A 'Sign of the Times': New Form of Customization and Localization Spotted at Fresno Fresh & Easy Store

The "Sign of the Times" pictured above was spotted and photographed today by @thehieb (on Twitter) at the Fresh & Easy Neighborhood Market store at Cedar and Nees (3040 North Cedar Avenue) in Fresno, California. Tesco has seven Fresh & Easy markets in the Fresno metro region.

As you can see in the photo at top, the store manager, most likely, or a store employee, decided to customize and localize the Fresh & Easy Neighborhood Market standard issue corporate sign, which the grocer installs in all the stores, by adding: "Even if you just came in here to cry" at the bottom, using what looks to be a Magic Marker.

Here at Fresh & Easy Buzz we've said since 2008 that one of Tesco's week points with its 169 Fresh & Easy stores in California, Nevada and Arizona is senior management's failure to customize and localize its stores based on the demographics and lifestyle criteria in the neighborhoods where the stores are located. But we frankly haven't thought about doing the same with the hand wash signs. But then we can't think of everything.

One example of our lack of custom and local-focused product mix critique of Fresh & Easy is this: The Fresh & Easy stores in Riverside and San Bernardino counties in Southern California, which just-released U.S. Census Bureau figures show both have a population that's nearly 50% Latino, as is the case in many other parts of Southern California, the Central Valley and metro Phoenix, Arizona, is identical to the product mix in the stores where the Latino population is less than 10%, such as in parts of Southern California's Orange County.

The store-level Fresh & Easy managers can't doing anything about the product merchandise mix situation however: It's controlled and dictated by Fresh & Easy Neighborhood Market's corporate buying and merchandising department in El Segundo, California.

But in the case of the standard issue hand washing sign, one of which goes up inside every Fresh & Easy store when it's built, it does appear that some customization and localization is going on at store-level, at least at the Fresno store at Cedar and Nees.

And in terms of the 'crying in the bathroom' customization aspect and the local angle explanation, Fresno currently suffering from a variety of economic ills, including having an unemployment rate of about 15%, along with having one of the highest housing foreclosure rates in the U.S. So perhaps that's it? At least we hope its that or something similar in the macro sense that might elicit the potential crying in the bathroom rather than the crying being a reflection on how the store employees feel on a regular basis because of store management.

Either way, it's a creative form of store-level customization and localization. And it's ... a "Sign of the Times."

[Readers: If you spot something you think is unique at a Fresh & Easy store, or in any grocery store or supermarket, shoot a photograph of it and send it to us at freshneasybuzz@yahoo.com. Or if you use Twitter, tweet it to us @FreshNEasyBuzz. If we think it's a suitable "Sign of the Times" we'll use it in Fresh & Easy Buzz.]

Independent Film 'READY, SET, BAG!' Chronicles the Serious, Humerous and Ruthless Life of Competitive Grocery Bagging

To paraphrase the late comedian Rodney Dangerfied - "Grocery baggers don't get enough respect."

Think about it, grocery store baggers, who're often called courtesy clerks these days, have arguably the most face-to-face contact - and are the employees shoppers have the last contact with when leaving the store - with a grocer's customers than any other store employee or company executive. Yet the typical supermarket chain CEO makes more money in just a few hours than a typical bagger makes in a year.

And least you think it's the case, grocery industry CEO's don't have anything on grocery baggers when it comes to being competitive.

Every February grocery baggers from across the country meet in Las Vegas, Nevada to vie for the title of 'National Best Bagger,' in the National Grocer's Association's (NGA) Best Bagger
National Championship competition. (see the 2010 winners here.)

The baggers represent the grocery retailers they work for and come from throughout the U.S. to compete in the competition, which is held in conjunction with the trade associations's annual convention. The NGA is the national trade group for independent grocers in the U.S.

The annual grocery bagging competition receives a fair amount of publicity each year, particularly from media outlets in the winners' hometowns. But a new independent film - 'READY, SET, BAG!' - aims to elevate the annual bag off competition and grocery baggers to iconic status.

The 80-minute film, produced by Justine Jacob and co-directed by Ms. Jacob and Alex D. da Silva, is currently showing at select theaters throughout the U.S. (You can view a list of upcoming screenings here.)

Oren Jacob is the executive producer of 'READY, SET, BAG.' It was his idea to make the film about competitive grocery bagging and the NGA annual bagging competition.

Justin Jacob is a filmmaker and entertainment law attorney in the San Francisco Bay Area and the former president of the Bay Area Women in Film and Media organization. She produced and co-directed, with da Silva, the award winning independent film 'Runners High,' in 2006.

Alex D. da Silva has been working in the film industry since 1989. He received an MA Degree in Film in São Paulo, Brazil and has worked as a producer, cinematographer and director in commercials and non-commercial projects shot in the U.S. and Latin America. He produced and directed the award winning short film 'O Cantor de Samba' and co-directed 'Runners High.'

'READY, SET, BAG!' is a true slice of Americana.

"Americans don't only work hard, they also like to have fun and the world of competitive grocery bagging is often bizarrely entertaining and unexpected," says producer Justin Jacob. "Contestants unveil their competitive side as they train and take the competition - but never themselves - seriously. Spanning the US, they are the heart of the bagging competition, their workplaces and of 'READY, SET, BAG!'"

In the film viewers get to meet Jacob, a once shy and overweight teenager who blossomed and found friends when he got his first job at a grocery store.

Then there's Brenda. She works beside her daughter as a grocery bagger and rides Harley Davidson motorcycles with her hunting-obsessed husband, James, when not working at the store.

Another competitive grocery bagger in the film is Kim, whose posse of 45-80 year-olds gives her a sendoff to the annual grocery bag off in Las Vegas she’ll never forget.

Other competitive grocery baggers featured in 'READY, SET, BAG!' are:

>Roger, a Chinese/Trinidadian immigrant who sees the prize money from the bagging competition as his entry ticket to the American Dream;

>Ryan, an African-American home-schooled farm boy with a grocery bag full of charm;

>Brian, a returning state champion determined to redeem himself after the mistake that cost him the grocery bagging national title the previous year; and

>Jon, a 49-year-old stoic grocery bagger from Minnesotan who has one last chance to prove that he can snag "bagging gold" before he hits fifty.

Here's how (in italics below) the filmakers describe their motivation for making the film about the NGA's annual grocery bagging contest and the competitive grocery baggers who make it happen:

"Our story originated when Oren Jacob, our executive producer, was talking with some friends about their summer jobs back in high school. Someone blurted out “I used to be a grocery bagger, but never made it out to the regionals…

Driving home that night, Oren called and said, 'I know what our next film is about.'

The idea of taking something as mundane and common as bagging to an extreme competitive level intrigued us and we wanted to find out who would participate in such an endeavor. We started researching the competition, the National Grocers Association that runs the competition, and the supermarket industry in general. We found a competition that has been going on for over 20 years, an organization with a purpose to advocate for independent grocers that cater to their communities, and an industry filled with integrity where individuals love their jobs and serving their customers. We knew we had more than a competition film.

We then pitched the story at the Sundance Producers Conference, and won the Best Pitch award. With our first $500 in funding secured, and five months to go before the national competition, we started a tour of 21 states filming regional bagging competitions and meeting state champions. After propane fireballs, a dedicated coach, a winning 4H dairy goat, a victory dance, a harem, a rugby scrum, some dead deer, band camp, a 50th birthday party, drinking moonshine with flamingos, and a whole lot of very well packed groceries, what we discovered was the heart of America.

We had a blast and saw an opportunity to tell intimate, personal stories that would reveal a slice of Americana we all participate in. As we filmed the final round of the National competition in Vegas, we knew we had a compelling story to tell about these individuals who exemplified being the best at what you do, no matter what that is.

After watching our film, we’re confident that you will never go through a checkout aisle the same way again, knowing what it takes to be qualified, at a professional level, to ask the question 'Paper or plastic?'"

The film first debuted at a handful of film festivals in 2008-2009 but is just now getting a widespread national screening.

In 2008, 'READY, SET, BAG!' received the Award of Excellence at the prestigious Indie Fest film festival. In 2009 the Honolulu International Film Festival gave it its Award of Excellence in Filmmaking. The grocery bagger-focused film also is an official selection at this year's 2010 Sonoma (California) International Film Festival.

The filmakers are walking the talk (or video in this case) as well with their award-winning film: They're donating $1 from each ticket sold for 'Ready, Set, Bag!' to a local food bank in the cities where the film is shown during its current national tour.

Additionally, the filmakers are doing a number of other things to help America's hungry, as part of their philosophy that since the movie is set in the retail grocery business and focuses on bagging groceries, they have a certain obligation to assist those less able to buy bags full of food at the supermarket.

Those activities are:

>Food donations at screenings: In certain locations, individuals get $1 off the ticket price for bringing in at least 3 cans to donate to the local food bank.

>BlipTV Channel: Clips of the film and other related contect are available for viewing at http://www.readysetbag.blip.tv/. All of the advertising revenue from the channel is being donated to Feeding America, the national organization that supports U.S. food banks and pantries. The site is regularly updated with new video.

>Online: The filmakers are giving 10% of all item sales from their online store to Feeding America.

>Groupon.com Deal: The filmakers are offering a deal at http://www.groupon.com/. A donation of $1 from the deal goes to the local food bank when tickets to the film are sold through Groupon.

