Monday, May 12, 2008

Fresh & Easy Open Thread: Tesco's Fresh & Easy Says It Will Add 250 New Items to its Stores; What Should the Grocer Add?

Tesco's is saying today it will add about 250 new items across all categories to its current 61 Fresh & Easy Neighborhood Market small-format, convenience-oriented grocery stores in Southern California, Arizona and Nevada.

As we reported here yesterday, among the new items the retailer will add in the stores are a range of British food products from Tesco's homeland of the United Kingdom.

Among the categories and new items Tesco's Fresh & Easy will add include:

>Fresh, prepared foods and ready-to-heat meals.
>Ready-to-drink juices, tea-based drinks and more healthy beverages.
>Healthy dairy products like soy-based and goat milk yogurts, cottage cheeses and drinks
>Fresh meats, including a combination "ready-to-grill" item containing four sausages, four beef patties, and chicken thighs and drumsticks packed together, as well as more value-added "meal-centered" fresh meat items.
>Fresh sausages and bangers, including British favorites.
>Additional international or imported products along with the British-made foods.
>Some additional organic food and grocery products.

You can read today's Fresh & Easy's press release announcing the addition of the 250 new items over the next three months here.

Adding 250 new items is pretty significant because the Fresh & Easy stores at 10,000 -to- 13,000 square feet are limited assortment grocery stores. The markets have all of the departments of a regular supermarket, but offer a far less quantity of items across all store categories and departments.

For example, based on store observation and counts, we estimate a typical Fresh & Easy grocery store merchandises about 1,600 -to- 2,000 grocery items.

In adding the 250 or so new items, Tesco says it's responding to customer for a better and bigger food and grocery product assortment in the stores.

At a store grand opening event in Southern California some months ago, Fresh & Easy Neighborhood Market CEO Tim Mason said in response to a question by a Fresh & Easy team member that the grocer planned on adding new and different items to the store once it has a chance to evaluate the initial product selection.

The first Fresh & Easy store opened in Hemet in Southern California in late October, 2007. Since then, another 60 stores have opened in Southern California, Arizona and Nevada. The grocery chain has said its goal is to have 150 stores open by the end of this year.

Fresh & Easy Buzz has suggested for about five months now the Fresh & Easy stores need a better selection of food and grocery items.

Specifically, unlike many analysts, we tend to like the fresh & easy store brand overall. However, we believe Fresh & Easy needs to add more nationally branded food and grocery products in key categories (and add some key brands currently missing) to better balance out its store brand vs. national brand ratio, which is about 65% store brand to about 35% national and regionally-branded items.

The reason we make this argument is because Tesco wants its Fresh & Easy grocery stores to be shoppers primary--and to a lessor extend secondary--food shopping venues. In order to achieve that, the grocer needs to add a number of key branded grocery items across it's dry grocery category specifically, and in its other categories to a lessor but significant degree.

The reason this is important from a primary-secondary shopper creation and retention perspective, is that without these key brands--which Western USA consumers tend to love and buy--it will be very difficult for Fresh & Easy to move from its current status as a secondary and tertiary grocery shopping venue, to a primary and secondary one; with the emphasis on primary, which is the retailers goal.

As a result, we believe Fresh & Easy needs to do a full evaluation of its store's product mix, rather than just add 250 or so new items. Fine tuning product mixes is a dynamic process. The key, especially in small-format food retailing, is to work towards creating the best and most optimum core product mix a grocer can achieve. This requires taking into serious consideration local consumer food and grocery tastes as well as the wider category top sellers which comprise the core mix.

Adding the 250 or so new items though could be an exciting time for Fresh & Easy and its customers, as well as help bring in new, potential customers who have yet to shop any of the stores.

Since Fresh & Easy Buzz is read by everyone from Tesco corporate and Fresh & Easy store-level employees, to its competitors, food and grocery industry analysts and employees at all levels, as well as consumers who shop the stores, and those who haven't yet, we're interested in what you have to say.

What types--varieties, brands, flavors--of new food and grocery products should Fresh & Easy bring into its stores as part of the 250 or so new items it plans to add over the next few months? Fresh meat items? If so, what kind? More organics? What type? Gourmet food items maybe? Also, should most of these new items be under the fresh & easy store brand? Or should they be familiar national and regional brand items? Perhaps a mix of both?

We want and welcome your comments, ideas and suggestions. Tell Tesco's Fresh & Easy what types, varieties and brands of new items you think they should stock in the grocery stores.

You can choose to remain anonymous with your comments and opinions, or use your's up to you. Various options are on the screen, which you will see by merely clicking the comment link below.

For more about Tesco's new item plans you also can check out what the Fast Food Maven is writing about it in her blog, along with any comments from its readers here.


Anonymous said...

Fresh & Easy needs to add a better selection of name brand cleaning products because many consumers choose such items in the category over private label even if the cost is a higher.

Also fish and seafood almost doesn't exist.

In produce, a problem is that all the pre-packaged fruit and veggies ar a set weight like one pound. So you can't buy one pound and one quarter of something like you can with bulk produce. It's 1 Lb., 2 Lbs., ect only.

More popular label gourmet foods would be nice as well. Before I shopped at one of the stores I thought they offered lots more of such items.

Anonymous said...

Southern California and Arizona have about the highest percentage of Hispanics in the U.S. In some parts of the two states the population is nearly 50% of the total. This is big buying power. The Fresh & Easy stores will have to beef up their Hispanic food selection considerably to get even a small piece of this pie. More authentic Mexican food/grocery items, specialty cuts of meat, produce types, ect.

Anonymous said...

Add more varieties of beef in meat department.

Add larger pack sizes of things like toilet paper, paper towels. Jumbo packs. Fresh/Easy is losing sales to me because I need large packs, buy them at Costco.

More variety of fresh fruit. Does it all have to be packaged?

Dannon yogurt

Starbucks whole bean coffee like at Bashas and A. J's.

Better quality fresh orange juice like Odwalla.

Live in Phoenix, Arizona

Anonymous said...

Tesco should have done its market research first. You only get one chance to make a good first impression. My impression was of a boring store where everything in portioned out under plastic. Not my cup of tea. I had hoped to see some English products.
Maybe I’ll go back to check out the new products.
Also, they need to study their demographic, I doubt that many of the Laguna Woods Village denizens will take to the self-check-out-only. Older people want to interact, to see someone, to speak to someone.
They have a nice big Stater brothers just down the block with lower prices, and real people. Not to mention you can squeeze the tomatoes.

Anonymous said...

My family and friends have been talking for years about how we should make a business selling some of the ready to eat meals that Tesco has in England. You can look over their shelves and know you’re going to get an excellent meal without any preparation on your own part. Variety of cultures; English, Italian, Indian, Chinese etc, all excellent. We were excited about Tesco opening stores over here so we could get similar products. What a let down. They’re nothing even close to what they have in England. How difficult would it be to give a supplier the recipe and say “make 200 million of these”? What a wasted opportunity from an American market that would love to have excellent meals just sitting in their freezer ready to go.

Anonymous said...

Ditto the MAY 13, 7:50 PM comments. Writing this from in-laws' home in Suffolk. Really disappointed by photos and descriptions of Fresh & Easy stores in U.S.A. We've enjoyed Tesco ready-to-eat meals every night this week. However, wouldn't dream of buying products as marketed in U.S.A. They look like 5-day-old-bread stores.

Come on! We need you in America to be as enticing as you appear in the U.K. Get your act together and take it on the road!