The 'Mea Culpa' 'Mea Culpa' By Proxy With A Dash of Spin: Tesco's Fresh & Easy Now Says CEO Mason's 'We Got it Wrong' Comments 'Out Of Context'

The photograph above of Tesco Fresh & Easy Neighborhood Market CEO Tim Mason is from an exclusive interview piece the CEO did with the London Times, which was published on November 12, 2008, the same UK-based newspaper Tesco's Fresh & Easy says attributed or quoted comments made by the CEO "out of context" in the report its Sunday addition ran two days ago. You can read two pieces (November 12 and 16) we wrote about the interview here: Analysis: Hard Times at Fresh & Easy - Northern California Expansion to Be Postponed or Shelved Do to Economy; But its Only a Symptom Not the Cause and here: Tesco Fresh & Easy CEO Tim Mason Says He's 'Deliriously Happy' With the Chain's Progress Thus Far; We Prefer Andy Grove's 'Only the Paranoid Survive.' There's a link to the November 12 story in the Times at both of our links above. [Photo credit: Times of London.]

Analysis & Commentary

In this piece [A Healthy 'Mea Culpa': Tesco Fresh & Easy CEO Tim Mason Says 'We Got it Wrong;' Comments Tend to Agree With Fresh & Easy Buzz Analysis and Arguments] on Saturday, February 21, we wrote about a report in the Sunday Times of London in which Tesco Fresh & Easy Neighborhood Market CEO Tim Mason is attributed and quoted as saying the retailer got it wrong when it came to the research that formed the basis for what the Fresh & Easy format is and how the stores are merchandised and operated.

Since it has been our argument and offering (along with including positive suggestions) for over a year that Tesco did indeed "get it wrong" with its self-touted "extensive" and "in-depth" research -- which was too heavy on consumer focus groups and ethnographic research (researchers spent time in consumers' homes observing their food-related behaviors) and almost completely lacking in gaining an understanding of the food and grocery retailing business and market in California, Nevada and Arizona, in our analysis -- when we read the Sunday Times' story with the quotes and words attributed to Mr. Mason it made perfect sense to us that he would say what was attributed to him.

Upon reading the words attributed to CEO Mason, we said two things: "Good for him, he is now standing tall," and "It's about time" the grocer admitted what it knows to be the case regarding the research and the conclusions it drew from it, mainly that a major food retailing opportunity gap (the Fresh & Easy format) existed in the three markets that was just waiting to be filled.

No such major opportunity gap existed, in our analysis and in that of others who know the markets well. That doesn't mean Tesco shouldn't have launched Fresh & Easy. Just that the premise based on the research was faulty, in our analysis and opinion.

It is always better in business, politics and other related endeavors to define your problems rather than let others do it for you. This is what we felt CEO Mason achieved in the comments attributed to him in the Sunday Times' report. Experienced marketing and PR hands call this "hanging a lantern" on your problems. Once you define them for yourself it puts you more in the driver's seat. It also makes it easier to move forward on your own terms. It also feels good to do.

This morning however we were treated to an e-mail containing a story from the online version of the supermarket industry trade publication Supermarket News. That story, titled, "Fresh & Easy On Course, Company Says," contains what appears to our eyes, and experience, to be what we are referring to as the "'Mea Culpa,' 'Mea Culpa' by proxy." (See the title of our February 21 piece. Some might say it's even "spin."

The angle of the Supermarket News report is that Tesco Fresh & Easy CEO Tim Mason's comments in the Sunday Times' piece were "taken out of context," according to what the story reports Fresh & Easy Neighborhood Market's spokesman, Brendon Wonnacott, told the reporter.

We reprint the brief report from this morning's Supermarket News (in italics) below. Here is a link to the story as well.

Fresh & Easy On Course, Company Says
Feb 24, 2009
By ELLIOT ZWIEBACH

EL SEGUNDO, Calif. — Comments to the Sunday Times of London by the head of Fresh & Easy Neighborhood Stores here — to the effect that Tesco has been operating under mistaken assumptions in the U.S. — were taken out of context, a chain spokesman told SN yesterday.