According to the filmakers, donations from the above activities have so far this year provided over 5,000 meals.

Fresh & Easy Buzz readers who work in the retail food and grocery business, or have worked in the industry, particularly as a grocery bagger at some point, will get caught up in the film.

But 'READY, SET, BAG!' is far more than a film for past and present grocery industry employees. Rather, it's a serious, humerous and even ruthless sociological look at the world of competitive grocery bagging and more. As mentioned earlier - it is a true slice of Americana.

The eight competitive grocery baggers featured in the film 'READY, SET, BAG!"

Minnesota State Champion, Jon Sandell
With a goal to make it to the national competition the year he turned 50, 49-year-old Sandell won the state competition. Tough on the outside but with a generous heart, he represents Chris’ Food Center, a family-owned store run by a previous best bagger champ and proud displayer of numerous State Bagger Champion trophies. Sandell wants the top prize and brings along his “Harem," three female coworkers who knew that Sandell was their ticket to Vegas.

Utah State Champion, Brian Bay
The year before, Bay failed to place at nationals when he missed a pack of lifesavers that had rolled up against the side of the checkout stand. This year, he returned to beat out 38 competitors and became Utah’s reigning State Champion. After a year of practicing and more determined than ever, he, his wife and cheering squad can’t wait to return to Vegas for his chance at redemption.

Alabama State Champion, Roger Chen
Chen is very clear about why he’s participating in the contest – for the money. Describing himself as the “typical American,” he is a 25-year-old Chinese immigrant born in Trinidad, Tobego. He has been in the US for two years studying computer science and needs money to pay for his education. His lively and dedicated coach, Publix store manager Joe Yaeczitis, has found what he believes is the contestant who will finally bring Alabama its first national title.

Pennsylvania State Champion, Kim Weaver
Forty-eight year old Weaver is grounded, works with her teenage kids at the same store and loves to play pinochle. Once a month she gets together with the Flamingals – a hilarious group of eight women from the store (aged 45-80) to eat, play cards, have sleepovers and drink. Surrounded by flamingo paraphernalia, they give Weaver a special Vegas sendoff she’ll never forget.

California State Champion, James Hunter
Competing in the “Thunderdome of bagging competitions,” the driven, highly competitive Hunter had to drown out 400 screaming, dressed up, face-painted bagging fans to emerge the California State Champion. He’s a rugby star at school and off to college this year. Both a team player and a solo dynamo, he feels fully confident to compete against the best of the best in Vegas.

Iowa State Champion, Brenda Wygle
It took Wygle ten years of competition to finally become the Iowa State Champion. Her daughter, 17, who works with her at the store and has stuck by her side through it all, has no doubt her mom can win at the national level. Often taking Harley rides with her husband and son, Wygle is proudly the first woman to represent Fareway Stores over the 20 years of competitions.

Virginia State Champion, Jacob Richardson
At 17, Richardson is the youngest state champion in the competition this year. He’s outgoing, sweet-natured, and can’t stop talking. But, he wasn’t always this way. Once an overweight and solitary videogamer, getting a job at Food City helped him break out of his shell, make great friends and lose weight. Now when he’s not working, he’s at the store hanging out with his friends or talking with them on MySpace. His very supportive dad and sister have dreams Richardson will win in Vegas, but he says he knows he’s “already a winner.”

Ohio State Champion, Ryan Hamilton
“Ryan Hamilton IS Ohio,” as his friends describe. The consummate overachiever, Hamilton grew up and was home-schooled on a farm in Mt. Vernon, OH. He’s the winner of numerous 4H awards, a college swimmer, volunteer for an inner city afterschool program, and studying to become a vet. But what really matters to him is family.

Fresh & Easy Neighborhood Market Now Giving Cash Back With Debit Card Purchases

Among the numerous complaints about Fresh & Easy Neighborhood Market's self-service checkout-only policy we've heard from readers and shoppers since we started Fresh & Easy Buzz in 2007 - they don't accept paper checks, they don't cash checks, they don't accept manufacturers' coupons, they don't take WIC Vouchers, for example - is that a customer can't receive cash back from his or her debit card at the fresh food and grocery markets, like shoppers can at nearly every other grocery store.

On July 24, Fresh & Easy Buzz reader Russell from Southern California sent an e-mail, informing us the Fresh & Easy store he frequents at Rosecrans and Douglas in Manhattan Beach, California has started giving customers cash back on purchases made with debit cards. Russell was even kind enough to send a photograph (above) of his Fresh & Easy receipt, showing the $50 cash back he received on his $4.99 purchase.

The scoop

Nearly three years after opening its first stores, Tesco Fresh & Easy Neighborhood Market's executives have decided to listen to those numerous shoppers who've complained to store employees since early on about not being able to receive cash back on debit card purchases. That's a good thing - but the execs are a little late on the draw. Better late than never though, right? Tesco opened the first batch of Fresh & Easy stores in November 2007.

The Manhattan Beach Fresh & Easy store, along with other units in Southern California, is one of the first Fresh & Easy stores to start allowing cash back.

Fresh & Easy is in the process of retrofitting the point-of-sale systems in all 159 of its stores in California, southern Nevada and Metropolitan Phoenix, Arizona, so customers at those stores can receive cash back when they use their debit cards to buy groceries at the grocery chain.

According to our sources, all 159 of the Fresh & Easy stores are set to offer cash back with debit card purchases by the end of August, 2010.

Reader Open Thread: Should Grocers Ban Shoppers From Wearing Pajamas While Shopping?

United Kingdom-based Tesco, the parent company of Fresh & Easy Neighborhood Market USA, is making waves at home in Britain over a ban on wearing pajamas that one of its stores, a Tesco Superstore in St. Mellons, Cardiff, enacted last week.

At the Cardiff Tesco store, Elaine Carmody (pictured at left), was escorted out of the store and off the premises by store workers for breaking the new dress code prohibiting the wearing of pajamas (pyjamas in Britain) and other nightwear.

Here's a selection of press clippings about the Tesco store ban on wearing pajamas while shopping.

What quickly became a favorite topic in the British press last week, the Tesco store's pajama ban, is becoming an even more written and talked about topic in Britain this week after the Daily Mail and The Sun newspapers published stories pointing out that one of Tesco's TV commercials in 2007 featured its pitchman, British actor Martin Clunes, dashing into a Tesco store to pick up some milk while wearing a pair of pajamas.

Pajamas and supermarkets

Another irony of the Tesco pajama ban is that many of Tesco's food and grocery stores in the United Kingdom sell clothing, including pajamas and other nightwear. And Tesco sells some very attractive pajamas in its United Kingdom stores - including some you might not be ashamed to wear out in public.

We're all familiar with the age-old "No Shirt. No Shoes. No Service" policy at American fast food restaurants; a policy that seems to have worked well for both the stores and customers. However, we aren't aware of any fast food shops that will refuse to serve a customer wearing pajamas, either in the U.S. or across the pond in Britain.

Those who have or currently work in supermarkets and other retail stores know all to well the variety of dress, and lack of dress, some customers show up in to shop.

Grocery stores particularly are a human laboratory for the sartorial choices and behaviors of consumers. After all, food stores are a crossroads of humanity. Everyone has to eat - and therefore nearly everyone has to shop.

Pajamas and the evolution of cultural dressing norms

In the case of pajamas though, the attire has undergone a bit of a revolution over the last decade or so. In fact, today one can find designer pajamas that look every bit as nice, or even nicer, than some forms of regular day wear.

Pajamas have also undergone a cultural shift as a form of dress, from being strictly bedtime clothing to today being much more general purpose wear. This change goes hand-in-hand with the higher quality and better looking pajamas we mentioned earlier.

For example, many time-pressed mothers might leave their pajamas on while dropping off the kids at school in the early morning, and then perhaps drop into the grocery store after before returning home.

Additionally, ask any college professor, and he or she will tell you that it's not unusual for a number of students to show up in early morning classes wearing pajamas. Some college professors dislike this trend. Others seem to care less about it.

We've even heard of party's and gatherings in which those invited are encouraged to wear pajamas to the event. This signals a cultural shift away from the view that pajamas are attire designed to wear just for bedtime.

Reader Open Thread: Your opinions please

So we ask: With all the cultural changes pajamas have undergone, and are undergoing, as a form of dress, does it really make sense for a retailer like Tesco to ban shoppers from wearing them like its store in Britain has done?

Or do any of those changes matter? Is the Tesco store right to have banned customers from shopping-while-wearing-pajamas?

And even further, we ask: Should all supermarkets ban shoppers from wearing pajamas and other nightwear in their stores?

Tell us what you think on the topic using the comments box below. Opine away.

[Photo Credit: Wales News Service.]

Consumer Use and Retailer Redemption of Manufacturers' Coupons Soaring Says Leading Redemption Company in the U.S.; But Not at Tesco's Fresh & Easy

Inmar Inc., the leading promotions transaction settlement provider in the U.S., said late last week that manufacturers' "cents-off" coupon redemption in the fourth quarter of 2008 grew nearly 10%, compared to the fourth quarter of 2007, making it the first jump in redemption since the early 1990's.

Inmar operates one of the leading U.S. clearinghouse operations for the redemption of manufacturers' coupons by retailers and the payment to those supermarket and other format retailers by the manufacturers'-marketers.

