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    Published on: April 22, 2009

    While 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.

    Published on: April 22, 2009

    USA Today reports that “under pressure from consumers, environmental advocates and retailers, the companies that make more than 80% of plastic bags used by the nation's big retailers on Tuesday will announce plans to make the plastic bags from 40% recycled content by 2015 … The move comes as some cities are outlawing the bags and trend-setting retailers, including Whole Foods and Trader Joe's, have dropped them. Plastic bags, which take hundreds of years to degrade, are regarded by many consumers as eyesores, threats to wildlife and wasteful. The $1 billion industry makes about 90 billion plastic bags annually in the USA alone.”

    And, the paper reports, “with this move to ramp-up plastic bag recycling, some 463 million pounds of greenhouse gas emissions and 300 million pounds of waste will be cut annually.”

    • Whole Foods Market yesterday announced “a comprehensive energy commitment that more than triples the number of stores with solar panels, extending its commitment to offset 100 percent of its use of non-renewable electricity with wind energy, and investing in energy reduction opportunities while retrofitting existing stores with energy efficient lighting, equipment and mechanical components.

    According to the announcement, “Whole Foods Market recently contracted to add solar to more than 20 locations; including existing installations, solar will be brought to the rooftops of more than 30 of the Company's stores nationwide … Whole Foods Market hopes to have close to 70 total locations with rooftop solar panels, close to one fourth of the Company's total number of stores.”

    • To celebrate Earth Day, Save Mart and Lucky stores in Northern California and Northern Nevada announced that they are partnering with Tropicana to give away three reusable shopping bags with every purchase of a 128-oz. bottle of Tropicana Pure Premium orange juice. The giveaway will start on Earth Day, Wednesday, 4/22 and continue through Tuesday, 4/28. Up to 80,000 reusable bags are expected to be distributed.

    Shoppers are able to save five cents on their orders for every reusable bag they bring into the store.

    KC's View:
    These are just come of the things being done to recognize the importance of Earth Day – and broader environmental initiatives – in the US food industry.

    These moves aren’t just green in the ecological sense, however. They also strike me as good business. Which will give such initiatives even great impetus.

    Published on: April 22, 2009

    France-based Carrefour said this morning that it plans to roll out a new, 200-SKU, discount private label line called, appropriately enough, “Carrefour Discount.”

    The line is being developed as a way of catering to France’s cash strapped consumers affected by the global recession, and to compete more effectively with deep discounters. The company said that it expects to eventually double the size of the line, mostly in grocery but with some HBC products.

    “Carrefour Discount” is initially slated to be rolled out in France and Belgium.

    KC's View:

    Published on: April 22, 2009

    The New York State Legislature reportedly will consider a bill that would ban the sale of tobacco products by drug stores and any other store with a pharmacy, including supermarkets and big box stores. If passed and signed by Gov. David Paterson, the bill would be the first such state-wide ban; similar bills have been passed in San Francisco and Boston.

    The legislation already is generating waves of protest among citizen smokers who feel they are being unfairly singled out for discrimination.

    KC's View:
    I understand that there does seem to be a disconnect between the sale of healthy products and the sale of killing items under the same roof…but the more I think about this, the more I think it is an unnecessary intrusion by government. There are chains that already have decided to stop selling tobacco products on their own, and smoking is down … but this needs to happen for reasons other than government dictum.

    Published on: April 22, 2009

    The Chicago Sun Times reports that McDonald’s plans to add the one-third-pound Angus Burger – long tested at various locations around the country – to its permanent menu.

    The Angus Burger costs about $4 and is seen as a higher quality product that will allow McDonald’s to compete more effectively with Burger King’s Steakhouse Burger and Wendy’s Baconator.

    According to the Sun Times, there is some concern among some McDonald’s franchisees about the higher priced Angus Burger being introduced at the same time as the company’s up-market coffee program; both programs are seen as being at variance with McDonald’s traditional marketing approach and franchisees are uneasy about the dual efforts.

    KC's View:

    Published on: April 22, 2009

    • LonestarShopping.com, a new online grocery shopping model, has launched in Houston, Texas.

    According to an announcement by the company, the new service is not a traditional online supermarket, but is more of a personal shopping service: “LonestarShopping.com boasts an online shopping cart of over 10,000 products, with shoppers that live near you ready to go shop at your local HEB. Or, if you want them to go to a different store like Whole Foods you can just type your list in from scratch and tell the shopper/driver to go get it.”

    KC's View:
    LoneStar says that its delivery fees are a minimum of $25, which it says “is less than you'd probably pay for a taxi to the grocery store.” Which only made me wonder exactly how many people in Houston take a cab to the supermarket…

    I’m a huge fan of online grocery shopping, but I cannot see any way that this model works…especially in a recession, when people simply have less disposable income. Good luck to them…but I wouldn’t be making any long-range plans based on this model being around for a long time.

    Published on: April 22, 2009

    • PriceSmart Inc. announced that it has opened its fifth store in Costa Rica, which brings to 26 the number of stores operated by the company in Central America and the Caribbean.
    KC's View:

    Published on: April 22, 2009

    • Tesco said yesterday that its annual sales were up 13 percent to the equivalent of $78.6 billion (US), with annual profit that was up 8.8 percent to $4.5 billion (US).

    • McDonald’s announced this morning that its first quarter profit was $979.5 million, up four percent from $946.1 million during the same period a year ago. Q1 revenue fell to $5.08 billion from $5.61 billion.

    KC's View:

    Published on: April 22, 2009

    …will return.
    KC's View: