Wednesday, August 8, 2012

Fear & Loathing in the Aisles: Reduction in Hours and Selected Firings Begin Today at 33 Fresh & Easy Stores

The Insider - Heard on the Street

Tesco's Fresh & Easy Neighborhood Market began terminating selected store-level employees, mostly but not exclusively regular grocery clerks called Customer Assistants, today at 33 of its 199 grocery markets in California, Nevada and Arizona.

I learned this while visiting a number of Fresh & Easy stores in two states yesterday and today.

I also verified it with a number of store-level Fresh & Easy Neighborhood Market employees, including two who were fired today.

In this July 26, 2012 piece, Fear and Loathing in El Segundo: Mass Firings, Reduction in Store Hours at 33 Fresh & Easy Stores ... and More, I reported exclusively that Fresh & Easy Neighborhood Market planned to reduce the operating hours at 33 of its stores from the retailer's normal 8 a.m.-10 p.m. hours to 9 a.m-8 pm, beginning soon.

That day is here: I also learned during my store visits yesterday and today that the reduced hours at the 33 stores are effective today. Instead of the previous 8 a.m.-10 p.m. operating hours, the doors to these 33 Fresh & Easy markets now officially open at 9 a.m, and close at 8 a.m.

I'm not aware of one grocery chain (read competitor to Tesco's Fresh & Easy) in California, Nevada and Arizona. In fact, many stores operated by the leading chains in the three states, such as Safeway, Kroger Co., Supervalu, Save Mart, Albertson's LLC, Stater Bros. and others, keep many of their respective stores open 24-hours. The stores not open 24-hours close generally at 11 p.m or midnight and open at 7 a.m.

Grocery stores that are doing well don't close at 8 p.m., unless they're doing so well that opening them any later would prove to be an embarrassment of riches to a modest grocery retailer. And grocers who want their stores to do well don't close them at 8 p.m.

Additionally, for those not experienced in the food and grocery retailing business, if a grocer decides to close a bunch of stores, like 33 of its 199 units, at 8 p.m. rather than the previous 10 p.m., you can take it to the bank the company CEO has very little if any faith in the future potential of those stores. If that's not the case, then he just doesn't understand the grocery business.

The selected store-level layoffs are a part of the reduction in hours program at the 33 Fresh & Easy stores.

Since the stores are opening one hour later and closing two hours earlier, less employees are needed.

Some of the workers at the affected stores are getting transfers to other Fresh & Easy markets.

Other employees at the 33 stores are getting their hours cut, in many cases down to 20 hours a week, which is the minimum they are required to work in order for the grocery chain to pay the 70-75% employer contribution for the workers health insurance policies.

Over the last five years of its operation (the first stores opened in November 2007) most Fresh & Easy Customer Assistants, who are hired part time and guaranteed 20 hours a week at the time of hire, have worked more than the minimum guaranteed hours at the request of either store management or themselves. Few employees have worked just 20 hours a week over the last five years Fresh &Easy has been in operation.

Cost-cutting strategy

The reduction in store operating hours and related reduction in store employee hours, along with the layoffs of the Customer Assistants and others I'm telling readers about today, is all about reducing labor and related costs for Tesco's Fresh & Easy.

The store-level cuts go hand-in-hand with the termination of about 50 employees in one day at Fresh & Easy Neighborhood Market's corporate headquarters in El Segundo, California, which I wrote about here on July 26.

Battles and wars

The cost-cutting comes now, in my analysis and opinion, because Tesco's fiscal half-year ends in about a month. Tesco must show its making at least a minimum reduction in its losses, $245 million for the most-recently-ended fiscal year (ended February 2012), when it reports its fiscal half-year results this fall.

Prior to making the cuts at its corporate headquarters in late July and the store-reductions I'm describing in this piece, Fresh & Easy Neighborhood Market was not on track to show any significant improvement in its half-year performance over the previous half-year, based on my reporting and analysis.

Since the cuts come so near the end of the half-year, I don't expect Tesco to report a major reduction in losses for the half-year in relation to the $245 million it lost in its most-recently ended fiscal year. It will be interesting to see - and more cuts are coming - what Tesco does report as a loss for Fresh & Easy for the half-year.

