Saturday, July 28, 2012

Fresh & Easy Neighborhood Market to Test Full-Service Checkout at Two California Stores

Companion Story: Fresh & Easy Neighborhood Market Planning Major Renovations at Two California Stores

Breaking Buzz & Analysis

Tesco's Fresh & Easy Neighborhood Market plans to begin testing full-service checkout lanes in two California stores beginning, if all goes as planned, by the end of August, Fresh & Easy Buzz has learned.

The full-service checkout tests will be at the Fresh & Easy store at Main Street and Raymond Avenue in the Southern California city of Alhambra, and at the Lincoln and Sterling unit in Lincoln, which is near Sacramento in Northern California, according to information we have from multiple sources in positions to know about the plans.

The two test stores will continue to offer self-service checkout. The full-service checkout lanes will be offered in the test as an option to customers.

The full-service checkouts are part of a retrofit project Fresh & Easy is doing at the two stores. See our companion story here.

According to our sources, Fresh & Easy's senior management hasn't yet put a time period on the test in terms of if and when they will decide to roll the full-service option out to additional units. There are currently 199 Fresh & Easy grocery markets in California, Nevada and Arizona.

The decision to test full-service checkout at the two Fresh & Easy markets - an interesting one because since 2007 when the first stores opened the grocery chain's CEO, Tim Mason, along with its corporate spokesperson, have said publicly Tesco and Fresh & Easy Neighborhood Market are fully committed to the self-service checkout system, essentially saying it's a winner - was quarterbacked by new retail operations chief Tim Ashdown.

We broke the news about Ashdown's coming on board at Fresh & Easy in this May 2, 2012 story. Before joing Fresh & Easy Neighborhood Market a couple months ago he was CEO of Tesco's operations in China.

Since joining Fresh & Easy, Ashdown has been been a busy guy. For example, he was responsible for deciding to fire 50 employees at Fresh & Easy's corporate headquarters on Wednesday of this week, as one way of many to attempt to reduce the losses at the Tesco-owned grocery chain. [See the piece by our 'The Insider' columnist here.]

According to our sources, CEO Tim Mason approved Ashdown's decision. Mason and Ashdown then left it up to the various Fresh & Easy line managers to decide which specific people to let go, although the line managers were given guidelines, the chief one being that a certain financial target needed to be reached, which meant many of the employees fired were at director level; the highest paid staffers after top-level management.

For nearly five years we've been saying in Fresh & Easy Buzz that one of Tesco's major fumbles from day one with its Fresh & Easy Neighborhood Market chain is that it offers only self-service checkout in its fresh food and grocery markets in California, Nevada and Arizona.

In fact, we've done far more than say so -- we've offered historical analysis on why offering self-service checkout only is folly, along with offering proactive suggestions on why Fresh & Easy is missing the boat by not offering both full and self-service checkout.

We've also offered a variety of examples in various stories about why not offering both full and self-service checkout is a major point of competitive disadvantage for Tesco's Fresh & Easy.

A few of those examples include the inability to accept paper checks and WIC vouchers at the stores, along with the plain and simple fact that, based on nearly 40 years' experience in the U.S. food and grocery industry, which has included doing studies on shopper preferences for full or self-service checkout (including in California), the empirical evidence simply is that by offering self-service checkout only, Fresh & Easy limits its potential universe of customers because the majority of grocery shoppers in the U.S. just don't want to scan and bag their own groceries, particularly when they can go to numerous stores that offer groceries at the same prices, and even for less, than Fresh & Easy does, full-service checkout and bagging included at no extra charge.

In our analysis, testing full-service checkout at only two Fresh & Easy stores makes very little sense because it offers little in the way of a representative sample, although it is less expensive then testing it in five or six stores, which would not only make better sense - two urban stores, two suburban stores and one rural store, for example - but would provide a much better picture in considering whether or not to roll it out chainwide.

Of course from our perspective - and since we've said from day one that offering self-service checkout only is a huge mistake for Tesco - it's a moot point because we would have both self and full-service checkout in all stores without question or hesitation.

The move, in our analysis, really comes too late for Fresh & Easy. The chain basically has a year to show dramatic improvement in terms of reducing its losses. If not, the notion of breaking even by February 2014, which Tesco CEO Philip Clarke says will happen, not only won't be achievable but will essentially be a moot point. The operative point being: Can Fresh & Easy be anything more that a chain that finally stops losing money for Tesco?

In order to grow Fresh & Easy, even if it were to break even by February 2014 (if it's still around), Tesco has to have confidence in investing money in that growth - and it needs the confidence of its investors to continue doing so, considering about $2 billion has already been invested, and around $1.5 billion has been lost in five years. That confidence doesn't currently exist, even, we suggest, when it comes to CEO Philip Clarke, his (infrequent these days when it comes to Fresh & Easy) public prognostications to the contrary.

Meanwhile, five years after launching Fresh & Easy, and five years after we first pointed out why Tesco made a major mistake offering only self-service checkout in its Fresh & Easy stores, the retailer will test full-service checkout at the two stores in California.

No announcement has been made of this test by Tesco or Fresh & Easy. It will be interesting to see how they position it, now that it's being reported on.

