Thursday, December 06, 2007

Tesco's FRESH & EASY US Expansion Plan Lacks Personality

With stores that appear to be a cross between a Smart & Final and an AM PM convenience store containing generically their own branded items, British retailer Tesco's US expansion plans seem off the mark. The concept is unclear. I don't get it.

Invited to one of their store's latest grand openings I had an opportunity to query southern California's Regional Manager about the firm's concept. Either unwilling or unable to explain the idea I departed more than certain that this was not "The Neighborhood Market" the company's materials proclaim. You have to be friendly, especially if you are the boss.

The store also sells and sends mixed signals. Dropped in family neighborhoods I found shelves stacked with 2-pack potatos more suited for empty nesters and samples of staple macaroni and cheese to be so bland as to turn off young Kraft and organic addicts. Little loaves of bread sold for a buck but only contained enough slices for about 2 and 1/2 sandwiches. The food's not good (performance flavor profiles are off), it is mis-packaged versus target audience needs and the management's tight lipped. With first hour sales of $3,600, I expect initial average tickets around $38 during early trial rush, tapering down to $28 as age sets in. A far cry from industry standards and the mark required to cover overhead. Staples such as meat are way to expensive and deals appeared few.

Life expectancy from one who assisted in the US expansion of companies such as Entenmann's and Fererro USA...less than 24 months, about the same as Tesco's CEO and CMO on this venture.

1 comment:

JohnnyR said...

I totally agree with you. They said they did a lot of market research. I don't know what families they surveyed, but they really missed the mark. They are no way near as good as Trader Joe's. I think they might not even last 24 months.