New Report: How and Where Americans Spend Their Food & Grocery Dollars

The consumer and money website Bundle.com, which is backed by Microsoft, financial services company Citi and the investment firm Morningstar, has produced what it calls its first-ever Bundle Report, which is titled: "The 2010 Bundle Report: How America Spends." The comprehensive report uses data obtained from Citi, the U.S. Federal Government and third-party sources, to arrive at an analysis of how much money, excluding housing costs, the average American household spent in 2009.

As the numbers depicted in the infographic here show, the average American household spent $37,782 in 2009, not counting mortgage or rent (which are not included in the Bundle data).

In the report, Bundle.com divided the $37,782 spent in 2009 by the average American household into six categories. The six categories and the percentage of the $37,782 spent in each of them are: 23 percent of their daily budget on shopping, 14.5 percent on getting around (gas and auto expenses), 17.5 percent on food and drink, 7 percent on travel and leisure, 17 percent on house- and home-related expenses, and 21 percent on health and family.

How, where Americans spend their food & grocery dollars

Most interesting to Fresh & Easy Buzz - as well as the most useful aspect of the report for grocers and food marketers - is the analysis the Bundle.com researchers did in the food and drink category.

First, using their data, the researchers looked at the demographics of U.S. food and grocery spending overall, breaking down the percentage spent on groceries (at all food and grocery retailing classes of trade) and at restaurants (of all types and formats). The results of their analysis is depicted in the infographic here.

As you can see in the graphic, Bundle.com determined the average American family spent $3,778 in 2009 on food and groceries at retail stores, while spending $2,736 dining out. [There are additional details and links here.]

Second, the Bundle.com researchers examined consumer spending in major U.S. cities when it comes to groceries and restaurants, developing a top ranking by city.

As the infographic here shows, Austin, Texas is the number one food and drink spending city, while Detroit, Michigan is dead last. Note the stark differences between number one Austin - $12,447 total ($6,146 annually on food-groceries at retail and $6,301 dining out)compared to $2,246 total ($1,375 at retail annually and $871 dining out) for last place Detroit.

The Bundle.com researchers point out five interesting aspects of their food-grocery-drink ranking by city:

• Austin, TX, residents spend almost twice ($6,301) the US annual average for dining out.
• In fact, five average Detroit households (the nation’s lowest spenders) can eat on one Austinite’s food budget.
• If Manhattan were its own city, it would be No. 1 for food spending ($13,079) and No. 1 for share of food budget spent on restaurants (59%).
• In Atlanta, dining out accounts for 57% percent of the city’s average total food and drink spending annually, the highest in the US and 28% higher than the US average.
• Denver residents allocate 22 percent of their daily spending to food, more than any other big city in the country.

It's important to note though, and the researchers do so, that like the rest of the study the city ranking data doesn't include what the average American family spends on either a mortgage or rent. We suspect this fact accounts for why New York City, San Francisco and Los Angeles, for example - all places with high housing costs and rents but big food spending cities according to other data sources - aren't higher-up in the ranking. But despite this variable - the intentional omission by the researchers of the housing cost data - the study remains not only interesting but useful.

Tesco's Fresh & Easy Neighborhood Market

In terms of Tesco's Fresh & Easy Neighborhood Market, just one of the grocer's current 159 fresh food and grocery stores is located in the top 15 cities ranked in the Bundle.com study. That store is in Scottsdale, Arizona, which is ranked number nine.

Fresh & Easy has numerous stores in Orange County in Southern California but none in Irvine, which is ranked number 7 in the study. In addition, there are nearly 40 Fresh & Easy stores in Arizona but none in Tuscon, which is ranked 12th in Bundle's city ranking.

Further, Fresh & Easy Neighborhood market has stores in just six of the top 50 ranked cities - Scottsdale and Chandler (ranked number 33) in Arizona; Henderson (ranked 31rst), Nevada; Los Angeles (ranked 16th) and Santa Ana (ranked 49th) in Southern California; and in Bakersfield, California (ranked 50th)

A final word: Like all such studies, this one should be used in conjunction with other food and grocery consumer purchase research and data. The reason for this is because no one study is precise. Using multiple data sources allows for a check and balance system, along with arriving at a more precise snapshot of consumer food and grocer purchase data and demographics. Having said that, in our analysis and opinion, Bundle.com's comprehensive study is a valuable tool for retailers, marketers and consumers.

Make sure in using the study you pay attention to the numerous links at the pages here, here and here. At these links are numerous other features Bundle.com provides regarding its study and data, as well as download links for the infographics presented.

The researchers describe in depth the methodology they used in the study here. We compliment the Bundle.com researchers on their work.

Tesco Fresh & Easy, Research and Course Correction: What 'Was' Said and 'its' Context Matters Little; What 'Is' Matters Much, What's Done Matters More

Fresh & Easy Buzz has written much about the various forms and modalities of research that can be used in the food and grocery retailing sector as a way to both better understand consumers, along with better understanding the food retailing market vis-a-vis what a grocer's competitors (and for a new grocer entering a market its upcoming competitors) are doing -- and why they are doing it.

There is no more important use of research, ranging from market-oriented research and analysis to consumer-focused research, than in using it to help gain a better understanding of what is a central fact of American food and grocery retailing: That it is a regional, sub-regional, sub-sub regional, local and neighborhood enterprise.

For example, if you take a state like California -- the nation's largest and the one where Tesco's Fresh & Easy Neighborhood Market is based and has the majority (in Southern California and Bakersfield in the southern Central Valley thus far) of its current 113 small-format grocery and fresh foods markets -- it's not one market, nor even a series of regional markets. California is best viewed as three or four (or even five) regional markets, then broken down into sub-regional markets, sub-sub regional markets on down to local.

The three major regions of the Golden State -- Southern California, the Central Valley and Northern California (each with sub-regions and sub-sub regions within) -- have many similarities in terms of consumer behavior as it relates to food and grocery retailing. But the qualitative differences are vast in terms of demographics and other key variables.

And within each of these three regions there are significant differences as well. What the popular and powerful former Democratic Speaker of the U.S. House of Representatives, Thomas "Tip" O'Neill was famous for saying about American politics, that "All politics is local," can in the main also be said about American food and grocery retailing, which is something we've written often about in Fresh & Easy Buzz. Tip probably would have made a pretty good grocer with that understanding. It served him well in politics, after all.

We've also written often about ethnographic research, and have used an applied Anthropological research modality (participant and non-participant research) in some cases in our coverage and analysis of Tesco's Fresh & Easy and the food and grocery retailing business in general

On Saturday, February 21 we wrote this piece about some comments attributed to Tesco Fresh & Easy Neighborhood Market CEO Tim Mason in a brief story published in the February 22 edition of the Sunday Times of London. Since those comments and direct quotes from Mr. Mason in the story track arguments we've been making for nearly a year about the research the grocery chain did prior to launching its U.S. food and grocery chain -- research in fact that the retailer has publicly said formed the basis for the Fresh & Easy format -- we thought the CEO's remarks in the Times' report were right on, albeit a bit late in coming. We even called the comments attributed in the story to Mr. Mason"healthy" ones.

