Strategy Session: Tesco Might Want to Get 'fresh & naked' at 'fresh & easy'

Fresh & Easy Buzz Strategy Session

Tesco is launching a new brand and line (called range in the UK) of unwashed, fresh salad greens in 350 of its stores in the United Kingdom (UK).

The brand's name is: "fresh & naked."

The "fresh & naked" brand is the creation of the UK's G's Marketing. The lettuce is grown by Shropshire's, a UK family farming operation that's been around since 1952, and is partnered with G's Marketing.

There are four "fresh & naked" salad green varieties (SKUs) - wild rocket, lambs lettuce, sweet mixed salad leaf and strong mixed salad leaf - at present.

The salad greens are packaged in attractive boxes, pictured at top, rather than in plastic bags. Fresh & Easy Buzz likes the look of the package. And because they're in boxes rather than the expected plastic bags, we think they will draw shopper attention in the produce case. The boxes are 100% recyclable, except for the cellophane window.

The fresh produce company and the retailer have signed an exclusive agreement for Tesco to sell the "fresh & naked" brand and line in 350 stores in the UK. The agreement runs until the end of summer 2010, according to G's Marketing, and can be renewed.

Not only is the "fresh & naked" name, which G's Marketing spells using all lower-case letters, a tad bit naughty and fun, it fits rather well with the name of Tesco's U.S. fresh foods and grocery chain - Fresh & Easy - which similarly is spelled in all lower case.

How about that?

Fresh & Easy Buzz suggests Tesco grab the license to the "fresh & naked" brand for the United States from G's marketing and launch a line of unwashed salad greens, and value-added salads - perhaps replacing its current "fresh & easy" brand or adding to it - in its 159 Fresh & Easy Neighborhood Market stores in California, Nevada and Arizona.

Fresh & Easy Neighborhood Market already has the local suppliers for the salad greens. All Tesco need do is obtain the rights to use "fresh & naked," including the packaging, for its Fresh & Easy fresh food and grocery chain in the U.S.

The "fresh & naked" brand name would also be good for some other selected fresh produce items. We also think there are some ready-to-eat fresh foods items that would be great under the "fresh & naked" brand name. How about fresh, packaged sushi, which Fresh & Easy sells, for example?

We think the "fresh & naked" brand name would particularly resonate well with the primary demographic, "Millennials-plus six" (Millennials are ages 18-29. We add six years, to age 35, for our Fresh & Easy cohort), that our research has found most likes the Fresh & Easy stores. But it also would likely have appeal to most other demographics; or at least not offend.

But even less scientifically speaking, Additionally, the "fresh & naked" name just fits well with "fresh & easy," from both semantic and marketing-merchandising standpoints.

An introductory (and perhaps ongoing) promotional tag-line for the salad greens and value added salads at Tesco's Fresh & Easy could be: "Get "fresh & naked" at "fresh & easy," followed by a description of the new line. Another one: "They're getting "fresh & naked" in the aisles at fresh & easy."

As you can see, in addition to "fresh & naked" fitting well with "fresh & easy," it has the potential to provide for some catchy marketing copy - and loads of merchandising fun. Humor in marketing and merchandising done well can translate to strong branding and sales.

Additionally, It wouldn't take a whole lot of work to garner a bunch of media buzz over the introduction of the "fresh & naked" salad line at "fresh & easy" either.

Private branding some of its fresh salad greens, ready-to-eat green salads and a few other appropriate items under the "fresh & naked" brand would also go towards a strategy we offered in a May 18, 2009 piece - Strategy Session: Tesco's Fresh & Easy Needs to Move From its One Store Brand Fits All Strategy to A 'Three Brand' Store Brand Strategy - in which we suggested Tesco's Fresh & Easy should adopt a multi-private brand strategy, rather than using its "fresh & easy" store brand across all product categories in the stores.

Since we've published the 2009 piece, Fresh & Easy has added some additional store brands, including "Mother's Joy," for a line of breakfast cereals in the dry grocery category and, most recently, "Eat-Well," for a new line of fresh, prepared entrees and side dishes, which it introduced in early April of this year.

