General Merchandise 'Growing Legs' at Tesco's 'Food-Focused' Fresh & Easy Neighborhood Market

Merchandising at Tesco's Fresh & Easy
News/Analysis/Commentary

Tesco is hoping the addition of more general merchandise items to its 175 Fresh & Easy Neighborhood Market stores in California, Nevada and Arizona, along with featuring items in the category more prominantly in displays, will help it grow the average market basket size purchases (the amount spent on each store visit) its customers make.

The more money a shopper spends each time he or she visits a grocery store is important in the grocery business because retailers operate on extremely slim profit margins, which are reduced even further by the items promoted each week in advertising circulars and in-store, along with - and particularly in Fresh & Easy's case because it uses them as a regular part of doing business - other vehicles like discount store coupons, in which the discount percentage comes out of the grocer's profit margin.

What grocers want customers to do is, along with buying the items offered on promotion and the basics on their shopping lists, to also pick-up impulse items offered for sale at full margin, such as that decadent chocolate cake from the bakery, a couple pints of Ben & Jerry's ice cream from the freezer case, a prepared meal from the deli, and household items like can openers and cooking pans, for example.

For those of you not familiar with the ways of grocery store merchandising, this is why you see inviting (and often higher retail priced) food and non-consumable impulse-oriented items like fresh flowers displayed in can't miss locations inside supermarkets, as well as why those useful household items like wine cork openers and ice cream scoops are displayed on clip-strips next to compatible grocery products on store shelves. It's all about getting shoppers to buy more items, hopefully at full margin, than they planned to before entering the store.

For example, in a May 3, 2011 story - Tesco's Fresh & Easy Neighborhood Market Launching 'Clip-Strip' Cross-Merchandising Program in Stores - we reported Fresh & Easy Neighborhood Market was launching a clip-strip merchandising program in its stores, featuring an assortment of general merchandise items.

The general goal of such programs, which nearly every U.S. grocery chain uses in one form or another, is to create added sales by placing items on shelving strips throughout a store, tied-in to compatible products on store shelves, as a way to encourage shoppers to buy an item or two (or more) on impulse.

Who doesn't need another ice cream scoop, for example?

And there's always a better corkscrew than the one you've been using at home for five years.

How about measuring cups for the kitchen? Can never have enough of those, right?

Then there's the toys. Kids are the original impulse shoppers after all, regardless if mom likes it or not, although grocers need to be careful and not go to far with the toys, since mom may decide to shop elsewhere.

Since we reported on and detailed the new clip-strip program at Tesco's Fresh & Easy in our May 3 piece, we've noticed in our coverage of the food and grocery chain that its merchandisers and retail operations chiefs have been adding additional general merchandise items to the stores, displaying the products on end-caps and, in the words of one of our correspondents, on "clip-strips with legs."

For example, below is one of those "clip-strips with legs" that recently sprouted in most of the 175 Fresh & Easy stores. The photograph (as were the other two below) was taken by a Fresh & Easy Buzz correspondent in one of the grocery chain's stores last week.

The clip-strip rack, which includes kitchen items like ice cream scoops, pizza cutters, kitchen shears and measuring spoons, is attached to an end-cap display that features a variety of consumable and general merchandise items, all with a picnic or cookout theme.

Tesco's Fresh & Easy is also currently featuring general merchandise items on two end-caps in its 10,000-12,000 square-foot stores.

The end-cap above features a variety of household and kitchen-oriented items - glass tumblers, bowls, serving trays, paper pates, napkins and flatware.

Also notice the related items on the "clip-strip with legs" on the side of the display above.

On the second end-cap (below), Fresh & Easy is offering an assortment of reusable carry bags in a variety of different sizes, shapes, colors and price-points.

The clip-strip (including the ones with legs) and end-cap display programs are chainwide at Tesco's Fresh & Easy.

Fresh & Easy Neighborhood Market has had a general merchandise in-and-out merchandising program operating in its stores for some time. However, the current clip-strip and display programs are the most extensive general merchandising offerings, particularly in terms of store square-footage and display space, we've seen in the stores since we began covering the grocer in late 2007.

Analysis & Commentary

We offer three merchandising takeaways from Fresh & Easy's new strategy of increasing both the number of general merchandise items it offers in its stores and the more prominant display space the grocer is giving the category and items:

>When Tesco launched Fresh & Easy in November 2007, its merchandising plan was for the stores to be almost completely food-focused, offering only a very limited assortment of general merchandise items in the grocery markets, along with devoting very little if any off-shelf display space to the category.

That merchandising strategy has changed completely.

As you can see from our reporting here and in May, Fresh  Easy Neighborhood Market has embraced the general merchandise category, at least in a clip-strip and in-and-out off-shelf merchandsiing way, fairly strongly.

>Fresh & Easy's adding of the clip-strip program and increased displaying of general merchandise items on store end-caps, which is something nearly every U.S. grocer does to various degrees, demonstrates Tesco is begnnng to realize nearly four years after launching that it might be wise to emulate successful merchandising programs that have been tried and true in the U.S. food and grocery retailing industry for decades.