We also thought they were a good basis for creating a bridge in which the chain and its CEO could now go forward with the changes it needs to make in the Fresh & Easy format, merchandising, marketing and operations if it hopes to succeed in the ways Tesco has planned on doing with the grocery and fresh foods chain in the Western USA.

You can read our February 21 piece 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.

It appears though that Mr. Mason's comments attributed to him in the Sunday London Times' story were "taken out of context," according to the Tesco Fresh & Easy Neighborhood Market spokesperson, although we've yet to hear from CEO Mason in print in this regard.

We wrote about this development on February 24 here: 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.'

What's interesting is that it really doesn't matter if Tesco Fresh & Easy Neighborhood Market CEO Tim Mason said what was attributed to him or not in the Times' story, or if it was "taken out of context" and thus required clarification from the corporate spokesperson (although it is interesting that clarification was in another publication rather than in the Sunday Times) The fact is, Tesco's Fresh & Easy is struggling. And all of that struggle isn't just because of the current economic recession. The chain was struggling pre-recession.

In fact, based on what Tesco has said Fresh & Easy is, and promoted it to the press as -- a neighborhood grocery and fresh foods market for "everybody" (all consumers) that offers everyday prices 15-20% below competitors' everyday prices -- one would think the stores would be thriving in a recession, for that format as described by Tesco would appear to a reasonable observer to be just the retail prescription for cash-strapped shoppers in an economic recession. But this isn't the case at present.

Our analysis is that a major part of Tesco Fresh & Easy's problems goes back to this research -- research the grocery chain touted as being extensive, comprehensive and nearly ground-breaking in its public relations push prior to opening its first stores in November, 2007. Tesco failed, or did so poorly, to do the most basic of all research we argue -- the type of market-based research that would have allowed the retailer to gain an understanding of American U.S. food and grocery retailing in general and Western USA food retailing, particularly with a focus on California, Nevada and Arizona and each states sub-regional, sub-sub regional and local markets.

Had it done this type of research -- and hired an American research team with strong knowledge of the respective local markets to conduct it independently for the company -- it would have learned that no such food retailing gap existed in the market in terms of any lack of grocery chains and independents selling the types of products Tesco offers at the Fresh & Easy stores.

For example, there is nothing revolutionary -- despite the many articles to that effect that were published in the mainstream press before the first Fresh & Easy stores were opened -- about the prepared foods sold at Tesco Fresh & Easy. In fact, California grocers are among the innovators in fresh, prepared foods merchandising, and many have been doing in a major way what Tesco just started doing with prepared foods for a good 15 years, getting better at it each year.

It's not that Tesco should not have opened the Fresh & Easy stores, and as we often say -- "Don't rule Tesco out ever. But it is that, in our analysis, the research was flawed, and we also think some ethnocentrism played a role in how it was conducted.

And as a result, that flawed research -- too much emphasis on focus groups and elaborate in-home ethnographic research and not enough market-based study in an informed and unbiased way -- resulted in Tesco doing so many wrong things with Fresh & Easy that it positioned the stores in a way from the very start that dramatically decreased its odds of success.

Tesco's Fresh & Easy has also been super-slow on the draw in course-correcting. It appears CEO Mason is realizing some changes are "now" needed -- such as focusing on value and stronger and more frequent promotions, two things we've been emphasising and suggesting in our analysis for about eight months -- but those changes needed to come in about the third quarter of 2008, when it was clear the current direction -- which we've still not figured out is -- was not working. It's not too late though. We think Fresh & Easy has strong potential if fixed.

But now Fresh & Easy's corporate spokesperson has said CEO Mason does not believe any of the initial research was flawed -- that it was just fine. That Mr. Mason's comments in that regard were taken out of context. That he meant nothing of the sort. Instead, the company's position is that any problems at Fresh & Easy are due to the current recession, according to spokesperson Brendan Wonnocott in the Supermarket News report and in a couple other published reports yesterday.

We think that's too bad. Why? Because the research is flawed, or the conclusions drawn from it are, take your pick, and it is our analysis that unless that is realized by CEO Mason and the other senior executives at Tesco's Fresh & Easy, it isn't likely they will be able to make the changes needed to move the grocery chain forward to success.

For a thoughtful and interesting analysis of that research, we suggest you read a piece posted yesterday by Applied Anthropologist Grant McCraken in his Blog: "This Blog Sits at the Intersection of Anthropology and Economics." The piece, "Ethnography is not an in-home interview," directly addresses the Tesco Fresh & Easy research within the framework of ethnographic research, which is the writer's specialty. Click here to read his post.

We will offer additional original analysis and thoughts on the research and related issues in an upcoming post in Fresh & Easy Buzz.

Supplemental reading from the Fresh & Easy Buzz archives:

February 21, 2008:http://freshneasybuzz.blogspot.com/2008/02/supermarket-news-fresh-easy-not.html

March 24, 2008: The Analysis of Tesco's Fresh & Easy From Piper-Jaffray's Mike Dennis in This Interview Published Today Sounds A Lot Like Ours For the Last Few Months

April 1, 2008: Supermarket News' Fresh & Easy Cover Story: Industry Analysts and Others Agree With Our Multi-Month Argument That Fresh & Easy Stores Need Local Focus

April 3, 2008: Our 'Fresh & Easy Stores' Lack A Sense of Place' Theory is Growing; Read What We and Others Are Saying Tesco Needs to Do With Fresh & Easy

April 9, 2008: USA Today Discusses Themes We Sound Off On Here at Fresh & Easy Buzz Near-Daily: Neighborhood, Community and 'Sense of Place' in American Retailing

April 28, 2008: Having Trouble in the Neighborhood (Market)? Who You Going to Call? Gene Hoffman Would Be a Good Start

May 16, 2008: Tesco is Incorporating New Interior Design Elements and Enhancements Inside its 61 Fresh & Easy Neighborhood Market Grocery Stores

May 7, 2008: May 7, 2008: Feature & Analysis: Tesco is Launching A Major 'Local Foods' Program in the United Kingdom; Why Not Do the Same At Fresh & Easy USA?

Wednesday, July 23, 2008: Fresno, California Fresh & Easy Grocery Store to Be First in Chain to Include Local, Community and Neighborhood Design Elements and Features

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.

Competitor News: Where is 'Wal-Mart America?' A Demographic Look and Analysis

Fresh & Easy Buzz Editor's Note: The official U.S. commission that reports whether or not the country is "officially" in an economic recession reported today that indeed the United States is in a recession -- and has been in one since December, 2007, making the current recession already the longest since the 1980's. Our analysis, and that of the majority of government and independent economists, is that there are worse times to come before the economy starts to gets better. We see the current recession lasting most likely all of next year.

Both Wall Street -- commercial banks and what's left of the once mighty investment banks -- as well as main street --the "Big Three" Detroit auto makers, chain and independent retailers of all formats, and nearly every other industry and business -- are feeling the pressures of the economic recession and related financial and credit crisis to different degrees, ranging from being on the verge of bankrupcy to having to make serious cutbacks, to seeing stock share values melt away, in the case of publicly-held corporations.