In February-March 2009, Fresh & Easy introduced the "Buxted" brand, which it uses on a few SKUs of fresh meat: beef, pork and chicken items. "Buxted" is positioned as a value brand in the meat category, merchandised side-by-side with the grocer's "fresh & easy," brand for all other category items. [See - March 9, 2009: An English Village, A British Fresh Chicken Brand and Tesco Fresh & Easy's New 'Buxted' Discount Fresh Meat Brand: What Do All Three Have in Common?]

Since it appears our multi-brand advice was pretty spot on in 2009, perhaps it offers some utility regarding the grocer's adoption of "fresh & naked" as an additional private brand for selected use in the fresh produce category, and in a limited way for some ready-to-eat fresh foods like our sushi example? We think it does.

We still argue that Tesco's Fresh & Easy needs a different store brand for its natural and organic grocery items, rather than using the fresh & easy name on both conventional and natural-organic SKUs.

The Wild Oats brand is no longer available. It's in the process of being sold to one of two companies that have bid on it: Topco, a retailer-owned private brand cooperative, and a food manufacturing company in California. But Fresh & Easy could certainly create a natural-organic brand and use it for all of its items in the category, using 'fresh & easy" for just the conventional items.

As a start up, Tesco's Fresh & Easy needs to generate more excitement than it's currently doing, along with building the business. It needs to think outside of the 10,000 square-foot box more often as well.

We think "fresh & naked," as part of that multi-private brand strategy is one of many ways for the grocer to do so.

['Fresh & Easy Buzz Strategy Session' is a periodic feature in which we offer marketing, merchandising and other strategic concepts and ideas for Tesco's Fresh & Easy Neighborhood Market and other food retailers.]

Fresh & Easy Buzz Strategy Session: Professor Says Research Shows Both Price and Format Matter; Hendrick Meijer: Strategist; Prepared Foods Seminar

Strategic Marketing Lesson:

Research: Pricing and format both important variables in food retailing strategy

"Both pricing and format strategy are important when considering the retail strategy of stores," says Dinesh Gauri, assistant professor of marketing in the Whitman School of Management at Syracuse University in New York.

These recent findings by Gauri are based on research that took into consideration both the format of the store - i.e. whether it is a small convenience store, a supermarket, or a super center - and the stores' pricing strategy. Both Tesco's Fresh & Easy Neighborhood market and Wal-Mart's Marketside are mentioned in the report in terms of small-formats.

Typically, stores either adopt the 'high-low' (Hi-Lo) pricing strategy, where promotions vary week to week, or the 'every-day-low-price' (EDLP) strategy, where most items on a regular basis are consistently low priced.

Findings of the research indicate that although some combinations are more similar than others, considering only the pricing or only the format strategy in isolation fails to represent a complete picture, and the strategic implications change significantly when both format and pricing strategies are studied in combination.

Click here to read the rest of the report.

Food Retailing History 103 (advanced course)

Hendrick Meijer: Food retailing innovator, format and merchandising strategist

The tale of Hendrik Meijer. Hendrik Meijer, founder of what is now Meijer Inc., was one of the pioneers of self-service grocery stores. He also introduced the concepts of the supercenter and discount store. Read about his strategic vision here: The Grand Rapids Press (Mich.)

Prepared Foods Seminar: Competitive Analysis

Market Economy: Supermarket and C-store competition
Seeking to drive less, consumers are buying more meals where they buy groceries or gasoline. Supermarkets and c-stores are working hard to accelerate that shift.

The article does a nice job of describing how both supermarkets and convenience stores are growing the fresh, prepared foods category in their respective formats. The piece also looks at the competitive threat supermarkets and convenience stores, with their growing foodservice programs, are posing to restaurants of all types.

Tesco's Fresh & Easy Neighborhood Market is featured in the article, along with Whole Foods Market, Inc., convenience store chain 7-11 and fast food chain McDonald's.

The article also offers some nice demographic and related data on the prepared foods category.

Click here to read the article from the trade publication Restaurants & Institutions.

Fresh & Easy Buzz Strategy Session: Trader Joe's and the Key to Enlightenment?