The big question with this form of imitation though is: Does it fit with the Fresh & Easy format? Our answer is no.

However, if it helps Tesco increase sales and average market basket purchase size in its Fresh & Easy stores, then at this point in the game for the retailer, whether the general merchandise push fits with the format or not is really a moot point. Although it is an important merchandising question in terms of its working because such programs, when not compatible with a given format, can end up as more of a negative than they canbe  a positive for a grocery chain.

But Tesco has entered "crunch time" with its Fresh & Easy Neighborhood Market chain, which it says will break even with by the end of its 2012/13 fiscal year, a mere 21 months from now. Most recenty it lost $300 million on Fresh & Easy, in its 2010/11 fiscal year, which ended February 26, 2011.

Therefore it's probably wise to experiment as much as it can from a merchandising standpoint if it hopes to come close to break-even in 21 months.

>Lastly, will the increased general merchandise product selection (clip-strip program) and display focus in-store help Fresh & Easy to increase average market basket purchase size and therefore assist in increasing same or comparable store sales at the chain?

It's impossible to tease out to any precise degree how much a given merchandising program can contribute to those two metrics, unless such a program is a major one and there aren't numerous other merchandising changes going on at a chain at the same time.

Neither is the case with Fresh & Easy. The general merchandise program is small and incremental-oriented, although still significant.

It's also one of numerous changes and additions Tesco is currently making at Fresh & Easy Neighborhood Market.

We broke the news about the major changes planned for Fresh & Easy in these two stories -  April 12, 2011: Fresh & Easy Neighborhood Market to Shrink Health & Body Care Sections in Stores; Add Candy and Snack Items, and May 18, 2011: Major Changes Coming to Tesco's Fresh & Easy Neighborhood Market Stores - in fact.

Fresh & Easy is starting the health and personal care category section and bakery category section resets and additions in selected stores this month, according to our sources.

On Tuesday, Tesco reported an 11.1% first quarter gain in comparable-store-sales for its Fresh & Easy Neighborhood Market chain. As we noted in our story here - June 14, 2011: Tesco Reports First Quarter Comparable Sales Growth of 11.1 % For Fresh & Easy Neighborhood Market - the gain is significant for the chain despite the deep-discounting that helped Fresh & Easy achieve the boost.

But many problems and struggles remain, including: sustaining that comparable-store-sales gain, increasing sales at numerous under-performng stores and dramatically raising Fresh & Easy's whopping negative-38% margin, to name three

Tesco is counting on the general merchandise emphasis and the other changes and additions detailed in the stories linked above, along with the continued use of its discount coupons and other promotional vehicles - plus a new television adverising campaign it's preparing to launch in Southern California, where 101 of the 175 Fresh  Easy stores are located - to keep comparable-store-sales at Fresh & Easy growing at or near double-digits between now and the end of its 2012/12 fiscal year, when CEO Philip Clarke says the United Kingdom-based global retailer will break-even with its U.S. chain.

Related Stories

May 18, 2011: Major Changes Coming to Tesco's Fresh & Easy Neighborhood Market Stores

May 3, 2011: Tesco's Fresh & Easy Neighborhood Market Launching 'Clip-Strip' Cross-Merchandising Program in Stores

April 12, 2011: Fresh & Easy Neighborhood Market to Shrink Health & Body Care Sections in Stores; Add Candy and Snack Items

Also see these links - buying and merchandising, category merchandising, clip-strip programs, deep discount coupons, grocery merchandising, store discount coupons Category Management Report, HABC category, resets - for more related stories.

Tesco's Fresh & Easy Neighborhood Market Launching 'Clip-Strip' Cross-Merchandising Program in Stores

Breaking Buzz
News & Analysis - Merchandising

Tesco's  Fresh & Easy Neighborhood Market is launching a "clip-strip" cross-merchandising program in its stores, featuring a selection of numerous packaged general merchandise items like kitchen gadgets, cookware, toys and other products, merchandised on plastic "clips" attached to grocery shelving strips throughout the aisles.

The general merchandise "clip-strip" program was launched in the first batch of Fresh & Easy stores a little over a week ago, and is being implemented in all of the grocer's 175 units in California, Nevada and Arizona.

Tesco's Fresh & Easy Neighborhood Maket has not announced the new merchandising program publicly.

The general merchandise products are supplied to Fresh & Easy Neighborhood Market by distributor ATA, which for many years has implemented similar "clip-strip" and "j-hook" merchandising programs for grocery chains - Kroger Co. and Safeway Stores, Inc. are two examples -  independent grocers, drug stores, convenience stores and mass merchandisers.

ATA, which was founded in 1991 by Sumner Bennett and has distribution centers in Hayward, California and Nashville, Tennessee, is also a full-service "rack-jobber," meaning it offers merchandising services for its "clip-strip" programs, providing the labor to stock and replenish the general merchandise items for retailers. ATA is providing this service for Fresh & Easy Neighborhood Market.

