Tesco needs to go back to where it came from. Get out of Dodge.
Fresh and Easy has a strong and loyal customer base and has the ability to do extremely well. Obviously there have been foolish spendings. But with the right leadership and a little tweaking Fresh and Easy can and will do well. The British had the right idea and concept. But the British do things different then the Americans. They spent there time making the employees concentrate in areas that although were important they were not the MOST important. Example: changing out all the pull down shades in the stores for glass doors (they look good but could have waited), There are still stores sitting empty since day one they came to the US. There is so much more on that scale. Having said that I will also say that Fresh and Easy has done alot of good for the communtity. At a time when the economy is at it's lowest and budget cuts have hit hard. Fresh and Easy helped our schools out BIG TIME ! Come next year our schools are already worried about the little store that did big things for them and how there school will get without Fresh and Easy. They gave food to food banks and donated to the communtity. If ever the US needed a Fresh and Easy it was through these trying times. With the proper adjustments these stores have an extreme ability to profit. I know I work for Fresh and Easy and the Shop for Schools program. I'm also hear all the feedback from our customers.
F&E has devolved. It went from an ambitious plan, to a testing ground of R&D for Tesco to an unequivocal Brittish Boondoggle. There's simply no reason there is not 1 profitable store (cash flow positive) store. There's no reason for so few formats. There's no reason to not have tested stores more thoroughly prior to driving scale. There's no reason to not have sourced local talent and leadership. Simply stated, Tesco did nothing that shows leadership in the Retail industry but everything which showed: pride, single-mindedness, ridiculously outdated fealty and an ignorance of the American Market. Tesco's best days are behind it.
If you disagree, answer me this simple question. If I gave you $2B dollars - could you open 1 profitable (cash flow positive store) in the United States? If you think there are cash flow + stores, you're in for a shock.
Out od 200 hundred stores………..there ARE 10 profitable store.
But, you are spot on with the rest of your observations!
fresh and easy is wack !! will not survive in Us
We shop at Fresh and Easy ALL the time. Albersons is across the street and Albertsons prices are ridiculously high after being purchased by SuperValu (what a joke as they are not Super and not a Valu).
The F&E experience is great. Small store and I am in and out in minutes. I like store brands anyway.
F&E will make it. Their venture will take time to win over customers as all new ventures do.
Not sure what will happen to them. I'm guessing they'll pull the plug in the next couple of years. I am 100% sure though that in retrospect, they wish they'd never launched this venture. They've taken a complete financial beating. They're going to have to be wildly profitable in the upcoming 5-10 year to even get back to break-even.
They have shown massive hubris in this venture, something Jim Collins says in his "Why The Mighty Fall" book is a major reason why companies fail. What I don't understand is why they simply didn't open 5 stores or so in different areas and simply test this concept before doing this massive roll out. I know that economies of scale are nice, but it would have been nice for them to see that the concept isn't all that great.
I own a chain of grocery stores with similar footprint to theirs. Their losses are monstrous, way too much for their footprint. Their overhead is huge. They've left little room for error, as their break-even point looks like it's around $160K per week. I think they're only doing about $100K per week on average- and that's after being open for a while!
Has anyone noticed that Fresh & Easy has been delivering the highest comp store sales growth in the whole US for the past 12 months now? And that losses have finally started to come down? Check out some of the comments on Yelp - they are just as positive as for Trader Joe's, if not more so.. Customers - people who have actually tried shopping at F&E as opposed to armchair coroners who talk of "socialist Brits" (!!) - actually rather like it. Whether they can find a way of making it sufficiently profitable remains unclear, but you really can't argue with 22% two-year comp store sales growth in California..!
22% sales growth based on what?
For example: 100% growth on a base of $75,000.00 per week per store? THAT is nothing in retail grocery!
Tesco is learning (way too slowly) that you cannot force a concept down the throats of US consumers as they do in the (socialists-minded) UK. They have not learned that you need to do business with locals here to get support from locals.
I was recently at a trade convention and a Tesco buyer walked right by more than 2 dozen booths in less than 20 seconds without even looking at products as though she was there simply because she was forced to be there and had no interest in anything that might help their business.
The key to success in most businesses is attitude. But, it must be a positive attitude and not a know-it-all attiutude that is also unfriendly, unwilling to learn, negative, my-way-or-the-highway one.
Try contacting them to get an appointment to show them a product that would sell in their stores and you get nowhere.
My opinion is they came in with a UK plan that did not involve researching the US market or US consumer and dropped in a UK concept with a take it or leave it attitude that is shown to consumers from the moment you walk in the door.
Given their troubles in the UK, they will fold up here and sell off their US locations to Save A Lot, Aldi or Dollar General.
You cannot teach people that are unwilling to learn.
Have you seen the rents they pay? About 3 - 5 times market or more. They are paying $20 psf for sites that Save a Lot would offer you $4.00.
Their leases have negative value to a buyer.
I read that a V.P. from Asia will soon be driving the growth of T & E. Not only is the UK market different from the the U.S., surely Asia is special into itself.
With all the great U.S. bred talent, why doesn't Tesco hire an appropriate leader?
FRESH AND EASY COMPANY HAS THE FINANCIAL BACKING TO MAKE THE COMPANY SUCCESFULL. THE BIGGEST MISTAKE THEY ARE MAKING IS NOT HAVING THE FRIENDLY HOMEY ATMOSPHERE LIKE TARDERS JOE S
I worked for both company's and they are two different formats. The only comparison would be the size of the building. Trader Joes has more of a international and treat buying format and Fresh and Easy is a quick meal , staple item buying format. Both are great company's. Fresh and Easy's mistake from the start was not advertising their brand. They left it to Americans, who are very close minded when it comes to change, to figure out what they were about. It's a shame because it's a great concept and they really treat the employees with respect and give the flexibility of having a great work life balance. It is hard work that gets you noticed and Fresh and Easy failed growth also hurt them with keeping energetic employees due to the lack of promotion possibilities. Try shopping Fresh and Easy the prices are really fair and their brands are tasty.
TESCO parent will pull the plug and someone will gobble them up..
It was a silly overreach plan to begin with!
I do not believe the plan was silly. if they hired a U.S. based market research firm or consultant, I beleive the results would be far more promising with less financial loss. It is apparent that T&E is experiementing in trying to establish their brand from a UK perspective. Remember, Tesco is a giant in Eurpoe and Asia.
With their kind of money, they can buy a customer base gien sufficient time and the whiling to keep pouring out the dollars.
My thinking tells me the need the diversification to sustain themselves in todays highly delicate times.
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