Mega-retailer Wal-Mart Stores Inc. is on fire though, despite and in part because of the serious economic recession.

The retailer is experiencing a consumer flight to its U.S. Supercenters and other format stores by food and grocery shoppers in general, along with by consumers of nearly all income levels looking for holiday shopping bargains. After all, who cares where you buy that Ipod for daughter Cindy or computer for son Chip for Christmas right now, as long as it's offered at the best price available. And few consumers can even afford such gifts for Christmas. For many its a trip to Wal-Mart for its $10 and $20 Christmas gift selections this year.

Wal-Mart has been growing its share of the food and grocery market in the U.S. over the last few years considerably, recently unseating Kroger Co. as the number one retailer of groceries in America on an overall, national basis.

And that was even before about the middle of this year when the retailer began experiencing considerably higher customer counts in its stores with a particular focus on shoppers buying food and grocery items at primarily Wal-Mart's Supercenters, but also at its Sam's Club stores and Wal-Mart Neighborhood Market supermarkets. Consumers have flocked to Wal-Mart for consumables in even greater numbers since late September and early October when the first signs of the financial crisis started to hit.

As a result, it appears when it comes to shopping at least, and perhaps even more, Wal-Mart is America right now.

Dante Chinni, who writes the Patchwork Nation Blog for the Christian Science Monitor takes a look at Wal-Mart in the United States in what he calls a "Patchwork Nation" in an excellent demographic analysis piece titled: 'Where is 'Wal-Mart America'? Below is that piece:

Where is ‘Wal-Mart America’?
Christian Science Monitor
Patchwork Nation blog
By Dante Chinni
December 1, 2008

The early returns from the holiday shopping weekend show some good news for retailers and quite a bit of good news for one in particular: Wal-Mart. With the holiday air heavy with economic angst, the store that promises “always low prices” is one of the few that is expected to post good numbers for the season.

But most retailers in America don’t elicit the strong love-hate reactions that Wal-Mart does. In some locales, residents welcome the hangar-sized megastores, seeking their low-cost TVs, clothes, and groceries. Others have voiced concerns about what Wal-Mart does to smaller local retailers and how the company treats its employees.

It is arguably a part of America’s culture wars, complete with a documentary by a liberal filmmaker that blasts the company and a robust selection of pro- and anti-Wal-Mart websites. Even last weekend wasn’t without controversy for the retailer, when early on Friday morning an employee was trampled to death at a Long Island store.

Given all the attention paid to the stores, is there such a thing as “Wal-Mart America”? If so, where does it reside?
More than 3,700 Wal-Marts are open for business in the United States, so it may be that the term “Wal-Mart America” is almost redundant. Still, when the store locations are analyzed through the lens of Patchwork Nation, differences among the sites emerge.

Of the 11 communities that represent the various county types in Patchwork Nation, all but one have a Wal-Mart less than 20 miles away. Some have multiple stores. (A Wal-Mart is a bit further down the coast from Lincoln City, Ore., which represents our small-town “Service Worker Center.”)

In terms of sheer numbers of stores, the wealthy, largely suburban “Monied ’Burbs” lead the way, with 885 Wal-Marts in their boundaries. But that’s largely due to the number of people that live there – roughly 85 million.

A better measure may be Wal-Marts per 100,000 people, and that method yields very different results. One finding: The stores seem to have their strongest base in communities with a conservative tilt.

The highest Wal-Mart-to-person ratio exists in the aging “Emptying Nest” counties (2.4 Wal-Marts for every 100,000 people) and in the socially conservative “Evangelical Epicenters” (2.0 Wal-Marts for every 100,000 people).

Also scoring high are the “Military Bastion” counties located around armed-forces bases (1.8 Wal-Marts for every 100,000 people) and rural agricultural “Tractor Country” counties (1.7 Wal-Marts for every 100,000). Both of those types tend to lean Republican.

For the most part, Patchwork Nation correspondents in Hopkinsville, Ky. (our “Military Bastion”), and Sioux Center, Iowa (our “Tractor Country” community), speak fondly of their local Wal-Marts.

Meanwhile, the reliably Democratic big-city “Industrial Metropolis” counties have the lowest Wal-Mart-to-person ratio – at just 0.5 per 100,000 people.

Also on the low end are the more politically divided county types: the “Monied ’Burbs,” the growing and diversifying “Boom Towns,” and the “Service Worker Centers” (all those places have 1.4 Wal-Marts per 100,000 people or less). Conversations we’ve had with residents in some of these communities reveal a negative value judgment about the chain.

For instance, in Eagle, Colo. (our “Boom Town”), debate abounds about “big-box store” development. But the discussion changes for many when the name on the “big box” changes. Talk about the arrival of, say, Whole Foods, and you’ll hear warmer words. You’ll hear something else about one of Sam Walton’s superstores.

In part to appeal to communities that are less interested in them, Wal-Mart has recently introduced a new logo and is hipping it up a bit. The approach also includes a new motto about “living better.”

In some communities that consider themselves progressive, criticism has risen over how the company treats and pays its employees. Look at Ann Arbor, Mich. (our collegiate “Campus and Careers” community), where some people have signed up to start a Boycott Wal-Mart Meetup Group. No Wal-Mart is within the city limits yet, but there is one in neighboring Ypsilanti, Mich.

Protests or no, Wal-Mart has established quite a foothold in those “Campus and Careers” counties (1.9 stores for every 100,000 people). Cash-strapped students are often among the most concerned with stretching their dollars.

Watching how Wal-Mart performs and grows in all these communities in the coming years could be telling. If the current economic downturn deepens, protesting against or boycotting a company that promises low prices may become harder for some. And the Wal-Mart battlefield in the culture wars may shrink.

Consumer Research: A Positive Method of Reporting On Consumer Surveys and Other Types of Industry Primary and Secondary Research

On Tuesday, May 20, we published this piece, "Take One Dose of Internal Research, Add An 'Independent Survey' From an Unnamed Source, and You Get A Consumer Preference For Self-Service Checkout."

You can read our May 20 piece yourself here, but essentially we reported on the fact a story in a British food industry trade publication reported that internal research given to it by Tesco's Fresh & Easy Neighborhood Market USA, along with what the publication called an "independent survey," shows a growing consumer preference for Self-Service checkout in grocery stores in the U.S.

The problem with the "independent survey" reference is the publication didn't say who did the survey--the person, business or organization--and reported nothing about said "independent survey," such as not only who conducted it, but what it said in percentages, it's methodology or other minor details.

Yesterday, the U.S. grocery industry trade publication Progressive Grocer published this brief report about a survey by the respected research firm Packaged facts on self service technology, such as vending kiosks, self-service checkout stands and other related consumer do-it-yourself technology in America's retail stores and foodservice outlets.

Even though the Progressive Grocer report was brief, the publication managed not only to site the source of the survey--Packaged Facts--but also to report in brief on its findings using the quantitative data from the research study summary.

Additionally, Progressive Grocer included a link at the end of its report to the Packaged Facts' website, where good consumers of research can then go and read an abstract of the research on retail self-service technology conducted by the firm.

