More Reshuffling: Number Two Marketing Exec Follows CMO Uwins Out the Door at Tesco's Fresh & Easy Neighborhood Market

Tesco's Fresh & Easy celebrated birthday number four November 9.



The top-level management reshuffling and integration of the marketing function into a new combination buying-merchandising-marketing department headed by chief customer officer and former chief commercial (buying and merchandising) officer John Burry continues at Tesco's Fresh & Easy Neighborhood Market.

The latest departure from the Fresh & Easy's El Segundo, California headquarters is marketing operations director Paul Madarieta, who was the number two marketing executive in what was until a couple weeks ago the standalone marketing department.

Madarieta, now gone, reported directly to former chief marketing officer (CMO) Simon Uwins, who as we were the first to report in this story on November 10 left Fresh & Easy and Tesco in a top-level shakeup initiated by Philip Clarke, the CEO of Tesco, and Tesco group deputy CEO/chief marketing officer Tim Mason, who's also the CEO of Fresh & Easy Neighborhood Market.

Madarieta joined Fresh & Easy in late 2007 in a retail operations capacity. His title before moving into marketing was regional director of California stores.

He was later brought into the grocery chain's corporate marketing department by CEO Mason, who, according to our sources, believed his knowledge of retail operations, particularly in California, and high-level of enthusiasm would make him a good addition to the department and to the grocery chain's marketing efforts.

Mason, who since March of this year has been Tesco's chief marketing officer and deputy CEO, in addition to remaining CEO of Fresh & Easy, was the United Kingdom-based global retailer's chief marketing officer before coming to California in 2006 to start up Fresh & as its founding CEO.

Madarieta became Fresh & Easy's marketing operations director in January 2010.

As part of the shake up that resulted in Simon Uwins' leaving Fresh & Easy (see here), Madarieta was offered a lessor position in the new, combined department being headed up by John Burry, which he ultimately declined, instead leaving the 184-store fresh food and grocery chain, according to our sources.

Madarieta's position, like that of his former boss Simon Uwins, has been eliminated by Tesco's Fresh & Easy Neighborhood Market.

Fresh & Easy Neighborhood market recently posted an advertisement for a marketing analyst, a position that pays considerably less a salary than the former marketing operations director position, and a whole lot less than the chief marketing officer position formerly held by Uwins. The marketing analyst will work in the new joint commercial (buying-merchandising)-marketing department being headed up by chief customer officer John Burry.

Prior to joining Tesco's Fresh & Easy, Paul Madarieta spent a number of years working for iconic specialty grocer Trader Joe's, which Fresh & Easy Neighborhood Market has sought to emulate in a number of operational and merchandising ways, ranging from store size and look and its focus on private brands, to putting an emphasis on the wine category, among others.

Madarieta started out as a crew member (store clerk) at Trader Joe's. He later became a store captain (store manager), and from there was promoted to a regional vice president position with the Southern California-based grocery chain.

Fresh & Easy Neighborhood Market has hired a number of former Trader Joe's employees.

For example, Larry Biggerstaff, Fresh & Easy's current director of grocery buying and merchandising (reporting to John Burry), was the vice president of merchandising at Trader Joe's prior to joining El Segundo, California-based Fresh & Easy Neighborhood Market last year, as we reported in this September 11, 2010 story - Ex-Trader Joe's VP, Winn-Dixie Exec Larry Biggerstaff New Director of Grocery at Tesco's Fresh & Easy Neighborhood Market.

A number of category managers and buyers at Fresh & Easy also have previously worked for Trader Joe's, which is headquartered in the Southern California city of Monrovia.

For example, in the November 10 story about Simon Uwins' departure, we mentioned that three key mid-level headquarters employees had also recently left the grocery chain.

One of the employees who left in the last 60 days is Mei-Lon Jimenez, who until her departure was the category manager for bakery at Fresh & Easy, and prior to joining the grocery chain worked for Trader Joe's.

In her position at Fresh & Easy Neighborhood Market, Jimenez played a significant role in the start up of the new in-store bakery departments the grocer is putting in many of its stores. We broke the news about the bakery development in this May 18, 2011 story. Fresh & Easy started the in-store bakery installations late this summer. It's on the record as saying its goal is to have the bakeries in about 100 of its 184 grocery markets by the end of this year.

The former Fresh & Easy bakery category manager is now working for the Coles supermarket chain in Australia.

We discovered she joined the down-under supermarket chain two weeks ago when Coles' posted her name on a portion of its website, listing her as its new category manager for cheese. A senior executive at the supermarket chain confirmed the posting. She started at the down-under chain last week, according to the source.

Coles' is headed up by former British supermarket executive Ian McLeod. Its senior management team includes numerous veterans of the food and grocery retailing business in the United Kingdom, including Tesco, as we detailed in this December 25, 2009 piece: It's 'British Invasion: The Sequel Down Under' For Former Tesco Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell.

Another related Coles-Tesco Fresh & Easy angle: Charlotte Maxwell, who worked for Tesco for nine years and was the director of grocery buying and merchandising at Fresh & Easy from 2006 until August 22, 2008, joined Coles in April 2009 as its general manager of deli and bakery, which includes cheese. Ironically, she left Coles (about 30 days ago) to pursue other occupational opportunities. (Click here to read about Ms. Maxwell's departure from Tesco's Fresh & Easy and her joining Coles in Australia.)

With the departure of the number one (Simon Uwins) and two (Paul Madarieta) marketing executives at Fresh & Easy Neighborhood Market, chief customer officer John Burry has taken on the dual-responsibility for the corporate commercial (buying and merchandising) and marketing functions at the Tesco-owned chain, as we reported in our November 10 story.

Additionally, as we noted in the story, Tim Lee, who's been Fresh & Easy's director of fresh foods, reporting to Burry, is stepping in as a key player in the grocery chain's marketing efforts. He continues to report to Burry

Lee is being replaced as director of fresh foods by Ian Fletcher, who previously was in charge of Fresh & Easy's kitchen operation. He too reports to John Burry, as does Lee and director of grocery Larry Biggerstaff.

From a balance sheet (cost savings) perspective, Uwins' salary is being absorbed into Burry's, perhaps with a slight bump, while Madarieta's position and salary will essentially be absorbed by Tim Lee. As previously noted, the two marketing positions have been eliminated.

Tesco will report its 2011/12 fiscal year third quarter results on December 8, although it won't likely offer specific sales and loss numbers for Fresh & Easy, as it generally doesn't do so except when reporting half (interim) and full-year results.

On October 5, 2011 Tesco reported a fiscal 2011/12 half-year loss of $112 million for Fresh & Easy, on sales of $470 million. The loss is 21-23% (depending on how recorded) lower than the one reported for Fresh & Easy for the same period in the previous fiscal year.

The United Kingdom-based global retailer's CEO, Philip Clarke, says Tesco will break-even with Fresh & Easy Neighborhood Market by the end of the 2012/13 fiscal year, which is 15 months away. The 2012/13 fiscal year ends February 2013. Tesco reports its sales and profits/loss for the year in April 2013.

Post Script: Take a look at prediction number 7 in this story from last year - December 30, 2010: Seven Predictions For Tesco's Fresh & Easy Neighborhood Market For 2011.

Also see these columns by our 'The Insider' columnist, all published before Philip Clarke became CEO of Tesco in March 2011:

>October 8, 2010: Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA

>September 13, 2010: Reading Philip Clarke's Tea Leaves: Might A Mixed Corporate/Franchise Model Be in Fresh & Easy Neighborhood Market's Future?

>June 12, 2010: Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

Additional Related Stories

November 17, 2011: 'Meat Guru'-Category Manager Bill Arnold Out at Fresh & Easy Neighborhood Market

November 10, 2011: Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market.

