More Reshuffling: Number Two Marketing Exec Follows CMO Uwins Out the Door at Tesco's Fresh & Easy Neighborhood Market

Tesco's Fresh & Easy celebrated birthday number four November 9.



The top-level management reshuffling and integration of the marketing function into a new combination buying-merchandising-marketing department headed by chief customer officer and former chief commercial (buying and merchandising) officer John Burry continues at Tesco's Fresh & Easy Neighborhood Market.

The latest departure from the Fresh & Easy's El Segundo, California headquarters is marketing operations director Paul Madarieta, who was the number two marketing executive in what was until a couple weeks ago the standalone marketing department.

Madarieta, now gone, reported directly to former chief marketing officer (CMO) Simon Uwins, who as we were the first to report in this story on November 10 left Fresh & Easy and Tesco in a top-level shakeup initiated by Philip Clarke, the CEO of Tesco, and Tesco group deputy CEO/chief marketing officer Tim Mason, who's also the CEO of Fresh & Easy Neighborhood Market.

Madarieta joined Fresh & Easy in late 2007 in a retail operations capacity. His title before moving into marketing was regional director of California stores.

He was later brought into the grocery chain's corporate marketing department by CEO Mason, who, according to our sources, believed his knowledge of retail operations, particularly in California, and high-level of enthusiasm would make him a good addition to the department and to the grocery chain's marketing efforts.

Mason, who since March of this year has been Tesco's chief marketing officer and deputy CEO, in addition to remaining CEO of Fresh & Easy, was the United Kingdom-based global retailer's chief marketing officer before coming to California in 2006 to start up Fresh & as its founding CEO.

Madarieta became Fresh & Easy's marketing operations director in January 2010.

As part of the shake up that resulted in Simon Uwins' leaving Fresh & Easy (see here), Madarieta was offered a lessor position in the new, combined department being headed up by John Burry, which he ultimately declined, instead leaving the 184-store fresh food and grocery chain, according to our sources.

Madarieta's position, like that of his former boss Simon Uwins, has been eliminated by Tesco's Fresh & Easy Neighborhood Market.

Fresh & Easy Neighborhood market recently posted an advertisement for a marketing analyst, a position that pays considerably less a salary than the former marketing operations director position, and a whole lot less than the chief marketing officer position formerly held by Uwins. The marketing analyst will work in the new joint commercial (buying-merchandising)-marketing department being headed up by chief customer officer John Burry.

Prior to joining Tesco's Fresh & Easy, Paul Madarieta spent a number of years working for iconic specialty grocer Trader Joe's, which Fresh & Easy Neighborhood Market has sought to emulate in a number of operational and merchandising ways, ranging from store size and look and its focus on private brands, to putting an emphasis on the wine category, among others.

Madarieta started out as a crew member (store clerk) at Trader Joe's. He later became a store captain (store manager), and from there was promoted to a regional vice president position with the Southern California-based grocery chain.

Fresh & Easy Neighborhood Market has hired a number of former Trader Joe's employees.

For example, Larry Biggerstaff, Fresh & Easy's current director of grocery buying and merchandising (reporting to John Burry), was the vice president of merchandising at Trader Joe's prior to joining El Segundo, California-based Fresh & Easy Neighborhood Market last year, as we reported in this September 11, 2010 story - Ex-Trader Joe's VP, Winn-Dixie Exec Larry Biggerstaff New Director of Grocery at Tesco's Fresh & Easy Neighborhood Market.

A number of category managers and buyers at Fresh & Easy also have previously worked for Trader Joe's, which is headquartered in the Southern California city of Monrovia.

For example, in the November 10 story about Simon Uwins' departure, we mentioned that three key mid-level headquarters employees had also recently left the grocery chain.

One of the employees who left in the last 60 days is Mei-Lon Jimenez, who until her departure was the category manager for bakery at Fresh & Easy, and prior to joining the grocery chain worked for Trader Joe's.

In her position at Fresh & Easy Neighborhood Market, Jimenez played a significant role in the start up of the new in-store bakery departments the grocer is putting in many of its stores. We broke the news about the bakery development in this May 18, 2011 story. Fresh & Easy started the in-store bakery installations late this summer. It's on the record as saying its goal is to have the bakeries in about 100 of its 184 grocery markets by the end of this year.

The former Fresh & Easy bakery category manager is now working for the Coles supermarket chain in Australia.

We discovered she joined the down-under supermarket chain two weeks ago when Coles' posted her name on a portion of its website, listing her as its new category manager for cheese. A senior executive at the supermarket chain confirmed the posting. She started at the down-under chain last week, according to the source.

Coles' is headed up by former British supermarket executive Ian McLeod. Its senior management team includes numerous veterans of the food and grocery retailing business in the United Kingdom, including Tesco, as we detailed in this December 25, 2009 piece: It's 'British Invasion: The Sequel Down Under' For Former Tesco Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell.

Another related Coles-Tesco Fresh & Easy angle: Charlotte Maxwell, who worked for Tesco for nine years and was the director of grocery buying and merchandising at Fresh & Easy from 2006 until August 22, 2008, joined Coles in April 2009 as its general manager of deli and bakery, which includes cheese. Ironically, she left Coles (about 30 days ago) to pursue other occupational opportunities. (Click here to read about Ms. Maxwell's departure from Tesco's Fresh & Easy and her joining Coles in Australia.)

With the departure of the number one (Simon Uwins) and two (Paul Madarieta) marketing executives at Fresh & Easy Neighborhood Market, chief customer officer John Burry has taken on the dual-responsibility for the corporate commercial (buying and merchandising) and marketing functions at the Tesco-owned chain, as we reported in our November 10 story.

Additionally, as we noted in the story, Tim Lee, who's been Fresh & Easy's director of fresh foods, reporting to Burry, is stepping in as a key player in the grocery chain's marketing efforts. He continues to report to Burry

Lee is being replaced as director of fresh foods by Ian Fletcher, who previously was in charge of Fresh & Easy's kitchen operation. He too reports to John Burry, as does Lee and director of grocery Larry Biggerstaff.

From a balance sheet (cost savings) perspective, Uwins' salary is being absorbed into Burry's, perhaps with a slight bump, while Madarieta's position and salary will essentially be absorbed by Tim Lee. As previously noted, the two marketing positions have been eliminated.