California recently passed a law banning the sale of alcoholic beverages at self-service checkouts in the state's grocery and other format stores that offer adult beverages for sale. That law is currently in court, being challenged by the California Grocer's Association, largely because of Fresh & Easy, which is a member, since none of the trade groups other grocer-members offer self-service checkout only in their stores. As such, this could be one way Fresh & Easy explains the need for the full-service checkout test at the two stores.

Tesco isn't in any position to tinker around the edges with two-store self-service checkout tests at Fresh & Easy though. If it believes in Fresh & Easy, it should add the full-service checkout options to all the stores post haste.

And that's the central question and proposition: 'Does Tesco believe in Fresh & Easy?' It's a theme we will be returning to in the coming days in our reporting, analysis and commentary.

[Editor's Note: Fresh & Easy Buzz is an independent Blog, and is not affiliated with Tesco, Tesco's Fresh & Easy Neighborhood Market, or any of its competitors. No member of the Fresh & Easy Buzz editorial team has ever or currently works for Tesco or its Fresh & Easy Neighborhood Market chain.]


Anonymous said...

Back when it had its grand opening the store at 10930 Rosecrans Ave. in Norwalk, CA had a single traditional attended register in addition to the self serve registers for at least the first month or possibly longer it was open. The one person who worked the self check out also attended this register in what seemed to be an on request basis. Then this register just disappeared.

Matthew Brannigan said...

It's true that there are a significant amount of people that dislike auto checkouts - older folks tend to hate them and vote with their feet. The store I frequent - 4S Ranch in San Diego is reasonably busy but I almost never see anyone over 60 in the store, despite the area having a very large retiree population.

Anonymous said...

I love self checkout for a small amount of items but for a bigger shop it would be daunting to check out so much. I have always thought this has held f&e back of bigger baskets. It is ok mason saying customers love self service but he doesnt realize that getting no bad feedback is still bad because the ones that dont like it dont shop there anymore and cant leave bad feedback.

Anonymous said...

I don't mind the self checkout, but lots of people will never shop at a store with self service only checkout. It's not just older people it's also people who can't use computers, the visually impaired, the handicapped, people with arthritis, people who can't stand for long periods of time, people with poor reading skills, people who are bad at math, People who do not speak English, he lonely, people who the wealthy, people with little patience... One of the issues as I see it is not so much that people don't like any self checkout, but that they don't like Fresh&Easy's self checkout machines. I see a lot of mistakes which I call sloppy programming where items do not give the right points when scanned or sometimes when they do not scan at the correct price. Then you have the issue that the hardware is sub-par. The scanners themselves don't work really great. Many items will simply not scan with the regular scanner and you need to use the hand scanner - not something the average shopper would know. Bar codes are often printed too small on items or are pasted on the curve making them hard to read. The clearance tags are notoriously printed with handheld scanners that are beat up and loaded with almost empty ink cartridges. The cash registers also have very sensitive scales that make them need constant babysitting - they need to be cleaned and serviced regularly to do things like remove coins that fall down inside. Then you have that annoying voice that does not seem to know that you are clearing the belt and bagging but insists after about 20 seconds on pestering you to ask if you want to continue. Basically using a F&E scanner is intimidating because to use it right requires a lot of practice. Lots of people say to themselves why should I bother with this crap? It's simply too much of a hassle. With practice self checkouts can become faster than full checkout, but if you don't shop 3 times a week for a year it takes way too long. As I see it Fresh and Easy seems to listen to a few squeaky wheels, but you can't base your business model on what a tiny minority of Facebook users say on your wall. You need to conduct extensive market research!! If people are not shopping at your store you need to find those people and ask them: Why? What can we do different to win your business? You don't just cut store hours, dump products from your lineup, redecorate and not ask the customers first. As Howard says - research already shows that most people want full checkout or at the very least the choice to use it. Even for a veteran like myself I have had checkouts from hell - 30 minutes of scanning and bagging every item twice and ending up starting over on a different register. Self checkout is an unpleasant enough experience to cause you to lose many customers. -Bubba

Anonymous said...

It is a HUGE mistake not to have full service checkouts. Old people would LOVE Fresh & Easy products because they are healthy, fresh, and simple. But they HATE self-service checkouts. Also, a lot of Fresh & Easy products were made for people who do not want to spend time or effort dicing their onions or cutting fruits. If they are unwilling to perform even the simplest of tasks, what makes Fresh & Easy think those people are willing to checkout their purchases by themselves?

SoCalFoodBroker said...

My God, you've been telling them for 5 years self-service checkout only won't work. Guess they are finally listening. Sort of for 2 stores at least.

I've been commenting on the blog stories about it for almost that long. How any grocery retailer thinks they could force-feed self-service checkout down the throats of consumers amazed me. Shows they knew nothing of the markets they entered, of the shoppers.

Not one chain I call on in Southern CA is concerned about Fresh & Easy as a competitor anymore. But now they are worried about Walmart Neighborhood Market and thanks to the story in the Buzz Aldi.

Anonymous said...

and now 2014 they are trying it out 1-22-14 for the first time...I don't like it at all, they should have 1 full and the rest self serve