October 27, 2011: Former Meat Buyer Wins $400,000-Plus Legal Judgment From Fresh & Easy Neighborhood Market

February 23, 2011: Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market

February 28, 2011: Changing of the Guard: Clarke Takes Over the Reins as Tesco CEO Wednesday

Click on this link - Fresh and Easy headquarters personel changes - for more related stories.

[Photo credit: Fresh & Easy Neighborhood Market.]

Integrated Retail & Twitter Wine Promotion Rates Fresh & Easy Neighborhood Market A Gold Medal

Wine & Beer Category Report: News/Analysis/Commentary

Tesco's Fresh & Easy Neighborhood Market today launched a full-line-drive, mix and match wine category promotion in its 159 fresh food and grocery stores in California, southern Nevada and Metropolitan Phoenix, Arizona.

In the promotion, which runs from June 23 -to- July 6, 2010, customers get 20% off the total of any six or more bottles of wine they purchase.

Additionally, Fresh & Easy is giving away a reusable cotton wine bag with all single-customer wine purchases of $25 or more.

In and of itself there's nothing particularly unique or special about the promo as grocer wine category promotions go, although we like the free wine bag addition. It adds an additional layer to the promotion, beyond just the 20% price focus.

But Fresh & Easy Neighborhood Market is kicking off the wine promotion with a "Twitter Wine Tasting" this evening, starting at 7 pm pacific time.

This is the grocer's second such "Twitter Wine Tasting," in which participants purchase the wines to be tasted and pondered in the comfort of their homes at a Fresh & Easy store, and then share their questions, comments and evaluations on the various varieties of vino via Twitter.com.

The first such tasting was on February 9 of this year. Read our story about Fresh & Easy's first "Twitter Wine Tasting" - February 8, 2010: 'I Taste Therefore I Tweet': Fresh & Easy Set to Hold 'Twitter (Wine) Tasting' Tomorrow Night.

Tonight's wine tippling tweeters will be tasting three of Fresh & Easy Neighborhood Market's proprietary wines. The three brands-varieties are: Napa Family Vineyards Chardonnay, which retails for under $12; The Vine Yard Late Harvest Riesling, which sells for under $8; and Re del Castello Chianti Classico, which goes for under $10 at Fresh & Easy Neighborhood market stores. Fresh & Easy is featuring two of the varieties, along with a few others, in its "Friends of Fresh & Easy" e-mail promo which it sent out late yesterday. That's what we call "positive, practical, promotional merchandising integration," or PPPMI for short. More on that concept a little later below.

In order to participate in the virtual wine tasting event (virtual on twitter but real at home) people with a Twitter account - those who don't already have one can create one in a couple minutes - simply sign up at Taste Live, send an RSVP here, buy the three wines at a Fresh & Easy store, and then log-in back at Taste Live, at 7 pm tonight.

According to the grocer, Fresh & Easy Neighborhood Market wine category manager Karen Fletcher will be tweeting, answering questions and following the tasters' evaluations at its Twitter.com account - @fresh_and_easy - starting at 7 pm. The tippling tweeters need only to use the Twitter hashtag #FreshEasyWines in order to be able to view the wine tweets of their fellow tasters on Twitter tonight.

Positive, practical, promotional merchandising integration

As regular Fresh & Easy Buzz readers are aware - and non-regular readers of the blog will soon become aware of - we're big advocates of integrated promotions that tie-in what happens on the store floor (merchandising and promotional merchandising) with various forms of media, particularly forms of interactive social media like Twitter, Facebook and the like.

We've been suggesting to Fresh & Easy Neighborhood Market in our strategy session-oriented posts since about mid-2008 that the grocer needs to focus much more on doing integrated promotions across all categories. One of the Fresh & Easy's problems or challenges, in our analysis, has been a failure to integrate; to use multiple platforms, integrating on the store floor merchandising with various forms of media. For example, we liked this recent promotion at Fresh & Easy. But the grocer failed to take it beyond the stores; to integrate it with other media in a meaningful and significant way.

Merchandising and media-related promotions such as the wine promotion-twitter event, which tie-in the stores and the larger consumer world, are something Fresh & Easy needs to do more regularly in order to create excitement, drive sales into the stores, build brand, and create new, much-needed customers.

In terms of the various categories, in our analysis the best merchandising and promotional activity Fresh & Easy has done thus far is in the wine category.

Wine category manager Karen Fletcher has been in her position at Fresh & Easy Neighborhood Market from the very beginning. Therefore we give her the primary credit for this development.
Fresh & Easy's wine and beer category has flipped-flopped between the directors of the grocer's two buying and merchandising departments, fresh and grocery - and not totally against Ms. Fletcher's objection - three times since 2007.

The wine and beer category was originally (and logically) under the grocery department. But it later was moved to the fresh department for internal reasons. Then in the summer of 2008 the category was switched back to grocery, under the supervision of Sean McCurley, who made a lateral move at the time from director of fresh foods to grocery director - and who recently returned to Tesco in the UK - replacing Charlotte Maxwell, who departed Fresh & Easy to return to Tesco in the UK, which she left the employ of shortly after. (Yes, Sean McCurley and Karen Fletcher had a strong working relationship. They both also came to Fresh & Easy from Tesco in the UK.)

Tweet, drink and be merry

While a Twitter-based wine tasting doesn't have the glamour and excitement of a live tasting, say at a Napa Valley winery, it certainly offers some advantages. Among those advantages include: being able to dress comfortably - although we don't want to hear about participants wearing boxer shorts or old sweat pants while wine tasting and tweeting tonight - relaxing on your couch at home with a laptop computer nestled close by or a smart phone in hand, and being able to stock the fridge with one's own choice of foods to cleanse the palate between bottles of wine.

From a marketing and merchandising standpoint for Fresh & Easy the tasting offers the grocer a chance to get people into the stores to purchase the three bottles of wine, and then hopefully buy additional food and grocery items. But much more than that, as we said earlier, it integrates what is happening at retail - the June 23 -to- July 6 wine promotion - with a wider social media-based promotion, thereby helping over time (with repetition and other different integrated promotions added on) to create a story around the wine category at Fresh & Easy Neighborhood Market.

Doing this - integrating what goes happens on the store floor with media promotions and events - and doing it regularly, comprehensively and in a creative yet practical manner (need to sell product as well as create buzz) is what good merchandising and promotions are all about, as in creating and telling a good story, which in many ways is the essence of a potentially successful marketing campaign.

Salute! In 140 characters or less of course.

Readers: Click here to read a selection of past posts in Fresh & Easy Buzz on wine category merchandising and related topics.

Key 'Veteran' Fresh Produce Category Manager Chris Harris Leaves Fresh & Easy Neighborhood Market

The produce department in Tesco's Fresh & Easy Neighborhood Market stores. [Photo credit: Fresh & Easy Neighborhood Market]

Breaking Buzz

Fresh on the heels of former director of grocery buying and merchandising Sean McCurley's departure from Tesco's Fresh & Easy Neighborhood Market to return to Tesco in the United Kingdom (UK) at the end of May [May 23, 2010: Director of Grocery Sean McCurley Leaving Fresh & Easy Neighborhood Market to Return to Tesco in the UK], the El Segundo, California-based fresh food and grocery chain's corporate buying and merchandising department has lost another key player: Fresh produce category manager Chris Harris.

Harris, who was one of the few - if not the last - remaining original category managers who joined Fresh & Easy in late 2006-2007 before the first stores were opened, has left the company to pursue another employment opportunity in the fresh produce industry, Fresh & Easy Buzz has learned.

Since opening its first stores in November 2007, Fresh & Easy has seen numerous category managers and buyers come and go. [See -August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain' and August 17, 2008: Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department.] In fact, Chris Harris could be called the "departed veteran category manager" at Fresh & Easy because of the rapid turnover over the last three years in the corporate buying and merchandising department. The department is run by John Burry. He previously worked at Tesco in the UK. He came with CEO Mason and the initial group of senior executives from across the pond to start up Fresh & Easy in 2006.

