores is easier said than done.
I continue to believe that Tesco will figure this out…but I’ll be a lot more confident when the retailer announces that it plans to use some version of its UK loyalty marketing program in the US. That kind of targeted marketing might be a real differential advantage here, and I keep wondering why any company would go into battle only using a percentage of its available ammunition.