Wednesday, August 27, 2008

UFCW Union Reports Tesco Fresh & Easy Neighborhood Market's Prepared Foods Supplier to Labor Board For What it Says is Unfair Firing of Six Employees

The United Food & Commercial Workers (UFCW) union has charged Tesco Fresh & Easy Neighborhood Market's fresh, prepared foods supplier 2 Sisters Food Group with unfair labor relations practices in the U.S., reporting the company to the U.S. Labor Relations Board for what the union says is the unfair firing of six of the firm's employees for attending a union recruitment meeting, along with filing complaints against their managers at the company.

Tesco essentially brought United Kingdom-based 2 Sisters Food Group with it from the UK to Southern California USA (where Fresh & Easy is headquartered) to be its supplier of ready-to-eat and ready-to-heat fresh, prepared foods in its current 74 (and rapidly growing) small-format combination fresh foods and basic grocery Fresh & Easy stores.

In a statement, Emily Stewart who is one of the leaders of the UFCW union's campaign to bring Tesco to the table and meet with and discuss the unionization of Fresh & Easy Neighborhood Market store-level workers, said: "We have uncovered evidence that workers are being harassed and intimidated by 2 Sisters management to deter union activity, in clear contravention of US labor laws."

The U.S. Department of Labor has a process in which company employees, unions and others can report firms such as 2 Sisters Food Group to its labor relations board for investigation. Companies reported have the right to offer their side of the story as well. In the last 8 years however under the administration of President George W. Bush, the U.S. Department of Labor and its Labor Relations Board has investigated far fewer reports like the one by the UFCW of 2 Sisters than it has under past Presidential administrations, like the Clinton Administration in the 1990's.

The 2 Sisters Food Group built a $60 million fresh, prepared foods facility near Tesco's 850,000 square foot distribution center in Riverside, California in order to supply the fast-growing chain with ready-to-eat and ready-to-heat prepared foods.

UK-based 2 Sisters Food Group was only founded just 15 years ago in 1993 but has rapidly grown into a company that has 13 plants in the UK, one in Holland and one in the U.S. According to its website, it currently employees over 5,500 people internationally and has annual sales of ~650 million-p (British Pounds).

At press time, 2 Sisters Food Group hasn't issued a statement regarding the UFCW's claims and its reporting of the company to the labor board for what it says are the unfair firings of the six company employees.

The reporting of Tesco Fresh & Easy's prepared foods supplier, which like Tesco's Fresh & Easy is a non-union company, appears to be the latest and newest element on the UFCW's multi-front campaign designed to get Tesco executives to meet with union leaders to discuss unionizing Fresh & Easy Neighborhood Market employees.

That campaign by the UFCW, both in the U.S. and in the United Kingdom, includes leafleting neighborhoods where Tesco has existing and is opening new Fresh & Easy grocery stores with anti-Fresh & Easy flyers, demonstrating and picketing in front of the stores, conducting a political lobbying and media campaign in the U.S. and the UK, and getting the support of Democratic Party nominee for U.S. President Barack Obama, who has written two letters to Tesco CEO Sir Terry Leahy asking him to have company representatives meet with UFCW leaders.

Thus far the UFCW campaign hasn't budged Tesco. Tesco CEO Leahy and Tim Mason, CEO of Tesco's Fresh & Easy Neighborhood Market USA, both say the company has no plans to meet with UFCW representatives and sees no reason to do so. Further, Tesco says the union is free to organize Fresh & Easy store-level employees in accordance with existing U.S. labor laws, stating that it is up to the workers as to if they want to join the union or not.

Tesco is not required by U.S. labor law to meet with the union's representatives. Doing so is voluntary.

UFCW Tesco campaign being discussed at Demo convention

Meanwhile, Fresh & Easy Buzz has learned the UFCW union's Tesco campaign has been the topic of discussion among various union and political types at the current Democratic Party National Convention in Denver, Colorado.

The UFCW and every other U.S. labor union is supporting U.S. Senator Barack Obama for President against presumptive Republican Party nominee Senator John McCain. Senator Obama officially received his party's nomination for President earlier today in Denver. He will give his acceptance speech tomorrow night in Denver to a crowd expected to number 70,000 -to- 75,000.

America's labor unions, including the UFCW, are mobilizing tens of thousands of union members to conduct a nationwide grass roots campaign between now and November to help get Senator Obama elected President. The unions also are among the leading financial donors to the Obama campaign.

Organized labor is banking on an Obama victory in November to open the door to be able to increase union membership, which is at an all time low in the U.S.

Senator Obama supports the Employee Free Choice Act, a piece of legislation currently before the U.S. Congress. Organized labor is the major sponsor of this measure and has built a coalition in Congress in support of the measure.

Republican Presidential candidate Senator John McCain doesn't support the Employee Free Choice Act, which would establish stronger penalties for violation of employee rights when workers seek to form a union and during first-contract negotiations, provide mediation and arbitration for first-contract disputes, and allow employees to form unions by signing cards authorizing union representation.

It's the last aspect of the legislation, allowing employees to merely sign cards authorizing union representation rather than using the current secret ballot system, that not only is the most controversial part of the proposed legislation but the one getting the most objection by corporate America.

You can read the entire text of the Employee Free Choice Act legislative bill here, along with reading some related information about its supporters and other issues surrounding the proposed legislation.

If passed, the legislation will make it much easier for unions and employees to choose union representation where they work. Rather than go through the current secret ballot voting process which requires numerous steps before an actual secret ballot vote can be taken, unions and workers would have a much easier time because the act would allow employees to fill out a simple card saying yes or no to being represented by a union. If a majority says yes, union representation can go forward essentially.

What we've learned is that a number of labor unions have informally discussed supporting the UFCW more aggressively in its campaign to bring Tesco to the table to discuss the unionization of Fresh & Easy while meeting in Denver at the Democratic National Convention.

By no means is it at or even near the top of organized labor's agenda. Getting Barack Obama elected President is the number one objective and focus. However, since so many representatives of U.S. organized labor are attending the Denver convention, they're using the opportunity to discuss numerous issues and strategies, which is how the Tesco Fresh & Easy discussions have come up, Fresh & Easy Buzz has learned.

What next?

The next step in terms of the UFCW union's reporting of Tesco Fresh & Easy's prepared foods supplier 2 Sisters Food Group to the labor board is to await the response by the board as to if they will investigate the union's allegations that the six employees were unfairly fired for attending a union organizing meeting and for reporting managers regarding labor issues. It is against U.S. labor law to fire an employee for attending a union organizing meeting.

The issue is likely to turn up the heat on Tesco regarding the union issue with its U.S. Fresh & Easy grocery chain. Tesco, which is based in the UK and is that nation's leading retailer along with being the third largest retailer in the world, has union representation in its UK stores as well as being affiliated with unions in nearly every other region it does business internationally except for the U.S.

Tesco's Fresh & Easy Neighborhood Market is far from the only major food and grocery retail chain in California, Nevada and Arizona, where its current 74 stores are located, that's non-union. Major non-union chains in these three states include Wal-Mart, which is the world's largest retailer and the number one seller of food and groceries in the U.S., Whole Foods Market, Inc., specialty grocery chain Trader Joe's, Target, which operates Super Target combination food and general merchandise stores, and three smaller but fast-growing natural foods chains: Sprouts Farmers Market, Sunflower Farmers Market and Henry's Marketplace.

Tesco though has been very cool regarding the UFCW campaign thus far. It's senior executives seldom if every comment on the union publicly in the U.S. or in the UK. Additionally, neither Tesco PLC or its Tesco Fresh & Easy USA division has launched a public relations campaign to counter the union, preferring to simply repeat its statement that it is up to the retailer's store-level employees to choose if they want or don't want to join the union.

Tesco has not issued a statement at press time regarding the UFCW action against 2 Sisters Food Group. We would be surprised if the retailer does issue a statement regarding the development since 2 Sisters Food Group is independent (ownership) of Tesco.


Click here to read a selection of past stories and posts about the UFCW/Tesco Fresh & Easy issue in Fresh & Easy Buzz.

Wal-Mart's Four Phoenix Metro Arizona Small-Format 'Marketside' Community Grocery Stores Nearing Completion; Openings Just Weeks Away

The initial four Wal-Mart Marketside small-format combination fresh food and grocery community markets set to open this fall in the Phoenix, Arizona Metropolitan region are nearly completed, Fresh & Easy Buzz has learned.

