Tesco suffered a double blow yesterday as City analysts claimed the group’s new US chain is in deep trouble, while its core UK business is being battered by the economy and losing ground to rivals.
One analyst claimed the new California-based Fresh & Easy convenience stores are missing sales targets by as much as 70%.
Tesco, the parent company, denies this, of course.
For once I’m actually on the cutting edge frontier of this so-called new shopping paradigm. We shop there about once a week, usually for very specific items, such as imported butter, British bacon, packaged (not-frozen) dinners, unpasteurized orange juice, teas, occasionally meats, fruits and vegetables. (Despite malicious rumors to the contrary, vegetables and fruits are consumed in my household.)
Is Fresh & Easy’s concept something that will be big? I don’t know. I’m notoriously bad at determining what kind of marketing nonsense people will fall for. If I was good at evaluating these concepts, I’d own some sort of hi-end organic dog treat bakery and be making a fortune off people with more money than sense.
So does that mean I think Fresh & Easy is a bogus concept? Maybe a little bit.
Let me explain the Fresh & Easy shopping experience a little bit. Fresh & Easys (Easies?) (hereafter referred to as “F&Es”) are small grocery stores, roughly twice the size of a 7-11, Circle K or other convenience mart. They are laid out in an efficient design, the majority of things people are probably looking for are in the first 3 aisles. Those items are fresh fruits and vegetables, dairy, packaged meals and side dishes, sandwiches and meat. If you’re looking for just shopping for something to feed the family on your way home from work, F&E is tailored for you. Packaged foods are typically sized for two people.
As you move further back in the store, you reach alcohol, breads, crackers, chips, cooking ingredients, frozen foods, and along the front of the store, drug store items. Most items in the store are typically F&E branded, but a few national name products are available.
Meats, and many fruits and vegetables are packaged in plastic trays, some are netted or netted into the trays, others are sealed and filled with freshness-preserving gas. F&E makes a point of stocking items marked as having low or no preservatives. I’ll mention that more later. Non-packaged fruit items, such as bananas are priced individually.
F&E also carried no tobacco products, which I applaud. Somehow though I think it’s because of their check-out system and liability rather than any ethical stand they’re taking. Whatever the reason, while laudable, this does set them further apart from a profitable convenience store staple. Convenience stores always do a brisk trade in death.
Fresh & Easy has no dedicated cashiers, all check-outs are self checkout, which, normally, I hate.
The typical self-checkout equipment found in Frys or Walmart is oriented not towards facilitating convenience for the customer, but towards minimizing staff costs while deterring theft. (Because, obviously, all customers a scumbag shoplifters.) These systems typically are only allowed for customers with 15 items or less because all items need to be weighed in advance on the front side of the bar-code scanner, and weighed again on the backside to make sure you aren’t slipping an unscanned item in the bag. All you need is one child helping you at the checkout line who puts some weight on either plate to send the whole mechanism into shoplifter alert mode, often requiring staff to come reset the mechanism. At least it doesn’t trigger a full-body search – I can imagine that the TSA would love to implement these into their airport security system, but haven’t quite worked out how just yet.
Also, even though it has been years since the introduction these style checkouts, the average person is still too stupid to work them. I’m always seeing someone standing there, reading the screen, mouthing the words to themselves and they try to make sense of the obviously too-complex english words on the screen. (“Hey, Violinda May, what does, ‘scan yer’ first item,’ mean?”)
Fresh & Easy has a couple of these evil registers and they work just a badly as everyone else’s. However, they also have a different type of self-checkout – the semi-assisted model, which works infinitely better. These don’t use scales, they use baggers. You pull your cart up to the register (no weighing required) and scan your items, after you’ve scanned them, you place them on a typical checkout style conveyor belt which whisks the groceries down to the bagging area, where (typically) an F&E employees bags your groceries for you. Occasionally, you end up bagging your own, but not often. This system is typically smooth and fast (although I did once have trouble with coupons) and works much faster and better than the “You’re all riff-raff, thieving scum” self-check out systems.
If you’re not comfortable doing your own scanning, an F&E employee will do it for you – when you start, there’s a button for start scanning, or have a cashier do it for you. Just hit that button and someone will come to you. (Don’t bother, you could scan it yourself before they get there.)