According to data just released by Inmar, consumer response to manufacturers' coupons remained strong for 2008, with 2.6 billion coupons redeemed, the third year in a row at that level.

The peak year for coupon redemption was 1992, at the end of the last major recession, when 7.9 billion coupons were redeemed, Inmar says. [Fresh & Easy Buzz thinks 2009 could come comparatively close to that number. It won't be 7.9 billion because manufacturers aren't distributing coupons in the same volume as they were in the late 1980's-early 1990's. However, we bet when 2009 is over the total redemption amount will be much higher than 2.6 billion.)

"Consumers responded to the financial uncertainty (in 2008), in part, by using more coupons," says Bob Carter, president of Inmar CMS Promotion Services. "When everyone started hearing reports of record unemployment, drops in consumer confidence and losses on Wall Street, coupon redemption volume started to go up."

CMS Promotion Services is the brand solutions and promotions arm of Inmar.

The first three quarters of 2008 saw coupon redemption dip slightly, compared to the same three quarters in 2007, according to Inmar's data.

But manufacturer-issued food, grocery and non-food item coupon redemption surged up by nearly 10% in the fourth quarter of 2008, compared to the fourth quarter in 2007.

That increase came in November and December which both saw double digit redemption growth.

A double-digit increase in the use of food coupons primarily drove the jump in redemption, although non-food coupon redemption also rose by nearly 10%, Inmar says. [Note: This compares to the search trends by consumers we analyzed and published in this piece on March 8:

The increase in coupon use also accompanied an unprecedented shift in the channels in which consumers used coupons, according to Inmar.

"For years, nearly 70% of coupons were redeemed in conventional supermarkets," says Jennifer Mauldin, president of Inmar Carolina Services Revenue Recovery Services. "But in 2008, the mass-merchandiser channel saw a 15% increase in redemption overall, made up by a 20% increase in redemption for food coupons and a 13% increase in non-food coupons."

Inmar's Carolina Services Revenue Recovery Services processes coupons and manages third party pharmacy claims for retailers.

The majority of non-food coupons issued by manufacturers are for items like household cleaning supplies and essentials (toilet tissue, paper towels, cleaning products) and health and beauty care category items (vitamins, OTC drugs, body care products) that are sold in supermarkets, mass-merchandise stores and drug stores.

The mass-merchandiser channel includes retailers such as Wal-Mart, Target and Costco, all three of which accept manufacturer-issued coupons for food and non-food items.

Every major (and most minor) food, grocery and related format retailers in the U.S. accepts manufacturer-issued "cents-off" coupons in their respective stores.

Tesco's Fresh & Easy Neighborhood Market does not accept manufacturers' coupons at all in any of its stores in California, Nevada and Arizona, which currently number 115. Since Fresh & Easy is owned by the third-largest retailer in the world, Tesco, which also is the number on retailer of food and groceries in the United Kingdom, is qualifies in the major retailer category mentioned above.

Supermarkets and grocery stores still remain the top retail channel for the redemption of manufacturers' coupons, with about 64% of all coupons being redeemed in the channel, according to data provided by Inmar, which is based in Winston-Salem North Carolina.

However, coupon redemption is growing in the mass-merchandiser channel, largely because the mass-merchandiser channel is a fast-growing seller of food and groceries. About 19% of manufacturers' coupons are now redeemed in the mass-merchandiser channel, according to Inmar's data.

The remaining percentage of coupons are redeemed from other retail classes of trade, such as the drug store channel, and others.

Much of this growth in the mass-merchandiser retail channel in 2008 can be attributed to the fact that more and more shoppers have been turning to the channel, particularly to Wal-Mart, but also to other mass-merchandisers like Costco, to buy their food and grocery items, taking the manufactures' coupons with them to those stores.

Based on our research and analysis, it's not that fewer shoppers are using the coupons at supermarkets. Rather, it's the fact that over the last few years the mass-merchandiser channel has gain a much bigger share of the overall food and grocery (and non-food) consumer dollar. This therefore is reflected in the growth in coupon redemption for the channel.

For example, the overall number one retailer of food and groceries in the U.S. today is a mass-merchandiser, Wal-Mart. The number two seller of food and groceries nationally in the U.S. is Costco, also a mass-merchandiser, with a membership club store specialty. Kroger Co., the largest supermarket chain in the U.S., now comes in as number three. Just two years ago Kroger was the overall top-retailer of food and groceries in the U.S., and Supervalu, Inc. (now number four) and Safeway Stores, Inc. (now number five), were both in front of Costco.

Inmar CMS Promotion Services' president Bob Carter says food and grocery manufacturers'-marketers continue to believe in the power of coupons, proven by a 5% increase in the number of coupons made available to consumers last year. "At 317 billion coupons, distribution is not just up over the previous year, but is back up to levels from a decade ago," Carter says.

"This high level of (manufacturer-issued coupon) distribution, combined with a 9% increase in the average face value and a generally sour economy, make coupon offers more attractive to consumers than ever," says Carter.

As Fresh & Easy Buzz has been writing about and offer analysis on in a variety of pieces over the last many months, all of the empirical evidence out there demonstrates that Bob Carter is correct; that the use of manufacturers' "cents-off" coupons by consumers will continue to increase, and do so significantly.

To demonstrate this point, Inmar's Carter says current data shows consumers' use of manufacturers' coupons increased substantially in January, 2009, over January, 2008. Over 9% more manufacturer-marketer-issued food, grocery and non-food item coupons were redeemed (meaning they passed through retail stores) in the U.S. in January of 2009 than were redeemed in January , 2008.

"While we can't predict the future, it is safe to say that the traditional coupon is back in vogue for consumers, says Inmar's Jennifer Mauldin. "Even if the economy turns a corner sooner than later, a combination of factors have put coupons back on the radar of many consumers and introduced some to them for the first time."

Inmar is a logistics company that specializes in providing services and solutions between trading partners for the physical, financial and information flows within the supply chain. It's the nation's largest provider of promotions logistics and settlement services, serving over 1,700 business clients, including manufacturers, wholesalers and retailers. The company says it processes more than 3.5 billion transactions annually.

The Inmar data matches that from supermarket and other format retailers, which we've reported on and written about previously in Fresh & Easy Buzz . The retailers report that food and grocery coupon volume (use by shoppers) in their stores is at what some say is at an all time high, and what others say is significantly higher volume than they've seen in many years.

But since Tesco's Fresh & Easy has a policy of not accepting the manufacturer-issued coupons in its stores, the many shoppers who use the coupons take them to stores operated by its competitors, where they spend their money because those grocers accept the coupons.

Google & Yahoo - The Tale of the Search Engines: An Analysis of How Tesco's Fresh & Easy is Losing Out By Not Accepting Manufacturers' Grocery Coupons

Earlier today we wrote and published this piece [Analysis & Commentary: The Seven Retail Operations Changes Tesco's Fresh & Easy Neighborhood Market Needs to Make to Help it Get On the Success Track]. One of the seven retail operations changes we suggest in the story, and have been suggesting for at least a year, is that Tesco's Fresh & Easy Neighborhood Market change its policy of not accepting manufacturers' grocery coupons in its stores.

In the analysis below, we take a look the fast-growing trend among U.S. consumers to use the Google and Yahoo search engines to find grocery coupons, so they choose specific item coupons, print the coupons out, and use them at the grocery store in order to save money on their food and grocery purchases.

Today, Saturday, generally is the top shopping day for consumers to do their food and grocery shopping. It's a day off work for most Americans, and in most households it's what can be called household chores and errand-running day.

Fresh & Easy Buzz has for many months been writing about and offering analysis on what we call the mega-increase by American consumers in the use of manufacturers' "cents off" grocery coupons, those little slips of paper that come in the mail, are inserted in Sunday newspapers, and increasingly are available on the Internet at a multitude of coupon Web sites.

To show you just how popular the use of manufacturers' grocery coupons are becoming in the current economic recession, the search term "grocery coupons" is today the fourth most-searched term on Yahoo Search, just ahead of the actor Vince Vaughn (number five) and right after the actress Leelee Sobieski (number three most-searched).

And, what's up with Actress Carla Gugino that makes her the most-searched on Yahoo Search? You'll have to click her linked name on the top-ten list below to find out what all the fuss about her is.

Today's Top Searches on Yahoo Search

1. Carla Gugino
2. Michelle Obama
3. Leelee Sobieski
4. Grocery Coupons
5. Vince Vaughn
6. UFC 96
7. Bernard Madoff
8. Drivers Ed
9. Bartending School
10.DNA Tests

Google Trends for 'grocery coupons'

One way to demonstrate the dramatic growth in consumer interest (and use) in grocery coupons is to take a look at the search volume (for the U.S.) for the search term "grocery coupons" using Google Trends' "Search Volume Index," the analytical tool Google.com uses to rate and rank searches on its search engine.

The graph above (click here to view the graph) depicts the volume of Google searches for the search term "grocery coupons" from 2004-2008 in the entire U.S.

Notice the beginning of the spike in the number of searches starting in late 2007. The current recession officially began in December, 2007, according to the economic group charged with determining when recessions start.

Additionally, note the almost continual increase in searches throughout 2008, particularly the huge spikes in mid and late 2008. The financial and credit crisis hit hard beginning in about September-October, 2008 -- and it has been downhill in terms of the deepening of the recession since then. (Note: read the top portion of the graph, where it says "Search Volume index." The bottom portion of the graph measures the volume of news media searches.)