The Faith-Based Corporation: Organizational Sacralization and Sacrilege
By: Blake Ashforth, Kevin Corley and Spencer Harrison
WP Carey School of Business, Arizona State University USA

Is the importance of spirituality in society withering away? Earlier this year, the Vatican reported that the number of men and women in religious orders fell 10 percent between 2005 and 2006 alone -- a massive decline that mirrors the church's sagging membership across the Western world. Catholic schools are closing, parishes consolidating and Sunday attendance slipping.

But the Vatican is hardly alone.

The American Episcopal Church this year saw membership drop by 4 percent and growth among most Christian churches has not kept pace with overall U.S. population growth, according to several reports.

This is not to say that Americans aren't still seeking spirituality and meaning in their lives.

They're just finding it in new places -- like work.

From Google to Jet Blue and Patagonia to Trader Joe's, companies of all kinds are attempting to craft cultures and identities so idealistic that they could rightly be called "sacred." These companies are espousing these sacred ideals, values, beliefs, goals, behaviors and processes not only to attract and motivate employees and stakeholders but also as means to distinguish themselves from their competition. In fact, some say companies that take the sacred route may be able to offer something nearing spiritual fulfillment to customers and employees.

Recently, three W.P. Carey management researchers -- Professors Blake Ashforth and Kevin Corley and doctoral candidate Spencer Harrison -- set out to investigate what might be behind this trend.

The result of their research is a new paper, Organizational Sacralization and Sacrilege, that helps explain why companies are going sacred, why people seem to be embracing the idea and, maybe most interestingly, what happens when a company that has positioned itself as "sacred" violates the very principles it espouses.

Purpose-driven business

"Organizations are increasingly adopting ideological stances -- mission statements, statements of purpose, credos -- that mimic values that are often considered transcendent, virtuous, even sacred," Harrison says. The result "is a 'graying' of the boundaries between the sacred and the secular, allowing organizations to behave in ways once attributed only to churches and religious orders."

He adds: "Suddenly employees seem like parishioners and managers seem like priests."

It may seem somewhat of a leap that employees would find such deep meaning in their office cubicles. But the researchers insist the trend is a real one. Companies are doing this, they say. And they're doing it because it works.

"Companies are going to sacralize," Harrison says. "It's just a response to competitive dynamics and the need to stay structurally flat and increase nimbleness and innovation. So organizations replace bureaucracy with philosophy, levels of leadership with missions and meaning."

There may be no better example of the corporation as religion than Google -- the company that has famously proclaimed it will "do no evil."

Google's founders always "thought of themselves and Google as unique," the researchers write, and that became all the more clear as the company became widely known in the 1990s. As the
Google empire grew, the company's core beliefs became public, and began turning heads.

Among the company's espoused principles: "Life is beautiful; You can make money without doing evil; Uniting the world one user at a time."

Some might find this corny, but at Google headquarters, these aren't mere slogans. They are belief systems -- credos that helped create the sacred framework on which Google became one of the most respected, admired and even beloved corporations in the world.

Customers love Google -- and according to the W. P. Carey team, employees especially love Google. In the company's mission statement, these people have found purpose.

As they write: "Such proclamations, whether intentionally transcendental or not, began to provide the ideological raw material for individuals to seek transcendent experiences at work -
- to see work as sacred. As more individuals flocked to the company, these raw materials became more central to individuals' expressions of identification with Google and ultimately become institutionalized in religious rhetoric that characterizes the zeal with which people see the company."

Google isn't shy about its sacred ways. The company has hired a "chief Internet evangelist." Staffers only half-jokingly describe their company and its work as a "faith-based initiative."

Unconventional, yes, but all of the evangelizing certainly couldn't be said to be hurting the company's bottom line. Its stock is hovering around $445 and it remains the most dominant name in online search.

Falling from grace

Of course, there is a risk to all of this.

As Google learned when it willingly submitted to the demands of Chinese government censors -- apparently giving in to the wishes of an oppressive regime simply for financial reward -- the backlash against companies which espouse sacred beliefs but then act in a way counter to those beliefs can be enormous.

In some ways, "sacred" firms face a greater risk of losing customers, simply because of the higher standards they've set for themselves. Even if these companies' projects and services are the best around, alienating customers through "evil" action is a real threat.