This morning the Financial Times newspaper published a story in which it reported that the website for the city of Mesa, Arizona, one of the four Phoenix Metropolitan region cities the first four Marketside stores will open in, has the photograph pictured above posted on the site. That photograph from the city of Mesa, Arizona website which we have posted above shows a near-completed Marketside community grocery store.

The other three Phoenix region initial Marketside stores set to open this fall are in the cities of Chandler, Gilbert and Tempe. [Click here for the addresses and maps showing the locations of all four stores.]

This morning, a Fresh & Easy Buzz correspondent went out to the Mesa, Arizona Marketside site and reports the store looks nearly completed, needing just some minor work needing to be accomplished in order for it to be ready to stock with merchandise.

This afternoon, the correspondent visited the sites of the Chander and Gilbert Arizona stores and reports those stores also are nearly completed. Fresh & Easy Buzz talked to a representative of the city of Tempe building department today who told us the Tempe Marketside store also looks to be nearly completed.

The Fresh & Easy Buzz correspondent reports the Mesa Marketside store (pictured at the top of this piece) is slightly larger inside than a Tesco Fresh & Easy Neighborhood Market store, which tracks with our previous reports. Fresh & Easy stores average about 10,000 -to- 13,000 square feet, while the Wal-Mart Marketside stores average about 15,000 -to- 20,000 square feet.

The Marketside store does look very similar to a Fresh & Easy grocery store on the outside however, the Fresh & Buzz correspondent reports, although he said they have a slightly more upscale look than the Fresh & Easy stores in converted retail buildings do, including the use of natural wood around the outside of the front entrance along with the use of purple European-style awnings. And just like Tesco's Fresh & Easy stores, which do not mention the Tesco name on the store signage, the Marketside stores also omit any mention of "Wal-Mart" on the Marketside store signage.

As we've reported previously in Fresh & Easy Buzz, the initial four Phoenix Metro region Marketside stores are being put in former drug stores which Wal-Mart is converting to its Marketside format. This is a strategy similar to Tesco's, in that the majority of its current 74 Fresh & Easy small-format combination basic grocery and fresh foods stores are located in former retail buildings, many of which were once drug stores, supermarkets and other retail venues.

Additionally, like Tesco, which also is building some of its Fresh & Easy Neighborhood Market grocery stores from the ground up, so to does Wal-Mart plan to carry out a combination strategy in which it will locate some of its Marketside stores in former retail store buildings like it is doing with the first four stores, while also planning to build some Marketside grocery markets from the ground up, as we've previously reported.

In addition to looking at least three additional sites, two of which are likely to be built from the ground up Marketside stores, in the Phoenix Metropolitan area, we've also reported Wal-Mart is looking at potential locations for the combination in-store fresh, prepared foods and grocery markets in the Reno, Nevada region and in both Southern and Northern California. Wal-Mart is looking at putting the Marketside stores in both existing empty retail buildings as well as looking at built from the ground up sites in these regions.

Wal-Mart has confirmed it plans to at least initially opened ten Marketside stores as what it calls an initial pilot. Based on information from our sources, we expect 6-7 of those 10 Marketside stores to be in the Phoenix, Arizona region and the other four to most likely be in California, with the possibility of one in the Reno area in Northern Nevada.

We know though that Wal-Mart is scouting locations for far more than those initial 10 Marketside sites. However, our sources tell us the retailer plans to identify the sites but not sign leases on them until the ten initial stores have opened and have been operating for a while, so that the retailer can evaluate the stores, tweak the merchandising and operations, and evaluate other aspects such as pricing.

Wal-Mart believes doing this is particularly important because the Marketside stores will feature fresh, prepared foods made in kitchens inside the stores. Since this will be the first time the retailer has attempted such in-store fresh food preparation it wants to get it right before rolling out more than the initial 10 Marketside stores, our sources tell us.

Additionally, with the poor U.S. economy which is favoring Wal-Mart's discount Supercenters over all other food retailing formats in the U.S. at present, the retailer has decided to take a more cautious approach with its more upscale Marketside stores than it originally planned when it started developing the stores in early 2007, when the U.S. economy was on much more solid footing than it currently is.

Sunday, August 24, 2008

Sunday Supplement: 'America's Cheapest Family' Helping to Spur Increased Use of Manufacturers' Coupons At the Grocery Store; Accept At Fresh & Easy

The Economides', America's self-proclaimed "cheapest family" likely wouldn't shop at a Tesco Fresh & Easy Neighborhood Market even if one was located just a few steps from the front door of their house.

It's not that the family, who's last name (pronounced economy-dis) even sounds frugal, has anything against Fresh & Easy in general. Rather, they have one specific problem with the grocery chain's stores, which would be a deal breaker for the family to shop them: Tesco's Fresh & Easy Neighborhood Market grocery stores do not accept manufacturers' cents off coupons.

The Economides' use manufacturers' coupons as their key strategy in spending only $350 a month on groceries for their family of six. And despite spending such an amazingly small amount of money each month on food and groceries, the husband and wife team say they eat very well, thank you.

Husband and wife Steve and Annette Economides, the heads of the self-proclaimed cheapest family in America, say they are able to stock a lot of food for a little bit of money, thanks, in part, to coupons. They use them for almost every item. During one recent shopping venture, for instance, the Economides' bought more than $140.58 worth of food for $53.01, Annette Economides told ABC TV's Good Morning America last Thursday in this report.

The Economides' told Fresh & Easy Buzz that manufacturer cents off coupons are the key to their multi-level strategy, which allows the family of six to spend a mere $350 monthly for groceries.

Last week ABC TV's Good Morning America decided to put America's self proclaimed "cheapest family" to the frugal grocery shopper test.

The morning show's producers gave Annette and Steve Economides $100, telling them to employ all their frugal shopper strategies including using manufacturers' coupons, and see how much they could buy with the $100.

The Economides' did their America's Cheapest Family" image, and Good Morning America, proud. They left the supermarket with 13 full grocery bags, buying everything they intended to, going over the $100 budget by only $1.77. Thirteen full bags of groceries, including fresh produce, meats and everything else for $101.77 isn't anything to sneeze at. Most of us feel pretty good if we can get away with four bags at that cost.

Chief among the tools Annette and Steve Economides said they used to achieve the 13 bags of groceries for a shade over $100 bargain was manufacturers' coupons, and lots of them--but only for those items they regularly buy--which is one of their hard and fast rules. No impulse item coupons for "America's Cheapest Family."

The Economides' may be cheap but they also are savvy marketers. They've created a website called (what else) America's Cheapest Family. On the website they offer frugal grocery shopping advice and strategies, sort of a primer in strategic shopping, as well as sell their New York Times' best selling book titled (what else) America's Cheapest Family. The also offer a subscription-based newsletter, The HomeEconomiser, that is packed full of strategies and tips for families to save money. The website also sells other related books and items, along with having a few ads on it.

Annette Economides has been called the" Coupon Queen" for her strategic method of using manufacturers' coupons to save substantial sums of money at the supermarket. She's even taught classes in strategic coupon use.

Last week on ABC's Good Morning America, the "First Family of Frugality" offered a few other tips to viewers in addition to strategically using manufacturers' cents off coupons to save money on groceries. Three tips from the Economides from ABC's Good Morning America:

Don't go to the grocery store often
A lot of families are going three, four, five times a week. You have to take a challenge and say, "I'm going to plan a menu. I'm going to plan five dinners. And I am going to go shopping once this week, and buy the stuff I need, use what's in my pantry."

Leave the kids at home.
You'll save three times the price of the baby sitter if you have time to really think and walk through the store and pick up the things you really need.

Slice your own luncheon meat.
Buying meat and asking the deli to slice it can save $1 to $5 a pound. The Economides family also recommend that you grind your own meat. You can buy the cheapest cuts of chuck roast or chuck steak at $1.50 a pound, leave most of the fat on and grind it to look and cook as if you had bought $5-a-pound lean ground beef. The say the savings can be $3.50 a pound.

These three strategies, along with the strategic use of manufacturers' coupons, are merely the tip of the frugality list from "America's Cheapest Family." That's why they created the website, which is turning into an industry along with their book.

Hits on the website, sales of their book and other related items are soaring even higher than the cost of food and groceries are in the U.S. The high food inflation, soaring gasoline price and all together poor economy is creating a demand for what the frugal family is preaching, evidenced by the fact that requests for them to speak to groups, appear on television, be interviewed for publications and teach classes, are keeping them so busy Annette Economides is having a hard time finding time to do her grocery shopping.