Tesco will report its 2011/12 fiscal year third quarter results on December 8, although it won't likely offer specific sales and loss numbers for Fresh & Easy, as it generally doesn't do so except when reporting half (interim) and full-year results.

On October 5, 2011 Tesco reported a fiscal 2011/12 half-year loss of $112 million for Fresh & Easy, on sales of $470 million. The loss is 21-23% (depending on how recorded) lower than the one reported for Fresh & Easy for the same period in the previous fiscal year.

The United Kingdom-based global retailer's CEO, Philip Clarke, says Tesco will break-even with Fresh & Easy Neighborhood Market by the end of the 2012/13 fiscal year, which is 15 months away. The 2012/13 fiscal year ends February 2013. Tesco reports its sales and profits/loss for the year in April 2013.

Post Script: Take a look at prediction number 7 in this story from last year - December 30, 2010: Seven Predictions For Tesco's Fresh & Easy Neighborhood Market For 2011.

Also see these columns by our 'The Insider' columnist, all published before Philip Clarke became CEO of Tesco in March 2011:

>October 8, 2010: Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA

>September 13, 2010: Reading Philip Clarke's Tea Leaves: Might A Mixed Corporate/Franchise Model Be in Fresh & Easy Neighborhood Market's Future?

>June 12, 2010: Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

Additional Related Stories

November 17, 2011: 'Meat Guru'-Category Manager Bill Arnold Out at Fresh & Easy Neighborhood Market

November 10, 2011: Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market.

October 27, 2011: Former Meat Buyer Wins $400,000-Plus Legal Judgment From Fresh & Easy Neighborhood Market

February 23, 2011: Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market

February 28, 2011: Changing of the Guard: Clarke Takes Over the Reins as Tesco CEO Wednesday

Click on this link - Fresh and Easy headquarters personel changes - for more related stories.

[Photo credit: Fresh & Easy Neighborhood Market.]

Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market

Simon Uwins, chief marketing officer for Tesco's Fresh & Easy Neighborhood Market since early 2006 when the United Kingdom-based global retailer set up shop in El Segundo, California, is out as part of a top-level management reshuffling by Tesco's CEO, Philip Clarke, and Tim Mason, CEO of Fresh & Easy and Tesco group deputy CEO/chief marketing officer.

In addition to his position as chief marketing officer, Uwins was one of Fresh & Easy Neighborhood Market's senior corporate officers. He reported directly to CEO Mason.

Mason announced Uwins' departure from Fresh & Easy and parent company Tesco Wednesday at the grocery chain's Town Hall meeting.

The Town Hall meetings, which include the full office staff and are broadcast to employees at the Riverside distribution campus, are held weekly at 1 p.m at Fresh & Easy's corporate office in El Segundo, California

Neither United Kingdom-based Tesco or Fresh & Easy Neighborhood Market has publicly announced Uwins' departure. As a matter of policy, Fresh & Easy doesn't announce when senior executives or employees at any level leave the company. Additionally, Fresh & Easy doesn't as a practice announce new hires at any level.

Simon Uwins, 52, was part of the original team of senior executives who came with Mason to set up and launch Fresh & Easy Neighborhood Market in 2006. Prior to that he worked at Tesco's global headquarters in Cheshunt, United Kingdom, where he was a marketing executive.

As part of Uwins' departure as chief marketing officer at Fresh & Easy, Clarke and Mason have reshuffled the organization chart, making a number of changes.

John Burry, Fresh & Easy's chief commercial officer (head of buying and merchandising), is assuming overall responsibility for both the commercial and marketing functions at the Tesco-owned fresh food and grocery chain.

Like Uwins, Burry is one of the original members of Fresh & Easy's senior management team. He is also a senior corporate officer of Fresh & Easy Neighborhood Market.

The commercial department has two directors - grocery and fresh foods - who report directly to Burry. Below them are category managers, who are direct-reports to the directors. The category managers have buyers and assistant buyers directly reporting to them.

One of the two directors (the other is Larry Biggerstaff), Tim Lee, the trading director for fresh foods (produce, meat, deli/fresh-prepared foods) is vacating that position and will be working with John Burry to transition the marketing function at Fresh & Easy into the commercial department, according to our sources.

Lee won't be replacing Uwins as chief marketing officer but rather assuming many of his day-to-day marketing management duties. He will continue to report to Burry.

Tim Lee came to Fresh & Easy from Tesco in the UK in early-2010, replacing Jim Jensen, who left to take a position heading up drug chain Walgreens' new at the time fresh foods program. Lee's focus at Tesco in the UK was as a produce category manager and director.

According to our sources, Lee has 9-10 months left on his original assignment contract at Fresh & Easy. He will be using that time in the new position, which straddles commercial and marketing, our sources tell us.

Ian Fletcher, who runs Fresh & Easy's fresh-prepared foods kitchen operation, is replacing Lee as director of fresh foods, according to our sources.

Fletcher, who originally worked in the UK, has been with Fresh & Easy for a number of years. His wife, Karen Fletcher, was the beer, wine and spirits category manager at Fresh & Easy Neighborhood Market from 2007 until this summer, when she resigned. She too previously worked for Tesco in the UK. The Fletcher's were married not long after coming to Fresh & Easy at the start up stage. John Burry was the best man at the their wedding in Hawaii.

Rounding out the reshuffling, Mark Lodge will take over management of Fresh & Easy's corporate kitchen operation when Ian Fletcher moves into the director of fresh foods position, replacing Tim Lee, according to our sources.

Lodge is currently an employee of the kitchen operation, which is Fresh & Easy's central commissary at the Riverside County, California campus facility, where the ready-to-eat and ready-to-eat fresh-prepared foods sold in its 184 stores in California, Nevada and Arizona are prepared and packaged.

From a balance sheet perspective, the reshuffling will save Fresh & Easy one senior-level executive salary and benefits package, which is that of the departed Simon Uwins. Some of that savings will be taken up by probable pay raises going to Ian Fletcher and Mark Lodge in their respective new positions. Tim Lee is likely a wash, and it's unlikely Burry will be getting a raise as part of assuming the overall responsibility for marketing, in addition to keeping his commercial department duties.

Tesco's Fresh & Easy has lost a number of key middle management-level employees at its El Segundo, California headquarters over the last 60 days, according to our sources.

The employees include: a key director/manager in the grocery chain's logistics and supply chain department; a category manager/buyer who was playing a major role in heading up Fresh & Easy's new in-store bakery program, which is still in its infant stages; and a veteran-senior level  member of its information technology (IT) department.

