Monday, November 24, 2008

A Single Bird in the Ad (Even Wrapped in Bacon and Sage) Does Not Make For A Good Thanksgiving Promotion For A Neighborhood Grocer For 'Everybody'

Analysis & Commentary: Tesco Fresh & Easy Neighborhood Market's Thanksgiving 2008 Advertising Circular and Promotion

Benjamin Franklin's famous letter to his daughter Sally about why he wanted the turkey to be the national bird of the United State's instead of the bald eagle. Franklin wrote the letter to Sally on January 26, 1784 from France. She was in Philadelphia -- "For my own part I wish the Bald Eagle had not been chosen the Representative of our Country. He is a Bird of bad moral Character. He does not get his Living honestly. You may have seen him perched on some dead Tree near the River, where, too lazy to fish for himself, he watches the Labour of the Fishing Hawk; and when that diligent Bird has at length taken a Fish, and is bearing it to his Nest for the Support of his Mate and young Ones, the Bald Eagle pursues him and takes it from him.

"With all this Injustice, he is never in good Case but like those among Men who live by Sharping & Robbing he is generally poor and often very lousy. Besides he is a rank Coward: The little King Bird not bigger than a Sparrow attacks him boldly and drives him out of the District. He is therefore by no means a proper Emblem for the brave and honest Cincinnati of America who have driven all the King birds from our Country . . .

"I am on this account not displeased that the Figure is not known as a Bald Eagle, but looks more like a Turkey. For the Truth the Turkey is in Comparison a much more respectable Bird, and withal a true original Native of America . . . He is besides, though a little vain & silly, a Bird of Courage, and would not hesitate to attack a Grenadier of the British Guards who should presume to invade his Farm Yard with a red Coat on."

Fresh & Easy Buzz has been writing for some time about the fact Tesco's Fresh & Easy Neighborhood Market has failed to create and communicate a solid, clear value proposition for its small-format, convenience-oriented grocery and fresh foods stores, in our analysis.

We believe the primary reason this is the case is because the retailer has yet to define what the format is (is Fresh & Easy a discount grocery or specialty foods chain? Or both? Or more?) and it's retailing mission and focus are (are the stores really for "everybody" like Tesco says they are? If so, why is such a limited consumer demographic, mostly consumers aged 19-35, shopping the stores primarily? And not enough of them at that?)

As a result, the positioning of the Fresh & Easy is a muddle, as we've been arguing since December, 2007. We said give them time then. We said give them time in June and July of this year. But it's now nearly the end of November, 2008, and has been one year since the first batch of Fresh & Easy stores opened. The failure to position the stores is still as bad as it was in December, 2007, in our analysis. Why? Because of the reasons we stated above: The retailer still hasn't figured out the chain's format and mission, therefore there is no clear, comprehensive and solid focus and positioning for Fresh & Easy.

The grocer is using a shotgun form of positioning, merchandising and marketing (fire a bunch of shot out there and see what sticks) rather than a rifle approach, which is a clear, focused position and a comprehensive marketing communications program to then create the Fresh & Easy retail brand.

In fact, based on the thrust of Tesco's overall merchandising and marketing since the first batch of Fresh & Easy stores opened in November, 2007, our analysis is that the Fresh & Easy Neighborhood Market executive team is running a specialty foods chain, Fresh & Easy, and merchandising and marketing the stores in the main in that direction. Nothing wrong with that -- except that's not what Tesco says Fresh & Easy is.

The everyday low price, discount aspect of the stores has largely been obscured in the merchandising and marketing of the Fresh & Easy chain. The value proposition, which Tesco touted for over a year before the first store opened as being its key positioning factor for Fresh & Easy, along with convenience, has been nearly non-existent -- an after-thought when it comes to positioning, merchandising and marketing.

For example, for Thanksgiving Tesco's Fresh & Easy is promoting in-store, through a press release and in its current November 12-26 online and mass-mailed advertising circular, a gourmet, ready-to-cook turkey dinner, under the theme "Thanksgiving made easy," featuring a whole ready-to-cook turkey wrapped in smoked bacon and sage, along with including prepared side dishes and trimmings for six people for about $49, or $8 per-person. Here's the dinner promotional offering:

fresh&easy Whole Turkey Wrapped in Smoked Bacon and Sage -- $2.29 Lb.