Of course, what the Economides are teaching and preaching isn't the best music to the retail food and grocery industry's ears. In what is arguably the lowest margin business in the U.S., grocers count on impulse sales to give them a sales and profit boost. And manufacturers like to use coupons in many cases as a way to generate new trial and boost sales of impulse-oriented products. However, if the Economides family's strategic grocery shopping program ever becomes widespread, the industry just might have to rethink its entire business model.

But the frugal family also are partly responsible for the soaring increase in coupon use among American shoppers in the last year. Not as responsible as the poor economy and fast-rising food prices of course. However, their message is being publicized in media far and wide which is helping to generate the highest levels of manufacturer coupon use ever seen in recenttimes, according to a recent report from the Food Marketing Institute (FMI). Coupons are like cash (eventually) to grocers, so they generally welcome and even encourage their use.

Earlier we mentioned Annette Economides is so busy with the business and money-making aspects of "America's Cheapest Family" she's finding it hard to carve out time for frugal grocery shopping. She makes time for the strategic shopping though, along with making time to clip manufacturers' cents off coupons and use the Internet and other sources to obtain them. Shoping on the cheap and using the coupons are her bread and butter in more ways than one after all.

The frugal Economides family is helping to make cheap chic in the U.S. during these tough economic times. We predict there even soon might be low-priced cheap-chic designer versions of manufacturer cents off coupon mini carrybags. After all, even the cheap should get to do so in style.

Friday, August 22, 2008

Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK

On August 17 we reported in this piece: "Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department," that Charlotte Maxwell, director of grocery at Fresh & Easy Neighborhood Market USA, is leaving Tesco's U.S. food and grocery retailing venture to return to Tesco's corporate offices in the United Kingdom to accept a grocery director's position which she interviewed internally for and was recently offered. It was an offer she accepted.

In the August 17 story we reported she would be leaving Fresh & Easy Neighborhood Market and its headquarters in El Segundo, (Southern) California for her new position at Tesco in the UK before the end of this month.

We've now learned that today, August 22, is Ms. Maxwell's last day with Fresh & Easy Neighborhood Market USA and at its Southern California headquarters.

After today, Ms. Maxwell, who's home is Britain, will be returning home to live and take up her position as a grocery director level four at Tesco's offices in the UK.

Like many of the Tesco Fresh & Easy Neighborhood Market senior executives, including CEO Tim Mason, marketing director Simon Uwins and others, Ms. Maxwell came from the UK to Southern California to start up the Fresh & Easy chain. And like Mr. Mason, Mr. Uwins and most of the food retailer's other senior executives, Fresh & Easy has been Ms. Maxwell's first experience with food and grocery retailing American style.

As we reported in our August 17 piece, Sean McCurley, also a British native, will be replacing Charlotte Maxwell as corporate director of grocery at Fresh & Easy Neighborhood Market. Mr. McCurley is currently the director of fresh, which has been an equal position to Ms. Maxwell's in Fresh & Easy's corporate structure. Essentially he is making a lateral move within the company. He begins his new position with Charlotte Maxwell's departure today.

Fresh & Easy Neighborhood Market splits its category management/merchandising and buying department into two functional areas: grocery and fresh, as we detailed in our August 17 piece.

As part of Ms. Maxwell's departure, Tesco's Fresh & Easy is reorganizing its corporate buying department, replacing her with Mr. McCurley, along with making other adjustments and changes in the department.

That reorganization also comes on the heels of five category managers and buyers having left Fresh & Easy in the last 4 -to- 5 months. For more information on this category manager and buyer brain drain at Fresh & Easy's corporate offices read our other August 17 piece: "Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain.'"

Tesco opened its 73rd Fresh & Easy small-format (average 10,000 -to- 13,000 square feet) combination basic grocery and fresh foods store on Wedneday, August 20 at Tustin and Chapman streets in the Southern California city of Orange. It's the grocery chain's second store in the city, and its eighth unit in Orange County, which the city of Orange is located in.

Related stories from Fresh & Easy Buzz:

August 17, 2008: Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department

August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

Thursday, August 21, 2008

Royal Hands Across the Atlantic: The Buzz is Caroline Kennedy Could Become the Next U.S. Ambassador to Britain

The United Kingdom and the United States go back a long way. The U.S. once was a colony of Great Britain of course. The two nations fought as allies in two wars, World War I and World War II. And, each has been the others chief trading partner for decades. That both countries share the English language in common is a very important contributor to the special relationship the two nations have as well.

As a result of this shared history, the U.S. and the UK have come to share what is called "the special relationship," essentially that each is the others "best friend" when it comes to world affairs, along with other economic, cultural and social aspects.

Mandrake (aka Tim Walker), a writer for the UK's Daily Telegraph newspaper, is reporting this morning that "the special relationship" between the two English-speaking nations could become much more special (our interpretation not his) if presumptive Democratic candidate for U.S. President Barack Obama is elected this coming November.

The enhancement of "the special relationship" doesn't so much have anything to do with what Mr. Obama might do vis-a-vis the UK if elected President. Rather it has to do with a key decision he might make if elected.

That decision, according to the Telegraph's Tim Walker, will be to name America's sweetheart, the beloved Caroline Kennedy, the only living child of former President John F. Kennedy and former first lady Jackie Kennedy, to be the U.S. Ambassador to Britain's Court of St. James. In other words, if elected, Barack Obama plans to name Caroline Kennedy the United States Ambassador to Britain, according to the Telegraph.

We agree with Tim Walker's report that if elected Mr. Obama is likley to name Caroline Kennedy, who is one of two people in charge of Senator Obama's Vice Presidential selection committee, as the U.S. Ambassador to Britain.

Doing so makes strong sense for three key reasons:

First, Caroline Kennedy is a major backer of Senator Obama's campaign for President. It was Caroline in fact who played a major role in getting Democratic Party stalwart and liberal lion uncle Teddy Kennedy to come out in support of Obama for his party's nomination for President.

Senator Ted Kennedy served as a second father to Caroline since her own father was killed when she was just a child. Barack Obama is the first and only Presidential candidate Caroline Kennedy has publicly supported other than her Uncle Ted Kennedy, who ran for the Democratic party nomination in the 1980, challenging and losing to incumbent President to Jimmy Carter. Senator Ted Kennedy is currently fighting for his life with brain cancer.

Second, Caroline's grandfather, the late Joseph P. Kennedy, the man who built the Kennedy family political dynasty, served as the U.S. Ambassador to Britain under the Presidency of Franklin Roosevelt (FDR), whom most historians consider to be the greatest American President in history, along with Abraham Lincoln.

Joe Kennedy, who disagreed with President Roosevelt about having the United States enter in World War II as allies to the British, was recalled by FDR from his post in the UK over the disagreement. However, ever the political animal, Joe Kennedy still supported President Roosevelt in the following Presidential election, which FDR won, and in the 1960's went on to see his own son, John F. Kennedy, become President of the United States.

Lastly, Caroline Kennedy, age 50, and her husband Edwin Schlossberg, an industrial designer by profession, have lived in London in the past, and enjoyed it greatly.

Having a Kennedy representing the United States in Britain once again is likely to create much across the pond excitement, since the Kennedy family has always been the closet thing to royalty the United States has ever had.

When her grandfather Joe Kennedy moved to England as Ambassador to the Court of St. James during the Roosevelt administration, his large, young family took the UK by storm.

If Barack Obama is elected this November and does name Caroline Kennedy as U.S. Ambassador to Britain, it would be a stroke of genius. Ms. Kennedy is smart, savvy and polished, yet extremely down to earth.

She also understands "the special relationship" between Britain and the U.S. probably better than anyone else who could be named Ambassador.

After all, her grandfather's biggest mistake in an otherwise highly successful lifetime, was that he opposed the United States' going to war against Adolph Hitler, suggesting the dictator could be reasoned with, and that negotiation with him could bring peace.

Fortunately for the free world, particularly for Europe, the great Winston Churchill and Franklin Roosevelt disagreed with the Ambassador. The United States entered World War II as allies against the brave British, taking Hitler head on. The allies ultimately prevailed, thanks to the dedication and sacrifices of so many brave men and woman. And out of the ashes of World War II, the special relationship between America and Britain was forged.