As you can see in the photographs accompanying the story, the general merchandise items are cross-merchandised throughout the Fresh & Easy stores. In the stores we visited, the only sections without the "clip-stripped" products were the refrigerated/frozen food cases and fresh produce.

The philosophy and strategy behind "clip-strip" merchandising programs, which U.S. grocery stores have been using for many decades, is to create impulse sales by cross-merchandising related non-food and consumable items (as you can see in the photos) adjacent to compatible products on the shelves, in order to generate added impulse sales from shoppers. Cross-merchandising wine bottler openers next to wine and champagne (see the photo below), for example, frequently results in these types of impulse purchases by shoppers.

A number of grocers (some of Safeway's divisions, for example) also include higher-ring, higher-margin consumable items in their "clip-strip" programs, such as packaged sun dried tomatoes, dried mushrooms and gourmet dry-sauce mixes (near dry pasta), in order to achieve the same objective - impulse sales from shoppers.

All of the items we saw in the Fresh & Easy stores we visited were non-consumable, general merchandise products, however, which isn't uncommon, as numerous other grocers do the same.

Launching the "clip-strip" cross-merchandising program and using ATA to handle it is a good idea for Tesco's Fresh & Easy for a variety of reasons - although because of the limited and incremental nature of such programs it will result in minor overall added sales for the grocery chain.

First, Fresh & Easy needs to increase its customer average market basket size - the dollar amount of groceries a shopper buys during a visit to one of the stores. Therefore, any form of merchandising - and particularly a cross-merchandising-oriented effort like the "clip-strip" program that has the potential to add impulse purchases to customers' regular, planned item purchases - is a net positive for the grocery chain.

For example, suppose Jane A. Customer buys $20 dollars worth (planned purchase) of food and groceries at her local Fresh & Easy market. But while shopping in the store's aisles, she notices a wine opener, a plastic cat food can lid and a plastic "Pop Tart" container - all of which are currently available on "clip-strips" in the stores we visited - and tosses the three items in her shopping cart, which total, say, $7, bringing Jane's average market basket order for that particular shopping trip to $27, rather than the original $20 she planned to spend.

The result: An added $7 Jane might not have spent if the "clip-strip" program didn't exist at Fresh & Easy - as was the case until now - along with offering a potentially higher average market basket (purchase) for the store.

Additionally, "clip-strip" programs utilize available shelf space because the items are attached to the grocery shelf strips, thereby adding incremental sales without any additional cost to the retailer of added shelving or fixtures.

If the items sell well in a store, they also add to the store's average sales-per-square-foot metric, since the "clip-stripped" items are offered within a store's existing walls.

The "clip-stripped" general merchandise items, which are rotated periodically, are also almost always offered on a "guaranteed sale" basis by ATA and other distributors. In other words, if certain items don't sell over a given period of time, they're either traded out by the distributor for different items of equal dollar value or credited on the invoice to the grocer by the distributor.

Further, when grocers select to take the full-service merchandising service offered by ATA and other "rack jobbers," for "clip-strip" programs, that means the distributor sends merchandisers into the stores to stock and replenish the general merchandise items on a regular basis, which means no labor cost for the grocer. ATA is providing this service-level to Tesco's Fresh & Easy.

Lastly, the programs also offer advantageous seasonal opportunities for grocers. For example, in the summer months, items related to outdoor activities - picnics, cookouts - can be featured on the shelf strips next to related food and grocery items like condiments, beverages, hot dog and hamburger buns and others. Doing this takes advantage of seasonality to spur impulse sales.

The "clip-strip" item selection can also be partially geared to neighborhood demographics. For example, if a grocer desires to, it can have ethnic-oriented general merchandise items included in the overall merchandise  mix, say for its stores in neighborhoods with high Latino or Asian populations. Chopsticks are a good example, as are tortilla warmers.

And let's not forget the toys - a selection of which are almost always included in grocery store "clip-strip" programs, including the one being launched at Tesco's Fresh & Easy - frequently to the displeasure of mothers and fathers who take the kids grocery shopping.

Toys, largely because of those little customers sitting in the shopping cart child-seats, often are among the best-selling general merchandise products offered in "clip-strip" programs, regardless of where the items are placed on the shelf strips in stores.

But placing toys in, for example, the breakfast cereal aisle, and clipped on the shelf strip eye-level to a child sitting in a shopping cart seat, generally is a good bet if a grocer wants to generate some solid impulse sales.

According to our sources at Fresh & Easy Neighborhood Market, most of the 175 stores should have the "clip-strip" programs in place by the end of this week.

Additionally, new Fresh & Easy stores will include the cross-merchandised. "clip-strip" program and items in the stores when they open.

The "clip-strip" program won't cure Tesco's financial problems with Fresh & Easy's Fresh & Easy Neighborhood Market. [See -  April 19, 2011: Tesco's Fresh & Easy Neighborhood Market Posts Biggest One-Year Loss Yet - $307 Million Loss on Sales of $818 Million.]