All three of these employees left to take new jobs in the food and grocery industry, according to our sources.

Simon Uwins currently plans to remain in the U.S. rather than returning to the UK, according to our sources.

Tesco currently has no immediate plans to name a new chief marketing officer for Fresh & Easy either, our sources tell us, instead combining the marketing function and department with commercial under the direction of John Burry, as reported and detailed above.

Additionally, since Fresh & Easy's CEO, Tim Mason, is also Tesco's chief marketing officer and is based at the grocery chain's headquarters in Southern California, he will likely play a strong hand in the U.S. operation's marketing, since in the position, which he was named to in March of this year when Clarke became CEO of Tesco, he has the ultimate responsibility for all of Tesco's corporate marketing.

Therefore the new structure - no chief marketing officer at Fresh & Easy - has, at least theoretically, the effect of flattening the organizational chart at the senior level when it comes to the marketing function at Fresh & Easy Neighborhood Market and the headquarters office in El Segundo, California, where Mason is based.

Walgreens Announces Hiring of Former Fresh & Easy Fresh Foods Director Jim Jensen; Confirms Our January 6 Report

On January 6, 2010 Fresh & Easy Buzz was first to report that Jim Jensen had left his position as director of fresh foods at Tesco's Fresh & Easy Neighborhood Market, and was taking a similar position at the Walgreens drug chain. Our Report - Wednesday, January 6, 2010 Breaking Buzz: Corporate Director of Fresh Foods Jim Jensen Leaves Tesco's Fresh & Easy.

Additionally, see our follow-up piece - Friday, January 15, 2010: Just-Exited Tesco Fresh & Easy Fresh Foods Director Jim Jensen to Head New Fresh Foods Initiative at Walgreens Drug Chain.

Today, Thursday, January 21, Walgreens announced in a statement it has hired former Fresh & Easy fresh foods director Jim Jensen to head up its fresh foods program, confirming our early reports.

Here's a report on Walgreens announcement from Dow Jones Newswires published in today's Wall Street Journal - January 21, 2010: Walgreen Taps New Executive For Venture Into Fresh Food

Numerous other business and industry trade publications will be reporting the story today and tomorrow now that Walgreens has publicly announced the move in a press release...

But Fresh & Easy Buzz readers learned the news 15 days ago when we broke it on the Blog.

Fresh & Easy Buzz has been reporting on and writing about Walgreens' increased food and grocery product merchandising emphasis - and its connection to Tesco's Fresh & Easy - long before the recent spate of coverage in the mainstream press and in other Blogs came about in the last couple days.

For example, below is a bibliography of just a few of the related stories from Fresh & Easy Buzz on the topic going back as far as well over a year ago. There are links at these posts to other related stores from the Blog as well.

>January 22, 2009: Neighbors by Location Only: Will Mega-Drug Chain Walgreens' New Focus on Consumables and 'Affordable Essentials' Rob Sales From Tesco's Fresh & Easy?

>December 22, 2008: Drug Chain Walgreens to Slow New Store Growth; Despite Tesco Fresh & Easy's Recent Announcement to Do Similar, We Suggest An Analogy is Misplaced

>December 22, 2008: Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position

>Monday, September 22, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

[Editor's Note: Fresh & Easy Buzz will have more to come in the following days on Walgreens' move into fresh foods merchandising. Stay tuned.]

Breaking Buzz: Corporate Director of Fresh Foods Jim Jensen Leaves Tesco's Fresh & Easy

Jim Jensen, the director of fresh foods for Tesco's Fresh & Easy Neighborhood Market, has left the company, Fresh & Easy Buzz has learned.

According to our sources, Mr. Jensen left Fresh & Easy on December 30. He is no longer employed by Tesco plc in any capacity.

Sources tell us Jim Jensen left Tesco's Fresh & Easy Neighborhood Market to accept a new position with the Walgreens drug chain at its corporate headquarters in Illinois.

Interestingly, if Jim Jensen does join Walgreens, as our sources tell us he is, he will join another Tesco Fresh & Easy alum, former vice president of retail operations Brian Pugh.

Mr. Pugh left Fresh & Easy in September 2008. [September 22, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market] and joined Walgreens as a vice president in December of 2008. [December 22, 2008: Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position]

Jim Jensen became director of fresh foods at Fresh & Easy Neighborhood Market's corporate headquarters in El Segundo, (Southern) California just 17 months ago, when he was promoted to that position from his then position as category manager for bakery. Bakery is part of the fresh foods department. [Read our August 17 and August 22 stories here for additional background: [August 17, 2008: Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department] August 22, 2008: Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK]

Tesco's Fresh & Easy breaks its corporate merchandising and buying function (which it calls commercial, using the British term) into two functional departments: Grocery and Fresh. Each department is headed by a director, which are the top corporate operational merchandising and buying positions at corporate headquarters.

All of the merchandising and buying department category managers report to the two directors.

The two directors of grocery and fresh report to the vice president of commercial (corporate merchandising and buying).

The grocery merchandising-buying department includes all packaged food and grocery items, along with non-foods.

The fresh department includes fresh produce, meats, bakery, other perishables and the grocer's ready-to-eat and ready-to-heat fresh, prepared foods (entrees, side dishes, ect.)

Tesco's Fresh & Easy has yet to name a replacement for Mr. Jensen, according to our sources.

Jim Jensen is the second merchandising-buying director to leave Tesco's Fresh & Easy in the last 17 months.

Charlotte Maxwell, the former director of grocery merchandising, left her position in August 2008.

Ms. Maxwell was replaced by the then director of fresh foods, Sean McCurley.

Jim Jensen was then promoted to director of fresh foods, filling Mr. McCurley's position.

As we've reported in the past, Tesco's Fresh & Easy has experienced considerable employee turnover in its corporate merchandising and buying departments since 2007, with numerous category managers and buyers leaving the company. [August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain']

One of our sources tells us Tesco could replace Jim Jensen at Fresh & Easy's El Segundo, California corporate headquarters with a merchandising-buying executive from Tesco headquarters in the United Kingdom. However no replacement has yet been named, based on our information.