Once annoyance, F&E won’t automatically clear any credit purchase over $50 without checking your ID. That typically results in an inconvenient wait while someone comes over to check and punch in the all-clear code. With the prices of groceries shooting up, they might want to bump that to $75 or even $100.
These registers are part of the reason things are packaged in plastic trays or, like bananas, priced individually. Everything has been pre-allocated for you so that self-checkout works. There’s nothing in the store that isn’t bar-code priced.
Fresh & Easy employees are typically helpful and friendly.
Since the term “organic” when it applies to groceries is actually more of a marketing smokescreen than an actual definition of anything meaningful. I’m not going to evaluate F&E’s organic pedigree. Others have done so and claim that it comes up lacking – better than ordinary stores, but not good enough to satisfy the Earth-mother Gaia crowd.
What it does mean, though, is that F&E doesn’t compete on prices. They may be more economical than a really-fanatical organic food mart, but they don’t fare well against a typical supermarket. Further, in this country, “store brand” products are viewed (wrongly, in most cases) and low-cost, lower-quality items. (There’s the beauty of marketing, if you want to call it that.) Since F&E’s inventory is mostly store-branded, I think there’s probably a bit of market resistance.
For example, and, I’m 100% percent making this up, let’s say that Kraft Macaroni and Cheese is $1 a box at Fry’s, and Fry’s branded macaroni & cheese is 3 for $1. People still buy Kraft because it is perceived better. Along comes Fresh & Easy with a so-called more natural product at $0.90. It might be cheaper than Kraft, but people price evaluate it against the store-brands, in which case it is quite expensive.
Places like Trader Joe’s have managed to “sell” their store brand as being better than the national brands with a combination of “we’re all-natural” and “we cost more” because of it. Irony time, right? I’ll shop F&E any day over Trader Joe’s, but I suspect I’m in the minority.
Still, the fact that there are many chains of stores, and not all of them can be the cheapest proves conclusively that people don’t shop exclusively because of price.
Another “problem” with F&E is that, because of the no and low preservative model, their foods have terrible shelf lives. Fine, I don’t mind fresh meat expiring this week, but a bottle of salad dressing that expires in a week? I soak salads in dressing, but as a family, we can’t consume a bottle of dressing in a week.
When they first started, their meals, such as a ravioli in a bolognese sauce would typically have 3-5 days of shelf-life. Now, they have large stickers on them saying “Suitable for freezing” indicating that F&E may have realized that there’s some resistance to the short shelf life. (I have no empirical data on the subject, but I understand that Europeans typically buy smaller quantities of groceries, but shop more often. F&E is trying to tap that market, but this is not something that has caught on in the US, to my knowledge. We have large refrigerators, and they’re full.)
So, my conclusion is that Fresh & Easy has a convenient and fast shopping model. They stock enough items to do your full grocery shopping. All of the products we’ve had have been good, and some excellent. (Their French bread isn’t crusty enough, that’s my one complaint with their products.)
Do I think they’ve missed their targets by 70%?! I have no way to know that, but I can say this, location seems to be a huge issue in the success of the F&Es. There’s one location down at Baseline and 19th Ave, every time I’ve been there, it’s been quite busy. But – there is nothing else in that area, it’s a wasteland. It’s one of those areas that was rather like a slum that, developers desperate to build new homes that aren’t 90 miles from the city, started to reclaim, but as far as I can tell, F&E is the only store within 2-3 miles. How long will that last?
The newest store at Glendale and 19th Ave, an established neighborhood, has one of the larger Fry’s markets diagonally across the intersection. That store has been there (in one form or another) for as long as I can remember, and I’ve been familiar with this neighborhood for at least 20 years. That F&E is almost always empty when we visit.
Now, I’ll be quick to say that, because of the relative locations of those two stores, we’ve visited them at dramatically different times of the day, and, indeed, the same can be said of the other two we’ve visited, so that may completely invalidate my suppositions about location being more critical than concept. Time will tell. The newest one, which is moving along quickly now, is even closer to my home, but in an area near the central-corridor housing boom. There’s not much down there for shopping, and I predict this one will be a better location than Glendale and 19th.
I do hope they make it, they are a nice addition to the shopping scene..