We suspect Carolyn Kennedy could invigorate that special relationship, which has become a bit tarnished of late at least politically, should Barack Obama get elected President this November. We also believe Ms. Kennedy would be very aggressive in expanding economic and cultural ties even more so than they already are between the two nations. She has corporate, political and cultural connections and relationships in both the U.S. and UK, which could be used for the mutual benefits of both countries and its peoples.

In fact, should Republican candidate John McCain get elected instead of Obama, he could do much worse than to name Ms. Kennedy the U.S. Ambassador to Britain himself.

Wednesday, August 20, 2008

Mid-Week Tesco PLC News Roundup: Legal Troubles With UK Authorities; Competition From German Discounters; Paper, Plastic or Reusables; Wine...And More

United Kingdom-based Tesco PLC is the number one food and grocery retail chain in that nation with about 31% of total market share, along with being the third-largest retailer in the world, after number two Carrefour Group, which is based in France, and number one U.S-based Wal Mart, Inc.

Tesco opened its first small-format Fresh & Easy Neighborhood Market grocery store in the U.S. in late October, 2007, in the Southern California desert city of Hemet. To date, Tesco has opened 71 Fresh & Easy combination fresh foods and basic grocery stores in Southern California, Nevada and Arizona.

Mid-Week News Roundup:

Legal troubles: UK Times Online: Tesco slammed over 'unfair' food adverts ... Tesco has been rapped by the UK Advertising Standards Authority (ASA) for promotions that used an "unfair" selection of goods to claim that a market basket of groceries is cheaper than the competitions' ... UK Guardian: Tesco rapped by ad watchdog for misleading shoppers over rivals ... UK Independent: Tesco exaggerated size of price cuts.

A slip and fall in the line of duty: UK Telegraph: Tesco home deliveryman seeks compensation from customer ... Tesco customer is being pursued for compensation by one of the supermarket chain's home deliverymen months after he slipped on a driveway during a routine delivery.

UK competition: Discount supermarkets gain as consumers cut back on spending ... Tesco (number one in the UK) and Sainsbury's (the number three UK supermarket chain) both experienced slight falls in market share, down from 31.8% to 31.6% and 16.1% to 15.8% respectively, while discounters gain share ... Beware the Not-so-Supermarkets ... Aldi, other discounters giving Tesco, others a run for their money in the UK ... Middle classes flock to Aldi, Iceland and Lidl ... More: German grocers establish a bridgehead in Britain.

Paper (bags) vs plastic vs reusable in the UK: Grocery packaging: UK shoppers shun single-use bags ... UK supermarket chain Tesco says the use of disposable plastic bags is in steep decline as thousands of shoppers switch to permanent shopping bags ... But Tesco's Fresh & Easy in the USA offers free plastic bags only, no paper option.

Local design: New store tries to blend in ... Tesco attempts to localize A new Tesco Express store in a historic Northamptonshire high street neighborhood in the UK.

Tesco & charity: New Tesco store provides big cash boost for charity...Donates 500-p (British Pounds) to UK cancer charity.

Word of mouth marketing: Supermarket uses town crier to reveal new store plan. Very British actually. The town crier will need a 'stiff upper lip.'

Summer wine festival: Tesco is one of the world's leading wine retailers ... Read about it:
Award-winning wines on offer in Tesco in-store festival. Value Wines: Tesco Plots Low-Cost Wines for Value Line.

UK farmers feeling like the losers in nation's supermarket price war: UK farmers concerned as supermarket price wars continue.

Tesco PLC to move into India: Tesco opened the first store of its Fresh & Easy Neighborhood Market small-format grocery chain in Britain's former colony of the United States last year. It now has 71 stores in the U.S., with many more set to open this year and next.

The global retailer now plans to move into India, another of Britain's former colonies and the nation with the world's second fastest-growing economy, after China. Will Tesco succeed in India, a nation that since independence continues to adopt numerous aspects of British culture--ranging from food and fashion, to the English language? Tesco dips cautious toes into India ... Also an online discussion: Tesco Follows Walmart into India. A politcal bird: Meanwhile, Tesco's expansion plans in the nation of Turkey are running into some political problems: Tesco's expansion in Turkey caught in political turmoil.

Tesco likes it hot in the UK: Will Fresh & Easy follow suit and heat things up (at least in the produce departments) in its U.S. stores? Tesco to Stock World’s Fiercest Chili Pepper.

Monday, August 18, 2008

Small-Format Food Retailer 'Good Eats Grocer' Signs Leases For Two More Store Sites; Five More Stores in the Pipeline For the Sacramento Metro Market

Upcoming New Markets News: Northern California--Sacramento

It doesn't look like Tesco's Fresh & Easy Neighborhood Market will get the small-format grocery store fresh, prepared and organic-specialty foods market all to itself when it starts opening the first of it currently 19 planned grocery stores in Sacramento and the surrounding region in Northern California early next year.

On July 8 we reported the former CEO of Sacramento-based Raleys (supermarket chain), Michael Teel, had founded a small-format combination fresh, prepared and natural-specialty foods retailing company called Good Eats Grocer, headquartered in Sacramento. Teel left Raleys in 2002 to form his own advertising agency and then started a new business venture firm.

Teel, who is an heir to the family-owned 130-store, $3.5 billion a year Raley's food and grocery retailing mini-empire (his mother is the daughter of Raleys founder Tom Raley, Michael Teel's late grandfather), and partner investment banker and entrepreneur Michael Asker, signed a lease for the first Good Eats Grocer small-footprint food market which will be located in Sacramento's landmark Adiamo building at 3145 Folsom Blvd, as we wrote about in our July 8 piece.

The Adiamo building once housed the Rosemount Grill restaurant, which was a favorite of Sacramento's corporate chiefs and politicos, including Michael Teal's grandfather Tom Raley.

Michael Asker, Teel's partner in Good Eats Grocer, is the investment banker who arranged the much-publicized $30 million in new financing earlier this year for fast-growing small-format natural foods chain Sunflower Farmers Market, which is opening numerous stores in Arizona (and in other states), which is one of the three current markets for Tesco's Fresh & Easy, along with Southern California and Nevada.

Teel and Asker, who together operate a firm called M2 Venture Partners (M2=two Michaels) of which Good Eats Grocer is a part, are remodeling the Adiamo building into their small-format Good Eats Grocer bistro and market format. That format puts at its center high quality fresh, prepared foods, along with offering a selection of natural, organic, specialty and gourmet food and grocery products.

Below is how Michael Teel describes Good Eats Grocer:

"Good Eats Grocer is a natural-organic crossover market that sources the finest quality foods at incredible prices. We have designed our stores to be smaller, and more intimate with an overriding emphasis on the customers’ convenience and ease of access. We offer a great selection of natural and specialty foods from around the world and a huge variety of take-home meals and dinner solutions for the family."

In our July 8 piece, we also reported the flagship store going in the Adiamo building is merely the first of what the partners plan to be a regional chain of Good Eats Grocer food markets, starting first in Sacramento and the surrounding metropolitan area and then perhaps going from there to other parts of Northern California if the initial stores do well.]

Now, a story in yesterday's Sacramento Bee, the details of which we've confirmed with Good Eats Grocer, reports Teel and company have secured leases for two more food markets.

Additionally, Teel says the company has five more Good Eats Grocer stores in the pipeline (all in the Sacramento Metropolitan region), which would bring to eight the number of stores currently planned to open next year in Sacramento and the surrounding area. And that's just thus far. The partners are moving fast, having only inked the lease on the first store a few months ago.

The second of the three Good Eats Grocer stores in which the company has signed leases for is in what now is the Corti Bros. specialty foods supermarket at 5810 Folsom Blvd. in East Sacramento.

Corti Bros. is a 61 year old pioneering independent supermarket in Sacramento. Darrell Corti, who runs the store, and his brothers were the first grocers to introduce specialty, gourmet, artisan and local foods to Sacramento shoppers in a serious way. In addition, Darrell Corti, who is an internationally renowned wine expert, has created one of the finest wine retail shops in the Sacramento region at the family-owned Corti Bros. specialty supermarket.

Corti Bros. lost the lease on the 61 year old Sacramento store due to a failure between the grocer and the building's landlord to reach agreement on new lease terms. Good Eats Grocer picked the lease up and will be putting its second store in the building made famous for specialty foods and wine merchandising not only in Sacramento but nationally in the U.S. by the Corti Bros.