The graph pictured above (click here to view) is for 2008 (total U.S.). It shows a dramatic spike in searches for "grocery coupons" in October, right about the time when the financial crisis hit, then a trending down, and then another spike at the end of the year, the holiday period.

In 2008, the top ten states in which consumers searched "grocery coupons" on Google were: (1) South Carolina, (2) Kentucky, (3) Mississippi, (4) North Carolina, (5) Tennessee, (6) Alabama, (7)Georgia, (8) New Hampshire, (9) Missouri, (10) Arizona.

Seven of the ten top Google-search states are in the southern U.S. One, New Hampshire, is in New England in the east. The other two, Missouri and Arizona, are in the Western U.S.

Tesco's Fresh & Easy Neighborhood Market has stores in one of the top ten states -- Arizona. The other two states where Tesco has Fresh & Easy stores are California and Arizona. After California, Arizona has the second-highest number of Fresh & Easy markets. There currently are 115 of the small-format, convenience-oriented, combination grocery and fresh foods stores in the three states.

The graph pictured above (click here to view) is for 2009 thus far (all U.S. states). Note the significant spike in the graph for February.

Thus far this year, the top eight states for consumer searches on Google for "grocery coupons" are (1) North Carolina, (2) Georgia, (3) Ohio, (4) Texas, (5) Florida, (6) New York, (7) California, (8) Pennsylvania.

Notice that California, where Tesco operates the majority of its 115 small-format Fresh & Easy Neighborhood Market grocery and fresh foods stores, thus far this year has the seventh-highest amount of Google searches for "grocery coupons." About half of the 115 Fresh & Easy markets are in California.

California

Let's take a specific look at California, the largest state in the U.S. and home to Tesco's Fresh & Easy, specifically in terms of the volume of searches on Google for "grocery coupons.

The graph pictured above (click here to view) is for all of 2008. Note the major upward spike in June, 2008, then a steady trend, then a huge drop, followed by a major upward spike in September-October, 2008, when the financial and credit crisis hit big.

The following California cities and metropolitan regions had the highest volume (listed in rank order from first -to- 10th) of Google searches for 2008: Riverside, Rancho Santa Margarita, Long Beach, Santa Barbara, Irvine, Los Angeles, Pasadena, Bakersfield, San Luis Obispo and Fresno.

Tesco's Fresh & Easy currently has stores in each of these metropolitan regions except for Santa Barbara, San Luis Obispo and Fresno. It has plans to open stores in the Santa Barbara and Fresno regions in the very near future, and longer range plans to open stores in the San Luis Obispo region.

Since the grocery chain has numerous stores in the metro regions listed above that have the highest volume of "grocery coupon" searches on Google, and since most of the searches are for manufacturer's "cents off" grocery coupons on the Internet, rather than store coupons like Fresh & Easy offers, it's our analysis that by not accepting the manufactuers' cooupons, the grocer is missing out on all these shoppers who are searching Google for "grocery coupons," which it's rather safe to assume they then download, print out and take with them to the grocery store.

Our safe assumption that consumers aren't just looking at the coupons online, but rather going online to find the coupons and print them out, is backed up by statistics that show coupon use at all time highs throughout the U.S., including in California, Nevada and Arizona, where the 115 Fresh & Easy stores are located.

Above is California thus far in 2009 (click here to view). It's safe to say consumer-Google-users in California are pretty grocery coupon-focused so far this year, based on the data.

It will be interesting to see where the trend line goes once March is over and Google is able to include the full month data. The graph only includes seven days in March thus far, obviously. We suspect the trend line will go up more than it drops, as grocery coupon use continues to increase, and manufacturers' continue to distribute more coupons as a way to keep and increase sales of their respective brands in the recession.

Arizona

Now we turn to Arizona. Above is a graph for 2004-2008 (click here to view), depicting the volume of searches on Google for "grocery coupons" from consumers-Google users in Arizona. Note the huge spike in search in late 2008.

Additionally, this graph for 2008 shows a steady upward trend for Arizona in the volume of Google searches for the coupons in 2008.

Lastly, this graph depicts searches thus far in 2009. There are some peaks and valleys, and currently the trend is headed very much upward in coupon search volume.

Thus far this year these are the top seven (in ranked order) Arizona cities in terms of having the highest volume of coupon searches on Google: Pima, Tempe, Chandler, Phoenix, Mesa, Tucson and Scottsdale.

Tesco has Fresh & Easy stores, or will soon have stores, in all of these cities except for Pima (at least that we are currently aware of in the case of Pima.)

Nevada

The graph pictured above (click here to view) shows Google coupon search volume for 2004-2008 for the state of Nevada. Note the major growth trend beginning in late, 2008.

You can view all of 2008 by itself in this graph. Coupon search shot up considerably beginning in about October, 2008.

The top three Google-search cities for 2008 were (in rank order): Carson City, Las Vegas and Reno.

Carson City and Reno are in northern Nevada. Las Vegas is in southern Nevada. All of the Fresh & Easy stores are in the Las Vegas region in southern Nevada, where the vast majority of the state's residents live.

The fact that so many consumers in the Las Vegas Metro region were searching for coupons on Google in 2008 demonstrates how Tesco's Fresh & Easy is missing the boat by not accepting the manufacturer's "cents off" grocery coupons in its stores in Nevada (as well as in Arizona and California.) Those consumers that printed out the coupons took them to one of the grocery chain's competitors in the Las Vegas market region, where they used them to shop.

Lastly, this graph depicts the Google search volume thus far for 2009 for coupons. There was a huge spike in late February with the line now trending down. However, that's largely due to the fact we are only seven days into March.

Conclusion

It's increasingly said that as Google goes (and to a lesser but significant degree Yahoo Search and search in general), so goes the country -- and the world. Online search has revolutionized the way consumers live their lives and shop.

And as our analysis demonstrates, consumers are increasingly using manufacturers' grocery coupons and turning to search engines like Google and Yahoo Search to find the coupons online, download and print them out, and take them to the grocery store to use when they do their shopping.

It's all about pinching pennies and trying to save a buck in this severe recession. But it was a very popular consumer practice pre-recession as well.

Therefore, those grocers that accept the coupons, which amount to nearly 100% of all major food retailers in the U.S., are the ones who are benefiting, and will continue to benefit, from this fast-growing trend.

Meanwhile, Tesco's Fresh & Easy, which by company policy does not accept manufacturers' coupons from shoppers in its stores, will continue to lose out on the growing sales volume that comes from shoppers who choose where they shop to a significant degree (and since nearly 100% of all grocers take coupons it's not an issue for the majority of retailers) based on the fact they will be using the coupons as one of the ways of saving money on their food and grocery purchases in these trying economic times.

The trend is great for Fresh & Easy's competitors, since all of them accept the coupons. It's not so great for Fresh & Easy, since as a matter of policy and strategy it believes achieving the minimal savings in store labor required to handle the manufacturers' coupons from shoppers trumps the benefits of accepting them, and the added sales and customer loyalty doing so brings a food and grocery retailer.

Since about 100% of the grocery chains and independents (including Wal-Mart) in California, Nevada and Arizona take the manufacturers' "cents off" coupons -- and even encourage the use for promotional purposes -- these being Tesco Fresh & Easy's competitors -- might they collectively all not be on to something? Might the rule therefore be good retail operations strategy and the acception -- Tesco Fresh & Easy's no manufacturers' coupon policy -- be a bad one? We think so, as does the marketplace.

[Editor's Note: We've included links to the original Google Trends graphs for each of the graphs pictured in this post. Since the search data is dynamic, there will be changes in the original 2009 linked graphs over time compared to the 2009 graphs pictured in this piece. That's because as new search data is incorporated by Google into its search trends data base, the graph trend lines change. The 2009 graphs pictured in this post therefore are a snapshot in time, that time being when this piece was published this afternoon.]

[You can follow Fresh & Easy Buzz on Twitter at www.twitter.com/freshneasybuzz.]

Analysis & Commentary: The Seven Retail Operations Changes Tesco's Fresh & Easy Neighborhood Market Needs to Make to Help it Get On the Success Track

First in a Series. Today: Tesco's Fresh & Easy's - Retail Operations

Fresh & Easy Buzz has been writing of late about and offering analysis on the change in positioning by Tesco's Fresh & Easy Neighborhood Market to a more "value-based" retail positioning model, which is something we've been saying for over a year that the grocery chain needs to do. [March 2, 2009: Fresh & Easy Buzz Redux: Much of the Value Proposition-Based Analysis and Suggestions We've Been Offering Now Being Adopted By Tesco's Fresh & Easy.]

However, we've always stressed a "value proposition," which is far more than just getting "down and dirty" on price, as Tesco Fresh & Easy CEO Tim Mason put it in a recent interview in the Sunday London Times. [February 26, 2009: Tesco Fresh & Easy, Research and Course Correction: What 'Was' Said and 'its' Context Matters Little; What 'Is' Matters Much, What's Done Matters More.] Although, in the current super-competitive aand recessionary food retailing climate in California, Nevada and Arizona, where Tesco's Fresh & Easy Neighborhood Market has its current 115 stores, getting "down and dirty" with low everyday prices and hot and deep promotional price offerings is a must -- regardless of what any other analyst might tell you.

