Wednesday, October 1, 2008

'The Promotional Pundit:' Fresh & Easy Buzz Analyzes, Offers Suggestions and Grades Tesco Fresh & Easy's Bi-Weekly Advertising Flyer

Tesco's Fresh & Easy Neighborhood Market today kicked-off a new two week round of promotional specials today in its fortnightly (every two weeks) advertising flyer, which is distributed in a paper hard copy format at the stores and to homes in the neighborhood near its stores in Southern California, Nevada and Arizona, and available on the Fresh & Easy Web site here.

Below we detail what's in the October 1 -to- October 14 promotional flyer, offer some analysis and commentary, and then assign two grades: one for creativity/item selection and one for the item promotional pricing.

The focus of the main body of the advertising flyer are eight items, featured at promotional prices suggested to be even "lower" than the items' previous discount prices. Tesco's Fresh & Easy headlines this feature "This Week's Extra Low Price."

The following items are featured with the notation was X price is now Y (extra lower) price:

Fresh Meats and Fish:
>Beef Chuck Roast. Was: $3.59 Lb. Now: $1.99 Lb.
>Assorted Pork Loin Chops. Was: $2.99 Lb. Now: $1.99 Lb.
>Filleted Tilapia. Was: $6.99 Lb. Now: $3.99 Lb.

Frozen Foods:
>fresh & easy (brand) Chicken Makhani, 24oz. Was: $4.99 each. Now: $3.39 each
>fresh & easy Cod Fish Sticks, 12oz. Was: $7.99. Now: $5.99

>fresh & easy Fruit Punch (ready-to-drink), 64oz. Was: $1.88. Now: 99-cents
>Reese's Peanut Butter Cup-snack size, 10.5oz. Was: $2.79. Now: $1.99

Perishable-Dairy Beverage:
>Dannon Light & Fit Smoothie - Strawberry-Banana, 4-pk, 7oz. Was: $3.65. Now: $2.45

[You can view the "This Week's Feature Low Price" flyer section here.]


Creative/Item Selction: From a creative or item selection standpoint this section is well...fine. Nothing special, nothing outstanding. It's not much different (except fewer items) than what most mid-range supermarkets choose as items. Not good, not bad.

Grade: B-.

Promotional Pricing: The beef roast, pork loin chops and fruit punch are good prices relative to the in-market competition. There are a number of competitiors that match these prices though. Therefore we can't say the three items are any better than "good."

The remaining items are medicore from a pricing standpoint. And we certainly don't think they will draw customers into the stores per se.

What's needed in this section we suggest are at least two door buster items. For example the 130 store Raleys supermarket chain in Northern California recently ran Foster Farms brand all-natural chickens for the super-low price of 49 cents a pound in its weekly ad. A Doorbuster. Safeway ran the same item for 79 cents a pound in its ad for all of its western USA banners (Vons, Safeway) a few weeks ago. Still a doorbuster but to the tune of 30 cents less of a one than Raleys.

Grade: C

The Fresh & Easy October 1 -to- October 14 promotional flyer also features a "meal solution" themed series of items titled "Pizza Dough to Go," to make a simple pizza at home. The items include:

>fresh & easy Pizza Dough. 16oz (enough to make one pizza), for $1.18.
>fresh & easy Shredded Mozzarella Cheese. 8oz, for $2.48
>fresh & easy Pizza Sauce. 15.5oz jar, for $1.18
>Gallo (brand) Sliced Pepperoni. 3oz, for $2.29

[You can view the "Pizza Dough to Go" section here.]


Creative/Item Selection: Sometimes "simple" equals a good "meal solutions" promotional grouping. Actually, "often" is more the operative word. We would have tweaked the item selection a bit compared to what Fresh & Easy did. But overall it's fine from an item selction standpoint. Not great. Not outstanding. But just fine.

Grade: B

Promotional Pricing: The total cost of the basic Pepperoni Pizza made at home with the items from Fresh & Easy is $8.13. While that's a decent price or cost, the fact is there are Pizza restaurants in Southern California, Nevada and Arizona like Little Ceasars (comparable or better quality ingredients) and a couple of others where a consumer can get a large Pepperoni (or any one topping pizza with cheese included) for $5.99 -to- $6.99 plus tax, which still comes out to under $8.13 -- and the pizza doesn't have to be prepared, nor does the consumer have to use and pay for the gas and electricity to bake it in the oven.

Fresh & Easy therefore might want to sharpen its promotional pencil a bit on the "make your own pizza" "meal solution" promotional item prices. For example, we think a $5.99 -to-$6.99 cost would be good. Otherwise its a good promotional idea since we think "meal solution" groupings can be rather strong promotional vehicles if the right items are used and they are priced right.

Grade: C

The grocery chain also has a second "meal solution" themed item grouping in the promotional flyer called "Baking Essentials." The items grouped together under that theme are:

>Farmer's Gems Large Grade AA Eggs. 1 dozen, for $1.59
>fresh & easy Banana Bread Mix. 12.8oz box, for 2.29
>fresh & easy Vegetable Oil. 48oz, for $2.55
>fresh & easy salted butter. 16oz, 2.67


Creative/Item Selection: Eggs, vegetable oil and butter. You can't generally go wrong in offering those three items under the "Baking Basics: header. Sort of grcoery ad item selection 101; a no brainer. That's not a critic of Fresh & Easy. Rather, it's just a fact of grocery merchandising when it comes to baking basics. The Banana Bread Mix is fine since the category can benefit from one quick-fix mix items.

Grade: B+

Promotional Pricing: The item prices is a different matter though. With the exception of the eggs at $1.59 dozen, which is an excellent price, Fresh & Easy needs to sharpen its pricing pencil on the other three items.