"Customers won't buy clothes from Patagonia if they are dumping pollutants into a river," Harrison says. "Companies won't do business with Google if Google is using information to do "evil," because the ideological purpose of these companies now outweighs … the pure business or transactional purpose of these companies."

At least one company learned this the hard way.

The New York-based airline JetBlue has positioned itself from the start as the airline that actually cares about people. The company espouses a mission of bringing "humanity back to air travel." But to hear passengers tell it, the company did not act very humanely on Feb. 17, 2007. It was a day the company may not live down for years.

On that snowy, icy day, a JetBlue flight headed to Cancun from New York ended up being stranded on the runway for nearly nine hours. Repeated icing kept the plane grounded. At no point were passengers allowed to disembark. Horror stories emerged about the company's treatment of passengers, and the press pounced.

Making matters worse was the fact that several other JetBlue flights had the same problem on the same day. In the firestorm that followed, JetBlue was pilloried. Its stock tumbled. Analysts predicted the controversy would cost the company $30 million. The criticism grew so harsh that CEO David Neeleman eventually took the drastic public relations step of issuing an online apology to his customers and even ran full-page apology ads in several major newspapers.

In them, he begged for forgiveness: "Words cannot express how truly sorry we are for the anxiety, frustration and inconvenience that we caused. This is especially saddening because JetBlue was founded on the promise of bringing humanity back to air travel. We know we failed to deliver on this promise last week."

The company later created its own Passenger Bill of Rights and recommitted itself, internally, to its original "sacred" purpose.

But the PR damage was done -- and it was especially harmful, according to the researchers, because of the fact that JetBlue had so boldly positioned "above" other airlines in the first place.
As they write: "[Scandals such as the Jet Blue case] appear to incite a higher level of shock and moral outrage because … they contravene core ideals that have been rendered sacred by the organization. In rendering certain ideals sacred, the organization attracts strong supporters; supporters, however, that can turn on the organization with equal vehemence if those ideals are seen to have been violated."

JetBlue certainly suffered for violating its ideals, but at least it survived. The same could not be said for the late accounting firm Andersen. Once one of the pillars of the American accounting industry, Andersen had the misfortune of having among its clients probably the famously crooked company in American history: Enron.

And though it has since been revealed that much of the fraudulent financial maneuvering in that scandal was attributable to Enron executives, Andersen was not blameless. The company aided and abetted Enron's scam and was found guilty of obstruction of justice. Shortly thereafter, it ceased to exist.

The reason, Harrison says, is simple: The company acted in a way completely antithetical to what it claimed to be.

"One of the examples that was really striking for us was what happened to Arthur Andersen following the Enron scandal," Harrison says. "You can see how Andersen, by shredding documents, violated an inviolate principle. … Looking through the lens of "sacrilege," it becomes a case of ruining the fundamental purpose for existence. If accountants can't be trusted then why use them? It's equivalent to a hospital systematically breaking the Hippocratic Oath."

So yes, the researchers say, the danger is real. Sacralization brings inherent risk. It invites public relations nightmares when those sacred ideals are violated.

But that doesn't mean companies should avoid sacralization, Harrison says. Rather, it means simply that those who choose to pursue the righteous path must do so with great caution. They must, he says, practice what they preach.

"The difficulty for managers (and for anyone in a sacralized environment) is to realize the potential fragility of what pulls people together," Harrison says. "An ideal like Google's 'do no evil' provides a powerful rallying cry, until it is broken."

Bottom Line:

Companies of all kinds are increasingly adopting mission statements, statements of purpose, credos and belief systems that mimic, in some ways, organized religion.

This "sacralization" can provide a competitive edge for companies that employ it correctly, galvanizing staffers around the idea that their work is for a greater good. Google, especially, has successfully built a "sacred" culture -- and employees have bought into it.

With sacralization, however, comes risk. Companies that espouse sacred ideals and then violate them face harsher criticism than other companies.

For instance, JetBlue, which has long positioned itself as the airline that cares for its passengers, was pilloried for stranding some of its customers on a New York runway for nine hours.

[Copyright the Arizona Board of Regents at the W. P. Carey School, Arizona State University and the Wharton School of the University of Pennsylvania, Privacy Policy. Knowledge@W.P. Carey.]