The fresh food and grocery chain is also already on its second set of directors in both fresh foods and grocery in the corporate buying department. [See first link above, plus - August 22, 2008: Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK; January 6, 2009: Breaking Buzz: Corporate Director of Fresh Foods Jim Jensen Leaves Tesco's Fresh & Easy; and May 23, 2010: Director of Grocery Sean McCurley Leaving Fresh & Easy Neighborhood Market to Return to Tesco in the UK.] Fresh & Easy divides its corporate buying and merchandising department and function into two sections - fresh and grocery. Fresh includes produce, perishables and fresh-prepared foods. Grocery (which the grocer calls ambient, using the British industry term) includes dry grocery and everything else that's "ambient."

Chris Harris, 34, was a key player for Fresh & Easy's corporate buying and merchandising department because, among other positive attributes, he was known to be an aggressive, "get it done" fresh produce category manager, as well as a solid relationship builder, according to growers, vendors, and others who worked with him during his about three years at the fresh food and grocery chain of 159 stores. They also say Harris loves the fresh produce business in general, and demonstrated it in his job at Fresh & Easy Neighborhood Market, and in vendor relations.

Harris also is a native of the UK - although he never worked for Tesco before joining Fresh & Easy - which offers a certain cachet at the grocer's corporate headquarters in Southern California. Virtually all of Fresh & Easy Neighborhood Market USA's senior executives, from CEO Tim Mason on down, all came from the UK, and all worked for Tesco there previously.

Chris Harris first came to the U.S. in 2005, after working for a lettuce growing company in the UK, to work in the grower-processor side of the fresh produce industry. He working for the Ready-Pac and Professional Produce companies in Southern California before joining Fresh & Easy in 2007.

Additionally, he was a key player for the buying and merchandising department at Tesco's Fresh & Easy because he has a strong institutional memory of the start up of the chain in 2007, since he was key in getting the fresh produce category set up and functioning. That can be a difficult type of experience to replace, particularly at such a young grocery chain.

The timing of Harris' departure comes just shortly after a new director of fresh foods - Tim Lee - started at Fresh & Easy Neighborhood Market.

Lee only recently joined Fresh & Easy Neighborhood Market from Tesco in the United Kingdom, replacing Jim Jensen, the former director of fresh foods who left to take a job helping to start up the fresh, prepared foods program at Walgreens drug. [See - January 6, 2009: Breaking Buzz: Corporate Director of Fresh Foods Jim Jensen Leaves Tesco's Fresh & Easy; January 15, 2010: Just-Exited Tesco Fresh & Easy Fresh Foods Director Jim Jensen to Head New Fresh Foods Initiative at Walgreens Drug Chain and January 21, 2010: Walgreens Announces Hiring of Former Fresh & Easy Fresh Foods Director Jim Jensen; Confirms Our January 6 Report]

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. [More here.]

Sources tell us Lee has started initiating various changes in Fresh & Easy's fresh produce procurement and related policies and practices, based on some of the experiences he had with Tesco in the UK. As far as we're aware, Tim Lee has no previous experience in the U.S. food and grocery retailing or fresh produce industries.

Prior to Lee's arrival, Chris Harris was the point man for fresh produce procurement, pretty much running the category, with supervision by Jim Jensen, who's area of expertise is more in the fresh, prepared foods and related categories rather than produce.

Tesco's Fresh & Easy hasn't replaced Harris yet, nor is it currently advertising for his produce-bakery category manager position as of today.

Director of Grocery Sean McCurley Leaving Fresh & Easy Neighborhood Market to Return to Tesco in the UK

Breaking Buzz

Corporate director of grocery buying and merchandising Sean McCurley is leaving Tesco-owned Fresh & Easy Neighborhood Market to return to Tesco's global headquarters in Cheshunt, United Kingdom, where he worked prior to joining the U.S. fresh food and grocery chain as director of fresh foods, Fresh & Easy Buzz has learned. Mr. McCurley was a member of the original group of Tesco executives and others who started up Fresh & Easy Neighborhood Market in Spring 2006.

According to our sources, McCurley is set to leave Fresh & Easy's El Segundo, California headquarters to return to work at Tesco in the UK as early as the end of this month, but no later than June 12.

We're told Sean McCurley is leaving Fresh & Easy on good terms with Tesco.

His specific new position at Tesco in the UK isn't clear. But it will be in the commercial (buying and merchandising) area.

McCurley was Fresh & Easy's director of fresh foods until August 2008, when he became director of grocery, replacing Charlotte Maxwell, who left Fresh & Easy and returned to the UK that month. [See - August 17, 2008: Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department] [August 22, 2008: Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK]

Charlotte Maxwell left the employment of Tesco not long after. She moved to Australia in the spring of 2009, joining a group of British supermarket industry veterans who took over management of Australia's Coles supermarket chain. [See - December 25, 2009: It's 'British Invasion: The Sequel Down Under' For Former Tesco Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell.

Sean McCurley has held the corporate director of grocery position at Fresh & Easy since Ms. Maxwell's departure in August 2008.

In December of 2009 Jim Jensen, the then director of fresh foods at Fresh & Easy, who was promoted to that position from a category manager slot in August 2008 to replace McCurley, left Tesco's Fresh & Easy Neighborhood Market to accept a key position at Walgreens drug in its start up fresh-prepared foods program, as we were the first publication to report. [See - January 6, 2009: Breaking Buzz: Corporate Director of Fresh Foods Jim Jensen Leaves Tesco's Fresh & Easy] [January 15, 2010: Just-Exited Tesco Fresh & Easy Fresh Foods Director Jim Jensen to Head New Fresh Foods Initiative at Walgreens Drug Chain.] [January 21, 2010: Walgreens Announces Hiring of Former Fresh & Easy Fresh Foods Director Jim Jensen; Confirms Our January 6 Report]

Jensen was recruited to Walgreens by former Tesco Fresh & Easy vice president of retail operation Brian Pugh, who left Fresh & Easy in the summer of 2008. Pugh joined Walgreens, where he's currently vice president of merchandising, in 2009.

Jim Jensen's vacated director of fresh foods position was recently filled by Tim Lee, who came to Fresh & Easy Neighborhood Market from Tesco's corporate headquarters in the UK. Tim Lee was a corporate director of produce group procurement at Tesco in the UK prior to leaving to join Fresh & Easy as director of fresh foods.

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 United Kingdom 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.

Dower left Tesco last year to join the London-based fresh-prepared foods-maker and retailer Pret A Manger, which in addition to having over 100 shops in the UK and eight in Hong Kong, has over 20 stores in New York City, one in Washington D.C. (soon to be two), and is opening its first ready-to-eat, grab-and-go fresh foods shop in the Chicago area in August of this year.

Tesco's Fresh & Easy Neighborhood Market divides its corporate buying and merchandising function into two departments - grocery and fresh foods. Internally it uses the British industry terms, which are "ambient" for grocery and "fresh" for fresh foods. Fresh foods at Fresh & Easy consists of produce, meats-seafood, dairy-deli and fresh-prepared foods. Everything that's ambient - dry grocery, non-foods and the like - is under the grocery department.

Sean McCurley's departure affords Tesco's Fresh & Easy Neighborhood Market the opportunity to hire a new corporate director of grocery buying and merchandising who has a strong background in U.S. food and grocery retailing in general and extensive experience (mixed with talent of course) in the Western U.S., particularly in California. Fresh & Easy's chief commercial officer (the British industry term they use for buying and merchandising) John Burry is from Tesco in the UK, as is recent arrival, director of fresh foods Tim Lee.

It will be interesting to see if Fresh & Easy Neighborhood Market CEO Tim Mason, who's also a Tesco plc corporate director, takes the above approach or if Tesco replaces Sean McCurley with someone from the UK, as in the case of Tim Lee replacing Jim Jensen. Jensen is an American who never worked for Tesco prior to being hired by Tesco's Fresh & Easy.