“We’ve been very clear from the beginning that Fresh & Easy is continually evolving,” Brendan Wonnacott explained. “Making changes is something we’ve done from the start and will continue to do. That shouldn’t be surprising — that’s just being a good retailer.”

The newspaper had quoted Tim Mason, chief executive officer of Fresh & Easy, as saying, “We may have assumed certain elements of the Fresh & Easy brand would do the work for us, and we would not have to go down and dirty on price. That may have been a mistake.”

According to Wonnacott, “The economic environment has changed immensely over the past several months, [during which] we have heard consistently from our customers that they are more conscious of price, and like any good retailer, we are responding. We rearranged our flier a few months ago to highlight a few key products at great prices. We have simply turned up the volume on price communication so people know we offer high-quality products at great prices.”

Since the onset of the recession, for example, Fresh & Easy has launched a 98-cent produce pack that has helped increase produce sales by more than 11%, Wonnacott said; and it has continued to introduce more national-brand products in its stores and added larger sizes of detergents — all in response to customer requests for help stretching their budgets, he explained.

“We continue to evaluate different categories where we may complement the existing Fresh & Easy product range and help customers make their dollars go even further.”

All of what Mr. Wonnacott says -- the introduction of the value-based 98-cent produce packs (a value proposition we like because we've been suggesting for many months that value-based is where the grocer needs to move to and focus more on), adding more national brands (something we first suggested in early 2008) and the like are true -- and he says it well.

And since we weren't present when CEO Mason and the writer of the Sunday Times' piece talked, we have no idea if the words attributed to Tim Mason in the story were taken out of context. We should add that Tesco and Tesco Fresh & Easy often goes to the UK-based Times' when it has news to report on an exclusive basis. [See the photo caption with links at the top of this piece.]

In fact, in our February 21 piece we even used the word "healthy" to describe the words attributed in the Sunday Times' story to Mr. Mason, and to his showing in our opinion strong leadership ability in saying them, regarding Tesco Fresh & Easy's operating the Southern California-based 113-store small-format, convenience-oriented grocery and fresh foods Fresh & Easy chain under bad assumptions cleaned from the company's research.

After all, it is no secret to many that Mr. Mason and other Tesco Fresh & Easy executives, along with some of the top Tesco plc brass back home in the United Kingdom, have voiced concern and discussed at length the pre-Fresh & Easy launch research that formed the basis for the format and wondered how and why it was of less than top-flight quality.

And in standing tall and saying so in the Sunday Times' piece, Tim Mason showed the things of a leader -- the confidence to admit a mistake, a determination to correct it and move on once admitted, and a touch of humility backed up by a nice sash of resolve. (Note how much positive street credibility President Barack Obama has recently got for saying he got it wrong on a couple of key things so far in his Presidency.)

But now the spin. By having the Tesco Fresh & Easy Neighborhood Market corporate spokesperson "clarify" CEO Mason's comments to the Sunday Times' for its report -- adding nuonce and conflict to the reported statements and saying they were taken out of context -- it's our analysis and opinion that the company has now just added an unnecessary element to the reported statements. (We aren't putting down the corporate spokesperson for doing his job.

There was nothing wrong or negative about what Mr. Mason was reported to have said. In fact, it was refreshing and could have formed a great premise to go forward with the changes the CEO knows need to be made, and plans to make.

If the comments were taken out of context, the simple thing would have been to contact the Sunday Times' writer and express that viewpoint. We are rather sure he would have done a follow-up story, particularly since the UK-based newspaper writes about Tesco regularly.

Additionally, Tesco and Tesco's Fresh & Easy has chosen to go to the British papers rather than U.S-based papers whenever CEO Mason has specific (non press release) news he wants to put out publicly, so its not like there isn't precedent in terms of media relations with Tesco, Tesco's Fresh & Easy and the British mainstream press. CEO Mason is British after all, and was an executive at Tesco in the UK before coming to America to head-up Fresh & Easy. [See the photo caption and links at the top of this piece.]

Instead someone decided to do a little spinning to the Supermarket News' reporter, and he reported it like any good reporter should. But it's our analysis that this "clarification" from Fresh & Easy not only was unneeded, but now takes what was a story at the end of its news cycle and created a new news cycle for it.