Safeway is doing it. Kroger as well. Ditto on Supervalu.

Add Wal-Mart and basically all the other grocery chains to that list in these respective markets, as well as throughout most of the United States. Right now, "all grocers are discounters" in their own ways. Even Whole Foods Market, the natural-organic and premium grocer, is putting value above all else in its merchandising, marketing-promotions and operations right now. [August 4, 2008: The Value Proposition: Whole Foods Market's New Focus on 'Value' Demonstrates the Importance of the Value Proposition Currently in U.S. Food Retailing.]

But mere hot promotional pricing and advertising does not value make alone. That's something all grocer's need to keep top-of-mind, and most all successful ones do. [June 18, 2008: Tesco's Fresh & Easy and it's 'Value Proposition:' We Asked, They Answered; Discussion, Deconstruction and Fresh & Easy Buzz Analysis.]

Additionally, as we've detailed in Fresh & Easy Buzz for over a year, the problems Tesco has and is having with its small-format, convenience-oriented, combination grocery and fresh foods Fresh & Easy chain are far from exclusively price and promotional pricing-based. They involve other merchandising, marketing and retail operational omissions, mistakes and failures, which we've outlined in the Blog since December, 2007.

These problems, a theme we've been in the forefront of offering analysis and suggestions on regarding Tesco's Fresh & Easy, stem in our analysis from a failure to understand that food and grocery retailing in the U.S. (and in California, Nevada and Arizona) is a regional, sub-regional, sub-sub-regional and local business. [November 24, 2008: A Single Bird in the Ad (Even Wrapped in Bacon and Sage) Does Not Make For A Good Thanksgiving Promotion For A Neighborhood Grocer For 'Everybody.']

Like former Democratic Speaker of the House Thomas "Tip" O'Neill was famous for saying about politics, that "All politics is local," so to is it the case that "All food and grocery retailing in the U.S. must be locally-based," reflecting the unique democraphics, culture, history and local consumer behavior in the regions, sub-regions, sub-sub regions and neighborhoods where a retailer's stores are located.

This doesn't mean all U.S. food retailing is or should be done by locally-based independents. No indeed. What it means is that those chains that are successful in the U.S. generally put a serious and considerable focus on local and neighborhood merchandising and marketing in each of the market regions where they operate stores.

It's also why food retailing in the U.S. is, by-and-large, a regional business, with regional chains being the market share leaders in most regions of the country. Examples include Stater Bros in Southern California's Inland Empire region, Bashas in Arizona, and Save Mart and Raley's in Northern California. Each of these privately-held, regional chains is the number one, two or three market share leader in its respective regional and local markets. In fact, the only one of the four that isn't the market share leader in its respective market is bashas in Arizona. All do $3 billion-plus a year in sales. Save Mart does about $6.5 billion annually with about 230 stores.
It's also why the big chains like Kroger Co., Safeway Stores, Inc. and Supervalu operate multiple supermarket banners. Each of these three chains became semi-national food retailers not by organic growth, but rather through acquisitions of leading regional supermarket chains, nearly all of which were privately-held and built up by the local families or business people that owned them. And it is this local banner policy that helps them to be the market share leaders in the parts of the U.S. where they hold that status.

In Southern California, for example, that includes the number one and two market share leaders, Safeway Stores, Inc. and Kroger Co. Safeway-owned Vons was a privately held chain in Southern California before Safeway acquired it. Ralphs also was a privately-held chain, which was acquired by Southern California-basedsupermarket investor Ron Burkle's Yucaipa Companies in the 1980's, then acquired from Burkle by Kroger Co. in the 1990's.

The stength of the Vons' and Ralphs brands goes back to their privately-held, regional supermarket status, a status the owners of each of the chain's built by focusing on the local in Southern California. Safeway and Kroger realized this, which is why they never changed the names of the respective chains to "Safeway" or "Kroger."

Lastly, the local nature of food and grocery retailing also explains why multi and single-store independents are such a powerful and successful retailing force in the business in the U.S. It also expalins why, despite the long time and ongoing threat to independents from the mega-chains, the independent grocer sector continues to survive and even thrive. It's all about thinking and acting local in significant measure.

It's been our analysis for well over a year that unless and until Tesco realizes this fact about U.S. food and grocery retailing -- the regional, sub-regional, sub-sub-region and local nature of the business -- it will continue to miss the mark on creating a successful Fresh & Easy Neighborhood Market chain.

Ironically the word "neighborhood" is in the chain's name. But Tesco has yet to put the "neighborhood" in Fresh & Easy Neighborhood Market in terms of understanding and then acting on, with its merchandising, marketing and operations, the local natural of food and grocery retailing in America. [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.] [October 8, 2008: Putting the 'Neighborhood' in Neighborhood Market: 'Localism' and Tesco's Proposed Fresh & Easy Neighborhood Market in Sacramento's Oak Park.]

*****************
Over the next few weeks, Fresh & Easy Buzz will be offering analysis of the current state of Tesco's Fresh & Easy Neighborhood Market in five key areas: (1) retail merchandising (today's focus) (2) merchandising, (3) marketing-promotions, (4) format, and (5) store location strategy, along with offering suggestions for changes the grocer should make, in our analysis, going forward in each of these respective areas, combining them all into a whole.

Nearly all of these suggestions we write about today and will write about in the upcoming stories are ones we've made in one form or another for about a year. We will add some new suggestions in the upcoming pieces.

Today, we focus on the retail operations area in the piece below:

As we mentioned earlier in this piece, Tesco needs to make many more changes -- all then tied into a comprehensive, defined Fresh & Easy format, with a clear and solid merchandising, marketing and operations strategy, which is then communicated to consumers in a comprehensive manner -- rather than merely getting "down on dirty" on its promotional pricing, which is something though it does need to do right now, but is only one tactic in what needs to become an overall strategy.

The most basic, needed and logical "no brainer" changes Tesco should make -- and can make rapidly -- are in its retail store operations policy and practice.

Below are seven retail operations changes, which we first offered about a year ago and have continued to regularly write about, that Tesco should make.

The changes were important for Tesco to have made (which it didn't) in the non-recessionary period in which we first made them over a year ago. They are even more important now, in the current and likely to last for probably all of 2009 and 2010, economic recession

The Seven retail operations changes Tesco's Fresh & Easy needs to make:

1. Accept WIC Vouchers (Women's, Children's & Infants Program) issued by the U.S. government to the poorest of poor mothers. [September 7, 2008: Analysis & Commentary: Should Tesco's Fresh & Easy Put An Asterisk Next to its Motto? Yes; Unless it Corrects Four Operational Omissions.]

The U.S. government issues WIC Vouchers, which come in a paper form that looks similar to a check, to the poorest of poor mothers so they are able to purchase infant formula, whole milk, cereals and related nutritious and healthy-oriented foods and beverages for their infants and toddlers, as well as for themselves. The federal government is in the process of expanding the varieties of healthy foods mothers can buy with the vouchers. Some of the new categories will include more fresh produce and additional whole grain cereals and breads.

Tesco's Fresh & Easy stores do not accept the WIC vouchers from poor mothers. What a mistake. By not accepting the vouchers, the grocer excludes an entire group of potential customers. These potential customers also tend to purchase other food and grocery items with food stamps and cash at stores that accept the WIC vouchers.

In the current recession, distribution of the WIC vouchers has and is dramatically increasing. Additionally, the $787 billion economic stimulus bill recently signed by the President allocates additional funds for WIC because of the increased demand for the assistance, including from many mothers not previously needing WIC.

All of Fresh & Easy's major (and most minor) competitors accept WIC. So should Tesco's Fresh & Easy. Why turn down a potenital sale, after all? Particularly for a grocer that needs such sales. Lastly, accepting the WIC vouchers is the right think to do for Tesco from a social responsibility standpoint. WIC is a part of the relationship between the U.S supermarket industry, the federal government and American citizens -- part of the socioeconomic compact.[December 29, 2008: Tesco's Fresh & Easy, 'Food Deserts' and WIC Vouchers; A 'Year-End' Analysis & Commentary.]

2. Accept manufacturer's "cents off" item coupons. Fresh & Easy stores don't accept the the popular coupons issued by food, grocery and consumer packaged goods manufacturers and marketers, which allow consumers to receive anywhere from a 25-cent to a $1 disount (and at times buy-on-get-one-free and other offerings) on food, grocery and related items. [December 12, 2008: Marketing & Promotions Report: Manufacturers' Coupons Becoming the 'New Black;' Use Among Consumers Soaring; Marketers Distributing More Than Before.]

All of the grocer's competitors accept them. Many like Kroger-owned Fry's (Arizona) and Albertson's (Southern California, Arizona) even promote acceptance of the coupons aggressively, by regularlydoubling and even tripling the manufacturer's coupons in special promotions.

Consumers are using the manufacturers' "cents off" coupons, and shopping at stores that accept the coupons, in greater volume than at anytime in recent history. Manufacturers'-marketers are distributing the coupons in greater volume today than they have been doing for many years -- if not in history.

Can Tesco's Fresh & Easy really afford to exclude coupon-clipping shoppers, and their dollars, from its customer mix? We think not, particularly since the use of the coupons is so fast- growing in the recession. But even in a non-recession accepting the manufacturers' coupons is a "no-brainer."