Tesco currently has 159 of its small-format (10,000 -to- 13,000 square-foot) Fresh & Easy Neighborhood Market fresh food and grocery stores open and operating in California (Southern and the Central Valley areas of Bakersfield and Fresno), Metropolitan Las Vegas Nevada and Metro Phoenix, Arizona. In a November 27, 2007 presentation made in Southern California by CEO Tim Mason and his senior management team, Tony Eggs, Fresh & Easy's chief real estate officer, said there would be about 200 stores open and operating by February 2009. The grocer is about 60 stores shy of 200 units 15 months beyond February 2009, for those keeping count.

Just-Exited Tesco Fresh & Easy Fresh Foods Director Jim Jensen to Head New Fresh Foods Initiative at Walgreens Drug Chain

Connecting the Dots - And More

On January 6, 2010 we broke the news in this report [Breaking Buzz: Corporate Director of Fresh Foods Jim Jensen Leaves Tesco's Fresh & Easy] that Jim Jensen, Tesco Fresh & Easy Neighborhood Market's director of fresh foods, had left the company.

In the January 6 story we also reported that Mr. Jensen had left his position at Fresh & Easy to take a job with the Walgreens drug chain at its corporate headquarters in Deerfield, Illinois.

We also reported in the January 6 piece that Jim Jensen would join another Tesco Fresh & Easy corporate headquarters former employee at Walgreen's - Jeff Pugh, Fresh & Easy's former vice president of retail operations.

Mr. Pugh left Tesco's Fresh & Easy in September 2008, as we reported in this story: September 22, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market.

In December 2008 Brain Pugh joined Walgreens as its corporate vice president of format development, a new position at the drug chain, as we reported in this story: 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.

In March 2009 Brain Pugh was promoted by Walgreens, as we detailed in this report: March 2, 2009: Walgreens Promotes Former Tesco Fresh & Easy Exec Bryan Pugh to VP Merchandising Position; Move Fits Drug Chain's Current Strategic Focus.

In our reporting for the January 6, 2010 story, we had information that Jim Jensen was not only leaving Tesco's Fresh & Easy to join Walgreens but that he is taking a new position at the drug chain - director of fresh foods.

However, we didn't have enough source confirmation on that particular aspect of the story to go with it in print, based on our source and fact checking criteria - so we left it out, even though we believed it to be the case based on the information we obtained.

But today Bloomberg reporter-writer Carol Wolf helps us - and the ongoing story - out a bit.

In an interview piece today, she quotes Walgreens' vice president Brian Pugh from a January 11 interview she had with him (just five days after our Jim Jensen story was published) as announcing publicly that Walgreen Co. is going into the fresh foods merchandising business.

Here's what is reported in the piece today (in italics) from the January 11, 2010 phone interview with Brian Pugh:

Walgreen Co. plans to offer fresh foods and prepared meals to draw “time-starved” shoppers to its more than 7,000 stores, taking on retailers such as Target Corp. and Kroger Co. The drugstore chain has been talking with foodmakers including Unilever NV , Nestle SA and Sara Lee Corp. about creating private-label and branded products, said Bryan Pugh , vice president of merchandising.

“Everyone is time-starved and we have the most convenient 7,000 locations in the U.S.,” Pugh said in a Jan. 11 telephone interview. “They’re on-the-way-home destinations that are easy to get in and out of and will provide a good value.” He declined to say when the project will be implemented or how much it costs.

Walgreen, based in Deerfield, Illinois, must sort out supply and distribution issues and test in some markets before introducing freshly prepared foods such as salads, cut fruits, ready-to-bake pizzas and sandwiches into more stores, he said. The goal of the program, along with the sale of beer and private-label wine, is to boost revenue , Pugh said.

[You can read the entire Bloomberg piece here.]

In the Bloomberg interview Brian Pugh confirms Walgreens is getting into the fresh foods merchandising business in some form.

It's important to note though that unlike Tesco's Fresh & Easy, Walmart, Safeway and most other major food retailing chains that develop and operate their own fresh foods programs in-house, Walgreens is looking to (or already has found) find outside vendors/suppliers to actually make the fresh foods products it introduces in its drug stores. This in fact is a smart idea, since it would make little sense for the drug chain to create its own in-house fresh foods program given the high start up and operational costs associated with it. It's much better, if managed well, for the retailer to use outside suppliers to make the products.

Interestingly though - and remember we are connecting dots - in the Bloomberg interview piece Brain Pugh declines to name the new director of fresh foods Walgreens has hired to head up its fresh foods program - and no name is reported in the story.

Here's what Walgreen Co. vice president Pugh told the Bloomberg reporter as she reports in her piece today (in italics):

Walgreen hired a director of fresh foods, who will begin work in several weeks, Pugh said. He wouldn’t name the person.

Since Bloomberg's Carol Wolf helped us out a bit with this ongoing story in her piece today, it would only be fair to return the favor. So we will.

The name of the new director of fresh foods for Walgreens is Jim Jensen, who left his position as director of fresh foods at Tesco's Fresh & Easy on December 31, 2009, as we reported on January 6, 2010 in this story. Mr. Jensen is taking a little time off, packing up and moving to Illinois from Southern California, and will start work at Walgreen Co. in a week or two.

Walgreens has not confirmed publicly or officially confirmed Jim Jensen as the new head of its fresh foods merchandising efforts.

The story of Walgreen's going into the fresh foods business - although we stress we don't see it offering an as complete and extensive line of fresh, refrigerated ready-meals and other products like Tesco's Fresh & Easy and Safeway do, for example - gets all the more interesting because in California, southern Nevada and Arizona, where Fresh & Easy has its current 134 stores, a key store location strategy for Tesco has been to locate many of its Fresh & Easy Neighborhood Market stores right next to or near a Walgreens drug store unit.

Tesco and Walgreens have even partnered with shopping center developers to be the two key retail anchors - food and drug/pharmacy - in a number of new and remodeled centers.

[Fresh & Easy Buzz started connecting Walgreens and Tesco Fresh & Easy dots in late 2008 and early 2009. Suggested reading: January 22, 2009: Neighbors by Location Only: Will Mega-Drug Chain Walgreens' New Focus on Consumables and 'Affordable Essentials' Rob Sales From Tesco's Fresh & Easy? December 22, 2008:Drug Chain Walgreens to Slow New Store Growth; Despite Tesco Fresh & Easy's Recent Announcement to Do Similar, We Suggest An Analogy is Misplaced.]

Since Brain Pugh was in charge of retail operations at Tesco's Fresh & Easy, do you suppose he might see the irony - and potential opportunity - in the fact that so many Fresh & Easy and Walgreens units are located so close together in California, Nevada and Arizona?

Further, since fresh foods (and all consumables) falls into his responsibility list as the merchandising vice president at Walgreens, might Brain Pugh be seeking to use the close proximity of these numerous Fresh & Easy and Walgreens stores as a competitive advantage for the Drug chain in terms of fresh foods - and other consumables - merchandising and retailing?

And, in addition, might he like to use the irony of the Fresh & Easy and Walgreens units' close proximity as a retail category (fresh foods and all consumables) stiletto against Tesco, which he worked for in Asia for many years before coming to Southern California as part of the team starting up Fresh & Easy? When Brain Pugh left Fresh & Easy he left his career at Tesco plc as well, even though it began with the company long before Fresh & Easy was envisioned?

With Walgreen Co. getting into the fresh foods category - which is about 40% -to- 50% of the total offerings in a Fresh & Easy store (the other half being packaged goods and grocery products in various categories) - combined with the fact that numerous Fresh & Easy stores are located near Walgreen's stores in Tesco's three markets mentioned above - Tesco's Fresh & Easy will find itself with new and added competition right next door or across or just down the street at many of its locations.

