When We Suggested Adding 'Local Foods,' We Meant Local to the U.S. Fresh & Easy Stores Not the UK: Tesco to Add 'British Foods' to Fresh & Easy

Nancy Luna, a business reporter for the Orange County Register newspaper in Southern California, as well as the writer of a food blog at the paper called The Fast Food Maven, is reporting in her blog United Kingdom-based Tesco plans to make some changes and additions in terms of product selection in its small-format, convenience-oriented Fresh & Easy Neighborhood Market grocery stores.

Among these product mix changes and additions--which Fresh & Easy Buzz has heard bits and pieces about as well over the last few weeks--include adding more international food items, with a particular focus on increasing the variety and quantity of British foods in the stores, and adding an overall greater variety of fresh & easy store products in general, especially in the fresh meat and deli departments.

More British food products ?

Regarding Tesco adding more imported foods from Britain in the Fresh & Easy grocery stores, this is a very interesting development to Fresh & Easy Buzz for a couple of reasons.

For about the last five months or so, we've been monitoring a website, and some times participating in it by posting questions, called BritishExpats.com. The website is a community of interest and sharing for United Kingdom expats living in the U.S. and elsewhere in the world.

We first became interested in the BritishExpat.com website because a UK native living in California sent us an email with a link to a post on the site in which numerous Brits living in California, Arizona and Nevada, where Tesco currently has its 61 Fresh & Easy stores, were commenting on and complaining that the British grocer Tesco's Fresh & USA grocery markets were very poor "British grocery stores."

In other words, the perception of the 20 or so UK expats living in these three U.S. states who commented on the website post was that Tesco's Fresh & Easy stores were American versions of a British food store; sort of a British specialty foods store created in the U.S. to sell British foods.

We didn't correct them--a good observer doesn't do that if he or she wants to learn from observation. Rather, intrigued by the misperception of what the Fresh & Easy grocery stores are--they're everyday low-price basic grocery stores/ fresh, prepared foods markets, with a slight specialty foods twist, according to Tesco--we've continued to monitor the British expat website fairly regularly for the last few months.

We also started paying very close attention to other websites, like Chowhound.com and yelp.com. Both are restaurant and grocery store consumer review sites, where people post reviews of various restaurants and grocery stores, and others comment on the reviews and their experiences with the stores.

Over the last few months of monitoring these websites, along with the British Expat site, we've read numerous posts by both people identifying themselves as UK natives living in the U.S. and just plain old U.S. natives. Expats and natives alike in these particular posts on the websites talked about spending time in the UK, liking many of the foods, and bemoaning the fact Tesco's Fresh & Easy doesn't do a very good job of being a "British grocery store" in America.

The British grocer vs. British food store identity problem

In other words--and its a piece we've been working on for sometime but will offer it in part here--Tesco's Fresh & Easy has a serious identity problem, which means a retail positioning problem, among numerous consumers--native and expat alike--which is they think Fresh & Easy stores are "British food stores "rather than what the stores really are, which is a basic grocery and fresh foods grocery market designed by Tesco to serve all consumer segments and demographics, and to become a chain-store version of the typical American neighborhood grocery store, with a few twists like offering lots of fresh, prepared foods, specialty wines, and organic foods offerings, along with the basic groceries.

That's Tesco's (not well communicated) positioning for the Fresh & Easy stores folks, regardless if your a plain old American or an expat.

So, this is why when we first started hearing rumors that Tesco planned to add numerous authentic British food items to its stores, our first reaction--with no disrespect intended to our many British friends and correspondents--was to laugh out loud.

Now, don't get us wrong--we like and have much respect for British food and grocery products produced in the UK. In fact, in another life, for a time we even imported and marketed many UK-produced food and grocery products to the U.S. and elsewhere and made a buck or two doing so.

It's just we happen to know from our Britishexpat.com chums that many of them have been asking Fresh & Easy senior management to make those "British grocery stores" in America better by adding lots more British food products, for bloody damn sake.

And it sure looks like Fresh & Easy listened. Ms. Luna's report is true we believe as it mirrors the rumors we've been hearing for the last three weeks or so.

And, Fresh & Easy Buzz is pleased our British expat chums will now likely have a better selection of home-produced food products available to them at the Fresh & Easy stores.