Some might argue that since about 60% of the items sold in Fresh & Easy stores are under its store brand, that taking the coupons doesn't make since. We beg to differ. That leaves a potential universe of 40% of the items sold in the stores available for manufacturers' "cents off" coupon shoppers. Again, a "no brainer."

3. Accept paper, personal checks. It's near-impossible to find a major supermarket or grocery store in California, Nevada and Arizona (or elsewhere in the U.S.) that doesn't accept paper, personal checks. Tesco's Fresh & Easy doesn't accept them; only cash, debit cards and credit cards.

Many supermarkets would love to stop taking paper, personal checks. But they don't, and won't anytime in the near-future.

Why? A couple reasons:

>Too many consumers in the 55-plus age bracket still prefer using paper checks to using cash, debit cards or credit cards to pay for their groceries.

>Additionally, the U.S. supermarket business is all about creating options. The industry has become successful in large part by increasingly offering shoppers multiple options to pay for their grocery purchases. That's why the industry finally began taking credit cards in the 1980's after holding out on doing so for many years after they were introduced.

And in the current recession, more and more consumers are going back to paying for their food and grocery purchases with paper. personal checks for two reasons:

>It allows them to better control the amount of money they spend at the supermarket. It's just too easy to add an extra $20 (or more) on that debit card, as we all know.

> In the case of credit cards, many consumers have maxed-out their credit limits. Many consumers also have had their credit limits reduced by banks because of the credit crisis.

>Lastly, consumers are getting smart. They know that paying for essentials like food and groceries with a credit card is a prescription for even more debt than they already have. Therefore many have stopped using the plastic at the supermarket. The savings rate in the U.S. is also up, another indication that American consumers are using their credit cards less. Additionally, retailers like Wal-Mart, Target and a few others have recently reported shoppers using credit cards far less in their stores, particularly for essential food and grocery items.

By not taking paper, personal checks, Tesco's Fresh & Easy is excluding potential customers who prefer this method of payment.

The food retailing business is not one in which you can force consumers to use payment methods that the retailer prefers. Rather, it's all about offering a wide-variety of payment options so as to draw shoppers to your stores.

Can Tesco's Fresh & Easy really afford to say to consumers who prefer using paper, personal checks "no thanks, we don't accept them"? We think not. But the grocer's competitors love it.

4. Cash payroll and government-issued checks. Wal-Mart, Safeway (Vons and Safeway banners in California, Nevada and Arizona), Kroger (Ralphs, Fry's, Smiths), Supervalu (Albertsons), Bashas and nearly every other food and grocery retailer in California, Nevada and Arizona, cash shoppers' payroll checks -- and even encourage the practice. Tesco's Fresh & Easy doesn't.

Why do these grocery chains cash payroll checks? Because it brings added business to a store, and thus to a grocery chain's overall sales numbers.

Wal-Mart even lowered the amount of money it charges to cash payroll and government (Social Security, SSI, Veterans, Unemployment, Welfare) checks to $4 last year, regardless of the check amount, as way to encourage consumers to bring their checks to a Wal-Mart store and cash them. Prior to that change in 2008, the greater the value of the check, the more Wal-Mart charged to cash it.

But, Tesco's Fresh & Easy does not cash payroll or government-issued checks, as a matter of the company's retail operations policy.

Unemployment is unfortunately booming in the U.S., particularly in California (over 10% for February), Nevada and Arizona, which are among the hardest three states hit by the housing foreclosure mess, the financial crisis and the recession in general.

Tens of thousands of new people are going on unemployment in the three states each month.

Many people receiving unemployment checks cash them at the supermarket -- just like many people do with their other government-issues checks, as well as payroll checks -- and then buy their groceries at the store after cashing the checks. Kroger and Safeway owned stores even in most cases cash the checks for free with a minimum purchase.

None of these thousands of consumers are cashing their payroll or government-issues checks at Tesco Fresh & Easy stores, and then buying groceries with the cash though, since the grocer does not cash such checks.

This pleases Wal-Mart, Safeway, Kroger, Supervalu, Bashas, ect. though. They love the added business that cashing payroll and government-issued checks bring their respective stores.

5. Add two full-service checkout lanes in each Fresh & Easy store.The Fresh & Easy stores offer only self-service checkout in which shoppers must scan and bag their own grocery orders. Store clerks then collect the customer's cash or process her debit or credit card transaction. In other words, the clerks still have to make change for cash purchases or process the card transactions.

If asked the store clerks also will (cheerfully) assist shoppers with checkout. But anyone who has any experience in the U.S. food retailing business knows customers hate asking such things, particularly since they get full service, in many cases including carryout service to their cars, at stores that offer as good or better prices than Tesco's Fresh & Easy stores do.

Tesco said their "research" showed shoppers would love this self-service model. A few do. But a "few" shoppers that love a particular feature like forced self-checkout don't make a successful grocery chain. [May 20, 2008: Take One Dose of 'Internal Research', Add An 'Independent' Survey From An Unnamed Source, and You Get A Consumer Preference For Self-Service Checkout.]

Most shoppers don't like a self-service-only forced choice by a retailer though. And many who tried it once or twice, according to our research, have never set foot in a Fresh & Easy store again. This is particularly the case with consumers in the 55-plus age bracket -- you know, the ones who have the most income and wealth in the U.S. and just happen to be the fastest-growing demographic.

Tesco should add two full-service checkout lanes in each of its Fresh & Easy stores. This would be smart in that it would welcome all those shoppers who hate the self-service-only system. Doing so creates "choice" rather than trying to force "choice" with self-service-only checkout. Ask you local consumer researcher if "choice" is a key element of American consumers. Yes, yes and yes, it is.

Additionally, adding the two full-serve checkout would also create a larger potential customer base for the Fresh & Easy stores, since self-checkout-only is a barrier to entry for many shoppers from the start. Why exclude?

At the same time, adding the two full-service checkout lanes would still allow Tesco's Fresh & Easy to keep a partial self-service checkout system, preserving for the most part its cost-cutting model. Of course, if the full-service lanes prove much more popular than the self-service, then we would think additional conversions would be warranted. There's only one way to find out -- convert two of the existing self-service checkout lanes to full-service.

Adding these two full-service lanes would also provide a simple operational system for accepting items number one, two and three in our list -- the paper WIC vouchers, paper manufacturers' "cents off" coupons, paper, personal checks and payroll and government-issues checks.

For example, all Fresh & Easy needs to do is put signage in the front-end checkout area of the stores that lets shoppers know in advance of checking out that if they are using the WIC vouchers, paper manufacturers' coupons or paper personal, payroll or government checks (or any combination of paper methods of payment and coupons) that they should then go to one of the two full-service checkout lanes.

If this proves to create too much traffic in those two lanes, then it isn't difficult to also accept the paper methods of payment at the self-serve checkout lanes. We probably would create a system to do both. But that's a simple logistic task that doesn't take much to implement. [July 14, 2008: Breaking News & Analysis: CA Assemblyman Introduces 'Tesco Fresh & Easy Law' to Ban Stores With Self-Checkout-Only From Selling Alcoholic Beverages.]

6. Add paper grocery sacks to the stores rather than offering only free single-use plastic bags, the "Bags for Life," which are reusable, synthetic bags sold for 20-cents each, and the more expensive canvas reusable bags (which start at 99-cents each).

This is all about offering customer choice.

Many consumers hate the single-use plastic bags. That's why nearly 100% of all U.S. grocers offer the "paper or plastic option."

Additionally, even though we like the 20-cent each reusable "Bags for Life," the fact is many shoppers just don't want to pay 20-cents for a bag, or two or three or four, so they go by default with taking the free plastic single-use carrier bags at Fresh & Easy. But many of these shoppers would go for paper if it were available.

Fresh & Easy should add the paper carrier bag option, even if it has to charge 10-15-cents per bag for it.

We wouldn't charge for the paper bags unless we also charged for the single-use plastic carrier bags though. The reason being that charging for one suggests favoring plastic over paper. That's a bad message to send.

Instead, if the grocer has to charge, which is what small-format, hard-disount grocery chain Aldi does, for example, then charge 10-cents each for both paper and plastic -- or offer both for free. Then give each shopper 5 cents back for every paper bag they bring back to the store, like many other grocers do. Also continue to push the reusable bags.

We favor the promotion of all kinds of reusable carrier bags, and Fresh & Easy is doing a good job at it, offering a range of bags from 20-cents each (the "Bags for Life), to 99-cents (an inexpensive cotton carrier bag) on up. But that fact is consumers aren't yet taking reusable bags to the store in any significant numbers. Therefore, offering both the paper and plastic option remains a smart thing for any competitive food and grocery retailer to do. [August 13, 2008: Tesco to Offer Shoppers Free Plastic Bags in UK Stores Only if Requested; Still Offering Plastic Bags-Only in Fresh & Easy USA Stores; No Paper Option.] [Click here for more posts on the subject.]

7. Add small, "neighborhood" customer assistance and service kiosks to each Fresh & Easy store.

Like the other six operational changes suggested above, this also is one we first suggested about a year ago. It's really more of an operational addition rather than a change though.

It also serves an additional, overall positioning purpose for Tesco's Fresh & Easy in that it helps put the "neighborhood" in Fresh & Easy Neighborhood Market.