Prepared: Ready-to-heat
fresh&easy Mashed Potatoes -- $4.99/28 oz, or
fresh&easy Mashed Sweet Potatoes -- $3.99/24 oz
fresh&easy Herbed Stuffing -- $3.99/16 oz
fresh&easy Roasted Vegetables -- $4.99/19 oz
fresh&easy Turkey Gravy -- $3.49/20 fl oz
fresh&easy Cranberry & Orange Sauce -- $2.99/12 oz
fresh&easy 9" Pumpkin Pie -- $2.99 each

The $49 price for the gourmet turkey and trimmings (the turkey is gourmet while the trimmings are more mainstream) Thanksgiving dinner isn't bad at all -- it's about the same price nearly all of Fresh & Easy competitors in California, Nevada and Arizona are selling similar prepared Thanksgiving turkey/side dish/dessert dinners for. Except, the competitors' whole turkeys are already cooked in many cases, and they are your basic bird rather than being wrapped in bacon and sage or anything else. Many of these also feed 8-10 people rather than six.

We aren't saying a bacon and sage-wrapped turkey doesn't sound like it might be very tasty. The problem isn't with the dinner created by Fresh & Easy's in-house chef -- it's fine. The problem is, the Fresh & Easy Thanksgiving meal promotion is one a specialty or gourmet food store would offer, not one (at least making it its only advertised promotional offering) a neighborhood market that's positioned for everybody and claims it offers everyday food and grocery prices 15% -to- 20% lower than those of competing supermarkets would offer as its only Thanksgiving Turkey promotion. There is a disconnect from the attempted positioning of being a low-priced neighborhood market designed for all consumer segments and offering only the gourmet turkey promotion.

Such an offering would be fine as a secondary one by Fresh & Easy, say along with a value-priced Thanksgiving dinner (including just a basic, raw bird), as well as promoting basic, whole Turkeys at a hot price in the advertising circular.

But that's it. The gourmet bacon and sage-wrapped bird is the only turkey the grocer is promoting in its holiday ad. Fresh & Easy isn't promoting a value version of the dinner for say under $30 like the small-format Aldi USA discount grocery chain is doing, nor is the grocery chain offering fresh and frozen whole turkeys on sale for hot prices like Safeway Stores, Ralph's, Bashas and all of its other key competitor's are.

Aldi USA's value offering, which you can view here, is only $27.16 and includes a 14 pound Butterball brand whole turkey, which is one of the most popular brands in the U.S. The complete Thanksgiving meal fixings feed at least eight adults.

The positioning of Fresh & Easy with its Thanksgiving promotion is that of a specialty or gourmet market, plain and simple. If we may use a turkey metaphor: 'If your Thanksgiving holiday promotion looks like a gourmet turkey promotion (a bird wrapped in smoked bacon and sage), walks like a gourmet turkey promotion (higher-priced, prepared side dishes only) and is priced like an gourmet turkey promotion (higher than most consumers can afford this Thanksgiving holiday even though the price is decent for the perceived quality, and you offer no additional value-based options), it's a specialty/gourmet turkey dinner (promotion.)

For example, in addition to offering prepared turkey dinners at about $49, chains like Safeway (Vons in Southern California and southern Nevada, Safeway in Arizona, Northern California and northern Nevada) Ralphs, Albertsons, Bashas, Frys, Stater Bros, Food-4-Less and most others (all key competitors) all are offering a variety of turkey variations on sale this week. These range from promoting whole frozen birds for 38 cents -to- 49 cents per-pound if customers spend a minimum of $25 at the store, to selling frozen turkeys for 69 cents a pound (and some even less) with no minimum purchase requirements, to offering whole fresh birds for from 79 cents to about $1.39 per-pound.

These same supermarkets also are offering higher-end, premium birds, such as the popular Diesel brand free-range, all-natural turkey for as low as $2.29 per-pound, along with organic birds for a higher promotional price-point. A couple chains also are offering free turkeys (12-16 pounds) with a minimum total purchase of $100.