Related Stories From Fresh & Easy Buzz:

December 25, 2009: It's 'British Invasion: The Sequel Down Under' For Former Tesco Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell

August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

August 17, 2008: Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department

August 22, 2008: Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK

September 22, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

December 22, 2008: Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position

March 2, 2008: Walgreens Promotes Former Tesco Fresh & Easy Exec Bryan Pough to VP Merchandising Position; Move Fits Drug Chain's Current Strategic Focus

March 12, 2008: Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team

May 29, 2008: Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 5

January 22, 2009: Neighbors by Location Only: Will Mega-Drug Chain Walgreens' New Focus on Consumables and 'Affordable Essentials' Rob Sales From Tesco's Fresh & Easy?

[Follow Fresh & Easy Buzz on Twitter.com for the latest news and information at www.twitter.com/freshneasybuzz.]

It's 'British Invasion: The Sequel Down Under' For Former Tesco Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell

Fresh & Easy Buzz was the first publication to report in this September 22, 2008 story [Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market] that former co-vice president of operations Brian Pugh was leaving his position at Tesco's Fresh & Easy and Tesco plc.

Brian Pugh was a key executive for Tesco plc before being tapped to be one of the handful of Tesco executives from the United Kingdom sent to the United States to start up its Fresh & Easy small-format grocery and fresh foods chain in Southern California in 2006. The first Fresh & Easy markets opened in November 2007. There are now 131 Fresh & Easy stores open in Southern California, Arizona and Nevada.

Fresh & Easy Buzz was also the first publication (that we can find) to report in this December 22, 2008 story [Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position] that the former Tesco Fresh & Easy co-president of operations had landed a new position as vice president of format development at the mega-U.S. drug store chain Walgreens.

Mr. Pugh was promoted by Walgreens to the position of corporate vice president of merchandising (a position he currently holds) just a few months after being hired, as we reported in this March 2, 2009 story: Walgreens Promotes Former Tesco Fresh & Easy Exec Bryan Pough to VP Merchandising Position; Move Fits Drug Chain's Current Strategic Focus.

Prior to March of 2008 Brian Pugh held the position of vice president of operations at Tesco's El Segundo, California-based Fresh & Easy USA.

However, as we reported in this March 12, 2008 story [Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team], that changed when Tesco plc decided to transfer Jeff Adams, the former CEO of its Tesco-Lotus unit in Thailand, to Fresh & Easy USA to share senior retail operational duties with Mr. Pugh. [Suggested reading - May 29, 2008: Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 12.]

Charlotte Maxwell: Part of the British Invasion Down Under

Earlier in this August 17, 2008 story [Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department] Fresh & Easy Buzz was the first to report exclusively that Charlotte Maxwell, a nine-year Tesco plc executive and the former director of grocery at Tesco's Fresh & Easy USA for close to three years, was leaving her top position at Fresh & Easy headquarters in Southern California to return to Tesco plc's global headquarters in the United Kingdom.

Ms. Maxwell's departure from the top grocery merchandising job at Tesco's Fresh & Easy came amidst what we called in this August 17, 2008 story [ Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'] a category manager and grocery buyer "Brain Drain" at Tesco's Fresh & Easy Neighborhood Market's corporate headquarters in El Segundo, California.

Unlike former Tesco Fresh & Easy co-vice president of retail operations Brian Pugh, who left Tesco plc completely and not just its Fresh & Easy USA unit, former Tesco plc executive and Fresh & Easy USA director of grocery Charlotte Maxwell did return to Tesco and its global corporate headquarters in Cheshunt, Herts, England in the United Kingdom.

Her stay there didn't last long though.

We can now report that Charlotte Maxwell, like Brian Pugh, no longer is employed by Tesco plc.

In April of 2009 Ms. Maxwell joined the Coles supermarket chain in Australia as its new general manager of deli/bakery, which is the senior merchandising and buying position for the deli and bakery categories at the chain.

In 2008 and again in early 2009 Coles, which is Australia's second-largest food retailer after the Woolworths chain, tapped Charlotte Maxwell (in her case in early 2009), along with an entire team of former British supermarket chain executives, category managers and others, as part of a five-year strategic turn-around strategy being implemented by the board of directors of Coles' parent company, Westfarmers. Not too many years ago Coles held the number one market share position in Australia but was overtaken by Woolworths, which is something the board wants to change.

The turnaround effort is being led by Brit Ian MCLeod, who is a former executive with Asda, the number two supermarket chain in the United Kingdom after number one Tesco.

Another British grocery retailing veteran, turnaround specialist Archie Norman who is given much credit for the turnaround of the Walmart Stores, Inc.-owned Asda chain in the United Kingdom, is assisting in Coles' turnaround strategy, working with MCLeod in the position of "chief coach," a consulting capacity.

Former Tesco and Fresh & Easy USA executive Charlotte Maxwell is among a group of numerous Brits now at Coles' corporate headquarters in Australia. This group includes veterans from the United Kingdom's top three supermarket chains: Tesco, Asda and Sanisbury's. Many in the Australian food and grocery industry are calling it the "British invasion of Coles." We sot of like "British Invasion: The Sequel."

And the British food and grocery retailing vets transplanted to Coles in Australia look to be very busy, according to a brief report in Tuesday's (December 23) Herald Sun newspaper headlined: "Supermaket giant Coles accused of crunching suppliers with new campaign."

Here's the report (in italics):

Supermaket giant Coles accused of crunching suppliers with new campaign

SUPERMARKET giant Coles has been accused of launching a new campaign that strips profits from struggling suppliers.

A new management team recruited from UK supermarket chain Tesco has been blamed for the profit grab, which has seen Coles axe some branded lines that compete with its own private labels.

Suppliers say Coles is demanding big increases in payments for shelf space, playing cheap, low-quality imports off against local companies to force their prices down and asking suppliers to take a big hit on payments to subsidise the refurbishment of Coles' stores.

Coles has rejected the "wild" accusations. A spokesman said the chain sought to "strike a balance between paying sustainable prices to suppliers, and ensuring customers get the best possible prices in our stores".

But a food manufacturer who deals with local farmers said the new Coles management had been "ruthless", demanded "premium product for Chinese prices" and played several tricks during negotiations.

It appears the British invaders are stirring things up a bit down under.

Life After (Tesco's) Fresh & Easy

Neither Tesco plc or Tesco's Fresh & Easy Neighborhood Market USA announced the departures of either Charlotte Maxwell or Brian Pugh when each respectively left Fresh & Easy headquarters in Southern California. That's not an unusual phenonmenon though, and certainly not exclusive to Tesco.