Darrel Corti, who in addition to running the store is an international specialty foods and wine consultant and judge for some of the most prestigious wine competitions globally, is such a foodie that each year for decades he has a commercial kitchen prepare to his special recipe an orange marmalade produced from Seville oranges from the family's own orange trees, creating not only a local foods product but a Corti Bros. Estate Orange Marmalade as well. The marmalade, which is ready at about Christmas time each year, is sold out before it even hits the store's shelves.

Teal and company have some pretty large grocery aprons to fill in that location, home for 61 years to arguably Sacramento's most innovative grocer. Darrel Corti says he is close to finding a new location for the family-owned Corti Bros specialty supermarket, most likely in Sacramento.

The third Good Eats Grocer store will be located in Sacramento's popular and fast-growing Midtown neighborhood, which is increasingly becoming the trendy residential and commercial neighborhood in the capital city. It has lots of art galleries, cafes, shops and other businesses which encourage pedestrian traffic, which makes it a good location for a combination small-format fresh, prepared foods and natural-specialty foods market like Good Eats Grocer we believe.

Tesco is building a Fresh & Easy grocery market in Sacramento's Oak Park neighborhood, which is fairly close to where the Good Eats Grocer store is going in Midtown.

Teel hasn't announced the locations of the five additional small-format food markets, likely because those locations aren't finalized yet.

We do know at least some of the five will be in Sacramento, and that the grocer also has looked at locations in nearby Davis, home of the University of California at Davis, along with a few other Sacramento suburbs. Whole Foods is opening a new natural foods store in Folsom, next door to Sacramento. Don't be surprised if Good Eats Grocer opens one of the additional five stores in Folsom, where Tesco also plans to open a Fresh & Easy store next year.

Good Eats Grocer stores won't sell basic grocery items like Tesco's Fresh & Easy Neighborhood Market combination fresh foods and basic grocery stores do. About half of the product selection in Fresh & Easy stores consists of basic food and grocery items (about 65% under the fresh & easy store brand and about 35% supplier brands), along with some basic non-foods items. The other half consists of fresh produce, meats and other perishables, along with natural, organic and specialty grocery items, wines and beers.

Therefore, Good Eats Grocer and Fresh & Easy won't be identical competitors, at least 100% because Teel's food markets aren't going to sell the basic grocery items. However, a major portion of Fresh & Easy's offering is in the prepared foods and other fresh categories-- categories Teal's food markets will compete on--along with to a lessor but significant degree in the natural, organic and specialty grocer categories, as well as specialty wines and craft beers--all categories Good Eats Grocer stores will focus on extensively.

When Tesco first announced its plans to start Fresh & Easy over two years ago, it positioned it as a new retail offering for American consumers, with its focus on convenience shopping, low everyday prices on grocery items and fresh foods, and its emphasis on affordable fresh, prepared foods.

While the stores have numerous similarities to Trader Joe's markets, the big difference with Fresh & Easy is its emphasis on basic groceries at low prices. (Trader Joe's carries natural, organic and specialty foods and groceries but not everyday items.) The stores also carry a larger selection of fresh, prepared foods than Trader Joe's specialty markets' do, although that's changing as Trader Joe's is putting its "Joe's Shack" fresh, prepared foods kitchens in more and more of its stores.

However, less about 10 months since Tesco opened its first Fresh & Easy market opened in late October, 2007 (there currently are 71 stores), the retailer is seeing a proliferation of small-format food and grocery stores of multiple formats either opening or planning to open in its market regions.

There's Safeway with its "The Market" small-format grocery stores. One already is open in Long Beach, California, with more to come in California and likely in Arizona. Wal-Mart, Inc. which will open its first four small-format Marketside combination fresh foods and basic grocery stores in the Phoenix, Arizona region this fall. (Like Good Eats Grocer, the Marketside stores also will prepare foods right in-store, unlike Tesco's Fresh & Easy which prepares the foods at a central kitchen in Southern California then ships them to the stores in that region, Nevada and Arizona.

Additionally, on the small-format discount format side, SuperValu, Inc. is opening additional no frills discount Sav-A-Lot grocery stores in California. Save-A-Lot focuses on offering a limited assortment of basic grocery items and fresh foods, selling them for the lowest prices possible. There are 1,600 Sav-A-Lot stores in the U.S. The format has been around for many years, and SuperValu is putting increased emphasis on growing the chain throughout the U.S. beyond its already impressive 1,600 current store count.

Good Eats Grocer does not by any means pose a barrier to entry to Tesco's Fresh & Easy in the Sacramento Metro market. And let's not forget Fresh & Easy Neighborhood Market is owned by deep-pocketed Tesco, the third largest retailer in the world. But it does add yet another competitor--and in this case a significant one because of the small-format and in-store fresh, prepared foods focus--to the many established grocers already waiting for Fresh & Easy in the Sacramento Metro region market.

These competitors include Raleys, which is the number one market share leader in the market, Save Mart-owned Lucky stores (formerly Albertsons in Northern California), Safeway Stores, Inc., Wal-Mart Supercenters, Trader Joe's, Whole Foods Market, Inc., Super Target (soon to be coming to Sacramento), Winco (a large discount grocery chain), numerous warehouse format retailers, and many independents with formats ranging from discount to upscale.

Sacramento also is a very locally-based market, which in part accounts for hometown Raleys dominance, even in the face of stiff competition from giants like Wal-Mart and Safeway Stores. This local advantage or effect should help Michael Teel with Good Eats Grocer, since both he and partner Asker are extremely well known longtime Sacramento residents who have extensive business, political and charitable ties in the community and throughout Northern California.

But even more important than all that, Good Eats Grocer has to offer "good eats" at a decent price, as is the case with nearly every other food retailer except perhaps for Dean & Deluca and a couple others. If not, it won't succeed. After all, even organic and gourmet Whole Foods Market, Inc. has now put its stores on a value diet, focusing significantly on bringing shoppers value in these bad economic times.

Value is an area in which Tesco's Fresh & Easy can likely beat Good Eats Grocer in. But executing in the Sacramento market is going to require a localized approach in order to be successful. And that's a plus for Good Eats Grocer.

The competition continues to heat up in the Sacramento Market. Next year should be a very interesting one.

Sunday, August 17, 2008

Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department

Tesco's Fresh & Easy Neighborhood Market is in the process of reorganizing its corporate category management and buying department at its El Segundo, California corporate headquarters, Fresh & Easy buzz has learned. (Fresh & Easy calls its buying department "Commercial," in following the British usage, even though its a U.S-based division.)

As we reported earlier, five category managers and buyers have left the company over the last four -to- five months, from February -to- June, 2008.

Key to the corporate category management and buying department organizational changes is the departure of Charlotte Maxwell, Fresh & Easy Neighborhood Market's director of grocery. Ms. Maxwell, who is a British native, plans to return to Tesco PLC in the United Kingdom to assume a director position at corporate headquarters there, sources tell Fresh & Easy Buzz.

Replacing Ms. Maxwell as director of grocery will be Sean McCurely, who currently is director of the Fresh Department. Mr. McCurely is equal to Ms. Maxwell in the corporate organizational chart. Therefore his will essentially be a lateral move within the company.

Grocery and Fresh are the two departments within Fresh & Easy Neighborhood Market's merchandising and buying organization.

Additional changes and new category management and buying assignments include:

>The promotion of existing Bakery category manager Jim Jensen to the director of fresh, replacing Sean McCurley who is assuming Ms. Maxwell's director of grocery position.

>The existing category manager for dairy/deli (which is in the Fresh division) is moving over to the Grocery Department to be the category manager of specialty, baking and canned goods, reporting to Sean McCurley, who he currenly reports to in the Fresh Department.

>A new person has been hired to be the category manager for dairy/deli, replacing the existing category manager, who is moving over to the grocery division. Our sources say his first name is Dan. However they don't have a last name for the new dairy/deli category buyer. He will report to Jim Jenson, who will be the new Fresh Department director, as detailed above.

>The current beverages category manager is getting the confections category added to his portfolio. Previously he was in charge of canned goods along with beverages but no longer will be because that segment is now going to the new specialty, baked goods and canned foods category manager as we detailed above. Beverages is under the Grocery Department.

Additionally, we've learned the wine and beer category, which originally was part of the Grocery Department but was moved some time ago to the Fresh Department for internal reasons, is going to be switched back to its original location in grocery, under the supervision of Sean McCurley, who as we said above is switching from director of fresh foods to grocery director, replaces Charlotte Maxwell who is returning to Tesco in the UK.