You can read the Progressive Grocer report from yesterday here.

The study summary or abstract on the Packaged Facts site explains what the study looked at: self -service kiosks, vending machines, self-checkout applications and other technology in the retail and foodservice spaces. That's important since if one doesn't know the research looked at far more than just self-service checkout the results could be interpreted much differently, for example.

The abstract/summary on the website also offers the methodology of the study, which it says was a combination of primary and secondary research, and elaborates on it a bit, along with other aspects of how the research was conducted.

You can read the Packaged Facts abstract/summary here for yourself.

Packaged Facts is in the business of selling its research, and we have no problem with that. The research firm makes copies of its full studies available to the media if a given publication wants to write about a given study. The firm also makes researchers available to answer any questions a writer or analysts might have in the process of writing his or her piece on the study.

The way Progressive Grocer included data in its brief piece on the survey, along with not drawing any conclusions either pro or con about self-service technology, is the proper way to report research data.

If Progressive Grocer chose to write a longer, more detailed piece on the study, including making conclusions, that would be fine because the publication is fully-disclosing who conducted the study and what the study says--data, percentages, methodology and the like--which the publication would elaborate on in a longer piece.

It's a separate question as to if one agrees or not with those potential conclusions based on the mix of primary and secondary research done in such a study, but that's the case with every study conducted by every person or firm who has conducted one.

The important point is Progressive Grocer offered a link to a place (the Packaged Facts website) where a good consumer of research can go to read more about the study, not to mention the publication actually sited who conducted the research, which is the norm in reporting research of any kind.

[As consumers of research, if you read a piece in which an "independent survey" is quoted either to support or not support a particular technology or practice (or just in general), and the name of who conducted the "independent survey" isn't listed, let the red flags fly at full mast as you continue reading on in the story.]

Further, as a reputable research firm, Packaged Facts posts a summary of its research, including a description of the methodology, on its website so good consumers of research can be informed.

Of course, doing so also is an advertisement for people to purchase the study, as you can see on the link, but we have no problem with that. That's the business the company is in, after all. Additionally, Packaged Facts makes such studies available to the media to write about as we mentioned earlier.

We wanted to publish this piece as a follow-up to our May 20 story, as its an example of the proper way to report on research, along with showing how reputable research firms make available summaries of their study's online for good consumers of research to view.

Related Reading From Fresh & Easy Buzz:

Tuesday, May 13: "'America's Next Cult Retailer': Three Big Questions For Execution Research Limited About its Interview Study of Tesco's Fresh & Easy Store Customers." Click here to read the story

Take One Dose of 'Internal Research', Add An 'Independent' Survey From An Unnamed Source, and You Get A Consumer Preference For Self-Service Checkout

Fresh & Easy Buzz examines yet another report about third-party research involving Fresh & Easy Neighborhood Market. This time the report sites Tesco Fresh & Easy internal research and an 'indpendent survey' from an unnamed third-party, with both studies suggesting U.S. consumers are hot for self-service checkout in supermarkets.

There seems to be an emerging and somewhat disturbing trend developing in press reports regarding research studies or surveys about Tesco's Fresh & Easy Neighborhood Market and its U.S. small-format, convenience-oriented grocery store chain.

On May 13, Fresh & Easy Buzz published this piece questioning some research, reported on in the Financial Times newspaper out of its United Kingdom office, by a London-based investment banking and stock brokerage firm named Executive Research Ltd.

The Financial Times reported Executive Research Ltd. surveyed 700 Fresh & Easy grocery store customers outside of nine stores located in Southern California, Arizona and Nevada, and concluded from that research Fresh & Easy offers fresher foods than both Whole Foods Market and Trader Joe's, and offers better value for shoppers' money than Wal-Mart.

The report also quoted the Executive Research Ltd. researchers (but not by name) as saying: "Fresh & Easy is America's New Cult Retailer," whatever that means.

The problem with the Financial Times story was that it didn't mention anything a good consumer of research wants to know such as: What was the interview survey methodology, what were the questions, who asked them, how were the results analyzed, how were the conclusions reached, what percentage of the 700 shoppers interviewed said Fresh & Easy has fresher foods than Whole Foods and Trader Joe's and offers better value for their money than Wal-Mart, along with a couple other minor details.

Yesterday, we published a follow-up to our May 13 piece in which among other things linked to an interview food industry analyst Jim Prevor and his associates at the Perishable Pundit blog conducted with two researchers from Executive Research Ltd., as well as linked to a discussion on the website RetailWire.com about the Financial Times report and the conclusions reported in the story reached by Executive Research Ltd. We also offered some further analysis of our own. Read our May 19 follow-up piece here. The piece has links to Perishable Pundit and Retailwire.

Frankly, we thought we were done writing about questionable research from third parties regarding Tesco's Fresh & Easy when we put yesterday's piece on the Executive Research Ltd. interview survey to bed and pressed "publish."

However, no sooner had we put that piece to bed and started checking the email, what do we find?

We find this story from the United Kingdom-based grocery industry trade publication The Retail Bulletin. The title of the piece is: "More self-service technology coming to stores near you."

We reprint the complete story below in italics. Our analysis continues after the story under the Fresh & Easy Buzz heading.

More self-service technology coming to stores near you

Tesco's Fresh & Easy chain in the US has uniquely adopted an all-self-checkout model that was initially questioned but has latterly gained increasing customer acceptance, according to the grocer's internal research.

By Glynn Davis

As many as 90 per cent of its customers indicated that they were either 'satisfied or very satisfied' with the checkout experience, and in a separate independent survey some 60 per cent of shoppers found the arrangement 'favourable' while another 27 per cent stated that 'it doesn't matter' what format the checkouts take. A lesser 13 per cent stated that they would prefer a conventional staffed checkout.

These findings support the argument from self-checkout manufacturer NCR that such equipment is finding increasing favour among both retailers and consumers. Speaking to the Retail Bulletin Mike Webster, chief of strategy and communications officer at NCR, says that at Fresh & Easy it is possible to have every lane at every store open at all times of the day.

The average five 'scan and bag' and four 'belted' lanes (for larger baskets) in each store has helped Fresh & Easy deliver on its broad promise of making things easy for the customer, according to Webster, who suggests that the findings in the US will undoubtedly be factored into the domestic market in the future.

Helping the Fresh & Easy situation is the fact that bananas are the only product available loose (because they are too variable in size and react badly to shrink-wrapping) whereas everything else is packaged and bar-coded, thereby reducing the potential for problems at checkout and for the intervention of staff.

This reduction in the need for staff assistance has been achieved through the ongoing development of self-service technology with Webster citing the introduction of more advanced barcode look-up tables that are indexed on the most popular products sold in each store and improved standard deviation on the weight measured versus the weight expected of items.

There has also been a reduction in the footprint of the checkouts with Webster saying that the current space required, which can be half that of a traditional staffed checkout, will likely fall by as much as 30 per cent in the short-term. The clearly provides a great benefit to the retailer as it frees up valuable store space and enables checkout staff to be deployed elsewhere in the store on more value-added activities.