But both Mr. Pough and Ms. Maxwell were key in setting up Tesco's U.S. Fresh & Easy chain just three years ago -part of that select team of pioneers or "British Invaders" if you will - And now both are no longer employed by Tesco plc.

We aren't suggesting anything nefarious about the departure's of these former key Tesco employees. It happens.

It is an interesting phenomenon though since both were key Tesco plc executives prior to the establishment of Fresh & Easy USA, which has been a less than stellar venture for Tesco thus far, and now both are not only gone from Fresh & Easy but also from Tesco plc.

But we won't go as far as to suggest there exists anything like a "Fresh & Easy curse" for former key Tesco plc executives who, like those British pioneers of history, came to the former colony of America to stake their claim.

But as many of us know - a start up can be a cruel mistress or master, as has been the case at Tesco's Fresh & Easy USA. But in the case of Mr. Pugh and Ms. Maxwell, it appears they've both landed well - one (Mr. Pugh) with the leading U.S. drug store chain, Walgreens, and the other (Ms. Maxwell) with Australia's second-largest supermarket chain, Coles.

'British Invasion: The Sequel Down Under'

And in the case of Charlotte Maxwell, it's "British Invasion: The Sequel Down Under," in part. Having spent nearly three years as one of a group of Tesco plc senior executives starting up the Fresh & Easy chain in the Western U.S. - a move that's often been dubbed in the media as the "British Invasion" of U.S food and grocery retailing, she's now part of a group of British retail food and grocery retailing veterans who have parachuted (or invaded) into australia to lead the turnaround of that country's second-largest grocery chain.

Neighbors by Location Only: Will Mega-Drug Chain Walgreens' New Focus on Consumables and 'Affordable Essentials' Rob Sales From Tesco's Fresh & Easy?

Competitor News and Analysis

On December 22, 2008 we reported on the development that former Tesco Fresh & Easy Neighborhood Market co-vice president of retail operations Brain Pugh had been hired by the mega-drugstore chain Walgreens in the new position of vice president of format development-Walgreens.

The primary focus of Pugh's new position at the drug chain, which has thousands of stores throughout the U.S., is to focus on growing and strengthening Walgreens' consumables (food and grocery) household products (toilet paper, cleaners, ect.) and health and beauty care merchandising and retailing program. [Read the story here: Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position.]

In the December 22 story we also wrote about an additional two new hires the drug chain announced at the same time. Those new hires were: Jeffrey Zavada, as vice president and chief sales officer, and Colin Watts, as vice president and president of the Walgreens' Health and Wellness disease management business.

In September, 2008 Walgreens, which is headquartered in Deerfield, Illinois, made an additional major hire, bringing in Kim Feil as its new corporate chief marketing officer.

Ms. Feil, Brian Pugh and chief sales officer Colin Watts were all hired in large part because of their experience in consumer packaged goods marketing, merchandising, operations and sales.
The Hiring of these folks for that experience was not by accident.

Beginning in about the spring of 2008, and intensifying in the early summer of last year, Walgreens made a strategic marketing and merchandising decision to put a greater focus on consumables and related consumer packaged goods marketing, merchandising and sales in its drug stores, including dramatically increasing the number of food, grocery, household and health and beauty care items it will sell in its stores under the retailer's own store brands. These store brands include the Walgreens' brand (across all product categories including food, grocery and beverage) and its Deerfield Farms brand, which is for consumables only.

In the last month Walgreens has been introducing numerous new food, grocery and consumer packaged goods items in its drug stores under these store brands. The retailer also has been promoting consumables and household packaged goods items much more aggressively in its weekly advertising circulars, which are distributed in Sunday newspapers and via direct mail to households, with a particular focus on essential products, including grocery items.

For example, among the numerous food, grocery and non-food consumer packaged goods items in its advertising circular this week include two new products under the Deerfield Farms brand -- fresh butter and a line of packaged cheeses. Essentials. And perishables as well. Walgreens also is now promoting fresh milk and often eggs and fresh bread nearly every week in its advertising circular, as well as essentials such as toilet paper, soap, paper towels and cleaning products, for example.

Even more so the drug chain has increased the number of food and grocery items -- both store brand and national brand -- it runs in its advertising circular each week. This reflects Walgreens' evolving strategy over the last few months of adding additional national, regional and store brand skus of food and grocery products to its stores. This is a strategy and practice the retailer says it will continue.

In fact, beginning February 8, Walgreens is launching a major marketing and merchandising program it's calling "Affordable Essentials." The program, which will focus on consumables, household and related packaged goods "essentials" like milk, bread, toilet paper and the like, is designed to capture an increased share, including from supermarkets, of the dollars consumers are spending on basic or essential packaged goods products during the current recession.

"We've zeroed in on the last things people cut back on when they're in a (financial) pinch," chief marketing officer Kim Feil said at Walgreens' annual shareholders' meeting last week, on Wednesday, January 14.

Ms. Fell described Walgreen's "Affordable Essentials" marketing and merchandising program this way: The drug chain has selected one item from key basic or essential product categories (milk, bread, eggs, laundry detergent, toilet paper, aspirin, disposable diapers, ect.) that recent marketing research shows consumers purchase even in tough economic times like the present. The combined items will then become an "Affordable Essentials" market basket of products. Beginning on February 8, and running indefinitely, Walgreens will offer the items in the "Affordable Essentials" market basket at significantly reduced everyday low prices. The retailer will then tout the affordable market basket of essentials in-store and via all of its various advertising media.

The "Affordable Essentials" product market basket (it's a market basket in the sense of a collection of items rather than an actual physical basket of the goods) will contain a mix of Walgreen's store brands and national brands. The drug chain plans to include plenty of national brands because consumer use of manufacturer's cents off coupons has sored in its stores since about the middle of last year, as it has in other drug stores and in supermarkets throughout the U.S. By offering a strong selection of national brands as part of the program, along with the store brands, Walgreen's believes it can gain added sales since the manufacturers' cents off coupons serve to lower the cost of the items further for consumers but don't impact the retailer's profits because its paid back by the manufacturer.

Walgreen's focus on basic or essential products fits with much of the market-based research and retailer-based scan data currently available. The data is showing consumers are focusing on purchasing basic food, grocery and non-foods packaged goods items at present to a degree not seen in decades. The closest many market researchers and retailers we've discussed the data with say they've seen was the recession of the early 1980's. Most say however the trend towards essential or basic item purchasing is currently even stronger than during that serious recession.

