Tuesday, April 1, 2008

Does Tesco (and Fresh & Easy USA) Have a 'Credibility' Problem? One Retail Real Estate Industry Veteran Believes So

Forty-year retail real estate industry veteran Kenneth Leonard says Tesco has "launched one of the most irresponsible retail invasion plans (with its Fresh & Easy grocery market new store blitz in Southern California, Arizona and Nevada) he's seen in his 40 years of observing the U.S. retail real estate scene."

Find out what Mr. Leonard really thinks in this brief analysis piece he wrote today on the Gerson Lehrman Group professional services website.

We don't characterize Tesco's Fresh & Easy launch as irresponsible. Rather, as we've suggested here before, we believe it was poorly researched; executed without considering the fact many of the empty retail supermarket and other retail format stores the grocer has located most of the current 59 Fresh & Easy grocery stores in were empty for a reason, which is that generally the previous retail tenants closed the stores because the locations were under-performing; driven by an ethnocentric attitude that "localism" doesn't matter, and a few other key issues. Well... maybe irresponsible isn't a bad choice of words after all?

We do believe the numerous Fresh & Easy launch mistakes can be redeemed by Tesco however, as we've suggested by way of offering numerous examples for going forward based on our analysis. To do so though will require a real sober analysis of what's gone wrong, eating some humble pie, and likely making some changes and/or additions in the Fresh & Easy top ranks. In particular, it wouldn't hurt to bring somebody in who has years of experience in the western U.S. grocery retailing market.

But, the good news for Tesco shareholders is that Fresh & Easy has recognized it has problems and taken a three month pause in its aggressive new store opening pace, which is something we suggested the retailer think about doing back in January.

We also applaud Fresh & Easy marketing chief Simon Uwins for announcing the "pause" in his blog on the Fresh & Easy website. It's far better to get out in front of a story like Uwins did with his announcement than to let it fester over a period of days or weeks and then end-up responding to it.

Making such announcements on the corporate blog shows it can be a real and serious communications tool. Moves such as the announcement are actually a good start in our opinion as the retailer moves forward in the next three months reviewing and tweaking the Fresh & Easy grocery stores.

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