But folks...how many British expats--other than the Fresh & Easy guys--do you really think live in Southern California, the Phoenix, Arizona Metropolitan region, and Metropolitan Las Vegas, Nevada, where the current 61 Fresh & Easy grocery stores are located? That's a question, we've haven't done a census. We do know it is somewhat less than Hispanics, Asians, African Americans, Italians, Irish, Russians and a couple other ethnic or national groups though.

However, we doubt if we would need hundreds of census takers and a Supercomputer borrowed from NASA in order to do a count and tabulation of the number of British expats who live in these three Western U.S. regions.

The real problem dear readers, isn't that the Fresh & Easy stores haven't had enough produced- in-the-UK-products, it's that so many consumers--native Western U.S. and expat alike--have a false perception of Tesco's Fresh & Easy grocery markets as being British food-oriented stores rather than what they are--basic grocery and fresh foods markets which just happen to be owned and operated by a supermarket chain from Britain.

That my friends-- as Republican Presidential candidate Senator John McCain always says when he is a bit nervous or wants to create voter intimacy--is a real problem, and one our analysis shows runs far deeper than just among those specific consumers on the websites we mentioned above.

Of course, once a consumer goes into a Fresh & Easy grocery market, they see it's not a British food store. And, we aren't saying this is a massive, universal misperception--just that it's a serious and significant one. The key point is Tesco needs to drive new consumers into the stores, and such misperceptions hamper that effort seriously.

We don't think adding a bunch more British-produced food and grocery products will hurt the Fresh & Easy stores all that much overall--they have much bigger problems. But it won't do them any good overall either in terms of this consumer misperception of the stores, which we don't believe Tesco's Fresh & Easy senior management has any awareness of. It's there, contract an independent survey, and you will be surprised at the results if the questions are chosen properly.

As we mentioned, we've been working on a piece about this "identity" and "positioning" problem for a few weeks now, so we will have more in-depth analysis on the issue at a later date. However, in light of Ms Luna's report, and the comments we've been hearing from our correspondents, we wanted to address the issue a bit in this piece.

The Fresh & Easy format and marketing positioning muddle

The "British foods grocery store vs. the basic grocery store which just happens to be run by a British based company" identity and positioning problem illustrates what we've called on Fresh & Easy Buzz the "format and positioning muddle" that Tesco has created with its Fresh & Easy Neighborhood Market grocery stores.

In terms of the retailer's positioning of the stores and format, it's just all over the place.

Successful grocery retailers tend to have solid, defined positioning elements regarding what their stores are--and aren't. Think Safeway's "Lifestyle" stores, Whole Foods Market as a natural foods' grocer, Aldi and Save-A-Lot as small-format discount grocers, for example. Clean, clear positioning.

As in all marketing, the more clear a food retailer's proposition and positioning is, the better consumers "get it," and buy your offering--be it a hair care product, a loaf of organic bread, an automobile or a grocery store.

Fresh & Easy's proposition and positioning is all over the map. It's a store for everybody on the one hand. On the other hand, the retailer is positioning the stores with its new PR firm as the place to shop for organic foods and specialty wines.

Tesco wants the stores to be primary shopping venues for consumers who live in the neighborhoods where the stores are located. But all of Fresh & Easy's produce is either packaged in plastic tubs or plastic bags.

For decades, one of the top reasons consumers have given in the massive, annual consumer survey the supermarket trade group Food Marketing Institute (FMI) conducts as a primary reason for choosing a primary grocery store is...you guessed it, the retailer's fresh produce offering, and specifically offering a wide variety of fresh, bulk (read not in packages), high quality produce.

Packaged produce is fine for a specialty grocer like Trader Joe's, which doesn't rely on the category to be a major contributor to overall store sales. But a grocery chain like Tesco's Fresh & Easy, which says its format and retail positioning is to serve all classes of consumers, as well as to be a primary as well as secondary and tertiary food shopping venue, would be wise to listen to what the American consumer says they like when it comes to fresh produce.

Fixing the muddle is imperative

We've given Tesco the benefit of the doubt regarding its format and positioning muddle--and still do to a large extent--since the first stores have only been open for about 7 months. We understand start ups and appreciate and respect works in progress.

However, the first stores' one year anniversary isn't all that far away, and rather than showing incremental improvement in the Fresh & Easy positioning process, Tesco in our analysis has really created more confusion because it lacks an overall retail format and positioning philosophy--or is just failing to properly communicate it if it has one--in which to tie all the desperate elements--cheap groceries on the one hand, upscale fresh foods, organics and specialty wines on the other--together.