Further, our sources tell us the frozen foods category, which currently is in the Fresh Department, likely also will be moved to the Grocery department under Mr. McCurely's supervision.

After the organizational changes are completed, the Fresh Department will consist of the following: fresh meat, fresh produce, bakery and dairy/deli. All other categories will be under the Grocery Department.

According to sources, Fresh & Easy has filled some of the five category manager and buyer positions we reported on here. However, based on the math, it appears there remain openings to fill for bakery goods in the Fresh Department and snacks and breakfast in the Grocery Department. Of course, depending on how the new Grocery and Fresh department directors organize their respective departments, these two category manager positions could be merged, changed or otherwise adjusted.

Fresh & Easy has filled the vacant non-foods category manager position internally, moving former frozen foods category manager Michelle Bonilla into that position. Her non-foods duties include health and beauty care items. At press time we're told the buyer position under her has yet to be filled.

We weren't able to determine as of yet if Ms. Bonilla's frozen foods category manager position has been filled. Sources say there's been talk about trying to fill it internally.

Fresh & Easy Neighborhood Market category managers have started to informally tell their supplier sales representatives about the reorganization and changes. Sources tell us the company has no plans to make a formal, written announcement to the supplier community or the press about the changes however.

In addition to these major organizational changes in the category mangement-buying department, particularly the departure of Ms. Maxwell, there will be some additional minor changes and tweaks, particularly when the department is able to hire the remaining category managers and buyers.

Tesco's Fresh & Easy Neighborhood Market currently has 71 of its small-format (10,000 -to- 13,000 square foot), convenience-oriented combination basic grocery, fresh foods and specialty grocery markets open in Southern California, Metropolitan Las Vegas, Nevada, and in the Phoenix, Arizona Metro region. Numerous additional stores are scheduled to be open the rest of this year and next year, including moving into the new markets of Central and Northern California beginning in early 2009, as we've reported on extensively.

Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

Five category managers and buyers have left their jobs at Tesco's Fresh & Easy Neighborhood Market corporate headquarters in just a four -to- five month period, from February -to- June of this year, Fresh & Easy Buzz has learned.

These five category managers and buyers were responsible for headquarters product category merchandising and buying for the majority of the grocery chain's key grocery department categories. Fresh & Easy Neighborhood Market's merchandising and buying function is organized into various departmental segments such as grocery, fresh foods and the like.

The following are the titles and categories the departed Fresh & Easy category managers and buyers were responsible for:

Title: Category Manager/Specialty Foods. Responsible for merchandising and buying of all Specialty Foods, which includes: spices, baking products, oils and numerous other categories Tesco's Fresh & Easy categorizes under the broad specialty foods title.

Title: Category Manager/Non Foods. Responsible for the merchandising and buying of the entire non-foods category, in addition to directly buying about 50% of the category's items on a day-to-day basis. A buyer who reported to this category manager bought the other 50% of the category items on a day-to-day basis.

Title: Buying Manager/Non-Foods. This buyer, who also left like the non-foods' category manager, bought the about 50% of the non-foods category items the category manager didn't buy, including baby food and baby supplies and pet foods.

Title: Category Manager/Breakfast, Snacks, Confection, Cookies and Crackers. In addition to having overall merchandising responsibility for these categories, the category manager also bought all the confection and snack lines on a day-to-day basis, while a direct-report buyer bought the other categories.

Title: Buying Manager. Bought the following non-foods category segments on a day-today basis: vitamins, energy bars, paper goods, detergent and a few others. Additionally, this buyer had previously bought coffee, canned goods, jams, preserves and a few other food segments. The non-foods category buying responsibilities came after the non-foods category manager left employment, which according to sources was about 3 months before this buying manager left.

Fresh & Easy Buzz has identified the names of each of these five category managers and buyers through our sources and through additional research. However, we aren't publishing the names since we don't think doing so in necessary, along with the fact one or more of them may currently be in the job market.

The first category manager/ buyer left Tesco's Fresh & Easy in late February, 2008, according to multiple sources. The last buyer to leave the company did so in late June, according to our sources.

As each of these category managers and buyers left Tesco's Fresh & Easy in the four -to- five month period from February -to- June of this year, their respective category management and buying responsibilities were divided among the remaining category managers and buyers, resulting in what sources have described as significant added workloads for the remaining headquarters buyers.

Suppliers also say there's been somewhat of a "who's on first" situation at Tesco's corporate buying headquarters in El Segundo, California in that with so many category managers and buyers leaving over such a short period of time, product lines are being handed off near weekly, resulting in having a different buyer every other week or so for a supplier's line.

These five aren't the only category managers or buyers who've left Tesco's Fresh & Easy Neighborhood Market in its short tenure. A couple of the grocery chain's original buyers, hired in the pre-store opening phase, left the company before the first stores opened in late October-early November, 2007.

Tesco's Fresh & Easy Neighborhood Market has been advertising for category managers and buyers and conducting interviews to replace each of the five headquarters merchandising and buying department employees who've left the company over the last 4 -to- 5 months.

We've learned that a couple of the positions have been filled but that at least two, both category manager positions, have yet to be filled.

A person who interviewed for one of the positions recently, but who notified the company shortly after his interview that he wasn't interested in the position because he decided to accept another opportunity offered him elsewhere, told Fresh & Easy Buzz he was told that if hired it was possible he might end up as a category manager in a category different than the one he was interviewed for initially because things were in a bit of a state of flux within the buying department.

The five buying department employees who've left Fresh & Easy Neighborhood Market in just the last four -to- five months have left a serious void, or brain drain, at corporate headquarters when it comes to merchandising and buying, according to multiple sources.

In many ways, most of the grocery chain's short institutional memory and history in the grocery category headquarters and buying area has been wiped away with such a significant number of key department employees exiting the company over such a short period of time.

Numerous suppliers, many of whom already have expressed frustration in doing business with Tesco's Fresh & Easy, say they are even more frustrated by what one described as the turnstile buying department at the company.

The buying department brain drain and void also is in part to blame for the higher than should be out-of-stocks in Fresh & Easy grocery stores, although the retailer's official position has been that there isn't a problem.

Additionally, with such a dynamic passing around of buying responsibilities, as anyone who's every been a category manager or buyer is well aware, it's near impossible to properly learn a category when its in your portfolio for such a short amount of time.

Further, as those who've been category managers and buyers, along with those who've called on them know, when buyers get loaded-down with too many additional lines, they tend to end up essentially doing nothing but cutting purchase orders, which means instead of managing a category for optimized sales and gross margins, they merely are forced to become purchasing agents.

Tesco's Fresh & Easy is attempting to replace all five category manager and buyers, and as we mentioned above has hired some replacements thus far. Other changes are coming to the department as well, which we will report on as we learn more.

It appears when it comes to category management and buying at Tesco's Fresh & Easy Neighborhood Market, things are certainly "fresh," as in lots of buyer turnover, but keeping the buyers around certainly doesn't seem to be "easy."

UK Telegraph Newspaper Reporter Visits the Manhattan Beach Fresh & Easy Grocery Store: Observes and Writes About What He Sees

The photograph above of the Fresh & Easy Neighborhood Market store at 1700 Rosecrans in Manhattan Beach, California was taken by Fresh & Easy Buzz roving photographer Reno Tom from in front of the Trader Joe's grocery store just across the parking lot. The two competing small-format grocery stores are as close as they appear in the photograph. You can click on the photo to enlarge it.

From the Fresh & Easy Buzz Editor's Desk: For many months now we've been writing about how [Tesco's] Fresh & Easy Neighborhood Market USA's small-format, convenience-oriented grocery stores in Southern California, Nevada and Arizona lack a sense of place, warmth, a feeling of retail excitement, localization, and a few other similar in-store characteristics that are crucial for any large-scale food and grocery retailing chain, especially a start up one, to succeed in the United States--and particularly in California where multi-format food retailing is extensive and highly competitive. We've also offered numerous positive suggestions for Tesco on how it can improve on this condition with its Fresh & Easy grocery stores.

We've based our analysis of the the 10,000 -to- 13,000 square foot combination basic grocery and fresh foods Fresh & Easy grocery markets' design and merchandising on numerous field visits to multiple stores in all three states. We've spent considerable time in multiple stores in the way an ethnographer spends time studying and learning about a foreign culture. In other words, we take a very thoughtful and methodological approach.