Walgreen's already sells limited selections of packaged food and grocery items, household goods, beer, wine (and spirits in some locations) and perishables in its stores - and as we've reported and written about has been expanding its food and grocery selections in the stores for well over a year now - so that is existing competition close by for Fresh & Easy. But adding the fresh, prepared foods in whatever dimension and SKu count will add a new layer of competition to a category that Tesco believed was underdeveloped in the U.S., using that belief as one of the key reasons it invested in and developed the Fresh & Easy concept and chain.

The story is far from over - and it will get even more interesting. We will have more to come soon.

Connecting the Dots - And More: Related stories from Fresh & Easy Buzz:

>December 25, 2009: It's 'British Invasion: The Sequel Down Under' For Former Tesco Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell

>August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

>August 17, 2008: Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department

>August 22, 2008: Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK

>September 22, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

>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

>March 2, 2008: Walgreens Promotes Former Tesco Fresh & Easy Exec Bryan Pough to VP Merchandising Position; Move Fits Drug Chain's Current Strategic Focus

>March 12, 2008: Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team

>May 29, 2008: Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 5

>January 22, 2009: Neighbors by Location Only: Will Mega-Drug Chain Walgreens' New Focus on Consumables and 'Affordable Essentials' Rob Sales From Tesco's Fresh & Easy?

>December 22, 2008: Drug Chain Walgreens to Slow New Store Growth; Despite Tesco Fresh & Easy's Recent Announcement to Do Similar, We Suggest An Analogy is Misplaced

>March 29, 2008: Tesco's Fresh & Easy 'Taking a Pause' From New Store Openings: A Full Review In the Works

Breaking Buzz: Corporate Director of Fresh Foods Jim Jensen Leaves Tesco's Fresh & Easy

Jim Jensen, the director of fresh foods for Tesco's Fresh & Easy Neighborhood Market, has left the company, Fresh & Easy Buzz has learned.

According to our sources, Mr. Jensen left Fresh & Easy on December 30. He is no longer employed by Tesco plc in any capacity.

Sources tell us Jim Jensen left Tesco's Fresh & Easy Neighborhood Market to accept a new position with the Walgreens drug chain at its corporate headquarters in Illinois.

Interestingly, if Jim Jensen does join Walgreens, as our sources tell us he is, he will join another Tesco Fresh & Easy alum, former vice president of retail operations Brian Pugh.

Mr. Pugh left Fresh & Easy in September 2008. [September 22, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market] and joined Walgreens as a vice president in December of 2008. [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]

Jim Jensen became director of fresh foods at Fresh & Easy Neighborhood Market's corporate headquarters in El Segundo, (Southern) California just 17 months ago, when he was promoted to that position from his then position as category manager for bakery. Bakery is part of the fresh foods department. [Read our August 17 and August 22 stories here for additional background: [August 17, 2008: Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department] August 22, 2008: Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK]

Tesco's Fresh & Easy breaks its corporate merchandising and buying function (which it calls commercial, using the British term) into two functional departments: Grocery and Fresh. Each department is headed by a director, which are the top corporate operational merchandising and buying positions at corporate headquarters.

All of the merchandising and buying department category managers report to the two directors.

The two directors of grocery and fresh report to the vice president of commercial (corporate merchandising and buying).

The grocery merchandising-buying department includes all packaged food and grocery items, along with non-foods.

The fresh department includes fresh produce, meats, bakery, other perishables and the grocer's ready-to-eat and ready-to-heat fresh, prepared foods (entrees, side dishes, ect.)

Tesco's Fresh & Easy has yet to name a replacement for Mr. Jensen, according to our sources.

Jim Jensen is the second merchandising-buying director to leave Tesco's Fresh & Easy in the last 17 months.

Charlotte Maxwell, the former director of grocery merchandising, left her position in August 2008.

Ms. Maxwell was replaced by the then director of fresh foods, Sean McCurley.

Jim Jensen was then promoted to director of fresh foods, filling Mr. McCurley's position.

As we've reported in the past, Tesco's Fresh & Easy has experienced considerable employee turnover in its corporate merchandising and buying departments since 2007, with numerous category managers and buyers leaving the company. [August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain']

One of our sources tells us Tesco could replace Jim Jensen at Fresh & Easy's El Segundo, California corporate headquarters with a merchandising-buying executive from Tesco headquarters in the United Kingdom. However no replacement has yet been named, based on our information.

Related Stories From Fresh & Easy Buzz:

December 25, 2009: It's 'British Invasion: The Sequel Down Under' For Former Tesco Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell

August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

August 17, 2008: Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department

August 22, 2008: Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK

September 22, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

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

March 2, 2008: Walgreens Promotes Former Tesco Fresh & Easy Exec Bryan Pough to VP Merchandising Position; Move Fits Drug Chain's Current Strategic Focus

March 12, 2008: Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team

May 29, 2008: Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 5

January 22, 2009: Neighbors by Location Only: Will Mega-Drug Chain Walgreens' New Focus on Consumables and 'Affordable Essentials' Rob Sales From Tesco's Fresh & Easy?

[Follow Fresh & Easy Buzz on Twitter.com for the latest news and information at www.twitter.com/freshneasybuzz.]

It's 'British Invasion: The Sequel Down Under' For Former Tesco Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell

Fresh & Easy Buzz was the first publication to report 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] that former co-vice president of operations Brian Pugh was leaving his position at Tesco's Fresh & Easy and Tesco plc.

Brian Pugh was a key executive for Tesco plc before being tapped to be one of the handful of Tesco executives from the United Kingdom sent to the United States to start up its Fresh & Easy small-format grocery and fresh foods chain in Southern California in 2006. The first Fresh & Easy markets opened in November 2007. There are now 131 Fresh & Easy stores open in Southern California, Arizona and Nevada.

Fresh & Easy Buzz was also the first publication (that we can find) to report in this December 22, 2008 story [Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position] that the former Tesco Fresh & Easy co-president of operations had landed a new position as vice president of format development at the mega-U.S. drug store chain Walgreens.

Mr. Pugh was promoted by Walgreens to the position of corporate vice president of merchandising (a position he currently holds) just a few months after being hired, as we reported in this March 2, 2009 story: Walgreens Promotes Former Tesco Fresh & Easy Exec Bryan Pough to VP Merchandising Position; Move Fits Drug Chain's Current Strategic Focus.

Prior to March of 2008 Brian Pugh held the position of vice president of operations at Tesco's El Segundo, California-based Fresh & Easy USA.

However, as we reported in this March 12, 2008 story [Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team], that changed when Tesco plc decided to transfer Jeff Adams, the former CEO of its Tesco-Lotus unit in Thailand, to Fresh & Easy USA to share senior retail operational duties with Mr. Pugh. [Suggested reading - May 29, 2008: Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 12.]

Charlotte Maxwell: Part of the British Invasion Down Under

Earlier in this August 17, 2008 story [Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department] Fresh & Easy Buzz was the first to report exclusively that Charlotte Maxwell, a nine-year Tesco plc executive and the former director of grocery at Tesco's Fresh & Easy USA for close to three years, was leaving her top position at Fresh & Easy headquarters in Southern California to return to Tesco plc's global headquarters in the United Kingdom.

Ms. Maxwell's departure from the top grocery merchandising job at Tesco's Fresh & Easy came amidst what we called in this August 17, 2008 story [ Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'] a category manager and grocery buyer "Brain Drain" at Tesco's Fresh & Easy Neighborhood Market's corporate headquarters in El Segundo, California.

Unlike former Tesco Fresh & Easy co-vice president of retail operations Brian Pugh, who left Tesco plc completely and not just its Fresh & Easy USA unit, former Tesco plc executive and Fresh & Easy USA director of grocery Charlotte Maxwell did return to Tesco and its global corporate headquarters in Cheshunt, Herts, England in the United Kingdom.

Her stay there didn't last long though.

We can now report that Charlotte Maxwell, like Brian Pugh, no longer is employed by Tesco plc.