Instead the company should have used CEO Mason's bold and leadership-oriented comments attributed to him in the Sunday Times' story as the basis of the changes it plans to make with Fresh & Easy. Such a headline would read: "Confident CEO admits mistakes, vows to build on those mistakes with changes designed to greatly improve Fresh & Easy."

But instead the impression left is: "What did CEO Mason really say?" "And why does a corporate spokesperson need to interpret and clarify what the company leader said?" In other words, they've gone and muddied the whole thing up in our analysis.

We don't think you would see this happening with Safeway Stores, Inc. CEO Steve Burd, or just retired Wal-Mart Stores, Inc. CEO Lee Scott, who remains chairman of Wal-Mart's board of directors, for example, to offer just two examples of industry CEO's. The reason is because doing so would diminish the perception of their leadership ability to all stakeholders -- investors, employees, suppliers, industry peers and others.

It's key for stakeholders to clearly understand that when the person at the top is speaking out, he is doing so for himself and the company. And that if he or she feels something they said to a reporter was taken out of context, then they say so and describe what and how in their own words rather than via proxy.

As a result, Mr. Mason now needs to step back in and talk to the reporter who wrote the piece in the Sunday Times so that he clarify in what ways he believes his comments were taken out of context in the piece.

If not, the Tesco plc and Tesco Fresh & Easy stakeholders are left confusion -- with what to us were healthy, leadership-oriented made comments by the Tesco Fresh & Easy CEO in the Sunday Times' story, but which now today have been amended by the company spokesperson in the Supermarket News report, including suggesting the Sunday Times' writer took Mr. Mason's comments out of context, leaving confusion as to what was said, as well as to who is running the shop over in El Segundo.

Bloggers-At-Large: The UK's 'Village Postmaster' Offers His Thoughts On Tesco Fresh & Easy CEO Tim Mason's 'Mea Culpa'

The "Village Postmaster" is an independent retailer, town postmaster and Blogger -- the "Village Counter Talk" Blog -- in the lovely and bucolic village of West Chiltington, West Sussex, United Kingdom.

He's also a longtime observer of and posts often about United Kingdom-based global retailer Tesco, which owns and operates El Segundo, California (Southern)-based Fresh & Easy Neighborhood Market, which currently has 113 small-format (10,000-13,000 square foot) grocery and fresh foods markets in Southern California, Metropolitan Las Vegas, Nevada and Metro Phoenix, Arizona, in the Western United States.

Tesco plc is the leading food and grocery retailer in the UK. It controls about a 31% market share in the nation. Tesco is the third-largest retailer in the world, after number one U.S.-based Wal-Mart Stores, Inc. and number two Carrefour, which is headquartered in France.

As a longtime independent retailer, as well as having his store in West Chiltington, West Sussex UK serve as the town's post office, "The Village Postmaster" offers his experiences and insights in his "Village Counter Talk" Blog from the perspective of an independent entrepreneur. The Blog is followed closely by many in the United Kingdom and beyond.

For example, here's what columnist Vickie Woods of the London Daily Telegraph newspaper says about "The Village Postmaster" and his "Village Counter Talk" Blog: "The 'Village Postmaster' is a curmudgeon, and 'Village Counter Talk' is one long enjoyable moan about the somewhat embattled job of keeping a business going in the face of desperate odds."

The United Kingdom's "Village Postmaster" read our piece in Fresh & Easy Buzz published yesterday in which we reprinted a brief report from today's Sunday London Times about Tesco Fresh & Easy Neighborhood Market CEO, and Tesco PLC senior corporate officer, Tim Mason being quoted as saying the grocer "got it wrong" from the start about various aspects of its Fresh & Easy chain, and then we detailed in the post how Mr. Mason's comments, as attributed in the Times' report, sound like they came right out of the pages of Fresh & Easy Buzz, in terms of our analysis, arguments and suggestions over the last year-plus. [You can read our piece from yesterday here: A Healthy 'Mea Culpa': Tesco Fresh & Easy CEO Tim Mason Says 'We Got it Wrong;' Comments Tend to Agree With Fresh & Easy Buzz Analysis and Arguments.]

