Thursday, May 29, 2008

Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 5

On March 12 Fresh & Easy Buzz was one of the first publications to report that Jeff Adams, the former CEO of Tesco PLC's Tesco-Lotus retail division in Thailand, was joining Fresh & Easy Neighborhood Market USA in a senior executive position reporting directly to CEO Tim Mason.

Yesterday, Tesco's Fresh & Easy Neighborhood Market formally announced (and confirmed our March 5 report) that Adams has joined the small-format food retailing venture as executive vice president of operations, reporting directly to Tim Mason.

An interesting aspect of Adams' position and title is that he will share it with Bryan Pugh, who held the executive vice president of operations title (and keeps it) and position prior to Adams' arrival from his duties as CEO of Tesco-Lotus in Thailand.

Adams has been working at Tesco's Fresh & Easy Neighborhood Market corporate offices in El Segundo in Southern California for some time, despite the retailer only making the official announcement (and confirmation of our March 5 report) yesterday.

A Fresh & Easy corporate spokesman says Adams, who was born in the United States, will be on the same level as all of the grocery chain's senior corporate executives, each who reports directly to CEO Mason.

For Adams, assuming the co-executive vice president of operations position at Fresh & Easy, which is essentially a start-up with only 61 stores currently open in Southern California, Arizona and Nevada, has likely been a change from his last assignment with Tesco as the CEO of Tesco-Lotus in Thailand, which not only has higher sales than Fresh & Easy, but of which he was number one as CEO.

Additionally, it isn't clear how the co-executive VP's of operations will divide up their duties.

Austin, Texas-based Whole Foods Market, Inc. has a similar arrangement however, with Walter Robb and A.C. Gallo both having the title co-president and the same job description, and reporting directly to CEO John Mackey.

Despite the Whole Foods example, it's still the exception rather than the norm to have two senior executives sharing the same position and title in U.S. food and grocery retailing. Perhaps it's enlightened though, if it can work.

The official position of Tesco's Fresh & Easy Neighborhood Market is that Adams, who was raised in West Virginia and reportedly worked for Wal-Mart in the USA for a time, was added to the grocery chain's senior executive ranks in order to help with Fresh & Easy's rapid store expansion program.

While this is part of the reason for Tesco having Adams leave his CEO post at Tesco-Lotus in Thailand, it's not the complete reason.

Our sources for the March 5 report, including one very close to Tesco PLC operations in the United Kingdom, told Fresh & Easy Buzz Tesco CEO Sir Terry Leahy hoped at the time the fact Adams was a native of the U.S. would help the fledgling Fresh & Easy chain better adapt to U.S. food retailing conditions, as well as add an experienced hand to the team.

Fresh & Easy is preparing to resume its rapid new store opening program however. That program saw the retailer open 61 stores from late October, 2007 -to- March, 2008, which is a new store opening rate of about one new store every 2.5 -to- 3 days over that less than six month time period.

As we reported here On March 29, Fresh & Easy Neighborhood Market is taking a three month pause in opening new stores from April until the end of June next month. The next new Fresh & Easy small-format, convenience-oriented grocery store will open on July 2nd in the Orange County city of Manhattan Beach in Southern California.

Tesco has been inking numerous leases for new stores in the last couple months, as Fresh & Easy Buzz readers are aware from our numerous reports on the topic. The company also has numerous Fresh & Easy grocery markets in the pipeline set to open throughout this year in Southern California, Arizona and Nevada.

Additionally, Fresh & Easy Neighborhood Market recently acquired 10 empty former Rite Aid drug store buildings in the Las Vegas Metropolitan region which the grocer is in the process of converting to Fresh & Easy combination basic grocery and fresh foods markets.

New markets also are in the works. Tesco plans to open five Fresh & Easy grocery stores in Bakersfield and Fresno respectively in California's Central Valley early next year. These will be the first Fresh & Easy stores for Tesco in these markets.

One store also is thus far planned for Modesto, which is in the Northern San Joaquin Valley region of the Central Valley, about 130 miles north of Fresno.

Further, next year will bring Tesco's big push into Northern California, when it starts opening the first of its planned 19 stores in the Sacramento Metropolitan region and 18 stores in the San Francisco Bay Area.

Lastly, Tesco plans to build and operate a Northern California distribution center in Stockton, which is in the Northern San Joaquin Valley, about 30 miles from Modesto and about 70 miles from San Francisco. The plan is to have the DC up and running by the end of this year or early next year so it can supply all of the planned Fresh & Easy grocery stores set to open in Northern California.

This aggressive new store opening schedule, beginning with the Manhattan Beach store opening on July 2, should keep both Adams and Pugh busy as co-executive vice presidents for operations.

Tesco originally said it planned to have 200 of the small-format, convenience-oriented combination basic grocery and fresh foods Fresh & Easy markets opened in California, Arizona and Nevada by the end of 2009. The retailer recently scaled back that number, saying it expects to have in the neighborhood of 150 Fresh & Easy grocery stores opened and operating by the end of 2009.

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