Such an overall positioning hat rack in which to hang the many different merchandising elements and product mixes (the various hats) contained in the Fresh & Easy stores can be found--and communicated well. For example, Costco Wholesale has been and is doing it well. So is Safeway with its "Lifestyle" format supermarkets, which mix basic groceries with upscale premium and organic offerings.

In order to be successful in the medium to long run--even in the short run for that matter--Tesco needs to find this overall positioning element and then communicate it effectively in everything its does--from its stores and advertising circular, to its media advertising (which is nearly nonexistent), public relations initiatives and on its website. Everything a retailer does is marketing and merchandising, even how he or she says hello to a shopper in a store.

Meanwhile, the good folks over at Britishexpats.com will be happy if Fresh & Easy does bring in lots of authentic produced-in-the-UK food and grocery items. And, those people from wherever they were born who enjoy British foods and can't find them at the many supermarkets and specialty foods stores in the west that already stock them, might enjoy picking up an item or two if they shop the Fresh & Easy stores.

But, won't it just increase the misperception already out there among many consumers that Tesco's Fresh & Easy USA grocery stores are British food stores come to America?

More British foods: To publicize or not?

We would suggest Fresh & Easy not publicize the introduction of these new British food and grocery products too much. Especially unless it realizes its early publicity--in which hundreds and maybe thousands of articles were written in the business sections and other pages of U.S. newspapers with the headline, "British Grocer Invades America,"--actually helped to create the false perception among numerous consumers that Fresh & Easy stores were going to be "British foods" grocery markets rather than what they really are.

You see my friends, this publicity in part created the format and positioning muddle we discussed above. It's also why the expats writing in the website have been so disappointed in their British Fresh & Easy food stores which lack a decent offering of produced-in-the-UK foods and grocery products like a good "British foods store" in America should. We mean...if that's what Fresh & Easy was, of course.

We must ask a simple question: If the Fresh & Easy stores are basic grocery stores and fresh foods markets featuring everyday low prices and designed to be primary and secondary shopping venues, or in Tesco's words, " designed to serve everybody," why in the bloody hell is the retailer spending its time focusing on such a tiny niche when so much needs to be done in the larger scheme of things?

Introducing other fresh & easy store brand new items

Regarding Fresh & Easy's bringing in additional new items under its fresh & easy brand, and labeling them with "blue colored" "NEW" tags, that could be a good idea.

It all depends on the products brought in and if they serve the overall positioning of what the stores are. And, as stated above, currently that positioning is a muddle, which leads to the conclusion of "who knows," regarding if those new items are a good, bad or neutral idea. Remember, everything a retailer does is positioning.

At any rate, the addition of the new fresh & easy branded items, including those in the fresh meat and deli categories, isn't really a major development. Fresh & Easy initially planned to add numerous new items at about this time of the year (not the British foods ones though). That's a small part of the reason for the April -to- July new store opening pause. It is a "new" thing though, and Ms. Luna is correct to report on it in our analysis.

After all, getting the retailer's in-house food product production operation process completely up and running hasn't been easy. In fairness, it wouldn't be easy to accomplish for any retailer that's been opening a new store every two or three days for the last seven months like Fresh & Easy has. In our view, its impressive Tesco had as many fresh & easy store brand products on the shelves as they did when the first stores opened in November, 2007.

Fresh & Easy stores need product mix review not just additions

As we've suggested numerous times, we think Fresh & Easy needs a complete review of its product mix. The mix does not reflect the markets the stores are in as well as it should and could. The stores also are missing some key national brands in various categories. These are brands and key items any grocery store that wants to be a primary or even secondary shopping venue must have.

And, of course, we continue to argue Tesco needs to customize the stores on top of tits basic format (simple to do), so they reflect at least some minor local features of the communities and neighborhoods they're located in. This includes some customization and localization (adding more local foods) of the overall store product mix, which is something Tesco is doing in a big way in the UK, as we wrote about here last week.

We just mentioned three of four "big picture" focuses that would help Fresh & Easy greatly in its positioning. these areas, along with a few other key factors, are where the grocery chain should be focusing its energy, efforts and cash if it wants to be a success in America, in our analysis and view. Now, about that fresh & easy store brand Marmite currently in development...?