We weren't surprised to see today that longtime Tesco-watcher, independent retailer and Blogger "The Village Postmaster" has already offered his own view of the issue today in his Blog in a post titled: "Tesco Own's Up At Last." He does follow Tesco and its USA Fresh & Easy venture rather closely, after all.

You can read what "The Village Postmaster" has to say in his post today in the "Village Counter Talk" Blog here.

A Healthy 'Mea Culpa': Tesco Fresh & Easy CEO Tim Mason Says 'We Got it Wrong;' Comments Tend to Agree With Fresh & Easy Buzz Analysis and Arguments

Pictured above is the Fresh & Easy Neighborhood Market store on famous Hollywood Boulevard, in Hollywood, California. The Fresh & Easy market is nearby the Kodak Theatre, where the annual star-filled Academy Awards show, also called the Oscars, will take place tomorrow night. The envelope please: It's now about 15 months since the fist batch of Fresh & Easy stores opened. Will Tesco Fresh & Easy Neighborhood Market CEO Tim Mason be able to make the small-format, convenience-oriented grocery and fresh foods chain a "star?"

In a brief story to be published in tomorrow's Sunday London Times, Tesco Fresh & Easy Neighborhood Market CEO Tim Mason and the Southern California-based grocery and fresh foods chain's chief marketing director, Simon Uwins, tell the Sunday Times' William Kay that the retailer's "extensive" market research in the Western U.S. market regions of California, Nevada and Arizona, research Tesco has been touting as top-flight and comprehensive for over two years, was wrong and mistaken.

"We may have assumed that certain elements of the Fresh & Easy brand would do the work for us and we would not have to go down and dirty on price. That may have been a mistake," Tim Mason, CEO of Tesco's Fresh & Easy Neighborhood Market USA, is quoted as saying in the report.

It not just about getting "down and dirty" on price though, although that's a reality in the current deep economic recession. It's all about creating a comprehensive Fresh & Easy format rather than the current muddled format, placing value at the center of that comprehensive format and then communicating it in a clear and regular way to consumers, as we've been suggesting the grocer needs to do since we started Fresh & Easy Buzz.

We reprint the full Sunday Times' report below (in italics):

Tesco admits: We got it wrong in US
February 22, 2009
The Sunday Times
By William Kay, Los Angeles

THE head of Tesco’s US operation, Fresh & Easy, has said its early market research was mistaken and it may make big changes to the stores.

“We may have assumed that certain elements of the Fresh & Easy brand would do the work for us and we would not have to go down and dirty on price. That may have been a mistake,” said Tim Mason, head of Tesco’s US business.

Ahead of Fresh & Easy’s launch in November 2007, Mason trumpeted the in-depth research that was done to identify a gap in the West Coast grocery market.

Marketing director Simon Uwins said: “We went into people’s houses, talked to them about food and food shopping. We went into their kitchens and poked round pantries.”

Unfortunately, Mason now admits, they did not poke around their garages, where they would have found huge freezer chests bulging with stockpiled meat bought on special offer.

“There’s less loyalty in the American market,” said Mason. “A Brit has to hear it a few times before you accept that people make up their mind where to go each week when they check out the special offers round the kitchen table.

“In a key moment at a focus group, one man told them that he had stopped shopping at Fresh & Easy because they no longer sent him a flier promoting the latest special offers.

“We came out of that meeting and said we had better make sure we hit everyone in the area with fliers.”

Recession has slowed expansion. There are 113 Fresh & Easy outlets and plans to have 200 branches have been put back at least six months. [Here is a link to the story as well.]

Analysis: Tesco Fresh & Easy CEO Tim Mason takes a page right out of Fresh & Easy Buzz

Mr. Mason's comments and quotes should sound rather familiar to regular readers of Fresh & Easy Buzz.

For over a year we've been writing and offering analysis in numerous pieces that Tesco's "extensive" pre-Fresh & Easy launch research was questionable, since the grocer failed to discover so many basic aspects and practices of how food and grocery retailing in America works.

