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 yelp.com, chowhound.com, craigslist.com 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.