But it and similar merchandising programs - along with making some major changes at Fresh & Easy - are essential for Tesco if it wants to come close to breaking even with its U.S. fresh food and grocery chain by the end of its 2013 fiscal year (just 23 months away), as CEO Philip Clarke says it will do.

Fresh & Easy Neighborhood Market Launches 'Extra-Low Every Day Low Price' Merchandising Program

Private brands & grocery merchandising
News/Analysis

Tesco-owned Fresh & Easy Neighborhood Market today launched a new everyday low-price-oriented merchandising program in its 156 stores in California, Nevada and Arizona, in which it's guaranteeing the shelf prices on a selected number of its private brand items for an extended period of time. Fresh & Easy is calling the shelf prices on the selected group of items: "extra low every day."

Among the first batch of products included in the program include: 'fresh&easy' apple juice, in a 64 ounce bottle ($1.99); a multi-pack of 'f'resh&easy' brand bone-in loin pork chops ($1.99 pound); a multi-pack of 'fresh&easy' chicken breasts (1.99 pound); and assorted varieties of 'fresh&easy' packaged pasta (99 cents each).

Additional private brand items in the new everyday low-price-oriented program include various varieties of fresh&easy brand packaged cheese, ice cream, pre-packaged fresh lettuce items, and bagged vegetable steamers.

The shelf prices on the first batch of private brand items in the new everyday low-price-oriented merchandising program, which have shelf signs featuring the item price and the words "every day" below it, are guaranteed for about two months - from today -to- March 22, 2011. After March 22 Fresh & Easy reserves the right to raise the prices on the products, although it may or may not do so.

Based on our research, the shelf prices on the items listed above with the "extra low everyday low-prices" listed are the same as they were before Tesco's Fresh & Easy launched the program this week. That's not to say the price points are good or bad. Rather, its to say the price points on those specific items weren't lowered from what the shelf prices were a few weeks ago. The pasta price of 99 cents a unit everyday is excellent, for example. On the other hand, a number of the other items are about the same as what nearly all of Fresh & Easy's competitors offer on their respective private brands of the same variety.

The key proposition in the new merchandising program though, in our analysis, is the "price guarantee," in which the grocer is pledging not to raise the "extra low every day" shelf prices on the selected items for a given period of time.

EDLP, high-low, or both?

At first blush Fresh & Easy's new everyday low-price-oriented (EDLP) merchandising program looks like a move by the grocer to become more of an EDLP operator, rather than the hybrid EDLP/high-low grocer it currently is.

However, that's not the case. In addition to launching the merchandising program in the stores this week, Fresh & Easy Neighborhood Market also distributed a spate of its deep-discount store coupons today, which included a $6-off purchases of $30 (20%-off) or more coupon online and a $5-off purchases of $2o (25%-off) or more in its direct-mailed paper advertising circular.

The grocer also continues to distribute an online and direct-mailed weekly promotional circular, which features various items at reduced prices for a one week period of time.

The deep-discount store coupons, which can be used by shoppers on any of the retailer's private brands or manufacturer brands offered in the Fresh & Easy markets - the coupon amount is taken off customers' total grocery order purchase - is a promotional device and therefore part of high-low food and grocery retailing philosophy and practice - particularly because Fresh & Easy uses the coupons regularly - rather than a merchandising philosophy normally associated with EDLP grocers.

Many high-low retailers, such as Walmart and WinCo Foods, to name two that operate in the same markets as Tesco's Fresh & Easy Neighborhood Market does, use promotional mailers, coupons and other promo devices occasionally, but not on a regular basis like Fresh & Easy does. These retailers focus primarily on everyday low shelf pricing, using promotions at times as a device to stimulate customer draw and sales.

Fresh & Easy, on the other hand, is what we call a mixed or hybrid EDLP/high-low operator because the grocer uses the EDLP philosophy and practice and the high-low promotional variant equally in its stores.

It is our analysis though that Fresh & Easy Neighborhood Market CEO Tim Mason and his senior executive team, at least conceptually, have launched the "extra low every day low prices" merchandising program in the hope if it's successful down the road it could allow the grocer to stop distributing its deep-discount store coupons on a regular basis, as it has been doing chronically since 2008.

The 20% and 25%-off coupons take a big bite out of the fresh food and grocery chain's overall margin, which currently is in the cellar, at a negative-38%. Mason and company must get this margin up significantly, say at least in the low plus-twenty percentile, in order to have a chance of ever making a profit with Fresh & Easy, in our analysis.

Tesco has set the end of its 2012/13 fiscal year, a little over two years from now, to break-even with Fresh & Easy Neighborhood Market. Tesco lost $151 million on Fresh & Easy in the first half of its current fiscal year - 2010/11. The current fiscal year is over at the end of February 2011.