We suggest that in each Fresh & Easy store Tesco install a small kiosk type area in the front-end of the store. This kiosk would be staffed by a store clerk. The kiosk would be used as a "neigborhood" and store informational center. Neighborhood groups could have the store distribute their information at the kiosk. The store could also distribute coupons and other information at the kiosk, like its literature and related materials for its store charity prograsm and "shop for schools."

The kiosk also could be used to pre-approve paper, person checks and either to pre-approve or even cash payroll and government-issued checks. That way time would be saved by shoppers and store clerks at checkout.

Additionally, Tesco's Fresh & Easy could use the "neighborhood" store kiosks to sell a selected variety of products, both for store sales as well as community and neighborhood assistance.

On the community-neighborhood side of the equation, sales could include things like bus and other mass-transit passes, tickets to local events and fund-raisers, along with related communitiy-based products. (We don't mean consumer packaged goods by products. BUt rather the type of things we describe.)

In terms of products for added store sales, items could include: pre-paid cell phones and phone cards, local area maps, Fresh & Easy gift cards, Fresh & Easy coupon books (a new creation) and other, similar products that could evolve over time.

These store "neighborhood" kiosks, which would be small and take up very little floor space, serve multiple purposes.

First, they assist with the check cashing process, as mentioned above. Additionally, they allow Fresh & Easy stores to add some incremental sales by selling the types of products mentioned. Further, they offer an added customer service element to the stores, and to the neighborhoods, and from a longer term positioning standpoint. Lastly, they help to better communicate what Tesco says is a central position of the Fresh & Easy format, which is to be the "neighborhood grocery store."

Safeway Stores operates similar customer service centers at the front-end of most of its stores, for example. Customers love it and it works out very well for store operations.

Adding the "neighborhood" service kiosks in the Fresh & Easy stores also would help add a better "sense of place" to the stores, something that we've been saying for over a year in our analysis is much needed. Remeber, the whole is more than the sum of its parts in food retailing.

Conclusion

Tesco's retail operations policy is a top-down, command-and-control-style model.

The policy says to shoppers: We want you to shop at our Fresh & Easy markets as long as you are willing to" pay with cash, debit and credit card only; aren't a poor mother who needs to use WIC coupons to feed her kids; are willing to not use manufacturers' "cents off" coupons to save on your grocery bill; are willing to scan and bag your own grocery order; and a will accept single-use plastic bags only, or pay for your own bag, but not be offered paper bags, even if that is your preference.

That's a mouthful.

On the other hand, all of Tesco Fresh & Easy's competitors say in their policies, which are bottom-up (choice) rather than top-down policies: We invite you to shop at our stores by offering you as many ways of paying for your grocery purchases as we can think of offering -- cash, paper checks, cashing payroll checks, credit cards, debit cards.

Their policies also say: We also invite you to use manufacturers' coupons to save money on your total grocery bill. We provide full checkout service (and in a few cases offer the option of self-checkout along with it). We offer you a choice of paper or plastic bags (and in many cases will carry the groceries out to your car), along with selling a variety of reusable bags. And we invite poor mothers to use their WIC vouchers in our stores. Your money is as good as anybody elses. And we treat you fairly.

Compare and contrast the two retail operations strategies and policies -- Tesco Fresh & Easy's and all the others. Which one seems like it would induce the greatest number of potential consumers to shop in a grocery chain's stores?

American consumers love choice and options. For that matter, even former Sovet Block nation consumers in Eastern Europe like and demand more choice than the Tesco Fresh & Easy command and control retail operations policy provides, despite having lived under command and control economies until recent times.

One of the positioning elements of the Tesco Fresh & Easy stores is that they are "for everybody." The grocer says the stores are for all consumers; that they are neighborhood markets where Tesco wants people to do the majority of their grocery shopping at. That's the positioning.

But how can a retailer say it's stores are for "everybody," all consumers, when its retail operations policy excludes so many by limiting choice? The answer is, it can't.

There's a major disconnect between what Tesco says is the positioning of the Fresh & Easy stores and what's its retail operations policy is. By making the changes we offer, the grocery chain can go a very long ways towards making a better connection between what it wants the Fresh & Easy stores to be and what its operations strategy and policy has created.

Food and grocery retailing is a wholistic and comprehensive process and strategy. You can't just tinker with one element of merchandising or marketing, for example, if their are problems, and expect doing so to solve those problems.

This gets us back to the value proposition concept and practive. Tesco Fresh & Easy Neighborhood Market CEO has indicated the grocery chain has discovered it needs to compete better on promotional pricing, as well as adopting some elements of what we've been saying it needs to do in terms of the value proposition. But remember, value isn't just hot pricing.

Because of its consumer-limiting retail operations strategy, policy and practice, it's our analysis that what Fresh & Easy could likely end up doing, unless it makes the changes we suggest and creates a pro-customer-choice environment for its stores, is that by offering the hot promotional prices it has started offering (which we agree with as part of a wholistic strategy), is to create a class of "cherry-picking" shoppers, who just shop the stores for the promoteddeals, then go elsewhere to one (or more) of Fresh & Easy's competitors to buy the rest of their food and groceries.

The reason behind this is because many shoppers will shop a store if it has a few deals with prices so hot they just can't pass them up. But they won't spend much time in that store, and spend money on other items that are more profitable for the retailer, if that particular retailer has created a retail operations policy and practice that so limits customer choice that it alientates shoppers, which we argue Tesco has done with its command and control policy at Fresh & Easy.

The whole -- retail operations, merchandising, marketing -- after all, is much greater than the sum of its parts -- offer hot promotional deals and all will be solve -- in food and grocery retailing.

Making the seven simple retail operations changes we detailed above, as we've argued for some time now, will also add sales to Fresh & Easy, along with opening up a much larger potential customer base for the stores than currently exists.

Adding sales, creating more customers -- isn't that what it's all about? Indeed it is. It's a "no brainer."

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

We just finished reading a piece by Jim Prevor, sent to us from one of our readers. Mr. Prevor is a fresh foods industry consultant and writer who publishes a blog called the Perishable Pundit. He's been, like Fresh & Easy Buzz has, writing frequently about Tesco's small-format, convenience-oriented Fresh & Easy Neighborhood Market grocery store retailing venture in the Western USA.

We were pleased to read the following in Mr. Prevor's April 1 piece: "All these are good ideas [he has a list of seven suggestions for Fresh & Easy above this paragraph]. Our sense, however, is that there is a bigger problem [with the Fresh & Easy stores]. Many of the stores are ill-sited--they lack a sense of place--and it is unclear as to the kind of customer the stores are built for.

Some months ago, we first started writing about our empirical observation that one of the main problems with the Fresh & Easy small-format, combination basic grocery and fresh foods grocery markets, is that the stores lack a sense of place.

We sighted a body of sociological, anthropological and urban planning theory and empirical research called "Sense of Place Theory" as the basis of our assertion that the grocery store format--which has "neighborhood" in its name but not in its stores--lacks a sense of place, thus contributing to the fact people are shopping the grocery markets more like they do a conventional convenience store, rather than a neighborhood grocery store--which is how Tesco has positioned the stores--and how they must be shopped (primary and some secondary shoppers) in order to be successful.

We came upon this finding not only deductively by applying our knowledge and experience with "Sense of Place Theory" to the Fresh & Easy stores when observing and analyzing them in the field, but we also conducted what is called "action research," which is a social and behavioral science field research methodology.

[You can learn more about "action research" by getting the book, "A Practical Guide to Behavioral Research: Tools and Techniques," by Dr. Robert Sommer and his wife Dr. Barbara Sommer. Additionally, you can read a number of Dr. Robert Sommer's papers and articles here. Click here for Bob Sommer's complete list of publications.

Bob Sommer is a professor emeritus at the University of California, Davis, where he has been a Pychology professor--along with a consumer behavior researcher and pioneer--for 45 years. Dr. Sommer also is one of the founders of the field of Environmental Psychology, and was the founder and longtime director of the University's renowned Center for Consumer Research.]

Using the methods of behavior and observational "action research" (which you are now an expert in from reading Dr. Sommer's work linked above), we confirmed our hypothesis that the Fresh & Easy grocery stores are lacking a sense of place based on a number of objective criteria. [Action research is called that because it's not a mere theoretical exercise. Rather, as the term implies, it's a useful scientific research method to use in the real world (like a grocery store), the results of which can be used as data to make changes and improvements.]

Click here to read one of our more comprehensive pieces about the conclusions we reached, (and the suggestions we made in moving forward) about Tesco's Fresh & Easy grocery stores' lacking a sense of place, based on our research.

We're pleased Mr. Prevor independently arrived at the same conclusion we determined through our research, which is that a "big" problem with the Fresh & Easy stores is their serious lack of a sense of place.

[For more knowledge about "Sense of Place Theory" take a look here at what's called "Third Place" as well. Ray Oldenburg is one of the better writers on "Third Place" theory and practice. Coffee chain Starbucks has used "Sense of Place" and "Third Place" theory and practice extensively in it design, operations, marketing and merchandising strategy. Whole Foods Market, Inc. also has used elements of the concepts in its store design and merchadising practices.]

In his April 1 piece, Mr. Prevor also offers Tesco seven suggestions for moving forward with the Fresh & Easy format, operations and merchandising schemes.