In April of 2009 Ms. Maxwell joined the Coles supermarket chain in Australia as its new general manager of deli/bakery, which is the senior merchandising and buying position for the deli and bakery categories at the chain.

In 2008 and again in early 2009 Coles, which is Australia's second-largest food retailer after the Woolworths chain, tapped Charlotte Maxwell (in her case in early 2009), along with an entire team of former British supermarket chain executives, category managers and others, as part of a five-year strategic turn-around strategy being implemented by the board of directors of Coles' parent company, Westfarmers. Not too many years ago Coles held the number one market share position in Australia but was overtaken by Woolworths, which is something the board wants to change.

The turnaround effort is being led by Brit Ian MCLeod, who is a former executive with Asda, the number two supermarket chain in the United Kingdom after number one Tesco.

Another British grocery retailing veteran, turnaround specialist Archie Norman who is given much credit for the turnaround of the Walmart Stores, Inc.-owned Asda chain in the United Kingdom, is assisting in Coles' turnaround strategy, working with MCLeod in the position of "chief coach," a consulting capacity.

Former Tesco and Fresh & Easy USA executive Charlotte Maxwell is among a group of numerous Brits now at Coles' corporate headquarters in Australia. This group includes veterans from the United Kingdom's top three supermarket chains: Tesco, Asda and Sanisbury's. Many in the Australian food and grocery industry are calling it the "British invasion of Coles." We sot of like "British Invasion: The Sequel."

And the British food and grocery retailing vets transplanted to Coles in Australia look to be very busy, according to a brief report in Tuesday's (December 23) Herald Sun newspaper headlined: "Supermaket giant Coles accused of crunching suppliers with new campaign."

Here's the report (in italics):

Supermaket giant Coles accused of crunching suppliers with new campaign

SUPERMARKET giant Coles has been accused of launching a new campaign that strips profits from struggling suppliers.

A new management team recruited from UK supermarket chain Tesco has been blamed for the profit grab, which has seen Coles axe some branded lines that compete with its own private labels.

Suppliers say Coles is demanding big increases in payments for shelf space, playing cheap, low-quality imports off against local companies to force their prices down and asking suppliers to take a big hit on payments to subsidise the refurbishment of Coles' stores.

Coles has rejected the "wild" accusations. A spokesman said the chain sought to "strike a balance between paying sustainable prices to suppliers, and ensuring customers get the best possible prices in our stores".

But a food manufacturer who deals with local farmers said the new Coles management had been "ruthless", demanded "premium product for Chinese prices" and played several tricks during negotiations.

It appears the British invaders are stirring things up a bit down under.

Life After (Tesco's) Fresh & Easy

Neither Tesco plc or Tesco's Fresh & Easy Neighborhood Market USA announced the departures of either Charlotte Maxwell or Brian Pugh when each respectively left Fresh & Easy headquarters in Southern California. That's not an unusual phenonmenon though, and certainly not exclusive to Tesco.

But both Mr. Pough and Ms. Maxwell were key in setting up Tesco's U.S. Fresh & Easy chain just three years ago -part of that select team of pioneers or "British Invaders" if you will - And now both are no longer employed by Tesco plc.

We aren't suggesting anything nefarious about the departure's of these former key Tesco employees. It happens.

It is an interesting phenomenon though since both were key Tesco plc executives prior to the establishment of Fresh & Easy USA, which has been a less than stellar venture for Tesco thus far, and now both are not only gone from Fresh & Easy but also from Tesco plc.

But we won't go as far as to suggest there exists anything like a "Fresh & Easy curse" for former key Tesco plc executives who, like those British pioneers of history, came to the former colony of America to stake their claim.

But as many of us know - a start up can be a cruel mistress or master, as has been the case at Tesco's Fresh & Easy USA. But in the case of Mr. Pugh and Ms. Maxwell, it appears they've both landed well - one (Mr. Pugh) with the leading U.S. drug store chain, Walgreens, and the other (Ms. Maxwell) with Australia's second-largest supermarket chain, Coles.

'British Invasion: The Sequel Down Under'

And in the case of Charlotte Maxwell, it's "British Invasion: The Sequel Down Under," in part. Having spent nearly three years as one of a group of Tesco plc senior executives starting up the Fresh & Easy chain in the Western U.S. - a move that's often been dubbed in the media as the "British Invasion" of U.S food and grocery retailing, she's now part of a group of British retail food and grocery retailing veterans who have parachuted (or invaded) into australia to lead the turnaround of that country's second-largest grocery chain.

Walgreens Promotes Former Tesco Fresh & Easy Exec Bryan Pough to VP Merchandising Position; Move Fits Drug Chain's Current Strategic Focus

Mega-drug chain Walgreens has promoted former Tesco Fresh & Easy Neighborhood Market co-vice president for operations Bryan Pough to the position of corporate vice president of merchandising-Walgreens after just slightly over two months on the job as vice president of store format development at the corporate headquarters of the largest drug chain in the U.S.

As we reported in this December 22 piece [Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position], Deerfield, Illinois-based Walgreens hired Pough as its vice president of store format development in December, 2008, a new position in which he was tasked with focusing on growing the consumables and related categories in the drug chain's stores, such as food, groceries and household goods, as well as the strategic development of the existing and new store formats for the drug chain, including its new small-format drug store development we call "Smallgreens." The existing format development has to do with the drug chain's new, added focus on food, grocery and related products.

As we've written about previously in Fresh & Easy Buzz, Walgreens has been dramatically increasing the number of consumables SKUS in its U.S. drug stores, including adding lots of food, grocery and perishable products, both national and regional brand, as well as under its own store brands, which include Deerfield Farms, Walgreens and W, along with a couple others.

Walgreens has also been featuring more food, grocery, health and beauty care (HABA) and household item packaged goods in its 12-page weekly advertising circle since late last year, something we've previously reported on as well.

And since mid-January of this year the quantity of consumable, HABA and household packaged goods items in the weekly advertising circulars has more than doubled. For example, this week's Walgreens ad circular looks much more like a supermarket chain advertising circular than one that a drug store chain would normally produce. The first three pages of the promotional piece, for example, are devoted almost entirely to food, grocery, HABA and household items.

This is all part of Walgreens' strategic plan to focus more on everyday essential products in its stores in general, and in particular because of the current economic recession in which shoppers are cutting back dramatically on non-essential products.

Walgreens said today that Bryan Pough was named the comapny's new vice president of merchandising effective yesterday, Sunday, March 1. As vice president of merchandising Pough will continue in his roll as head of store format development, adding the merchandising responsibilities to that role, according to Walgreens. This gives the former Tesco Fresh & Easy Neighborhood Market USA executive a full plate right on the front lines at the drug chain.

Pough replaces former Walgreens vice president of merchandising George J. Riedl, who has been named senior vice president of pharmacy innovation and purchasing in the pharmacy services department, effective March 1, according to the company.

"During his 27 years with Walgreens, George has led several areas in pharmacy services, e-commerce and purchasing,” said Walgreens President and CEO Greg Wasson. “He brings vast knowledge of our entire company to his new role, and his pharmacy experience uniquely positions him for taking the implementation of POWER forward and driving our transformation of community pharmacy."

Riedl, 48, will oversee all pharmaceutical purchasing along with rollout of the POWER project, which is designed to enhance patient-pharmacist interaction and reduce costs. POWER is currently operational in more than 360 Florida stores and is anticipated to roll out to all 774 Florida stores by the end of August, according to Walgreens CEO Wasson.

Pough brings with him an extensive background in the food and grocery retailing industry, which fits the current merchandising direction Walgreens is moving in regarding beefing-up its consumer packaged goods merchandising and marketing, along with the transformation of its stores into a more consumables and essential consumer packaged goods-focus merchandising mix.

His focus while at Tesco on the small-format Fresh & Easy also fits with Walgreens plans to develop and open the smaller-format "Smallgreens" stores, along with continuing to open its larger drug stores.