For example, comparable private label 48oz vegetable oils can be bought at competing supermarkets in the market regions for at least 15% lower on an everyday price basis. And in-market supermarket chains regularly advertise store brand and even national brand vegetable oils for $1.89 and $1.99.

The butter price offering is pretty good. But still not among the lowest in Fresh & Easy's markets. Competing supermarket chains regularly advertise store brand, and often regional manufacturer's brands 16oz pkg's of butter at $2 -for- $5.00, or $2.50 each, which is 17 cents a unit cheaper than Fresh & Easy promotional price this week.

Lastly, the banana bread mix is ok priced, and it's not going to be a super hot item anyway. However, we often see store and national brand banana mix's promoted in market for $1.99, which is 30 cents less than Fresh & Easy's promoted offering.

Grade: C- (the promo price on the eggs saved it from being a D-).

[You can view the "Baking Essentials" section here.

Lastly, the October 1 -to- October 14 Fresh & Easy ad has a third "meal solutions" themed grouping. It's titled: "Get Your Omegas in Minutes," referring to the fatty acid of the same name. The items are:

>fresh & easy brand Chipotle Salmon Burgers. 8oz pkg, for $5.99
>fresh & easy Focaccia Roll (ready-to-eat). 2-pk, for $1.79
>Wild Rocket (a Fresh & Easy house brand) Salad Greens Mix. 7oz bag, for $3.31
>Roslyn Chardonay Wine (and F&E proprietary brand). 750ml bottle, for $5.99


Creative/Item Selection: From the creative/item selection standpoint we are of a bit of a mixed mind on this one. We like the concept and theme. However, we think its a bit misleading since the only item we can find out of the four that has Omega-3 fatty acids are the Salmon Burgers. But that's not a deal breaker for us. We like the Omega-3 concept.

But we would have at least two of the four items containing Omega-3 Fatty acids. Additionally, we would suggest A simple solution: Add a serving suggesting for the salad greens to make an oil and vinegar dressing using olive or another oil that has Omega-3's in it. Also, an additional serving suggestion to use nuts like walnuts that contain Omega-3's on top of the salad.

By doing those two simple things we just added two additional sources (and potential sales at Fresh & Easy) of Omega-3 to the menu.

Grade: B. (Likely would have given it an A- if Fresh & Easy would have included a least one serving suggestion (like the olive oil or nuts) to add Omega-3's to the menu.

Promotional Pricing: From a pricing standpoint the Salmon Burgers are OK-priced but nothing special. Same with the ready-to-eat Focaccia Rolls and the wine.

Wine is a rather subjective price/quality item. The $5.99 bottle could be an outstanding value. Or it could be overpriced. hard to tell. Since most consumers have never heard of the brand, or have a zero comparitive reference point for it, we don't see the real utility of including it in the promo section. Would have been far better to run the retailer's $1.99 a bottle Big Kuhuna store brand wine. That also would bring down the cost of the "meal" by four bucks.

The bagged, mixed salad greens in the 7oz bag for $3.31 are outrageously high, especially for a promoted item. Similar bagged mixed salad greens in 12oz bags are frequently on sale at in-market supermarkets and even natural foods stores at 2 -for- $5.00. Trader Joe's offers a similar item at a lower everyday price than $3.31, as does Costco. A shopper can even get 7oz's of organic mixed greens at Whole Foods Market (not know for low prices) at about $3.31 or less.

Promo Pricing Grade: C-


Overall we generally are fine with and even like Fresh & Easy's promotional flyer format -- the feature section and the three or so "meal solution" sections.

The format allows for a combination of feature item selection and pricing, yet also provides structure for more culinary "meal solution" types of promotions in addition. We would make some changes to the format. But for now overall we are favorable to it in general.

We do suggest the grocery chain go from a fortnightly (one flyer every two weeks) to a weekly ad flyer. It's the norm in U.S. food and grocery retailing. Especially for those chains that aspire to the "big time." It also creates more excitement in the stores -- more in-an out deals, ect.

Fresh & Easy Buzz will be analyzing Fresh & Easy Neighborhood Market's advertising flyers on a semi-regular basis in this manner. Not every fortnight. But often.

From a promotional pricing standpoint, our expectation -- based on Fresh & Easy's positioning and pricing claims (as well as one of the key things what the retailer needs to differentiate itself from the already established supermarket pack) -- is the promotional flyer prices should be right in line with those of the deepest disount food and grocery retailers such as Costco, Wal-Mart, Warehouse and no frills supermarket format discounters and other low-priced formats.

This means the promo item pricing should be across the board lower than supermarket chains such as Safeway (Vons, Safeway) Kroger's Ralphs, Stater Bros., Bashas and other supermarket format chains and independents in California, Nevada and Arizona.

The current October 1 -to- October 14 advertising flyer promotional item pricing does not meet that test. It's essentially in-line -- with a number of items even priced higher -- with the ad-promo pricing of the mainstream supermarket chains' mentioned above, along with others in-market.

By the way, since we are offering analysis and commentary on Tesco Fresh & Easy's advert-promo flyers, we invite you to offer suggestions (using the comment link below) of additions and the like you think we should make in this format we're using to analyze, comment on and critique the Fresh & Easy promotional flyer item selection and pricing. It's only fair after all.

1 comment:

Anonymous said...

I think the ad is one of their worst ones. Overall I would give the ad a D.

I thought the page on Baking essentials was poorly timed since the baking season really doesn't start until November. It's just too darn hot now to start baking in all the states the stores are in.

I also thought the back page was really lacking. Only 4 items and to me it was a waste of paper ...and it looked really sparse like they forgot to list the rest of the items. I also didn't see any cohesiveness to them. They were called "family favorites" but the 4 items looked really weird next to each other (reeses, punch, string cheese?)