“There is an opportunity to manage labour more effectively by putting the staff away from the tills and in the aisles. This is a primary driver of self-service for retailers,” says Webster.

Self-checkouts can also be used as a means of reducing in-store staff numbers with Webster saying that in certain countries this need for fewer employees is a major benefit as retailers often find it difficult to recruit staff as a result of ageing populations or labour shortages caused by high levels of migration.

However, Webster says it is not the retailers that are driving the increased adoption of self-service but more the consumer. This is leading to a key trend in self-service checkouts - the increased penetration of such checkouts in-stores.

Whereas in the past the density of these units in an outlet was 15 to 20 per cent of the total number of tills it has risen to account for 50 to 60 per cent of checkouts today. “This is a very noticeable increase which shows there is a consumer demand and that there is a significant business impact,” he says.

Another trend is the adoption of self-checkout by non-food outlets. Having been a regular sight in grocery outlets they are now starting to appear in other retailers such as DIY, pharmacy and petrol forecourts. Among the early adopters in Europe are French electricals retailer FNAC, Portugal-based department store El Corte Ingles and IKEA in Sweden and the US.

Finally, Webster suggests retailers are also starting to consider implementing other forms of self-service technology such as navigation kiosks, which help shoppers to find specific products in-store, and pre-order counters that could enable items from the deli to be ordered before being picked up by the customer as they navigate around the store.

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Fresh & Easy Buzz

The subhead of The Retail Bulletin piece says, "Tesco's Fresh & Easy chain in the U.S. has uniquely adopted an all-self-checkout model that was initially questioned but has latterly gained increasing customer acceptance, according to the grocer's internal research."

The lede paragraph then elaborates:

"As many as 90 per cent of its customers indicated that they were either 'satisfied or very satisfied' with the checkout experience, and in a separate independent survey some 60 per cent of shoppers found the arrangement 'favourable' while another 27 per cent stated that 'it doesn't matter what format the checkouts take. A lessor 13% stated that they would prefer a conventional staffed checkout."

As you can see in the paragraph reprinted above in italics, that's it. All the report says is in a separate independent survey (who conducted it?) 60% of shoppers found self-checkout to be favorable over full-service checkout, and that 27% could care less which is offered, with only a mere 13% preferring conventional full-service checkout.

For those of you in the food and grocery retailing business, we hope you are now saying... Wow, 60%, that's a big deal, especially since nearly every food retailing store in the U.S.--from mega Wal-Mart and nearly every chain and independent supermarket, to the corner grocery store offers conventional, full-service checkout rather than self-service like Tesco's Fresh & Easy Neighborhood Market and a handful other U.S. retailers do.

Wouldn't it be nice to know who did this independent survey? Who they sampled for the survey. What the sample size was? Was it a phone survey or in-person interviews? What was the survey methodology. Who asked the questions? How was the data analyzed?

Stating that 60% of American consumers prefer self-service checkout, compared to only 13% who prefer conventional checkout, is big news, considering if true it turns the entire checkout scheme in America's supermarkets on its head.

Regarding the article's report that Tesco's internal research finds 90% of its shoppers prefer self-service checkout over conventional full service, we will just take it as face value as the truth--for now.

It would be interesting to know what sort of internal research it was though. Random sample interviews with an appropriate and gender stratified segment of Fresh & Easy customers, for example. Or, comment cards on the store counters for customers to fill out. It does make a difference.

But it doesn't matter in the larger scheme of things. Why? Because all one can generalize from a report that 90% of customers who shop at a store that offers self-service checkout, is that 90% of those shoppers who already shop at Fresh & Easy, like the self-scanning scheme over conventional full-service scanning. Nothing more.

What about the flocks of consumers who aren't shopping at a Fresh & Easy grocery store? For example, those consumers who've never been in one before at all, as well as those who've been once but haven't returned?

Wouldn't you want to know--especially if you seriously needed to generate new customer trial like Fresh & Easy does--if having to scan and bag their own groceries might be a barrier to entry for many consumers, which might in-part help explain why more new shoppers aren't trying the stores. That's valuable data for a grocer.

Or, just as important, wouldn't you want to know if one of the reasons--especially if it could be the primary reason--those shoppers who've tried the stores once but haven't returned might not have done so because they don't want to scan and bag their own purchases? That's valuable data for a grocer.

In contrast, knowing that shoppers who already shop in the stores are fine with self-checkout to the tune of 90%--or even 100%--isn't real valuable data to a grocer, expecially a startup. It's basically singing to the choir.

So, as we've said, the only conclusion that can be drawn from an internal finding that 90% of customers who shop at a store that has self-checkout prefer self-checkout over full-service checkout is that you now know shoppers who are ok with self-checkout have no problem shopping at a store with self-checkout rather than full-service checkout.

It's like an automobile company which makes only SUV's surveying its customers and finding out 90% of them (I would worry why the other 10% bought an SUV) prefer SUV's over mid-sized cars.

What you've learned as the owner of ACME SUV, Inc. is that 90% of the core customers at theautomotive manufacturing company that only produces SUV's prefer them over mid-sized cars. It's a self selecting sample, just like the 90% of Fresh & Easy customers who prefer self-checkout over full-service. Those who prefer conventional full-service checkout shop at stores that offer full-service checkout, not at Fresh & Easy which does not.

The clerks at the Fresh & Easy stores will assist shoppers with scanning and bagging if asked. But anyone who has worked more than a few months in a grocery store can tell you customers really don't like to ask for such things. Therefore, those who prefer full-service checkout will generally seek out a store that offers it without having to ask for it as an option.

Those shoppers who prefer self-service or who could care less won't have a problem with it either way. They aren't shopping at Fresh & Easy because it offers self-service checkout. It's just that all things being equal, they really don't care one way or the other. And of course there's a small portion of that 90% who like it, think it's cool.

Unfortunately, the challenge for Fresh & Easy is not only keeping those customers they currently have and getting them to spend more money per shopping trip, it's also to get lots of new shoppers in the stores and convert them at least at first into secondary shoppers and eventually into primary ones. If not, the grocery chain will not hit it sales targets. And it has a ways to go to achieve them.

Regarding the larger issue of the "independent survey" which found that a full 60% of consumers prefer self-checkout over conventional full-service, lets just be kind and say it sounds very dubious.

Who did the survey? Where is the survey? Will the taker of this survey please stand up?

We've reviewed scientifically-based surveys over the years regarding the self vs. full-service checkout question. Not many have been conducted but some exist. We've never seen one that showed a U.S. consumer preference for self-service checkout rather than full-service.

In fact, we bet the only variable you could throw into such a survey to change the opinion from prefer full-service to prefer self-service is product price. Even then, the price variable would have to be at least somewhat significant to change the consumer opinion we believe.

We suspect you would likely begin to see a tiny bit of opinion change towards self-service at about a 5% cheaper price level, with it starting to increase more so at around the 10% savings level. In other words, if you add a second question to such a survey asking consumers if they prefer self or full-service checkout you might see some opinion change in the direction of prefer self-service.