Here's what Walgreens' CEO Wasson said today about the promotion of former Tesco Fresh & Easy Neighborhood Market co-vice preident of operations Bryan Pough to the vice president of merchandising position at the drug chain:

"Bryan brings a quarter century of terrific merchant expertise to Walgreens, including a combination of store operations and merchandising responsibility for Wal-Mart and Tesco,"
Wasson said.

"Over the last three years with Tesco USA, Pugh designed the Fresh & Easy Neighborhood Market store operations model and launched the retail grocery chain on the West Coast, where it grew to 90 locations in less than a year.

Prior to his Tesco experience, Pugh spent six years with CP Group of Asia, opening hypermarkets in China and Thailand and having responsibility for all purchasing, including consumables, over-the-counter health and wellness, electronics, clothing and other categories. From 1985 to 1993, he worked for Wal-Mart Stores, Inc., moving up from an assistant store manager in the Sam’s Club division to vice president of membership marketing."

The store format development aspect of Pough's portfolio includes, among other things, heading up a group that's looking to open small-format Walgreen's drug stores in the U.S., as we mentioned above. This development is something Fresh & Easy Buzz reported almost a year ago that Walgreens was studying.

The "Smallgreens" (our term not Walgreens') stores would be about half the size of the chain's current stores, which are in the 10,000 -to- 20,000 square foot range, depending on the store location and format model.

Walgreens already operates some smaller footprint stores, such as those in highly-dense citys like San Francisco. But they are small-format based on design considerations and space (real estate)restrictions rather than intent. In other words, the stores are basically smaller versions of a basic Walgreens drug store.

The "Smallgreens" format is a specific design and format for the chain's smaller-version drug stores.

We've learned that a major focus of the smaller-format Walgreens stores will be on consumables, particularly food, grocery, household and HABA items, including a limited assortment of perishables like Walgreens currently offers in its 6,658 drug stores, which it operates in 49 U.S. states, and is expanding upon in those stores. Think "affordable esentials" as the merchandising base mix for the "Smallgreens" format stores. This focus also fits with the company's current strategic focus chain-wide on consumables and essential packaged goods items.

Walgreens announced another personal move today. Thomas J. Connolly, 49, has been promoted to vice president of facilities development effective March 1, overseeing real estate, construction and facilities planning, design and engineering. Connolly succeeds senior vice president of facilities development William A. Shiel, 58, who has retired after a 38-year career with Walgreens.

Expect to see an even greater focus on the food, grocery, household and health and beauty care categories in Walgreens' stores over the next couple months and throughout 2009.

This will include, in our analysis:

>An ongoing increase in store floor and shelf space devoted to food, grocery, household and HABA items.

>Increased introduction of more store branded items across all consumable and packaged goods categories. This includes packaged perishables in the dairy, deli categories.

>The likely addition of a couple new grocery product categories, including in the perishables segment.

>An increased emphasis on promoting grocery items, with a focus on essentials, in-store and in the drug chain's weekly advertising circular. More consumables and packaged goods in the weekly ads, less items like cameras and gifts.

>Increased focus on offering "everyday essentials" at hot promotional prices. This includes items like eggs, milk, bread, refrigerated orange juice, toilet paper, toothpaste and the like.

Another added added layer of competition

Walgreens' strategic focus on consumables and related consumer packaged goods is adding an additional layer of competition in the already red-hot competitive environment in U.S. food and grocery retailing between discounters like Wal-Mart, Target and Costco (and others) and supermarket chains, along with all of the other alternative format retailers out there, such as dollar and 99-cent format stores, other drug chains like CVS-Longs, and many other competitors

This competition is being felt in a white-hot way in California, Nevada and Arizona, where Tesco's Fresh & Easy operates its 115 small-format, convenience-oriented, combination grocery and fresh foods markets.

And since Walgreens, which had gross sales of $59 billion in 2008 (all in the U.S.), operates numerous stores in these three states, another layer of competitive heat in the food and grocery (and household item and HABA) categories is being added in each of these market regions, as Walgreens continues to up its ante in the food, grocery and related category segments in its drug stores.

Suggested Reading: Related posts from Fresh & Easy Buzz

>January 22, 2009: Neighbors by Location Only: Will Mega-Drug Chain Walgreens' New Focus on Consumables and 'Affordable Essentials' Rob Sales From Tesco's Fresh & Easy?

>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

>December 22, 2008: Drug Chain Walgreens to Slow New Store Growth; Despite Tesco Fresh & Easy's Recent Announcement to Do Similar, We Suggest An Analogy is Misplaced

>September 22, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

>March 12, 2008: Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team

>May 29, 2008: Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 5

>March 29, 2008: Tesco's Fresh & Easy 'Taking a Pause' From New Store Openings: A Full Review In the Works

>August 22, 2008: Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK

>August 17, 2008: Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department

>August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

Neighbors by Location Only: Will Mega-Drug Chain Walgreens' New Focus on Consumables and 'Affordable Essentials' Rob Sales From Tesco's Fresh & Easy?

Competitor News and Analysis

On December 22, 2008 we reported on the development that former Tesco Fresh & Easy Neighborhood Market co-vice president of retail operations Brain Pugh had been hired by the mega-drugstore chain Walgreens in the new position of vice president of format development-Walgreens.

The primary focus of Pugh's new position at the drug chain, which has thousands of stores throughout the U.S., is to focus on growing and strengthening Walgreens' consumables (food and grocery) household products (toilet paper, cleaners, ect.) and health and beauty care merchandising and retailing program. [Read the story here: Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position.]

In the December 22 story we also wrote about an additional two new hires the drug chain announced at the same time. Those new hires were: Jeffrey Zavada, as vice president and chief sales officer, and Colin Watts, as vice president and president of the Walgreens' Health and Wellness disease management business.

In September, 2008 Walgreens, which is headquartered in Deerfield, Illinois, made an additional major hire, bringing in Kim Feil as its new corporate chief marketing officer.

Ms. Feil, Brian Pugh and chief sales officer Colin Watts were all hired in large part because of their experience in consumer packaged goods marketing, merchandising, operations and sales.
The Hiring of these folks for that experience was not by accident.

Beginning in about the spring of 2008, and intensifying in the early summer of last year, Walgreens made a strategic marketing and merchandising decision to put a greater focus on consumables and related consumer packaged goods marketing, merchandising and sales in its drug stores, including dramatically increasing the number of food, grocery, household and health and beauty care items it will sell in its stores under the retailer's own store brands. These store brands include the Walgreens' brand (across all product categories including food, grocery and beverage) and its Deerfield Farms brand, which is for consumables only.

In the last month Walgreens has been introducing numerous new food, grocery and consumer packaged goods items in its drug stores under these store brands. The retailer also has been promoting consumables and household packaged goods items much more aggressively in its weekly advertising circulars, which are distributed in Sunday newspapers and via direct mail to households, with a particular focus on essential products, including grocery items.

For example, among the numerous food, grocery and non-food consumer packaged goods items in its advertising circular this week include two new products under the Deerfield Farms brand -- fresh butter and a line of packaged cheeses. Essentials. And perishables as well. Walgreens also is now promoting fresh milk and often eggs and fresh bread nearly every week in its advertising circular, as well as essentials such as toilet paper, soap, paper towels and cleaning products, for example.

Even more so the drug chain has increased the number of food and grocery items -- both store brand and national brand -- it runs in its advertising circular each week. This reflects Walgreens' evolving strategy over the last few months of adding additional national, regional and store brand skus of food and grocery products to its stores. This is a strategy and practice the retailer says it will continue.

In fact, beginning February 8, Walgreens is launching a major marketing and merchandising program it's calling "Affordable Essentials." The program, which will focus on consumables, household and related packaged goods "essentials" like milk, bread, toilet paper and the like, is designed to capture an increased share, including from supermarkets, of the dollars consumers are spending on basic or essential packaged goods products during the current recession.