As an example, the market research firm America's Research Group has been conducting regular shopper surveys over the last few months. What it's found, including in its latest survey conducted a little over a week ago, is that shoppers, pressured by debt, credit card bills and fear of losing their jobs, have been reluctant to buy anything beyond essentials. The percentage of shoppers who say in the surveys they are focusing more on essentials has increased progressively since the middle of 2008.

"Retailers are experiencing their most challenging time in three decades," C. Britt Beemer, CEO and founder of the Charleston, S.C.-based America's Research Group consumer research firm says about the results of its latest survey conducted a little over a week ago. "Our survey confirmed that consumers are in deep hibernation, and there is no sign that they will wake up this spring or that the retail outlook will pick up anytime soon," Beemer adds.

At the January 14 annual meeting, Walgreens' CEO Greg Wasson said consumer spending is going to be a challenge for all drug retailers and others throughout 2009, and could get even tighter than it currently is."

He announced that in response to this new consumer behavior Walgreens is moving 29 corporate vice presidents into the field instead of stationing them at its Deerfield, Illinois headquarters in a new local merchandising and operations program. The purpose of the change is to be able to better respond and adapt to local consumer trends and to be better able to focus the stores on their local markets, he said at the meeting.

The Walgreens - Fresh & Easy Connection

There are two interesting and related ironies about Walgreens' new focus on food, grocery and non-foods packaged goods items in relation to Tesco's Fresh & Easy Neighborhood Market.

The first one of course is that former Fresh & Easy chief operations executive Brian Pugh, who left his employ with Tesco's Fresh & Easy on a rather mysterious note (according to some company employees) in September, 2008, as we reported in this story, is now in charge of beefing-up Walgreen's store presence and sales of consumables, including store brands. Consumables, and particularly consumables under its fresh & easy store brand (about 60-65% of the grocery items sold in the stores are under the brand), are the near-100% focus of the Fresh & Easy stores. The stores carry only a very limited assortment of non-foods items.

Just by itself Pugh's moving from Tesco's Fresh & Easy to Walgreens isn't that unique of a development. After all, retailing executives, category managers and others change employers all the time.

But the related irony is that Tesco's Fresh & Easy, of which Brian Pugh was in charge of the retail operations aspects of from the time it started in the Western U.S. until September, 2008, has used Walgreens' as a model in terms of its "critical mass" store location strategy in the Western U.S. markets of Southern California, Metro Las Vegas, Nevada and Metropolitan Phoenix, Arizona. That strategy, like Walgreens in the same three markets where it has hundreds of stores, is one of locating stores rather close together (about two miles apart in concentrated rings) so as to create a retailing critical mass. The strategic goal of such as strategy being to become the de facto "neighborhood grocer" in the area -- in Fresh & Easy's case -- and the defacto "neighborhood drug store" in the specific areas -- in Walgreens' case.

This is a strategy Walgreens has been using for years in various U.S. markets. A few years ago it began turning this strategy into super-high gear in California, Nevada and Arizona. Tesco took notice of it. In large part Tesco used Walgreens (as well as Starbucks' store location strategy) as its model for this "critical mass" store location strategy.

As part of this strategy, numerous Fresh & Easy markets are located next to or just across the way from Walgreens' drug stores. In fact, the two retailers have gone into, and are further going into, numerous shopping centers as co-anchor tenants.

We've talked to a number of retail commercial real estate professionals who work with Tesco's Fresh & Easy. When they started doing so, they were given as one key criteria to identify potential Fresh & Easy store locations based on where Walgreens drug stores were located, as well as to identify locations where Walgreens plans to put new stores in the three markets. As a result, many of Tesco's & Fresh & Easy Neighborhood Market combination grocery and fresh foods stores are located next to or within walking distance (like across a shopping center) to a Walgreens' unit.

Taken together, we therefore find the two related developments become much more interesting -- and gain some added irony.

With Walgreen's new emphasis on consumables development under the leadership of former Tesco Fresh & Easy vice president of operations Brian Pugh, along with the retailer's "Affordable Essentials" program which begins in a couple weeks, it's feasible that if the mega-drug chain is successful, it will end up taking considerable sales in the basic food and grocery categories away from those many Fresh & Easy stores that are located next to or very near Walgreens' units.

With so many Walgreens drug stores in Southern California, Arizona and southern Nevada -- Fresh & Easy's three market regions with its 107 stores -- if successful with its new consumables and "Affordable Essentials" push, the mega-drug chain could likely take grocery share away from numerous other food and grocery retailers in these markets, not just Fresh & Easy. Fresh & Easy is worthy of singling out though because of the facts we laid out above -- the fact so many of the stores are in close proximity to Walgreens' drug units.

It's also worth noting that Walgreen's has found it needs to focus more on consumables and the essentials program because it's found itself losing sales most particularly to Wal-Mart Stores, Inc.'s Supercenters, which has been the only major discount retailer to increase sales during the recession. Despite that fact, Walgreen's same store sales did increase by slightly over 4% over the previous year in its most recent quarter.

Walgreens hopes its more aggressive focus on consumables and the "Affordable Essentials" grocery and non-foods packaged goods program starting on February 8 will bring more shoppers into its stores. Then once in the stores for those "Affordable Essentials," the drug chain hopes customers will pick up some higher margin items while shopping.

We've argued since about the middle of 2008 that in this current and severe recession nothing is more important for retailers than to create, execute and communicate a unique value principle. Walgreens appears to be moving towards this with its ongoing increased focus on consumables and essentials. It will be interesting to see the depth and focus of the new program beginning on February 8.

Linkage: Related stories from Fresh & Easy Buzz:

>Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position

>Drug Chain Walgreens to Slow New Store Growth; Despite Tesco Fresh & Easy's Recent Announcement to Do Similar, We Suggest An Analogy is Misplaced

>Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

>Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team

>Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 5

>Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

>Tesco's Fresh & Easy 'Taking a Pause' From New Store Openings: A Full Review In the Works

>Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department

>Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK

>Vegas Baby!: Tesco Announces Ten More Fresh & Easy Grocery Stores For The Las Vegas Metro Region; it's All About 'Critical Mass'

Drug Chain Walgreens to Slow New Store Growth; Despite Tesco Fresh & Easy's Recent Announcement to Do Similar, We Suggest An Analogy is Misplaced

Mega-drug store chain Walgreens said today its first quarter, fiscal 2009 profit fell by 10% despite a 7% increase in revenue (which is record first quarter sales for the chain), falling short of Wall Street analysts' projections. The drug store chain attributed the substantial drop in profits primarily to expenses related to its opening of new stores.