For example, two hypothetical survey questions on the topic:

Question one: Do you prefer to have a store clerk scan and bag your grocery purchases at the supermarket checkout counter or would you prefer to scan and bag your own grocery purchases at the checkout counter?

That's the normal question to simply gauge the consumer preference. What do you think the answer of the majority of American consumers would be to that question?

Now, we add the second question.

Question two: If you answered above you prefer having a store clerk scan and bag your grocery purchases, would you prefer scanning and bagging the purchases yourself if you could save 10% off your total grocery purchases by doing so each time you shop in the store.

These are two simple questions that would be interesting to see used in a real, random sample-based survey of consumers. Such a survey also could yield some useful data.

If the "independent survey" from the unnamed source does exist, and someone would like to email it to us at freshneasybuzz@yahoo.com (the entire survey not just a press release please), we will review it with a completely open mind. And if it is legit, and shows a 60% preference towards self-service, we will write about it, suggesting it's one of the most valuable pieces of research we've seen in some time in terms of food and grocery retailing trends.

Conclusion

The story in The Retail Bulletin is the second one in less then two weeks reporting "survey based" results favorable to Tesco's Fresh & Easy Neighborhood Market without offering in the case of the Executive Research Ltd. study report any quantitative backup information and in this case even the name of the company, group or organization that conducted the self-checkout vs. full-service checkout "independent survey," which yielded the results that 60% of consumers surveyed prefer self-checkout over conventional.

We've searched all over and can't find a press release from Tesco or its Fresh & Easy Neighborhood Market division reporting on the internal research study reported in the British trade publication The Retail Bulletin.

We also couldn't find any recent independent survey matching the one reported on in the publication. That's why we would like to know who conducted it. If it yours, please let us know.

There seems to be a pattern emerging--and we aren't accusing either the Financial Times, The Retail Bulletin or Tesco of anything--of dubious and suspect "third party" research reports regarding the Fresh & Easy chain. These reports seem to us to be more public relations-oriented than knowledge-based. There also seems to be a shroud of mystery involved; something just isn't kosher.

In the case of the Executive Research Ltd. study, the firm's head researcher refused to provide the Perishable Pundit publication with a copy of the interview survey research report, or even a summary, saying it was proprietary. Although, the publication obtained a copy elsewhere and analyzes it as part of this piece.

In the report by the UK-based publication, we don't even know who conducted the self-checkout vs. full-service checkout "independent survey" because no research firm, company or organization name is attached to the survey, just "an independent survey."

What is the point of writing about research that says 60% of U.S. consumers find self-checkout favorable vs. only 13% who find conventional full-service favorable, unless you are going to describe how such a determination was made?

Does a maker and marketer of self-service checkout equipment want to increase penetration (and sales) of that equipment in U.S. retail food and grocery stores?

Does somebody want to convince consumers, analysts and others that Fresh & Easy is way ahead of the checkout curve because of that 90% internal research figure, which as we said is meaningless in terms of sampling American consumers in general? [Since it's Tesco Fresh & Easy Neighborhood Market internal research, according to The Retail Bulletin, someone from Fresh & Easy had to have give the information exclusively to the publication, unless there is a press release somewhere we just haven't been able to find.]

As you can see, such reports raise more questions than they supply menaingful data and information. They also tend to really underestimate the intellegence of readers and consumers of research, which is too bad.

America's 'New Cult Retailer': Three Big Questions For Execution Research Ltd. About its Interview Study of Tesco's Fresh & Easy Store Customers

Execution Research Ltd., a boutique investment banking and research firm based in London, UK., with branch offices in New York and Hong Kong, has released the results of a study it conducted with what it says were interviews with 700 customers of Tesco's Fresh & Easy Neighborhood Market grocery stores in Southern California, Arizona and Nevada exclusively to the Financial Times newspaper.

The Financial Times published a story on the study results in its Monday, May 12 edition, which arrived in our email box early this morning.

A number of other publications, primarily UK-based, have picked up on the Financial Times' (FT) piece, basically reporting on what the FT reported on.

However, Execution Research hasn't issued a press release on the 700 consumer interview-based survey, nor has it made the actual study or a summary of it available online. Therefore the only data available is what the Financial Times has reported, which is minimal, and what the research firm has in its offices and computers.

The first three paragraphs of the Financial Times' story are as follows:

"Tesco's ambitious attempt to break into the U.S. grocery market with its Fresh & Easy convenience chain appears to be gaining traction with local shoppers, according to independent research conducted by the Financial Times.

Interviews with nearly 700 customers outside nine Fresh & Easy stores in Los Angeles, Las Vegas and Phoenix found a strong positive reaction to the chain. The interviews were carried out by Execution Research, a boutique research house with no corporate relationship with Tesco.

'Fresh & Easy is the new cult retailer' Execution wrote. At the risk of doing the job of Tesco's public relations department, F&E is already an incredible success story."

Read the complete FT story, "Shoppers positive on Tesco's U.S. stores here.

As you will see by clicking on the above link and reading the entire story, the piece is fairly short. There are only eight additional paragraphs after the three we reproduced above.

In the second of those additional eight paragraphs, the FT's reporters site this from Execution Research's report:

"The researchers found that customers who did visit Fresh & Easy liked what they saw. The chain was rated higher than Trader Joe's and Whole Foods on freshness of product, and it even managed to beat Wal-Mart on value for money."

What's strange about the Financial Times' report on the research interview study is that nowhere in the story are their any numbers. Nothing about what percentage of the 700 customers interviewed outside the stores said Fresh & Easy has fresher product than Trader Joe's and Whole Foods, nor how many say Fresh & Easy has better prices and offers superior value to Wal-Mart.

Nothing, Not a number. Not a percentage. Zero hard data. Not even soft data.

Nearly every report on consumer surveys and research studies published in the mainstream media--let alone in a prestiges financial publication like the FT--includes some sort of data or numbers, particularly percentages.

For example, do 98% of the 700 Fresh & Easy shoppers interviewed hold the opinion the stores offer fresher product than Whole Foods and Trader Joe's? Or is it 51%. Or 62%.

Further, what are the percentages in terms of shoppers who said Fresh & Easy beats Wal-Mart on price and value?

Inquiring minds need to know.

Execution Research is making three HUGE assertions in its study:

>That Tesco's "Fresh & Easy is the new cult retailer" in the U.S. Or, at least in Southern California, Arizona and Nevada where its stores are located. Regarding the term "retail cult," the word cult has very negative connotations in the U.S. As such, Tesco shouldn't be too pleased to see it used to refer to its Fresh & Easy stores, if you take a minute and think about it seriously.

>That the majority of 700 customers interviewed by the research firm rate Fresh & Easy's product as fresher than product from Trader Joe's and Whole Foods Market.

>That a majority of the 700 shoppers interviewed outside the Fresh & Easy stores say "Fresh & Easy beats out Wal-Mart in offering value for their money."

In fact, these aren't even huge assertions. If true, they are revolutionary.

Lets look at each of the three assertions briefly.

Tesco's Fresh & Easy as the 'new cult retailer'

Tesco opened its first Fresh & Easy grocery store a bit over six months ago in the city of Hemet, in the Southern California desert region. The retailer currently has 61 stores opened. About half of these stores have only been open for about three months; the other half for no more than five months, give or take.