Significantly reducing the frequency of, or eliminating completely, the deep-discount store coupons will be a tough slog for Fresh & Easy though because, by using them so regularly, the chain has created a perception among shoppers that the vouchers, and the 20%-25% discount (if used to buy the minimum dollar purchase required) they offer, is a normal part of the grocer's pricing policy. In other words, a perception exists among customers, in our observation and analysis, that without the coupons the prices at the Fresh & Easy stores are too high.

The evidence of this phenomenon is two fold: When in the past Fresh & Easy tried to not use the store coupons for a couple months in 2009, sales in the stores dropped, and customers complained about the lack of coupons to the grocer in huge numbers, many saying that without the coupons they were not shopping in the stores or buying much less when they did shop at Fresh & Easy.

The retailer responded to these twin developments in 2009 by resuming regular distribution of the discount coupons, something its continued on a regular basis ever since, including this month.

Extra-low - everyday

Obviously it's too early to offer an analysis on the efficacy of Fresh & Easy Neighborhood Market's new everyday low-price-oriented merchandising program, since it is just starting. However, we can see pitfalls with the program, as well as some potential positive opportunities.

Overall though, it's our analysis right now that the program isn't going to have any material benefit on Fresh & Easy's sales. Even more important - and obvious - it will do nothing directly to help increase the grocery chain's gross margin.

The program could over time possibly help create a better overall customer price perception of Fresh & Easy. However, a true picture of how the stores can do will not come until the grocer stops - and perhaps it never will - using the deep-discount store coupons on a chronic basis.

For example, Fresh & Easy seldom lets more than two or three days pass between the expiration date of a batch of coupons and the distribution of a new batch. A good test would be to issue the coupons for just one week out of each month. Then we could see how the stores do for the other three weeks out of the month when the coupons offering 20%-25%-off shoppers' total grocery purchases aren't available.

We don't see this happening though. Why: Because it's our analysis that without the regular distribution of the coupons as described above, sales at the Fresh & Easy stores would drop substantially, despite the fact the everyday prices in the stores are decent, and despite the fact the chain distributes a decent promotional circular each week.

It's not too early to offer this, however: What we call the "Fresh & Easy coupon conundrum"and the associated issues described above is something incoming Tesco CEO Philip Clarke, who takes over the corner office at Tesco's corporate headquarters in the United Kingdom in early March, should be very concerned about.

Related Stories

Click on the following links - corporate merchandising, deep discount coupons, grocery merchandising, private brand showcase, promotional merchandising, store discount coupons, Fresh and Easy promotional-ad flyer, Fresh and Easy $6-off store coupon - to view a selection of related stories in Fresh & Easy Buzz.

Ex-Trader Joe's VP, Winn-Dixie Exec Larry Biggerstaff New Director of Grocery at Tesco's Fresh & Easy Neighborhood Market

The Tesco corporate flag flies at full staff over corporate headquarters in Cheshunt, United Kingdom. With divisions and stores in Europe, Asia and the United States, the sun seldom sets on the Tesco flag.

Breaking Buzz -- and Analysis

Rather than replacing its former director of grocery buying and merchandising, Sean McCurley, with an executive from its United Kingdom headquarters, Tesco has hired Larry Biggerstaff, a grocery buying and merchandising executive and manager with extensive experience in the U.S. food and grocery retailing industry, as the new director of grocery at El Segundo, California-based Fresh & Easy Neighborhood Market USA, Fresh & Easy Buzz has learned.

We broke the news of former grocery director McCurley's departure, to return to Tesco in the United Kingdom, in a May 2010 story, which you can read here: May 23, 2010 - Director of Grocery Sean McCurley Leaving Fresh & Easy Neighborhood Market to Return to Tesco in the UK.

Tesco's Fresh & Easy has been without a director of grocery since then.

Since Sean McCurley's departure months ago, there's been considerable speculation in certain circles in the UK and U.S. that Tesco would replace him with someone from its UK headquarters. But that's not the case...this time around.

Fresh & Easy Neighborhood Market hasn't announced the hiring of Biggerstaff as its director of grocery.

Larry Biggerstaff hasn't personally announced his new job or new employer yet either. For example, on his Linked-In.com profile page, as of the time (10:02 pm) this story was published today, he has listed as his current position the 'to be announced' as shown below (in italics) directly from the Linked-In page:

Larry Biggerstaff
Grocery Executive at TBA - September 2010
Location
Greater Los Angeles Area
Industry
Retail

Prior to accepting the position as director of grocery with Tesco's Fresh & Easy, Biggerstaff was the vice president of merchandising at Morovia, California-headquartered Trader Joe's, although his time with the iconic Southern California-based grocery chain of about 315 stores was brief.

Before joining Trader Joe's, Larry Biggerstaff was senior director of grocery, dairy, frozen, alcohol and tobacco at Jacksonville, Florida-based supermarket chain Winn-Dixie. In that position he had overall responsibility for all of the chain's buying and merchandising in those respective categories. Before assuming the senior director position at Winn Dixie, he was the director of category management at the chain.