The U.S. national drug chain, which is headquartered in Deerfield, Illinois, had earnings of $408 million, or 41 cents per share, in the three months ended Nov. 30. That total fell short of analyst expectations, and compares with $456 million, or 46 cents per share, a year ago. Revenue grew 7 percent to $14.95 billion. The expectations of the analysts (the consensus) was for Walgreens to earn 46 cents per share and generate about $15.08 billion in first quarter revenue.

As a response to its drop in income for the quarter, Walgreens today said it plans to slow the opening of new stores to save $500 million. It said doing so is a response to the current recession.

The drug chain says its selling and general expenses grew 9% in the quarter as it opened 212 new stores, and profit margins dipped due to greater expense provisions.

Sales at its older stores grew 1.7 percent, with prescription revenue in older stores growing 2.6 percent. Front-end revenue, or sales of nonprescription products, was flat compared with last year.

The company said prescriptions filled in its stores grew 3.7 percent during the quarter, while industry data has showed falling prescription levels for its rivals. In total, a significant 66% (which is both good and bad) of Walgreen's quarterly revenue came from prescription sales.

As a result of the new store opening expenses and the current recession, Walgreens president and chief operating officer Gregory Wasson said in a statement today that the drug chain will in fiscal 2010 slow its organic store openings to a rate of 4.5 to 5 percent, with growth of 2.5 percent to 3 percent in fiscal 2011. In July of this year the company said it would slow the pace of store openings down to 5 percent in 2011, from 8 percent. The reductions are expected to save the company a total of $1 billion in annual spending, according to Wasson. Organic store openings means opening new stores but not including acquisitions. We doubt Walgreens is planning any acquisitions in the near-term.

Walgreens currently operates 6,630 drugstores in 49 states. The chain had sales of $59 billion in the 2008 fiscal year. It said today plans to increase its store count by 475 stores in fiscal 2009, which ends in August of next year. At its annual investors day conference in October Walgreens announced s number of new strategies for 2009, which you can read about here.

Just a few months ago, Walgreen's made a counter-bid to acquire the Northern California-based Long's Drug chain following a deal made between Long's and the CVS drug store chain in which CVS said it would acquire Long's. Not too long after announcing it would make a counter-bid against CVS for Long's, Walgreens announced it has decided to drop that offer and plan. CVS is in the process of acquiring Long's.

That decision by Walgreen's was a good one in our analysis in terms of its current challenges because if it did buy Long's it would currently be having an even tougher time making its revenue and income keep pace with its expenses. That decision however, or the initial one to make the counter-bid for Long's, apparently wasn't a good one for now-former Walgreens' CEO Jeffrey Rein, who resigned on October 10, just two days after the Illinois-based drug chain withdrew its counter-offer to acquire Long's. Walgreens said today it plans to name a new CEO in early 2009.

As we reported earlier today, Walgreens has made three new executive hires, which it confirmed to Fresh & Easy Buzz today. Those new hires include former Tesco Fresh & Easy Neighborhood Market co-vice president of operations Brian Pugh, who left Fresh & Easy in September of this year.

Pugh has been named to the new position of vice president of store development at Walgreens. In that position he is charged with further developing the food, grocery, household goods and related categories for the drug chain.

Walgreens v. Tesco's Fresh & Easy: A non-valid analogy -- if made

In today's piece about Brian Pugh's hire by Walgreens, we commented that his new position at the drug chain has occupational and operational synergies for him personally, regarding his previous position at Fresh & Easy.

Many may want to make an analogy between Tesco Fresh & Easy Neighborhood Market USA's recent announcement that it's cutting back its opening of new stores and postponing its Northern California market launch and today's announcement from Walgreens that it also is doing so.

However, other than the fact doing so will help both chains to conserve cash during the current economic recession, it's our analysis that the comparisons and analogy stop there for a number of reasons.

First, Walgreens is a drug chain and Fresh & Easy is a food and grocery chain. Drug chains are hurting far more from the recession than grocery chains are. In fact, chains that offer food at a discount such as Wal-Mart, Aldi USA and some others are doing well in this economic downturn, as shoppers shop where they perceive than can get the best deals.

Tesco's Fresh & Easy is positioned as a no frills, everyday low price format. As a result it should be doing much better than it is in the current recession, just like similar positioned food and grocery retailers are doing. It isn't, which is primarily why it is scaling-back its store expansion program at present.

Drug chains like Walgreens sell much more recessionary-influenced (negative) products than grocery stores do. These products includes prescription drugs and health and beauty care category items, which make up the majority of Walgreens' overall sales. (Prescription drug sales alone are 66% of Walgreens' total sales.) The stores sell some food and grocery items but they comprise only a small share of total store sales.

Additionally, there currently is a prescription drug price war going on among drug and discount chains led by Wal-Mart's price cutting on generic drugs. Even though prescription drug sales were up for the quarter at Walgreens, generic drug profits are down for all retailers offering pharmacy services. [For an interesting analysis on the generic drug price war you can read this piece from today's Wal-Street Journal.

Second, unlike Walgreens -- which in addition to being a drug rather than food and grocery chain is a mature chain in terms of store count and market region penetration in the U.S.; it operates 6,630 stores in 49 states and has been opening hundreds of new stores a year for the past few years -- Tesco's Fresh & Easy is a start-up grocery chain with only 104 stores at present, which is nearly 200 less than the company originally said it would have open by now.

In fact, Walgreens is in our analysis overstored in some regions of the U.S., which is in part why we think it has decided to focus (the Brian Pugh hire) more on developing food, grocery and related category sales in its existing and new stores. The time is soon coming to an end for the drug chain when it can count on significantly growing its sales by opening new stores. At some point -- and we think having 6,630 stores in the U.S with hundreds more in the pipeline. is getting near that point -- a chain reaches the point where new store growth can't be its primary sales driver (and profit driver either) because the stores in most market regions begin to cannibalize sales because they are just to close to one another geographically. We think Walgreens is almost at that point.

Therefore, developing organic, same store sales through consumables and related category developments, along with perhaps some new format development like the drug chain is looking at by opening smaller footprint stores, is a logical development in our analysis, as is going international, which is something Walgreens has no plans to do at present, as far as we are awre.