Breaking even with Fresh & Easy, which Tesco says it will do so by the end of its 2014 fiscal year, which is less than two years away, is only part of the story for Tesco - it's the battle but not the war. And it's the war that truly matters. Despite winning many battles a war can still be lost.

For Tesco, continuing my battle vs. war analogy, the war boils down to this question: Does Fresh & Easy have a future as a viable and profitable grocery chain?

That's a question I will be addressing in one of my next columns.

-The Insider

[Editor's Note: 'The Insider' isn't a literal or descriptiive title for our columnist. 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.]


Alicia said...

I shop there almost exclusively! Love the store but there are picketers there all the time because they are non union.
Too bad because the prices are good, the locations convenient, the selection and quality really good and its quick in and out all the time!

Anonymous said...

Some of the closings could be due to safety and security. Did F&E opens some stores in some really bad neighborhoods?

But yes I do realize that the volumes of these stores are horrible.

Anonymous said...

Here's something I would ask about the store volume numbers. I would not be at all surprised if they are using bogus numbers. If you buy items and use discounts there are basically 3 totals. They total the items, then deduct the BOGO and quantity discounts which gives you the "qualifying purchas" number they use to calculate your bonus points. Then you deduct coupons and you get another total. Now one more discount is sometimes applied - the amount you get from spending your bonus points. So the actual amount of money spent can be much less than the amount of the groceries. I honestly don't think the corporate big shots know what the heck is going on in the actual stores. Does corporate ever send people to the stores in Las Vegas for example to speak to actual customers? I sort of doubt it. There really should be monthly or quarterly trips to every store by upper management. I can say that I shop a lot and I have never seen anyone except the local store employees. -Bubba

Anonymous said...

I was fired from a store in Vegas Wednesday. Kind of glad though because I don't see Fresh & Easy making it. Our store didn't even do close to $100,000 week. Try about $50,000 week. Put my application in at Winco and another chain store Friday.

Marcel said...

I've been in this business for 40 years. F&E has been the laughing stock of the industry since they first announced they were opening. Whole Foods products at Aldi prices. Yeah right. All that research - LOL. All those bad locations in B- locations at best. Sure we could go all day about the stupid press releases with stupid canned comments. And all the stupid answers to changes. Remember when they said no more direct store deliveries because it caused air pollution? Moe like its not worth it for a COKE truck to deliver 3 cases of 12 packs. Ok, enough piling on. Obviously they will pull the plug, regardless of the "we are encouraged by....." comments. I work for the competition and can tell you F&E is considered a complete ineffectual competitor. The concept and some locations my be salvaged is given some good old American retail know-how. So it looks like all the ideas come from some liberal college freshman.

cab said...

I know this and more. I was hired to do "cash office". I do many other jobs along with it now, because FnE won't hire. I along with everyone else in my store are TIRED. What to do? Wait until I get laid-off, or resign. They want to burn me out so I'll resign. Cost's them no EDD. Hate this.

Christopher said...

Well, I hope they can hold on. We've cut our weekly grocery bill by 40% without sacrificing quality. Even with the strange change that happened early this year. And I have been rather impressed with their store brand foods. They do need to up employee moral though - in the past 2 months or so you can actually feel the change in the stores. Not good. My advice to the CEO (for whatever it is worth) - Do a bit more market research in store placement. We drive 5 miles to your nearest store. FE almost opened a store a block away but changed their mind. The location was perfect (W. Sahara). Right next to a large middle class condo complex - which itself is next to other complexes. Or neighbor hood is ~ 40% hispanic and many of them shop at groceries that cater to them culturally - of which there are plenty. However, the rest of us are stuck with a single grocery store in the area - and it's an expensive one - and it's not close. In fact there is a large "void" of grocery stores in my area unless they are ethnic. Yet, FE puts stores across the street from things like Smith's? If you are gonna do that, you better buy much bigger signs. Anyways, I think - at least in vegas - FE's target audience is middle and lower middle class white and African American folk. The Asian Pacific folk and Hispanic/Latino folk have store that specifically cater to them. But, our neighbor hood are mixed - so you actually need to research the demographics and put stores where there is a need and/or void - understand them demographics. Also, ~20% of our work force is on swing or grave yard shift - and you are cutting back hours? Vegas isn't California. lol.....I must really like FE to write that much.

