Fresh and Easy
Can Small-Format Markets Succeed?
Will Americans accustomed to super-sized supermarkets go for a smaller, moderately less expensive store to buy their food in? Six months after the opening of Tesco's Fresh and Easy in Hemet, California, the jury is still out. Fresh and Easy is a new supermarket chain in California, Nevada and Arizona. Owned by parent company Tesco, Fresh and Easy is smaller than a typical market and less expensive than Whole Foods. Fresh and Easy is attempting to make inroads into a market characterized by small profit margins. In a market dominated by large supermarkets with extensive inventories, can Fresh and Easy succeed?
A Neighborhood Market
British retailing giant Tesco plc is the power behind Fresh and Easy. According to Wikipedia, Tesco, the world's fourth largest retailer, decided in 2006 to open small "neighborhood markets" in the Western United States starting in 2007. The first Fresh and Easy opened late last year in Hemet, California. On November 8, 2007, five more stores opened, in Los Angeles and Orange County. Tesco's strategy is to open small-format stores in underserved areas, and to serve all levels of the market. This approach means that while consumers may not make Fresh and Easy the stop for major shopping trips, they just might go there when all they need is a few items.
In Las Vegas, Nevada, Fresh and Easy has opened eight stores, with two in nearby Henderson, and two in North Las Vegas. True to the plan, the stores are smaller than most supermarkets. They also carry fewer products. There are no cashiers: Customers must check themselves out. There are employees waiting, though, in case someone needs help. One of the reasons for not using cashiers: to keep prices low. We will see whether they have suceeded.
Lower Prices?
Fresh and Easy's prices come in between an Albertson's or Smith's, and a Whole Foods. One reason their prices are lower is that they have a lot of items under their own label. Over 45%, according to an article in Fortune. In a flyer showing prices good until May 13, 2008, Fresh and Easy offers a box of twenty bags of Ginger Peach Black Tea for $1.98. A box of cornbread mix for $1.89. And, a can of beef chili - no beans - for $1.49. All private label. Fortune writer Matthew Boyle wonders if U.S. shoppers will embrace store brands the way the British seem to. "Unlike the Brits, we Americans are still a bit wary of store brands --frightening childhood memories of generic cans of "BEANS" still lurk in our minds."
In addition to its canned and packaged foods, Fresh and Easy offers fresh prepared meals, salads, and other dishes, again, under its own label. A 12-oz package of sliced chicken breast pieces goes for $4.99; a 16-oz package of Spanish rice, for $1.99. The size of these packages makes them convenient for single people, or smaller families. A single shopper said that while she would not make Fresh and Easy the site of a major food shopping trip, she would be happy to go there for "a few things." Not only because of the size of the portions, but also because they carry foods she can't find in a regular store, such as chocolate-covered espresso beans.
Other Issues:
The reception of Fresh and Easy has been mixed. While a trip to the market will usually turn up a few shoppers, it is usually not as busy as a typical supermarket. In addition, the Las Vegas stores have been picketed because the employees are not unionized. One newspaper article said that Fresh and Easy's advertising had prepared customers for prices much lower than those actually encountered. This problem seemed to have been resolved at press time. Also resolved was the issue of not enough stock on the shelves. What remains to be seen is whether the markets will end up being true competitors in the U.S. market, and if their approach is able to take customers away from the larger stores.
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