This Advertising and promotion is traditional. Every Thanksgiving U.S. supermarkets offer a wide range of turkey's -- usually at least three brands of frozen (a lower-end, medium range and high-end) and at least three brands of fresh turkeys (low, medium and high-end) -- for sale the week before Thanksgiving in their advertising circulars. Most also offer additional brands and versions, including premium, free-range and organic, as well as a couple value-added versions such as smoked, honeysuckle, ect. They do this because it works -- it appeals to the entire consumer spectrum, from lower income shoppers to the wealthy, or those who aren't wealthy but are willing to splurge and spend more for a premium turkey and higher-end trimmings.

It's our analysis that by promoting only one Thanksgiving offering, a ready-to-cook turkey wrapped in smoked bacon and sage, along with higher-priced ready-to-heat side dishes only, not only is Fresh & Easy missing the boat on drawing the majority of shoppers into its stores, its running a specialty food store promotion. There would be nothing wrong with this if Fresh & Easy was a specialty grocery. But it says it isn't. Rather it says it's a discount or everyday low price-format neighborhood grocery and fresh foods market designed for all consumers.

If that's the case, and positioning, then where are at a bare minimum the discount-priced and advertised fresh and frozen whole turkeys? And why not a value-version of a complete Thanksgiving dinner, along with the smoked bacon and sage-wrapped gourmet offering, like discount grocery chain Aldi USA is offering here, for example.

We say this with all humility and with zero pleasure: Tesco Fresh & Easy's November 12-16 Thanksgiving advertising circular is one of the worst Thanksgiving holiday promotions we've seen a grocer produce in nearly 30 years of working in and participating in the food and grocery industry in the U.S.

There's just no there there in the ad. No meat on the promotion's bones. No real value offered. No reason for a consumer to read it, comparing it to Safeway's, Kroger's and the other chain and independents Thanksgiving holiday promotions in California, Nevada and Arizona, and saying: 'I've got to shop Fresh & Easy for my Thanksgiving turkey and groceries.'

And in terms of promoting just the one turkey, the bird wrapped in smoked bacon and sage, most American consumers like a plain old bird for their Thanksgiving dinner. They then season it the way they choose. Feel free to ask the various U.S. poultry industry trade associations for their annual sales figures by type of bird sold if you don't believe us about the overwhelming popularity and sales of the plain old bird at Thanksgiving compared to all other variations.

A few consumers/cooks might even choose to wrap their plain old whole turkey in bacon, although we would guess that percentage would likely be about 1% of the U.S. population.

Additionally, most Americans like to buy a plain turkey because they generally serve Thanksgiving dinner to a number of family members, as well as often including friends at their holiday dinner celebrations.

Most if not nearly all U.S. consumers will shy away from buying a turkey wrapped in smoked bacon and sage because perhaps Uncle Jeff, who has high cholesterol, has been told by his doctor not to eat bacon, so he can't eat it. Or maybe because son Tom's wife is Jewish and doesn't eat pork. Then there's that crazy cousin Larry who hates bacon period. Not to mention all the kids who when they see a turkey wrapped in bacon and sage don't want any part of it. Too gross they might say, even though those of us who've enjoyed such a bird know its not gross at all. The plain turkey, seasoned by the home cook, is therefore the default bird for Thanksgiving in America.

Offering promotional variations in ads, like the bacon and sage-wrapped bird, on the plain whole fresh and frozen turkeys and turkey dinner package like Aldi's is fine. But they aren't a substitute, (rather an addition to) to offering the plain bird, unless the grocer doing so isn't concerned about sales. or drawing in holiday shoppers to its stores.

The point is, when feeding numerous family members, many from out of town or out of state even, on Thanksgiving Day, most Americans want to please all. Therefore they go for a basic, plain turkey most of the time and season it so that it appeals to most if not all of their dinner guests. Many offer a second entree as well.

The bacon and sage-wrapped turkey sounds tasty, although we prefer wrapping ours, on those rare non-Thanksgiving holiday occasions when we do so, in Pancetta. However, by making it the only offering in its Thanksgiving Day promotion and advertisement, Fresh & Easy is appealing to the smallest of consumer segments, rather then appealing to "everybody," which it could have done had it offered a plain bird, value version of the full Thanksgiving dinner, along with offering at least one frozen and one fresh whole turkey at a super hot price, like Safeway, Ralphs, Stater Bros., Food-4-Less, Bashas, Albertsons, Frys, Save Mart, Raley's and most others are doing, in its Fresh & Easy Thanksgiving holiday advertising circular.