We've also interviewed hundreds of shoppers outside the Fresh & Easy stores since December, 2007, along with reading nearly every online review about the Fresh & Easy grocery markets on Internet review sites such as,, and a couple others. And, of course, we've received feedback from scores of Fresh & Easy Buzz readers on the stores.

We haven't interviewed shoppers in-person and read hundreds of online reviews because we've questioned our own observational analysis of the overall lack of a sense of place and retail excitement in and of the Fresh & Easy stores, but rather because like a good ethnographer we've also wanted to learn as much as we can about what others, particularly consumers, think of the store designs, how they feel shopping in them, and other key variables.

We've suggested strongly to members of the consumer press, who unlike members of the Fresh & Easy Buzz team haven't spent many years in the food and grocery industry, that the best way to analyze Tesco's Fresh & Easy stores is to get out and spent time in them observing and talking to shoppers. A few business reporters for newspapers located in Southern California, Metro Las Vegas Nevada and in Arizona have done just this, and have written some very informative and insightful stories about the Fresh & Easy stores.

However, the British press, which we understand has certain geographical constraints including having to cross the Atlantic Ocean in order to tour a Fresh & Easy store, hasn't in the main written much of anything about its hometown Tesco and its Fresh & Easy Neighborhood Market USA food retailing venture in America based on actually visiting, spending time in, observing and talking to shoppers in the Fresh & Easy stores. Field work.

That's why we were pleased to see an article in today's UK Sunday Telegraph by writer James Quinn in which he recently visited the Tesco Fresh & Easy grocery store in Manhattan Beach, California and reports on what he observed, including conversations he had with customers in the store.

We're even further pleased that Mr. Quinn visited the Trader Joe's (at 1800 Rosecrans) across the parking lot from the Manhattan Beach Fresh & Easy store at 1700 Rosecrans, which we were the first to report Fresh & Easy would become a neighbor of when it opened its store there on July 2, and writes about his observations of that store, comparing what he observed at the Trader Joe's to what he observed at the Fresh & Easy across the way.

Additionally, we're glad Mr. Quinn extended his field work to include a visit to the nearby Bristol Farms specialty supermarket, the name of which was inspired by Britain if you didn't know, and compares and contrasts his observations of the store to his observations and analysis of the Manhattan Beach Fresh & Easy market at 1700 Rosecrans.

There are numerous qualitative differences between food and grocery retailing in the United Kingdom and the United States, and even many significant differences on a regional basis in the United States, as we often point out in Fresh & Easy Buzz.

That's why adding local design elements and merchandising is such an important part of being a successful food retailer in America, as we've written about in relation to the fact that Tesco needs to localize certain design and merchandising aspects of its Fresh & Easy grocery stores to the communities and neighborhoods where they are located.

Although the British press has covered Tesco's Fresh & Easy Neighborhood Market USA extensively, there have been few and far between reports and stories based on a reporter actually visiting one or more Fresh & Easy grocery stores and observing and analyzing what they've found.

We aren't really faulting the UK press on this as much as we are merely stating an observable fact.

Like its U.S. counterpart newspapers, which have few UK-based correspondents, the British papers also have few U.S-based reporters. This is largely for economic reasons. The newspaper industry is struggling financially on both sides of the pond these days. Those in-country-based reporters the major British newspapers do have are kept busy in the main covering international affairs and U.S. politics from Washington and corporate America from Wall Street, along with a bit of Silicon Valley--and of course Hollywood.

Therefore, we're pleased to read Mr. Quinn's story based on his visits to the Manhattan Beach Fresh & Easy store, the Trader Joe's across the parking lot, and the nearby Bristol Farms specialty supermarket. It's arguably the most insightful piece we've yet to read in any UK newspaper on the realities Tesco faces competing with food and grocery retailers in the U.S. states of California, Nevada and Arizona. And that's no accident since there's often no substitute for field work when attempting to explain food retailing and retailers.

Below is the story from today's edition of the Telegraph:

Fresh & Easy at risk of going stale
Tesco's chain faces serious obstacles in its bid to crack California. James Quinn checks out the reasons why

For Jan Perry, the recent ground-breaking at a near-barren construction site in the depressed southside area of Los Angeles was a turning point. After years of campaigning in her role as an LA councilwoman, fresh food was finally coming to the area, in the form of Tesco's Fresh & Easy, the British retailer's US convenience store venture.

"Having Tesco come along was a great opportunity," admits Perry. "Here in south LA, we have a plethora of liquor stores and fast-food restaurants, but what's frustrating is that the need is there for fresh produce and yet we haven't been able to get our own domestic grocery chains into the area."

A recent study showed that $400m a year leaks out of the area as residents go in search of fresh food, groceries and entertainment, and Perry estimates that 45pc of the area's 900 restaurants serve some form of fast food. "It will be very interesting to see if people will gravitate towards it," she says of the new store, which will open early next year.

Her positive perspective is everything that Tesco wanted to achieve when it launched F&E in southern California, Nevada and Arizona to much fanfare last autumn.

The new venture promised affordable, fresh produce for local communities, providing decent jobs and strong integration into local communities.

The business, run by Tesco's former marketing director Tim Mason, has now grown to 71 stores, with a move into northern California - taking in San Francisco and the Bay Area - planned early next year.

But not everyone sees F&E in such a positive light. The Los Angeles Alliance for a New Economy is suspicious of F&E's practices.

The Alliance, a citywide coalition of church, community and other interested groups, is concerned, among other things, about the impact stores such as F&E have on the city.

"When Tesco first came to America, we were pleasantly surprised. They were saying they wanted to do things differently," says Elliott Petty, the alliance's senior retail analyst from his office in downtown LA. "But, today, almost a year later, we've found they're a lot like others in the industry, opening stores in the exact same locations, neglecting others."

Petty rejects F&E's move to the southside of LA, saying the store is in an area going through "revitalisation with condos and lofts and a bunch of high-end developments".

"They didn't show up in the heart of south-central," he points out, suggesting that Tesco is favouring only wealthy communities.

An F&E spokesman rejects this claim, pointing out that as well as its southside store, it recently opened a store in LA's Compton, which has one of the highest murder rates in the whole of the US.

Petty is also dismissive of the company's pay incentives and opportunities for career progression - likening F&E to that pariah of the socially responsible, Wal-Mart.

"We want them to engage in the community, and talk to us," he pleads, saying the alliance has requested discussions on various occasions.

F&E has given no reason as to why the retailer doesn't seem able to speak to the alliance, but nevertheless rejects its claims.

"We have developed a very competitive pay and benefits package for all of our employees," the spokesman says, pointing out that more than 50pc of employees already live within four miles of their store, and stressing the retailer's career progression policies.

Unconvinced, Petty says the company's lack of willingness to talk to his or other community groups creates a potentially harmful "cloud of suspicion".

The store visits

A few miles to the south and the west of Petty's office, in a tranquil area on the edge of the mid-market Manhattan Beach, lies an F&E store that boasted the retailer's largest launch to date - with almost 2,600 customers on its first day - when it opened in early July.

But on the mid-week morning when I arrive, all is quiet. The 2,000 sq ft store (see editor's note below), very similar in feel to a large Tesco Express, does not look busy. At the back of the store is what is heralded by my F&E guide as the heart of the store - the "Kitchen Table", essentially a demonstration area run by a member of staff who chooses what items to display.

It's a nice idea, but far from original, as can be seen across the car park at rival retailer Trader Joe's whose "Snack Shack" concept looks very similar.

As we wander further around the store, in spite of the clearly fresh produce, it feels a little cold - and not just in temperature - despite a recent revamp by F&E.

There are nice, localised features - a small, child-height poster encourages youngsters to locate a hidden cuddly toy within the store in return for a prize - but they are few and far between. By and large, this is very much a store that has been designed to be rolled out, rather than one designed to entice customers.

At Trader Joe's the opposite is true. With a strong smell of cooking out front - coming from some beef being grilled at the Snack Shack - the shop is positively buzzing with customers. Gregarious staff chat away in a relaxed environment designed with a tropical surf shack in mind.

It's then that it becomes clear: the cheery staff-led atmosphere is what's missing in F&E. Because F&E's tills are entirely self check-out, there is little interaction between the retailer and the customer. Given the outgoing nature of most Americans - and in particular Californians - F&E might have just missed the point.