While at Winn-Dixie, Biggerstaff, who attended Western Michigan University, graduated from the 'Retail Masters Program,' class of 2008, sponsored by the Florida Retail Federation.

Biggerstaff has also worked as a category manager for mass-merchandise chain Target, and as a category manager and logistics director for Walmart's Sam's Club membership warehouse chain.

Tesco's Fresh & Easy divides its corporate grocery buying and merchandising function (which it calls 'commercial,' using the British industry term) into two functional areas, grocery (which it calls ambient, again using the British industry term) and fresh (for fresh foods). We use U.S. industry terminology in Fresh & Easy Buzz.

The fresh department includes produce, meat and deli/fresh-prepared foods. Grocery includes all ambient packaged grocery and non-foods products, along with beer, wine and spirits. Packaged perishables like frozen food also are part of grocery.

John Burry, who is one of the original Tesco UK transplants who came to America to start up Fresh & Easy in 2006-2007, is the senior executive in charge of the grocery merchandising and buying (commercial) function at the fresh food and grocery chain, which is based in El Segundo, California, and has 163 stores, with five new units opening on September 15 (2 stores) and September 22 (3 units). Four new stores opened on September 8.

In December 2009, Jim Jensen, the former director of fresh at Fresh & Easy, left the chain to take a job heading up Walgreen Drug Co.'s new fresh foods program, joining former Fresh & Easy Neighborhood Market senior vice president of retail operations Brain Pugh, who had previously joined the drug chain to head up its expanded grocery merchandising and retailing efforts.

We broke that news of Jim Jensen's departure, and his joining Walgreens, in this story - Breaking Buzz: Corporate Director of Fresh Foods Jim Jensen Leaves Tesco's Fresh & Easy - on January 6, 2010. Also see this story - January 21, 2010: Walgreens Announces Hiring of Former Fresh & Easy Fresh Foods Director Jim Jensen; Confirms Our January 6 Report.

Additionally, Fresh & Easy Buzz was the first publication of any kind to report on Brian Pugh's sudden departure from Tesco's Fresh & Easy in this September 22, 2008 story: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market.

Pugh was hired by Walgreens in late 2008. See our stories - December 22, 2008: Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position and March 2, 2009: Walgreens Promotes Former Tesco Fresh & Easy Exec Bryan Pugh to VP Merchandising Position; Move Fits Drug Chain's Current Strategic Focus - for details.

Tesco's Fresh & Easy Neighborhood Market replaced Jim Jensen as director of fresh foods, who spent all of his career in the U.S. retail food-grocery and convenience store industry, including working as a category manager for 7-Eleven, with Tim Lee, who prior to coming to Fresh & Easy earlier this year was a long time category executive and manager at Tesco's headquarters in the UK. The Fresh & Easy position is Lee's first in the U.S.

Tim Lee's specialty at Tesco's corporate headquarters in the UK, where he was a produce category procurement director, was fresh produce. There Lee and another Tesco produce category procurement director, Alex Dower, launched Tesco's global fresh produce sourcing buying and supply chain initiative in about mid-2009. The initiative focuses on direct procurement of fresh produce for Tesco stores in the UK and continental Europe. Lee's responsibilities included setting up satellite offices in growing and sourcing regions around the world and staffing the offices with technical specialists and produce buying teams.

Lee was a key force behind Tesco's buyout of Fresh & Easy's produce and meat suppliers, Wild Rocket Foods (fresh produce) and 2 Sisters Food group (fresh meat), earlier this year. The buyout, which Tesco director and Fresh & Easy Neighborhood market CEO Tim Mason said cost "tens of millions of dollars"happened shortly after Lee arrived at Fresh & Easy from Tesco UK and assumed the director of fresh position.

Lee is also a key force behind Fresh & Easy's recent (July 2010) expansion of its 'Farm to Store in 24' locally-grown produce program. Direct procurement (think the the Wild Rocket buyout) and locally-grown produce (think 'Farm to Store in 24') were two of the programs Tim Lee worked on and developed in his position at Tesco UK. [Read: June 21, 2010: The Missing Link in Tesco's Purchase of Fresh & Easy Neighborhood Market Meat Supplier '2 Sisters Food Group' and June 9, 2010: Key 'Veteran' Fresh Produce Category Manager Chris Harris Leaves Fresh & Easy Neighborhood Market]

After Sean McCurley left Fresh & Easy to return to Tesco in the UK, we suggested Fresh & Easy Neighborhood Market replace him with a director of grocery who has extensive experience in the U.S., particularly in the Western U.S. and especially in California. The grocery chain has done that to a significant degree, although Larry Biggerstaff's experience in the Western USA is limited. But it is in the U.S.

Former director of fresh foods, Jim Jensen, has a U.S. food and grocery retailing background. His replacement, Tim Lee, has a United Kingdom industry background.