Additionally, aren't ready-to-eat prepared meals a key aspect of Tesco's Fresh & Easy? Why no pre-cooked, ready-to-heat-only or ready-to-eat turkeys advertised for the holiday?

We suspect Fresh & Easy didn't advertise and promote this version, despite it being key to its prepared foods merchandising, because it feared it would be stuck with too many pre-cooked turkeys, having to mark them down 50% and toss many of them away after Thanksgiving. Safeway, Ralphs and most other chains are offering fully-prepared Thanksgiving meals for 8-10 for about $49 -to- $59, that include a pre-cooked turkey that just needs heating at home. Or in some cases if shoppers can get the pre-cooked birds home fast enough, keeping them hot, they just need to be carved and served.

If you view Fresh & Easy's November 12-16 advertising circular here, which is the grocer's Thanksgiving holiday promotion, we think you too will ask the same two questions we did when we first saw it: Where's the value proposition? Why no basic turkey dinner at a hot price? And where in the world are the fresh and frozen plain whole turkeys at a discount price? We had a couple other questions as well. But those were the key ones.

American consumers haven't been as financially strapped as they are this Thanksgiving since perhaps the recession of the 1970's. For many its even far worse than that. Based on its no frills, discount model, Tesco's Fresh & Easy should be offering at least one value-based Thanksgiving dinner, along with those discount-priced frozen and fresh whole turkeys we mentioned above, in its current holiday ad. By not doing so the retailer is missing the boat for what is the number one consumer spending holiday in the U.S. -- Thanksgiving. Where's the holiday value proposition? Look through the entire ad as well. Not much value. Few items even.

It's a time-tested empirical fact of American shopper behavior that U.S. consumers purchase most of their Thanksgiving holiday dinner, dessert and related food and grocery products at the store in which they decide to purchase their turkeys at, which the vast majority still serve on the holiday, although some serve ham or beef roasts. A few even serve chicken, lamb or a goose as their main course instead of turkey. But the mighty bird loved by Ben Franklin still remains far and away the number one Thanksgiving holiday dinner center of the plate item in American homes on the American-only holiday this Thursday.

In tough economic times like now many shoppers will cherry pick ads, going to two or three stores to purchase their holiday fixings. However, they still will buy lots of incremental items at the store where they purchase their turkey, ham or beef roast. That's why major U.S. chains and independents feature numerous varieties of turkeys (and hams , beef roasts, ect.) in their Thanksgiving holiday advertising circulars and promotions.

The promotional objective is to appeal to all segments of the consumer base -- from the lowest income end to the mid-range and often even the high-end. It's also to offer hot buys on the birds (often loss leaders in fact) in order to get consumers into the stores so they will buy other items. Get shoppers in with the cheap bird and hope they buy higher margin items along with other advertised products is the philosophy and practice.

Specialty markets on the other hand, especially those focused on the upscale shopper which most are, tend to focus only on the high-end Thanksgiving shopper, which this year is comprised of far fewer consumers. These are the consumers who would be more likely to buy a turkey wrapped with smoked bacon and sage to grace their holiday dinner table.

But we think most higher-end consumers wouldn't buy the bacon-sage-wrapped bird either. Rather they tend to go for a free-range, broad-breasted, organic turkey, then choose how they season it on their own. Perhaps rubbed with extra virgin olive oil and fresh garlic, then seasoned with sea salt, fresh, cracked black pepper, fresh rosemary, sage and thyme, which is a popular version for Thanksgiving.

Our analysis is Fresh & Easy has missed this empirical reality of U.S. food retailing and promotion this Thanksgiving. It's holiday promotion is pure specialty foods store, which would be fine if that's what Tesco would say Fresh & Easy is. But it isn't, according to the company. It's a neighborhood grocery and fresh foods market with low-prices positioned for all consumers, according to Tesco. But based on its Thanksgiving promotion it looks specialty foods store to us.

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