"We've zeroed in on the last things people cut back on when they're in a (financial) pinch," chief marketing officer Kim Feil said at Walgreens' annual shareholders' meeting last week, on Wednesday, January 14.

Ms. Fell described Walgreen's "Affordable Essentials" marketing and merchandising program this way: The drug chain has selected one item from key basic or essential product categories (milk, bread, eggs, laundry detergent, toilet paper, aspirin, disposable diapers, ect.) that recent marketing research shows consumers purchase even in tough economic times like the present. The combined items will then become an "Affordable Essentials" market basket of products. Beginning on February 8, and running indefinitely, Walgreens will offer the items in the "Affordable Essentials" market basket at significantly reduced everyday low prices. The retailer will then tout the affordable market basket of essentials in-store and via all of its various advertising media.

The "Affordable Essentials" product market basket (it's a market basket in the sense of a collection of items rather than an actual physical basket of the goods) will contain a mix of Walgreen's store brands and national brands. The drug chain plans to include plenty of national brands because consumer use of manufacturer's cents off coupons has sored in its stores since about the middle of last year, as it has in other drug stores and in supermarkets throughout the U.S. By offering a strong selection of national brands as part of the program, along with the store brands, Walgreen's believes it can gain added sales since the manufacturers' cents off coupons serve to lower the cost of the items further for consumers but don't impact the retailer's profits because its paid back by the manufacturer.

Walgreen's focus on basic or essential products fits with much of the market-based research and retailer-based scan data currently available. The data is showing consumers are focusing on purchasing basic food, grocery and non-foods packaged goods items at present to a degree not seen in decades. The closest many market researchers and retailers we've discussed the data with say they've seen was the recession of the early 1980's. Most say however the trend towards essential or basic item purchasing is currently even stronger than during that serious recession.

As an example, the market research firm America's Research Group has been conducting regular shopper surveys over the last few months. What it's found, including in its latest survey conducted a little over a week ago, is that shoppers, pressured by debt, credit card bills and fear of losing their jobs, have been reluctant to buy anything beyond essentials. The percentage of shoppers who say in the surveys they are focusing more on essentials has increased progressively since the middle of 2008.

"Retailers are experiencing their most challenging time in three decades," C. Britt Beemer, CEO and founder of the Charleston, S.C.-based America's Research Group consumer research firm says about the results of its latest survey conducted a little over a week ago. "Our survey confirmed that consumers are in deep hibernation, and there is no sign that they will wake up this spring or that the retail outlook will pick up anytime soon," Beemer adds.

At the January 14 annual meeting, Walgreens' CEO Greg Wasson said consumer spending is going to be a challenge for all drug retailers and others throughout 2009, and could get even tighter than it currently is."

He announced that in response to this new consumer behavior Walgreens is moving 29 corporate vice presidents into the field instead of stationing them at its Deerfield, Illinois headquarters in a new local merchandising and operations program. The purpose of the change is to be able to better respond and adapt to local consumer trends and to be better able to focus the stores on their local markets, he said at the meeting.

The Walgreens - Fresh & Easy Connection

There are two interesting and related ironies about Walgreens' new focus on food, grocery and non-foods packaged goods items in relation to Tesco's Fresh & Easy Neighborhood Market.

The first one of course is that former Fresh & Easy chief operations executive Brian Pugh, who left his employ with Tesco's Fresh & Easy on a rather mysterious note (according to some company employees) in September, 2008, as we reported in this story, is now in charge of beefing-up Walgreen's store presence and sales of consumables, including store brands. Consumables, and particularly consumables under its fresh & easy store brand (about 60-65% of the grocery items sold in the stores are under the brand), are the near-100% focus of the Fresh & Easy stores. The stores carry only a very limited assortment of non-foods items.

Just by itself Pugh's moving from Tesco's Fresh & Easy to Walgreens isn't that unique of a development. After all, retailing executives, category managers and others change employers all the time.

But the related irony is that Tesco's Fresh & Easy, of which Brian Pugh was in charge of the retail operations aspects of from the time it started in the Western U.S. until September, 2008, has used Walgreens' as a model in terms of its "critical mass" store location strategy in the Western U.S. markets of Southern California, Metro Las Vegas, Nevada and Metropolitan Phoenix, Arizona. That strategy, like Walgreens in the same three markets where it has hundreds of stores, is one of locating stores rather close together (about two miles apart in concentrated rings) so as to create a retailing critical mass. The strategic goal of such as strategy being to become the de facto "neighborhood grocer" in the area -- in Fresh & Easy's case -- and the defacto "neighborhood drug store" in the specific areas -- in Walgreens' case.

This is a strategy Walgreens has been using for years in various U.S. markets. A few years ago it began turning this strategy into super-high gear in California, Nevada and Arizona. Tesco took notice of it. In large part Tesco used Walgreens (as well as Starbucks' store location strategy) as its model for this "critical mass" store location strategy.

As part of this strategy, numerous Fresh & Easy markets are located next to or just across the way from Walgreens' drug stores. In fact, the two retailers have gone into, and are further going into, numerous shopping centers as co-anchor tenants.

We've talked to a number of retail commercial real estate professionals who work with Tesco's Fresh & Easy. When they started doing so, they were given as one key criteria to identify potential Fresh & Easy store locations based on where Walgreens drug stores were located, as well as to identify locations where Walgreens plans to put new stores in the three markets. As a result, many of Tesco's & Fresh & Easy Neighborhood Market combination grocery and fresh foods stores are located next to or within walking distance (like across a shopping center) to a Walgreens' unit.

Taken together, we therefore find the two related developments become much more interesting -- and gain some added irony.

With Walgreen's new emphasis on consumables development under the leadership of former Tesco Fresh & Easy vice president of operations Brian Pugh, along with the retailer's "Affordable Essentials" program which begins in a couple weeks, it's feasible that if the mega-drug chain is successful, it will end up taking considerable sales in the basic food and grocery categories away from those many Fresh & Easy stores that are located next to or very near Walgreens' units.

With so many Walgreens drug stores in Southern California, Arizona and southern Nevada -- Fresh & Easy's three market regions with its 107 stores -- if successful with its new consumables and "Affordable Essentials" push, the mega-drug chain could likely take grocery share away from numerous other food and grocery retailers in these markets, not just Fresh & Easy. Fresh & Easy is worthy of singling out though because of the facts we laid out above -- the fact so many of the stores are in close proximity to Walgreens' drug units.

It's also worth noting that Walgreen's has found it needs to focus more on consumables and the essentials program because it's found itself losing sales most particularly to Wal-Mart Stores, Inc.'s Supercenters, which has been the only major discount retailer to increase sales during the recession. Despite that fact, Walgreen's same store sales did increase by slightly over 4% over the previous year in its most recent quarter.

Walgreens hopes its more aggressive focus on consumables and the "Affordable Essentials" grocery and non-foods packaged goods program starting on February 8 will bring more shoppers into its stores. Then once in the stores for those "Affordable Essentials," the drug chain hopes customers will pick up some higher margin items while shopping.

We've argued since about the middle of 2008 that in this current and severe recession nothing is more important for retailers than to create, execute and communicate a unique value principle. Walgreens appears to be moving towards this with its ongoing increased focus on consumables and essentials. It will be interesting to see the depth and focus of the new program beginning on February 8.

Linkage: Related stories from Fresh & Easy Buzz:

>Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position

>Drug Chain Walgreens to Slow New Store Growth; Despite Tesco Fresh & Easy's Recent Announcement to Do Similar, We Suggest An Analogy is Misplaced

>Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

>Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team

>Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 5

>Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

>Tesco's Fresh & Easy 'Taking a Pause' From New Store Openings: A Full Review In the Works

>Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department

>Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK

>Vegas Baby!: Tesco Announces Ten More Fresh & Easy Grocery Stores For The Las Vegas Metro Region; it's All About 'Critical Mass'