Former director of grocery, Sean McCurley, has a UK-only background, while Larry Biggerstaff has spent his entire career in the U.S.

All things being equal (like individualism and performance), perhaps Tesco has found a good balance in its new (Biggerstaff) and fairly new (Lee) directors of grocery and fresh foods. One (Lee) has Tesco experience and the other (Biggerstaff) has a long track record of experience in U.S. food and grocery retailing.

Fresh & Easy Neighborhood Market Promotion Benefits America's Wounded Warriors

Promotional Merchandising - For A Good Cause

Tesco's Fresh & Easy Neighborhood Market is teaming up this week with global consumer packaged goods giant Unilever, in a promotion to support Operation Homefront, a non-profit organization that provides financial and other forms of assistance to U.S. military troops, their families at home, and to America's wounded warriors returning home from the wars in Iraq and Afghanistan.

From Wednesday, May 12 -to- May 18, the fresh food and grocery chain will donate 25 cents to Operation Homefront, up to a total of $15,000, for each of the Unilever-owned and marketed food, grocery and non-foods branded items advertised in this weeks Fresh 7 Easy advertising flyer.

Unilever brands featured in the promotion include the following consumables: Country Crock and I Can't Belief It's Not Butter (margarine); Best Foods (mayonnaise); Wish Bone (salad dressing); Skippy (peanut butter); Ragu (pasta sauce); Lipton (tea and soup mix); Breyers (ice cream); and Knorr (bullion and pasta side dishes).

Additionally, Unilever's Dove brand Men's Body Wash and Body Bars, and its Suave brand Body Wash are included among the advertised items in the promotion, which is headlined: "Bring Home Any of these U.S. Favorites and We'll Donate 25 cents to Operation Homefront."

The Unilever-owned brands all are among the top selling in the U.S. in their respective categories. Unilever, which has 163,000 employees worldwide and sells its brands in 170 countries, is headquartered in the Netherlands. The U.S. is its number one market in terms of annual gross sales volume.

Like Unilever, Fresh & Easy parent Tesco, which is headquartered in the United Kingdom, is a global company. Tesco has about 400,000 employees worldwide. It's Fresh & Easy Neighborhood Market USA chain is based in El Segundo, (Southern) California.

It's good to see two global giants - one, Unilever, a top-three global consumer packaged goods company, and the other, Tesco, the fourth-largest retailer in the world - donating money out of a promotion to a great organization like Operation Homefront, which serves as a lifeline for U.S. troops and their families.

Operation Homefront has been particularly vital over the last nine years, during which America's all-volunteer fighting force has been engaged on two war fronts - Afghanistan and Iraq. So many wounded warriors have returned home from these two wars. The organization has been key in easing their transition, in advocating for them, and in helping their families cope.

We can say from experience that the $15,000 donated by Tesco's Fresh & Easy to Operation Homefront will be put to immediate, practical use by the organization to aid U.S. soldiers and their families.

[In fact, we suggest Tesco plc and Unilever both consider matching the $15,000 Fresh & Easy Neighborhood Market maximum donation to Operation Homefront. We suggest this because the organization needs as much assistance as it can receive. The $45,000 could be put to good use right away. Readers, if you would like to help Operation Homefront, it's currently in immediate need of various forms of assistance, which you can learn about by going to its website here.]

One of Operation Homefront's four current corporate sponsors is Walmart Stores, Inc. Others are: Outback Steakhouse, Jim Beam, and technology company BAE Systems. We suspect the group would welcome additional corporate sponsors.

Supplier-retailer leveraged promotions

Fresh & Easy Buzz is a big fan of what we term "supplier-retailer leveraged promotions," and we've suggested for some time it's something Tesco's Fresh & Easy needs to do semi-frequently on its manufacturer branded (as opposed to private brand) side of the business.

As an example of the power of such promotions, in which the supplier funds a part of the promotion - in the current Fresh & Easy promotion this week it being the 25 cent per item purchased donation to a great non-profit group - read this April 2009 piece [Competitor News: Safeway Leverages Supplier Promo Monies to Fund 'Living Well Feeling Great' $10 Store Coupon On $30 Purchase Promotional Program] from the blog.

Cause-focused promotions like this one are great, as they allow the retailer - and shoppers - to step outside of themselves and give to a good cause while at the same time getting useful products at sale prices. Win-win comes to mind.

A solid A grade

We award solid grade of A to Tesco's Fresh & Easy and Unilever for the "Bring Home U.S. Favorites" promotion to benefit Operation Homefront, which starts tomorrow.

Click here to view the promotion in Fresh & Easy's advertising flyer, which is effective starts tomoor, may 12 and ends on May 18.

Fresh & Easy Buzz Linkage:

[Click here to view a selection of past Fresh & Easy Buzz stories and posts about promotional merchandising by Tesco's Fresh & Easy and other grocers.]

A British Grocer in King Arthur's Court? Trader Joe's is Ending its Long Relationship With King Arthur Brand Flour ... Enter Tesco's Fresh & Easy ...