Anonymous said...

Besides the obvious large portion of our work force on shifts, cutting back on hours is also a horrible idea this time of year for several reasons. #1: It's too freaking hot to shop in the daytime. It's like they ignore the fact that a lot of groceries get sold between 8pm and midnight. #2: School's back in session. Our schools stagger start times, but the largest schools (high schools) start at 7am. The rest start at 8 or 9am. Considering the fact that F&E has moved big time into the Kitchen to Go convenient meals, by cutting hours they eliminate everyone who either works for CCSD (or attends) which is a huge school district. Concerning locations: as time goes on it seems to me that their locations are commingle even more inconvenient. If you map them out there are virtually no locations near the middle of town, near or other shopping, or near the Las Vegas Strip. I need a store to buy lunch near where I work, but F&E has slowly abandoned the places that are close to the urban center of LV and moved totally to the outlying areas. The stores that are actually close to me have decided to cut hours - the actual hours when I am near my house. I really thing they are starting a new kind of store - The Inconvenient Store. One must wonder if their goal is actually to sell more groceries or not. The secondary issue here is that when you cut hours, more food will spoil and they'll end up losing even more money. It's sad to see them make such idiotic moves. All I can do is complain and watch the the craziness as it unfolds. -bubba

Anonymous said...

As someone who just resigned from Fresh&Easy after hours were cut and seven employees were laid off, I am happy I left. I was tired and burned out. I was expected to be a one women show, while my "supervisors" just stood around talked. Fresh&Easy shot themselves in the foot by condensing hours. They are losing regular customers who rountinely came in early in the mornings or late at night, waste on mark down items has increased because we no longer have time or the employees to mark them down, customer service is at an all time low because we are so busy trying to get other things done. Every aspect of that store is at an all time low. I think Fresh&Easy as a company has forgot that the customers are what are keeping them in business, and they deserve exceptional customer service. They treat their employees just as bad as their employees, they deserve what's coming.

cab said...

"...and seven employees were laid off". You had seven CA's in your store? What a luxury! We're almost at the point where if someone calls in sick, or doesn't show... we have to close the store.

caB said...

I was remiss in mentioning that anon, who started her post with "as someone who just resigned", IS absolutely correct in her description of store level operations. Ultimatly I'm sorry she had to quit. Sadly, I'll probably have to do the same. I was hoping to stay with fne to the finish... but why be a masochist?

Anonymous said...

I recently resigned from F&E due to low compensation and reduction in workforce. When I began with F&E in 2007, as a Team Leader it had so much promise. Fast forward 5yrs later and now you have a company, that is lost in the peril of there own design. The upper brass (Coporate) truly has no idea on how to remedy F&E bleeding financial losses to date. The once great concept of bringing wholsesome fresh heathly affordable food. Is turning into the laughing stock of the grocery industry. With companies such as Walmart, Aldi's, The Fresh Market and host of others prepared to open by the end of 2012. It would be in F&E best future. To consider withdrawing from this industry alltogether. Save face, pull out, go back to the UK. What was once a great idea. Is now the biggest joke in the grocery industry.!

Anonymous said...

I live in Phoenix, AZ. Several of the Fresh n Easy stores I shopped at regularly have closed downin the last few months. I make a special trip to a Fresh n Easy that is kind of far away to pick up a few items I haven't been able to find at other stores closer to me. Well, long story short, by the time I get off work and get down to the grocery store I see they are closed! I was shocked to see they changed their hours to close at 8pm. As someone who works later hours, late night shopping is the only time I can get my grocery shopping done. Very disappointed with this change.

Pheonix said...