These research failures include such simple basics as how Americans prefer fresh, bulk produce over pre-packaged, to (a major Fresh & Easy Buzz theme) the regional, sub-regional, sub-sub regional and local nature of grocery retailing in the U.S. -- that there are regional markets like the Western U.S., then sub-regional markets within those which have extensive differences, like California, Nevada and Arizona, then additional sub-sub regional markets within those, such as Southern, Central and Northern California, and then even local markets within those sub-sub regional ones, right on down to the neighborhood level. There are niches within the niches. Just ask Safeway Stores, Inc. what it discovered when it finally started taking its neighborhood merchandising-marketing program seriously in the late 1990's.

We've suggested that despite the research being bad, something Mr. Mason has only admitted now, such things happen, but that Tesco's Fresh & Easy should have admitted it long ago and then course corrected. It has started doing a bit of that course correcting of late, including taking our advice in terms of beginning to build a better value proposition. But it is nearly a year too late in doing so, as we've written previously.

Another major theme in all of our writing and analysis has been that's what lacking with Fresh & Easy's merchandising, marketing and operations is the creation of a value proposition and then the communication of that proposition in a clear, concise and repetitive manner. It appears our argument has now found receptive ears.

By value proposition we of course mean discount pricing, both everyday and promotional -- after all from day one Tesco claimed Fresh & Easy was and is about 15% cheaper everyday than its food retailing competitors stores are, which hasn't tuned out to be true based on our research -- but not just discount pricing. Value is much more than that. Value is appealing to consumers on multi-levels, and it must include their pocket books. It's Convincing them your offering provides the best value for the best price.

As we frequently suggest, for Tesco's Fresh & Easy,that value proposition needs to be the hub of its wheel, with all of its other offerings -- prepared foods, natural and specialty foods, specialty wines, ect. -- then being the spokes of that hub and wheel.

Based on our extensive research, which has included talking to numerous past Tesco Fresh & Easy employees, it's, as we've previously reported and discuss in the Blog, our analysis that what Tesco has done to date with Fresh & Easy is essentially assume it could force-feed its model of British food and grocery retailing into the Western U.S. and convince consumers that they would prefer it to what they are used to and like -- food retailing Western USA style, which means appealing to the consumer and focusing locally like a laser beam on the communities and neighborhoods served.

The U.S. is a decentralized (there really is no national chain, Wal-Mart comes the closest to being one), super-competitive, multi-format food retailing market. And unlike the United Kingdom, regional supermarket chains and independents are a key and significant force in U.S. grocery retailing.

In California alone there are numerous multi-billion dollar, privately-held chains that are top market share players in their sub-market regions. These include Stater Bros. (about $4 billion in annual sales) in Southern California's Inland Empire region, Bashas (about 3.4 billion in annual sales) in Arizona, and Raley's (about $3.6 billion in annual sales) and Save Mart (about $6.5 billion annual sales) in regional markets in Northern California.

There are a few others over the billion dollar annual sales mark as well, along with many multi-store independents approaching a billion dollars in annual sales, and even more in the hundreds of millions and high tens of millions in annual sales.

Then there's the really big guys -- Wal-Mart, Costco, Target, Safeway, Kroger Co., Supervalue, (and many more), along with the big niche players -- Trader Joe's (about $5 billion), Whole Foods Market (about $6 billion) (and numerous medium and smaller niche players too) -- and the ethnic grocers (particularly Latino consumer-focused food retailers) in California, Nevada and Arizona).

Did we forget to mention the legions of high-volume single store independent grocers in the U.S.? And California is one of the strongest single-store independent markets in the nation, as one example.

And let's not forget the mega-drug chains like Walgreens, CVS-Long's and Rite-Aid, all of which increasingly are offering and discount promoting more and more food and grocery items. For example, this weeks 12-page advertising circular from Walgreens, the largest U.S. drug store chain (maybe should change the name to Walgreen's drug & grocery) looks more like a supermarket ad circular -- about 60% of the items are groceries, including dairy and deli items -- than a traditional drug chain (or Walgreens') advertising piece.