Food and Grocery Merchandising in a Land Called America

King Arthur brand Flour is considered by the culinary-informed to be arguably the finest quality baking flour in the land.

Not so many years ago finding King Arthur Flour at retail was quite a chore, it then generally being sold only at specialty stores and more upscale and specialty foods-oriented supermarkets. You know, those us common folk only shop at on special occasions.

Despite that fact, many King Arthur brand-loyal subjects (consumers) in the land called America sought out the flour anyway, often traveling for many miles in their four-wheeled chariots to a store that sold King Arthur Flour. Others went right to their local grocer and asked him to carry it, which many then did -- and do.

But then the bakers, the packagers and the marketers that comprise the King Arthur Flour company -- which is employee-owned -- joined forces with what then was a small chain of specialty grocery stores named Trader Joe's. The Trader and the King; a perfect match thought many of the loyal subjects of the brand.

Then like bread dough rising on a warm cupboard, Trader Joe's grew and grew, in the process introducing more and more subjects in the land called America to the King Arthur Flour brand -- and making it easier for the brand's already many brand-loyal subjects to get their King Arthur Flour closer to home, since Trader Joe's was spreading throughout the land. And unlike at the upscale stores, subjects of all classes trade with the Trader.

And as Trader Joe's grew in size, popularity and store-count, other grocers throughout the land -- not just the upscale royalty of the food retailing world -- also started carrying King Arthur Flour on their store shelves. What was once royal in terms of retail distribution was becoming much more common.

But the Trader still stood alone as a key retailer of King Arthur Flour. And for years the relationship between the employee-owned company and the specialty grocer thrived.

But alas, like happens in many relationships, King Arthur and the Trader are now parting company. Trader Joe's has decided to stop carrying King Arthur Flour in its about 304 specialty grocery stores located throughout the land called America.

Below (in italics) is what the "Baker-Bloggers" at King Arthur Flour are saying about the end of the Trader Joe's relationship this week in a post titled, "Say it ain't so, Joe's," in their "Bakers' Banter" company Blog:

"Breaking up is hard to do.

Just ask all of us here at King Arthur Flour. We’re suffering the heartbreak of a broken relationship.

We’ll survive. Everyone does. And someday we’ll think back on this time with fond nostalgia.
But right now, it hurts.

A number of years ago, when King Arthur Flour wasn’t a widely known national brand, we joined forces with a not-quite-ready-for-prime-time grocery chain. It was a match made in heaven. We needed distribution in other areas of the country; Trader Joe’s needed a quality flour to anchor their baking aisle.

We started a business relationship.

And the rest, as they say, is history.

King Arthur Flour, thanks in part to our exposure in Trader Joe’s, is now available at supermarkets across the land. Wherever you live, there’s a market selling King Arthur Flour somewhere fairly close by."

But wait... As they say, when one door closes, perhaps a new one opens?

About 18 months ago a grocer from Britain, a land that knows a thing or two about Kings, road into America and opened its first small-format combination grocery and fresh foods stores, which many say are one-part Trader Joe's and one-part mini-Costco's. And they aren't just for royalty either. Rather, the stores welcome the masses, boldly proclaiming "Fresh & Easy is for everybody."

Today that grocer, Tesco's Fresh & Easy Neighborhood Market, has 115 of those little (10,000 -to- 13,000 square-feet) grocery stores -- not as many as Trader Joe's (yet), and the Fresh & Easy stores are only in three states -- California (Southern California and Bakersfield so far), Nevada (Metropolitan Las Vegas) and Arizona (Metro Phoenix) -- but its a fast-growing chain, despite its current struggles.

And in the United Kingdom, the mighty Tesco, who's CEO, Sir Terry Leahy, has been knighted by Britain's Queen, is the King of all grocer's, controlling a whopping 30% of all food and grocery sales in that land of the royal -- and the not so royal.

And across the globe, in that great British flair that once found the UK sitting on top of the world as a great Empire, Tesco (the world's third-largest retailer) is marching, trailing only Wal-Mart (number one) and France's Carrefour (world's second-largest retailer) in the battle for global retailing domination.

So we posit -- might King Arthur's ending its relationship with Trader Joe's be a "royal" opening for Tesco's Fresh & Easy to ride in and stock the renown King Arthur Flour in all of its stores in California, Nevada and Arizona -- many of which are located very close to Trader Joe's markets -- thereby pleasing the legions of brand-loyal King Arthur Flour customers who soon will no longer be able to buy the product at Trader Joe's? And might we add, in the case of Fresh & Easy, making an extra buck or two, along with creating some potential customer loyalty, as well as perhaps offering a bit of a royal poke at Trader Joe's.

One door closes -- another opens.

We would jump on the opportunity right away. King Arthur Flour has some of the most brand loyal customers of any niche brand in the U.S. [You can get a hint of that strong consumer brand loyalty by reading the reader comments on the post in the King Arthur Flour Company "Bakers' Banter" Blog here.]