His seven suggestions and a number of suggestions we've offered in the last few months are similar. (We've never met or compared notes.) And, he offers some good ideas we haven't mentioned, such as his concept that Tesco needs to stop running the chain like its a multi-thousand store operation rather than the start up it is. We also disagree on some key things of course.

For example, Mr. Prevor even offers a "final solution" of sorts in his piece, which is to break Fresh & Easy into two seperate chains--one a no-frills, discount grocery store format like Aldi, and the other a specialty grocery chain like Trader Joe's, which just happens to be owned by family members who also are the primary owners of German-based Aldi International.

We've thought about the same thing often. In fact, we warned of what we called a "format model muddle" problem with the Fresh & Easy grocery stores long before the the first unit opened. It's a real problem.

Statistitions and economists have a concept called BiModal Distribution. In very basic terms, it's a continuous probability distribution with two different and distinct (the Bi) modes. Up and down are bimodal modes, for example.

This concept has been applied to retailing, the results of which suggest in the case of grocery retailing. formats which have clear differentiation--Whole Foods as upscale, Aldi or Sav-A-Lot as no frills, discount grocers, for example--do the best. It's those in the middle, or without clear format differentiation, that fail the most.

Fresh & Easy does fall into this category in many ways (but not completely), so at some point we might determine that despite some significant format fixes, it might come time to scrap the current format outline altogether.

We aren't there yet. However, if Tesco doesn't make what we are calling significant format tweaks, we do believe the probability of the present format being successful with just marketing and merchandising changes alone is low.

In a nutshell, here are the basic (not all of them) suggestions we've offered to date on improving the Fresh & Easy format, operations, marketing and merchandising processes and practices, based on our field research, interviews with numerous vendors, consumers, store-level workers and others. You can find all of these suggestions in various pieces we've written in Fresh & Easy Buzz:

>Localism: There is a serious need to localize the stores' product mix (and to some degree the actual stores) to the neighborhoods in which they are located. This includes having a solid understand of and respect for the history, culture and demographics of each respective neighborhood a store is located in. From this knowledge flows product mix customization on top of the basic core mix that goes in every store. This customization process is category-wide.

Localism is actually a conceptual suggestion that covers many areas such as marketing, merchandising, format design tweaking and more. It's also a mind-set. It needs to permeate all that Fresh & Easy does in its retailing.

>Create a Sense of Place in the stores; or put the "neighborhood" in Fresh & Easy Neighborhood Market: This is explained a bit above. However, essentially the Fresh & Easy stores are too sterile and uninviting in our analysis to encourage customers to spend much time in them shopping and spending money, which is key to gaining primary shoppers. Doing so is vital for the chain's positioning as a "neighborhood" market, and essential for their financial success. As we mentioned above, there's what we call a "model muddle" within the Fresh & Easy format.

We've offered a number of suggestions for creating a better sense of place in the stores. Among the suggestions include: creating much more inviting bulk produce departments, creating a small, in-store "Fresh & Easy Cafe," in part modeled after Tesco's successful "Tesco Cafe" in the chain's UK stores, and adding design elements and unique features ("localism") to the stores which will reflect a given community and neighborhood's demographics, history and culture. This is done by numerous successful grocery chains. For a good example, note how Whole Foods Market, Inc. localizes it stores while still having an overall core design and merchandising mix. from a conceptualization standpoint, think "mass customization."

>Eliminate most of the packaged produce, with the exception of some specialty items, in favor of abundant, bulk produce displays. This is one of Mr. Prevor's suggestions as well. And of course it should be, he's an experienced produce man. So are we, among other things. And decades of that experience is in the Western USA market.

Americans, especially westerners, love their produce: lots of it and untouched in the main by bags, cellaphane and plastic containers. Sure, Trader Joe's sells produce in packages, and does pretty well with it, the argument will go. However, fresh produce is a mere sideline for Trader Joe's, compared to most supermarkets, large or samll-format.

For a grocer which is positioning its stores as a primary, neighborhood shopping venue like Tesco is with Fresh & Easy, produce can't be a sideline; it must be key. Fresh produce is one of the top-three reasons consumers choose a grocery store. And, at the top of their definition of "good produce" is fresh, bulk and lots of variety. Farmer's Markets have grown in the U.S. by 28% each year for the last 10 years. Does anybody wonder why? Let's see: fresh, abundant, wide variety, bulk, local produce....you get the point.

>Store Brand vs. National Brand: We've argued Fresh & Easy needs to change its current store brand vs. national brand product ratio (especially on basic grocery items) from it's current mix of about 65% store brand/35% national brand, to at a minimum 50% store brand/50% national brand mix. Even better, we've suggested, would be a 60% national grocery brand vs. 40% store brand mix.

We don't agree Fresh & Easy should eliminate most all of its store brand grocery items. We think the 60%-40% mix is good. If Tesco digs deep into it's corporate store brand marketing expertise it can do much with that 40%, which also (if marketed well) offers the Fresh & Easy chain a unique product offering to hang it's merchandising hat on. It's called differentiation. Again, it must be executed well. A little history: It took Trader Joe's many years to gain the popularity it has today for its various store brands. TJ's is doing store brand marketing far better than Fresh & Easy is though to date.

>Understanding and Executing a 'Western' USA Product Mix: We've argued the fact that in grocery retailing in the USA their are significant regional differences in brands and consumer product preferences. For example, Kraft Miracle Whip is one of the top two items in the condiment category in most of the Midwestern U.S. However, it ranks far-lower in California, for example.

What about Best Foods mayonnaise? That's what the category's number one selling brand is called west of the Rocky Mountains. East of the Rockies, the exact same product (also number one in the category) is called Hellman's. We've done studies: Western consumers claim Hellman's isn't near as good as Best Foods. They say they wouldn't buy it even if it was 40-50% cheaper. The east of the Rocky Mountain consumers say the same thing about Best Foods vs. Hellman's. There are numerous other, similar examples of the differences we mention.

There even are significant intra-region differences within the Western USA, for example. Even though there are more similarities than differences, the Southern California and Arizona markets have many brand and product preference differences. Even within California, there are many brand and product preference differences between Southern and Northern California.

The Fresh & Easy stores need a product mix review and analysis. This needs to be done by people who have experience in grocery retailing and merchandising in the respective markets: California, Arizona and Nevada. There currently are items in numerous categories--in some cases the number one and number two selling brands/skus--that aren't in the stores. Conversely, there are brands/skus that should be removed because they are poor sellers in the respective markets.

Picking a product assortment for a limited assortment format grocery store is far more difficult--and precise--than doing so for a standard-sized supermarket is. As we've suggested a number of times, Fresh & Easy needs to go back to the drawing board and review and optimize the product mix, across all categories, in the Fresh & Easy grocery markets.

>Fresh & Prepared Foods Out-of-Stock Problem: As we written often, Fresh & Easy continues to have out-of-stock problems in many of its stores in the fresh foods categories, especially fresh, prepared foods. This problem isn't due to massive sales unfortunately. It's a logistics problem. It's improved considerably over the last two months, but still exists.

We argue this is a problem that must be fixed "yesterday," or else it will define the Fresh & Easy stores in consumers' minds as "that store that's always out of what I want." The problem has already created this definition in the minds of numerous consumers we've talked to.

>Dump the Self-Scanning Checkout: American's don't like to scan and bag there own grocery purchases. It's been tried, going back to the 1980's, and has failed. Only a few, niche deep-discount grocers use it today, and its more a novelty than anything else. American consumers also don't buy the proposition that self-scanning leads to lower prices. Wal-Mart, Costco, bare-bones warehouse stores all have clerks who scan and bag customer orders. A chain would have to have really low prices to sell self-scanning to mainstream U.S. consumers; or even non- mainstream ones for that matter. Dump it and dump it fast, as we argued all the way back in December, 2007.

>A General lack of Consumer Awareness of Fresh & Easy Stores: To date, Tesco has relied almost exclusively on publicity generated via the media ("free media") to create awareness for the Fresh & Easy stores. Marketing PR if you will. This hasn't worked. Our analysis is that there's a low-level of consumer awareness (less in Nevada than Southern California and Arizona) in the neighborhoods where the stores are located. Therefore, we've suggested an integrated marketing campaign, using radio advertising as the campaign's "lead media horse." Tesco's "if we build it they will come" strategy hasn't worked thus far.

These six suggestions--and remember "localism" is a more conceptual, multi-purpose suggestion, as well as an attitude that in addition to the specific ideas we offered also must permeate all that the retailer does: format tweaks, operations, marketing, merchandising, customer service--form the basis of the suggestions for moving forward we've offered thus far over the last few months for Tesco's Fresh & Easy Neighborhood Market.

There are numerous points of agreement, and some significant differences as well, which are emerging from a group of grocery industry analysts and participants--who aren't in all cases talking to each other about the issues--about some of the ways Tesco needs to move forward in this now, new store opening "pause" period--and beyond--to help create a more successful outcome for the Fresh & Easy chain.

It's also clear most of these analysts aren't wishing Tesco failure with Fresh & Easy, as Tesco CFO Andrew Higginson suggested might be the case in this piece we ran yesterday.

As part of that "localism" which we humbly suggest should permeate all Tesco does with Fresh & Easy going forward, it might be a worth it to listen to what some of us experienced "locals" are saying. As we used to say in those old "action research" training sessions: 'There's no such thing as too little good data.'