Lastly, unlike the mature Walgreens, in addition to its being a less recessionary format and being a mere start-up with only a shade over 100 stores currently, Tesco's Fresh & Easy hasn't even gone beyond three market regions --Southern California, Southern Nevada and Metropolitan Phoenix, Arizona -- as of yet with its small-format, convenience-oriented combination grocery and fresh foods markets. As a result, cutting-back its new store opening program, which includes postponing for at least the second time this year its entry into the Northern California market, even in the current recession isn't a good overall sign for the retailer.

The reason we say this is because the logic for say postponing going into Northern California, where Tesco has leases signed on nearly 50 store sites and is in the process of remodeling and building stores at many of those locations, is that when things get better with the economy it will make more sense to open those stores.

But since United Kingdom-based Tesco is paying monthly leases, as well as putting out cash for the construction costs on many of these near 50 stores, we question the real reasons for postponing the launch. Our analysis is its not so much the economic recession, which ironically finds Northern California as one of the best-off regions in the U.S. although it too is hurting, but rather part of an overall crisis in confidence within Tesco as to the performance of Fresh & Easy to date, along with a bold move to conserve cash. Why else make a decision to conserve cash by cutting back on new store openings despite the fact that with a shade over 100 stores operating at present the chain is only at about one third of where Tesco said it would be as recently as late last year by this point in time? Tesco also is slowing the pace of new store openings in its three existing markets in addition to postponing the openings of its Northern California region stores.

From a potential-for-success standpoint, it's probably wise Tesco has put the brakes on its rapid new store growth with Fresh & Easy based on current chain performance and confidence levels. However in terms of its investment in Fresh & Easy, doing so does play havoc with the company's sales and profit targets for Fresh & Easy Neighborhood Market USA, which is something Tesco analysts in London and on Wall Street will soon start pointing out much more regularly we believe.

>Related Story: Monday, December 22, 2008: Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position

Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position

U.S. drug store chain Walgreen's has hired former Tesco Fresh & Easy Neighborhood Market co-vice president for operations Brian Pugh as the mega-chain's new vice president of format development, Fresh & Easy Buzz has learned.

Pugh, who abruptly left Fresh & Easy Neighborhood Market USA this summer, will focus on growing the consumables and related categories, such as food, groceries and household goods, in his new executive position at Walgreen's.

Walgreen's has been adding more food, grocery and household items to its drug stores over the couple years, as well as increasing the categories sku counts and promoting them more in recent months during the serious U.S. economic recession. Pugh will focus on increasing the consumables and related category development in the Walgreen's stores in his new corporate position.

Earlier this year Walgreen's also said it planned to create a new, smaller-format Walgreen's store. Typical Walgreen's drug stores are about 15,000 -to- 20,000 square feet. The new, smaller-format stores will be about 10,000 square feet -- and even smaller in some cases like those stores designed for dense urban regions; cities like New York, San Francisco and others.

The drug chain already operates some smaller-format stores in cities like San Francisco, where the available space and real estate costs in numerous neighborhoods make it logical to do so. However, those stores are basically scaled-down versions of a typical, bigger, Walgreen's drug stores. The new, small-format Walgreen's in most cases will be of a bit of a different, customized, format compared to these smaller versions of the basic Walgreens stores.

Although he was primarily hired to focus on the consumable and related categories overall for Walgreen's, Pugh's experience in small-format retailing also will be utilized by Walgreens as it roles out its new small-format drug stores selectively in the U.S.

Pugh, came from the United Kingdom with Tesco Fresh & Easy CEO Tim Mason and a number of other former British Tesco executives to start up Fresh & Easy Neighborhood Market USA in Southern California. He was the sole senior vice president for operations for Fresh & Easy until Tesco transferred its former CEO of Tesco-Lotus, the company's Thailand division, to Fresh & Easy Neighborhood Market headquarters in El Segundo, California to share the title and duties of senior vice president of operations with Brian Pugh.

Both men held the title co-senior vice president for operations until September of this year, as we were the first publication to report in this piece: "Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market," Pugh suddenly left Fresh & Easy.

Tesco's Fresh & Easy has never commented publicly on the reasons for Brian Pugh's leaving the grocery chain. Additionally, Fresh & Easy Buzz has been the only publication to date to write about it.

In addition to hiring former Fresh & Easy executive Brian Pugh, Walgreen's also made two additional new hires to its senior corporate team.

The drug chain hired Colin Watts as vice president and president of the Walgreens' Health and Wellness disease management business, which helps patients coordinate their care, continue treatments and practice healthy behavior. He is the former president of Johnson & Johnson's McNeil Consumer Healthcare Worldwide business and most recently worked as vice president and general manager of the U.S. business of Campbell Soup Co.

Additionally, Walgreen named Jeffrey Zavada, a national vice president of health insurer UnitedHealth Group Inc., as vice president and chief sales officer. He will be responsible for selling health services to health insurers and other health plan sponsors.

A Walgreens' corporate spokesperson has confirmed the drug chain's hiring of Brian Pugh, as well as the the two others, to Fresh & Easy Buzz.

Tesco's Fresh & Easy Neighborhood Market has been following a retail store location strategy, which we call "critical mass," that is modeled strongly on the strategy used by drug store chain giant Walgreens.

For Fresh & Easy that strategy is to open numerous stores within a short distance of each other in specific market regions like Southern California, Metropolitan Las Vegas, Nevada and in the Phoenix, Arizona Metro region market. Walgreens uses this strategy near nationwide in the U.S.

Tesco's Fresh & Easy also has been co-locating many of its small-format, combination grocery and fresh foods stores next to or near Walgreens drug stores in both existing and new shopping centers in its Southern California, Southern Nevada and Phoenix, Arizona region markets.

These two facts make Brian Pugh's new job at Walgreens both an occupationally and operationally synergistic one in at least those two aspects to his previously position at Tesco's Fresh & Easy Neighborhood Market USA. One could say not only that has he landed -- but that he has done so at a bigger retailing airport, in terms of store count and annual sales in the U.S.

Related stories from Fresh & Easy Buzz:

>Monday, September 22, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

>Wednesday, March 12, 2008: Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team

>Thursday, May 29, 2008: Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 5

>Saturday, March 29, 2008: Tesco's Fresh & Easy 'Taking a Pause' From New Store Openings: A Full Review In the Works

>Friday, August 22, 2008: Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK

>Sunday, August 17, 2008: Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department

>Sunday, August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'