This means if the Execution Research study is correct, Tesco has managed to become the "new cult retailer" in the U.S. by opening and operating 61 stores, half of which have only been open for three months.

No other retailer in America has achieved this. In fact, other than Trader Joe's, Whole Foods and perhaps gourmet retailer Dean & Delucca, its hard to name any other "cult retailer" in the United States. Maybe Costco, but that's questionable. Wal-Mart is many things, but it's not a "cult retailer."

Having watched the beginnings and evolution of Trader Joe's and Whole Foods since day one, when Joe Coloumbe (Trader Joe's founder) and John Mackey (Whole Foods founder) turned the keys in the doors of their first respective stores, Fresh & Easy Buzz can tell you it took both chains a good decade before each of them even began to approach "mini-cult" status.

According to Execution Research, Tesco's Fresh & Easy has achieved this designation in a mere six months. And its done so by operating in only three Western U.S. markets--Southern California, the Metropolitan Las Vegas/East Valley region in Arizona, and the Las Vegas, Nevada Metropolitan area.

Not even Tesco's Fresh & Easy marketing team, who's job it is to tout the grocery chain, has made any assertions that even approach claiming the grocer is the "new cult retailer" in the U.S.

Fresh & Easy product fresher than Trader Joe's and Whole Foods

This is another major assertion. We happen to know a little about Whole Foods' fresh foods' procurement system and supply chain, and "freshness" is generally the system's first, second and third priorities.

Regarding Trader Joe's, it too has a stellar reputation for product freshness.

We aren't saying Fresh & Easy doesn't have as fresh--or even fresher product. (In fact, we are impressed with many of the retailer's fresh foods offerings.) Rather, merely that this is a bold assertion by the researcher which needs to be backed up with some data. If the study was saying Whole Foods or Trader Joe's had these superior attributes, we would asking the very same questions.

Fresh & Easy better value for shoppers' money

The data from the interviews could very well demonstrate the majority of the 700 customers interviewed outside the stores said Tesco's Fresh & Easy offers them better value for their money than Wal-Mart does. But show us the data.

Research isn't an act of faith, it's a scientific-based enterprise. Bold assertions made in the name of having a research study to back it up put the burden of proof on demonstrating such conclusions with numbers on the person or organization making such assertions.

Any trained researcher reading the Financial Times' (it's all there is since the researcher hasn't released anything to others) piece would be justified to believe its all just make believe. There's not one number, data point or percentage regarding the study. After all, Faith is a wonderful name for a girl, and hope is a great political slogan, but analysts and good consumers of research studies like data.

Nor is there any mention of the study's methodology in the FT's story, which makes us question whether the research firm shared any with the reporters. Nearly every newspaper report on a survey or study at least takes a single paragraph to mention the study's methodology. Other than the sample size and the information about the nine stores, we know nothing about the methodology.

The report says Execution Research interviewed 700 shoppers outside of nine Fresh & Easy stores in each of the regions where the stores are located. That's not a bad sampling at all. But, what type of questions did the researchers ask the customers? Did they use a questionnaire form and then tabulate it? Or did the researchers just ask questions but not write anything down?

In other words, what was the study's methodology? It's protocol? How did the researchers tabulate the data? Was there data? Did they really include all the responses in the interviews, or just the positive ones?

This lack of data leads to questions and speculation, especially when such bold assertions and conclusions as those the Financial Times is reporting were made to its reporters by Executive Research, based on its study results.

Therefore, we have three simple questions that as experienced researchers and analysts we would like to ask Executive Research about its Fresh & Easy consumer study and interviews. If these questions aren't answered, we suggest the research cannot be properly evaluated. Therefore, it's essentially worthless. If these questions are answered, and it's a real, quality, unbiased study, Fresh & Easy Buzz will sing the praises of the results in multiple stories.

Three Questions For Execution Research

>Will you publish your study and its results online so analysts, consumers and others can read it for ourselves and make our own judgements? Additionally, so we are able to see, read and study the data that's not available in the Financial Times' story?

>Was the research funded in-house by you, Execution Research Ltd., or was it funded by a client or other third party? If it was funded by a client or other third party, does that client or third party have any business relationships with or financial investments in Tesco PLC.?

Nearly every study done by companies, retailers and trade groups disclose who funded a given study as a matter of practice and professional behavior.

For example, what if the results of a survey were published that said Safeway's O' Organics brand food products were "fresher" by a significant factor than Trader Joe's, Whole Foods' and Fresh & Easy's store brand organic items are? Wouldn't everyone want to know who funded the study?

>What form of research methodology and practice did you use to arrive at the estimates, quoted from you and your report in the Financial Times' story, that "the sales densities (sales per square foot) at Fresh & Easy stores sampled were running at $6 -to- $12, with sales at some of the best stores already clocking up $12."

Even as experienced researchers it's difficult to understand how an intercept consumer or store observational research methodology could allow one to make these sales density estimates.

One could post researchers in the stores for a given period of time (say 2 hours in the morning, 2 hours in the afternoon and 2 hours in the evening), have them observe each ring at the cash register and write it down, and then use that cumulative data from all nine stores to derive a crude estimate of sales per square foot we suppose. But that isn't easy, and somehow we doubt that's what was done. It not only would be helpful to know, but interesting to learn what type of methodology you used in general.

Conclusion

Therefore, knowing this information, along with obtaining answers to questions number 1 and number 2 above, would allow experienced analysts and researchers, as well as consumers, to better understand the basis for what on the face of it appears to be not only excellent but revolutionary news for Tesco's Fresh & Easy Neighborhood Market in the U.S.

However, absent such data--at least some percentages, numbers, stuff of reality--it makes it hard for professionals to take the research report seriously.

We look forward to seeing the study posted online, and getting the answers to all three questions--as we know the many Fresh & Easy Buzz readers, along with consumers and others will as well. Thank you.

Editor's Note: Fresh & Easy Buzz wants to make it perfectly clear, as this piece states, that all of the questions, as well as the piece itself, are addressed to Execution Research regarding it's study of Tesco's Fresh & Easy grocery stores.

The piece and the questions are not addressed to Tesco PLC or its Fresh & Easy Neighborhood Market division, which to our knowledge didn't participate in or fund the study in any way, shape or form. Further, the piece and the questions aren't addressed to the Financial Times. The publication has the right, which we respect, to publish any story in any way that meets its editorial standards, just as we have the right to suggest including more about the study in their story would have illuminated the findings better in our opinion.

Virtual Ethnography: A Shopper and Blogger Named Barb Writes About Her Shopping Behavior; We Observe as the Virtual Ethnographer

Barb, who's a shopper extraordinaire, blogger and business services specialist who lives in Whittier in Southern California, writes in her blog today about her Sunday, which she calls a "Target Day," as in a day to shop at Target.

She follows that up by saying she will be shopping at her local branch of Fresh & Easy Neighborhood Market when finished at the Target store.