One block away, at larger rival Bristol Farms, a woman offering free samples of the latest oxygenated water pounces almost before customers get through the doors.

Although it's much larger than F&E it also has much more to offer shoppers. Like the nearby Whole Foods, which is just a two-minute drive away, it offers seating for people to eat their purchases from the deli, creating a sense of belonging to the shop that F&E does not.

By now it's lunchtime, which should be good news for F&E and its three neighbouring retailers.

As the other supermarkets fill up, I grab some food from a small Chinese eatery and, as I wait, I count the number of customers eating at outside tables: 32.

Keen to see how F&E is coping with the lunchtime rush, I wander back to the store to count the customers: 32.

Given this is a busy area with thousands of office workers within five minutes' driving distance of the shop, that seems incredibly low.

"This is a great store," says an elderly female customer who approaches me. "The problem is that around here - with all the competition - I'm just not sure if it's going to take off."

Fresh and Easy? Fresh, certainly, when it comes to its produce. But judging by my experience in Manhattan Beach, Tesco's dream of offering West Coast America something it didn't already have may not prove to be quite as easy as it first thought.

Fresh & Easy Buzz Editor's Note: In the above UK Telegraph story, the Manhattan Beach Fresh & Easy store is mentioned as being 2,000 square feet. That's a typographical or other error. The store actually is 13,000 -to- 14,000 square feet, approximately the same size as the Trader Joe's grocery store across the parking lot.

Thursday, August 14, 2008

New Store Openings: Tesco Opens Fresh & Easy Store Number 71 in San Diego, California's Point Loma Neighborhood

Tesco opened its Fresh & Easy Neighborhood Market grocery store number 71 (pictured above) yesterday in the Point Loma neighborhood in sunny San Diego, California to a large crowd of grand opening day shoppers, many of whom told a Fresh & Easy Buzz correspondent they were looking for bargains to save them money in the currently poor California economy.

Tesco distributed its $5-off for any total grocery order of $20 or more coupons throughout the Point Loma neighborhood prior to yesterday's Fresh & Easy store grand opening. Many of the opening day shoppers were armed with one or more of these $5-off coupons, according to the Fresh & Easy Buzz correspondent who attended the store opening.

The Point Loma Fresh & Easy grocery market (pictured at top) is one of the retailer's built from the ground up design prototype stores rather than one that's been installed in a remodeled, formerly empty retail building, which is the case with the majority of the current 71 stores.

The built from the ground up Fresh & Easy grocery stores are much more attractive inside and out than the markets located in the remodeled empty retail buildings. The stores have many more windows which let natural light into the stores, along with having skylights that do the same, for example. The interior colors also are brighter and the stores are somewhat more shopper-friendly than the remodeled Fresh & Easy markets are, in our analysis and opinion.

The built from the ground up stores like the one that opened yesterday in San Diego's Point Loma neighborhood still have a sterile quality to them however, in our analysis. As we've discussed before, the format lacks a sense of place and a warmness that encourages shoppers to linger (and thus spend more money), in our observation.

If the Fresh & Easy grocery stores were complete no frills, discount grocery stores like Aldi USA's and Sav-A-Lot's small format U.S. stores for example, this sterility wouldn't be a problem. However, Tesco is trying to achieve a combination basic grocery and hybrid fresh and specialty foods market with Fresh & Easy. Therefore, such a format should be warmer and more inviting, with a better sense of place we believe.

Numerous shoppers have made the same observations we are making about the stores, in interviews we've conducted, as well as on a number of online review boards like,, and a couple others.

But yesterday's grand opening at the approximately 10,000 square foot Point Loma neighborhood Fresh & Easy market, which was attended by CEO Tim Mason and other corporate executives as well as city of San Diego officials, was a busy one, according to our correspondent. Products ranging from fresh produce and basic grocery items to fresh, prepared foods were moving off the shelves at a good pace--with for example fresh produce items having to be refilled regularly--throughout the time our correspondent was at the store.

The Point Loma Fresh & Easy is the seventh unit to open in San Diego County. Thus far Tesco has Fresh & Easy Neighborhood Market grocery stores in the San Diego County cities of San Diego, Chula Vista, Escondido, Fallbrook, Casa de Oro and Vista.

In the next couple months Tesco is scheduled to open five more new Fresh & Easy stores in the following locations in San Diego County: Camino Santa Fe and Mira Mesa Boulevard, 32nd Street and University Avenue, Imperial Avenue and Valencia Parkway, Camino Del Norte and Dove Canyon Road (all in San Diego); and in the city of Lakeside at Winter Gardens Boulevard and Woodside Avenue.

The retailer is making a major commitment in San Diego County, as it is throughout Southern California, the Las Vegas Metropolitan region and the Phoenix Metropolitan area, the three current market focuses for Tesco's small-format combination fresh foods and basic grocery Fresh & Easy markets.

Beginning early next year Tesco will move into a number of new markets, all in California thus far. These new California markets include: The Lompoc/Oxnard/Santa Barbara coastal region in Southern California; the Bakersfield and Fresno Metro markets in the southern Central Valley; Modesto/Stockton in the Northern San Joaquin Valley; the Sacramento Metropolitan area; the San Francisco Bay Area; and the Monterey/Seaside market in Northern California's south coastal area.

The Fresh & Easy Buzz correspondent talked to dozens of shoppers at yesterday's grand opening. Three themes or reasons for attending the grand opening day emerged from those conversations. Those themes were: curiosity, looking for bargains, and deciding to attend because the attendees received the $5-off coupons.

It appears then that using the $5-off coupons to drive neighborhood residents to the store's grand opening worked well for Tesco's Fresh & Easy yesterday, as it has at some other store grand openings, based on the conversations the correspondent had with numerous shoppers yesterday.

The challenge for Tesco's Fresh & Easy is can it get these shoppers to return to the stores again and again without the $5 coupons, which when used for a grocery order of $20 doesn't leave much room for retailer margin at all?

In terms of bargain hunting, the challenge for Tesco's Fresh & Easy is the same challenge nearly all food retailers are facing right now in the poor U.S. economy. That challenge is attempting to convert the many bargain hunters into more regular primary or secondary customers rather than tertiary cherry picker shoppers.

Those $5-off coupons do encourage cherry picking in fact. But they may also build some shopper loyalty over time, although that's doubtful.

However, they can be a good short-term tool in a poor economy like is currently the case in the U.S. The problem is they are addictive to shoppers. Stop giving them out and the shoppers move on to the next deal--and retailer. For example, Wal-Mart doesn't use such coupons but it's turning in record sales and profits, especially in the food and grocery categories. Tesco will soon have to ask itself if its fresh & Easy stores can stand on their own without these deep discount coupons.

In terms of the curious grand opening day shoppers, we've found they tend to make up the majority of the crowds at supermarket grand openings of all brands, formats and companies. In fact, food and grocery retailers should celebrate the curious, as without them grand openings would most likely be duds. They may not spend a lot of money at the store grand opening in most cases but they sure can fill a store.

Just as it is a grocer's goal to convert grand opening day coupon users and bargain hunters into regular customers, so to is it a retailer's goal to convert those curiosity seekers into regular shoppers--keeping them as well as all consumers curious enough to return to its stores again and again.

In our analysis, Tesco needs to create much more consumer curiosity and excitement in all of its Fresh & Easy stores as a way to convert more irregular shoppers into primary and secondary Fresh & Easy store customers.

In order to do this, we suggest the retailer focus a bit more on in-store merchandising and promotional programs and a bit less on sending out new store opening press releases by the batch. Sure, the local newspapers--and Fresh & Easy Buzz--are likely to write about a new store opening. But it's fleeting publicity. Not to mention the fact that few consumers today even read local newspapers.

We think some exciting regular in-store events such as tastings of locally-produced food products, drawings and sweepstakes, a super-hot bargains of the week display of say six basic grocery items at blow out prices, and other related in-store merchandising and promotional events on a regular basis , would create that sense of excitement and thus consumer curiosity.

Tesco's Fresh & Easy can then use these events to drive its media marketing and public relations campaign, offering interesting stories to the press which reinforce what the retailer is doing where it counts--at retail.

Meanwhile, yesterday was a good grand opening day for the Point Loma neighborhood Fresh & Easy store. Our correspondent says store employees were spot on in performance and the store was well stocked when the doors opened in the morning.

Now that the grand opening is over of course, as is always the case in food and grocery retailing, the real work begins.