So my F&E is one that has reduced hours, I was shocked to roll in there aat 8:30 for my normal clearance markdown buying spree to see that store locked.
so I decide to cruise in there at 6:00 pm the next day to see if I can score some clearance deals, I spy one of the accociated loading the cart full of produce from the shelves, I'm thinking ok shes going to mark it down now, --NO SUCH LUCK

The whole cart was wheeled to the back, no evening clearance cycle.
The clearance is the only thing that lures me into the store, and the only way that I will try any of the prepared stuff because quite frankly is really spotty on flavor. Most of it my kids will not eat. I'm also consistently disappointed with the flavors of the prepared items however I will say they have been getting better.

Anonymous said...

I work in a fresh and easy in walnut park, Ca it's costumers come from a variety of cultural background. Fresh and easy has brings good quality service and food to the nearby neighborhoods that are bombarded by fast food chain in every corner. We offer good prices and organic products that aren't easy to find around low income surroundings. Yes their are two huge grocery store Food 4 less and El Super. Whole sale food means cheap food and a 25 minute wait in line. Take it from a guy who work at Target for 4 yrs been an employee for fresh and easy has been a dream job! For those team leads who got fire from Fresh and Easy, how do you get Fire from Fresh and Easy!!!!!:( we bring good quality and service. Plus who wants to cashier for 8 hrs..... Earl

Anonymous said...

Yes fresh and easy should go back to the UK . They are a joke and values are out the window.I love how people are getting wise of fresh and easy and finding new jobs.I'm glad I was let go because it gave me a chance to find a better place it's only a matter of time before more are let go and those slow not put in a great location or have at best assistant manager quality running stores that will close down.

Anonymous said...

You are only lying to yourself if you think this is a great retailer. High prices are what you pay unless you get the old food that is marked down and sometimes it looks so horrible why is it out. I still work for Fresh and Easy and all day it is stressful more work than you can do but you are expected to do it. My manager doesn't care and with reduced hours and staff it makes it impossible to get the sales desired .

Anonymous said...

I have no idea which stores you're referring to, but MY local Fresh and Easy (Duarte, CA) had a sign on the door yesterday indicating they were now going to open at 7AM instead of 8. And they're open until 10PM, too.

Anonymous said...

This only applies to 33 fresh and easy stores in California Arizona and las Vegas . The other stores only have to schedule each employee 20 hours and they are open 7or 8 till 10 pm. Unfortunately for 33 stores they open from 9am to 8pm only.These 33 stores had to cut staff to make the low payroll budget that was given. I know managers who still to this day haven't made a payroll budget and there DM will give them more hours and take from the managers who make budget.

Anonymous said...

I find your comments and opinions to be very illuminating and spot on.

I'm just wondering why you do not seem to post here on your blog very often anymore?

There is so much going on at F&E and you serve a very important role in keeping us informed because the company is not always forthcoming or truthful.

Anonymous said...

So, is it actually ok to have 3 people work 20 pallets in a day?!
Who is running the place and making such asinine policies.
Basically work faster with less staff - Great Concept!!

Anonymous said...

Fresh and easy why have you let us down, you were filled with such promise but it seems you lied to each of us,. I left a great paying and stable job to come here and launch this great concept but you do not want to listen to any of us on what works or what doesn't You insist on using a failing model and laying to us about how it's working, we are not stupid remember slot of us hired ad managers have more experience running stores then you do, thank you for the uncertainty and fear of will I have a job tomorrow feeling we ALL have daily. Why couldn't you just listen an ls stop being so self centered

Anonymous said...

It looks like fresh and easy is doing what it does best nothing. Same old range changes poor customer service and lack of help. The lonely one person at the checkout looking for help ringing the bell for help while management is goofing off cause lets face it they dont care. Or when I'm in the store and I need help guess what another conference call. It's only a matter of time when it's all over if this is the way it is going to be. And really the customers arent fooled by our supposed lowering prices they are not stupid .American consumers are very smart and know prices to the penny.

Anonymous said...

I heard from HR more lay offs are on the way next couple of weeks...Happy Holidays

Anonymous said...

So this is the last holiday season pretty much?
oh hey DC, please make sure to stack those pallets a minimum of 9'/ make sure to mix in ambient with meat all loaded on a layer of yogurt.thanks!