Barb says in her blog post about her shopping Sunday that she enjoys grocery shopping at the Fresh & Easy grocery market. She adds she buys lots of veggies at the Fresh & Easy grocery store.

Virtual ethnography

Shopper and blogger Barb has four pictures in her blog post which to us offer an interesting single source (Barb) applied virtual ethnographical look at how she shops Target and Fresh & Easy.

The blog post and pictures also offer some insight in general into Fresh & Easy shoppers, as well as offering some applied action steps Tesco's Fresh & Easy Neighborhood Market could take to nurture shoppers such as Barb. After all, good applied anthropologists should always offer suggestions for going forward as part of an ethnographic examination.

The first two pictures (the first one posted above with the groceries still in bags, the second one below with Barb's Fresh & Easy purchases laid out on her kitchen table) show all of the food and grocery products she bought today at her local Fresh & Easy grocery store.

The next two pictures, posted below one after the other, are of Barb's purchases at a Target store today. The first picture below is of her Target purchases still in the bags.

The next picture below is of Barb's purchases today from Target, with the products taken out of the bags and arranged on her kitchen table.

Virtual ethnographic analysis

First off, it looks to this observer like Barb purchased about the same quantity of products at Fresh & Easy and Target. When viewed both in the plastic shopping bags and laid out on the table, the purchase quantities look about equal. Obviously we have no idea how close in total purchase price they are.

This means she is both a primary and secondary Fresh & Easy and Target shopper. A double venue shopper or equal opportunity customer if you will.

Barb didn't purchase all of her grocery products at Fresh & Easy however. In the picture of the target purchases laid out on her kitchen table, you can see a quart of mayonnaise, a couple jars of what looks like relish and sauce, two bags and a box of snacks, a package of napkins, and some cleaning products, in terms of those items we would categorize as grocery products.

Additionally, in picture two of the Fresh & Easy purchases laid out on the table, there aren't any non-foods items except for what looks like two pie tins or pans.

The conclusion we draw from this phenomenon is that if Fresh & Easy could get the Barb's of the world to purchase a few more non-foods items, such as cleaning products and the like, at Fresh & Easy stores, they could increase their overall store ring or market basket nicely.

One way to do that might be to create some high-value coupons strictly for non-foods items such as cleaning products, paper towels, bathroom tissues, napkins and the like. These could be 40- 50% off coupons for the respective items which would generate trial because of their value.

Another way Fresh & Easy stores could increase sales in these categories to the Barb's of the marketplace is to do some better impulse merchandising of the non-foods' items in the stores, in our analysis. More food and non-food cross merchandising for example. More placement of higher-ring non-foods' items at the point-of-purchase would also work to increase sales in the categories mentioned above.

We are well aware the primary merchandising focus of Tesco with Fresh & Easy is food. However, selling more grocery and non-foods items will not only increase the stores' average ring, it also will generally help increase gross margin.

Aldi USA has figured this out well in the U.S., as we described in this piece about the small-format, no frills discount grocer we published earlier today.

One of the primary reasons Aldi USA promotes and sells an eclectic variety of non-foods and various consumer products in its stores is because such items help increase the total dollar average ring per order. They also bring new shoppers into the stores, as well as helping to convert secondary and tertiary shoppers into primary ones.

Barb's Target and Fresh & Easy shopping trips and purchases today also point to an interesting phenomenon: she is comfortable shopping for food at a small-format, limited assortment grocery store but also still loves to shop at a huge mass merchandise store like Target which offers tens of thousands of items in nearly every category.

Although as good applied anthropologists, we will caution ourselves from overgeneralizing from the specific (Barb) to the general (all consumers), this is still good news for Fresh & Easy. It demonstrates (again we aren't making a sweeping generalization) that shopping in two stores of radically different sizes and formats like Barb does isn't a foreign concept like some analysts suggest.

In fact, its our analysis that all things being equal, many U.S. customers like the idea of being able to shop at a smaller, neighborhood grocery store, while also shopping at least at least one or two mega-stores such as Target, Wal-mart or Costco.

Lastly, that Barb is a Target and Fresh & Easy lover offers an interesting observation on Fresh & Easy's positioning. Tesco has primarily positioned the small-format, combination basic grocery and fresh foods grocery stores more like a mini-Wal-Mart or Mini-Costco than the more upscale Target.

Perhaps the grocery chain needs to position and market more to the Target demographic and customer, than to the discount grocery store consumer. Again, we aren't overly generalizing, but Barb is a great subject, as she expresses herself very well in her blog post.

[We would be remiss if we didn't compliment Barb on her presentation skills in how she laid out the products from Target and Fresh & Easy on her kitchen table. She could have a very successful career in merchandising and product presentation based on the job she did in the pictures posted above and on her blog.]

Nurturing Barb, and the Barb's of the Fresh & Easy marketplace

Barb is a consumer and shopper Fresh & Easy Neighborhood Market would love to clone. (Target as well.) Not only does she regularly shop the grocery stores, and likes doing so, she even writes about it in her blog (along with pictures) in a positive manner.

Were we running Fresh & Easy, we would have a key executive contact Barb, let her know we read her blog post, and ask if she would meet us at the Whittier Fresh & Easy for lunch.

If she excepted, we would buy her lunch nearby (too bad they don't have Fresh & Easy Cafes in those stores), talk to her a bit, and when finished with lunch give her the following:

Three or four of Fresh & Easy's $5 off coupons good on any grocery order of $20.00 or more; a nice gift package of fresh & easy store brand products, including some cleaning products, as a thank you; a couple Fresh & Easy canvas tote bags, and three or four more of the cheaper Fresh & Easy synthetic bags for life. (We did notice all the single-use plastic carrier bags in Barb's pictures.)

We also would ask Barb if a member of the Fresh & Easy marketing or research team could hang out with her one day soon on her shopping trip to first Target and then to the Fresh & Easy, along with spending a little time with her when she brings the grocery products home.

We would use this time with Barb to observe her shopping, staying out of her way like a good participant-observer should, talk to her, asking some questions, and then following-up with her while we help her put away her groceries at home. Maybe spend about 3 hours with her that day.

Some may laugh when they read this. However, it's invaluable. Just ask Proctor & Gamble, which has made such applied anthropologically-oriented ethnographic research a central part of its marketing research program.

P&G has employees go shopping with customers, spend time with them in their laundry rooms washing clothes, and even spending an entire day and overnight with a family at their house observing their consumer behavior vis-a-vis the numerous categories and products P&G for consumers.

[If you want to learn more about the applied consumer-centric anthropological and ethnographic research P&G is doing, the company's CEO A.J. Laffey has a new book out called "Game Changer." The focus of the book is on driving revenue and profit through innovation. In the book Laffey talks about the various forms of what we call consumer-centric applied anthropology and ethnography which P&G is using, and how it has and is paying off for the company.]

The more Tesco's Fresh & Easy Neighborhood Market can learn about the Barb's of the marketplace--what they like, why they like the stores, and what could be better--the better they can customize their offering and target consumers, which the retailer needs to do a better job of.

We will be interested as applied anthropologists to see if Fresh & Easy does a little nurturing of Barb, both for its benefit and of course for hers too.