We aren't sure if this "British food-grocery retailing model "force-feeding" approach by Tesco has been because of pure hubris, which is something former and present company employees have suggested to use is the reason. But whatever the reason, in our analysis its been in many ways "Ted Mack time" (an important American pop culture reference to know) by Fresh & Easy's leaders thus far for Tesco, which is one of the best overall global retailer's in the business.

[If you do a search in the "search box" at the top of Fresh & Easy Buzz -- use words like "value proposition," "localism," "research" -- as well as looking through the Blog archives (even better) -- you will find that Mr. Mason's revelation in the Sunday Times' piece mirrors our analysis, arguments and suggestions rather closely in terms of where Tesco's Fresh & Easy has gone thus far -- and where it needs to go.]

It is said that admitting mistakes is the first step towards correcting them. We hope that's the case for Tesco's Fresh & Easy, especially because the grocer has some of the finest and most dedicated store-level employees in the business.

It's also important to note that unlike Tim Mason, many CEO's will never admit, particularly in print, that they "got it wrong." Instead, they would rather go down with the ship still saying they were right; that the environment was just wrong. For example, look how long it has taken General Motors' CEO Rick Waggoner to admit GM "got it wrong." And the timing was pretty close to the company's asking for billions of dollars in loans from the U.S. government, at that. Therefore we give Mr. Mason credit for having the confidence and wisdom to say what he said.

But the fact that Mr. Mason is admitting the grocer "got it wrong" should also shed some light on just how serious (as in not so positive) Tesco's struggles with Fresh & Easy are. Keep in mind Tesco will soon report its financials, including those at Fresh & Easy Neighborhood Market USA.

We have seen some positive signs in recent weeks in terms of changes in Fresh & Easy's merchandising and marketing. Of particular note appears to be the movement, albeit in baby steps, by the grocery chain more towards the value proposition-based model we've long been suggesting it needs to do. On the item side of this equation these developments include the introduction of what Fresh & Easy calls its 98-cent value produce packs. It also includes the addition of more nationally branded grocery products into the stores.

Fresh & Easy also has been sharpening its promotional pricing -- offering better deals -- and improving its in-store merchandising, particularly in the grocery category.

For example, when we visited a number of stores between the 2008 Thanksgiving and Christmas holidays we noticed pre-pack shippers being tastefully used in the stores. Prior to that Fresh & Easy had a "clean floor" policy, in which it didn't allow shippers on the store floor. The shippers we viewed then were all featured national brands, which is a good idea for the grocer because it helps augment the primarily store brand (about 60%) model and focus in the stores. The shippers, many of which contained items with a higher ring but were price-discounted well, also help increase market basket size for the stores.

We also saw an end-cap display we liked. It featured a number of well merchandised fresh & easy store brand grocery items. On the display were stacks of paper Post-It Notes, along with a sign that basically said: "Take a Post-It Note, write-down your favorite fresh & easy brand items and stick it on the display." The display (shelving) was covered with Post-It Notes, with customers' favorite fresh & easy branded items hand written on the slips of paper.

This is the type of creative merchandising the grocery chain needs to nurture and do more of. It's creative and interactive, inviting shoppers to participate in the grocer's business. We suggest Mr. Mason find out who came up with this idea and put them in charge of "creative merchandising" for the entire chain.

But it's our overall analysis at this point in time that Tesco's Fresh & Easy has yet to create this comprehensive value proposition and merchandising and marketing program. We suggest it follow up on its recent value-based offerings and the type of creative and successful (the items on that particular store's Post-It Note display were selling at a brisk pace) merchandising exemplified by the display we described, and build these various elements (the parts) into a value-based overall (the whole) merchandising and marketing program which then must be positioned and communicated well.

Value needs to be the hub of the Tesco Fresh & Easy wheel (format and overall offering) and then all of the other offerings (prepared foods, natural-organic-specialty groceries, wines, ect.) need to be the spokes. The other offerings are important. But they need to fit in with the overall value proposition and support it rather than detract from it in what we've termed as a "model or format muddle" that exists with Fresh & Easy at present.

We will return later for some further analysis on the topic and issue. But that's all for now.