Fresh & Easy Changing Its Image

ELLIOT ZWIEBACH

EL SEGUNDO, Calif. — When Fresh & Easy Neighborhood Market began opening its U.S. stores, they were viewed as cold and uninviting by some observers.

“Given the short time Fresh & Easy has been in business, and the fact it does not do any image advertising, the in-store look is its biggest opportunity to make a positive impression,” one industry analyst told SN. “Before Fresh & Easy made changes last spring, there was nothing that made it clear the stores had low prices, high quality and fresh products. Now the stores spell all that out in a very positive way and in a warmer in-store atmosphere.”

What the chain needs to do now, he said, is to add more fun to the shopping experience. For example, rather than placing the Kitchen Table — the chain's product-sampling station — in the back of the store, Fresh & Easy should consider moving it to a more central location up front “to make the shopping experience more fun,” the analyst explained.

David Bishop, managing partner in Balvor, Barrington, Ill., said the stores still feel somewhat cold, despite a revamped color scheme and new signs.

“Wal-Mart's Marketplace stores are warmer, with more vivid, brighter colors. So perhaps Fresh & Easy hasn't changed enough,” he said. “The atmosphere may be clearer and brighter than it was, but it's still lacking in the kind of warmth and color common to U.S. food stores, despite the adjustments they've made.”

Mike Griswold, a Boise, Idaho-based consultant for AMR Research, Boston, said he likes the improved look, including the in-store signage, “though they may want to do something to draw more attention to the featured items,” he noted.

He also said he thinks Fresh & Easy could improve its results if it did more customer segmentation — possibly by working with Dunnhumby, the research company with whom Tesco, its British-based parent company, partners in many parts of the world.

“Tesco's strength has always been customer intelligence, and the initial cookie-cutter approach Fresh & Easy took has been a bit disappointing,” Griswold said. “Many people feel Tesco has a huge opportunity to customize its U.S. stores with more customer-specific merchandise, which is something we haven't seen them do to date.” (See related story, Page 14.)

Asked about customization, Simon Uwins, chief marketing officer, said Fresh & Easy has customized its offerings in Southern California, Phoenix and Las Vegas — the three areas in which it operates — “and there are subtle merchandising differences from store to store within a market to accommodate specific preferences.”

“But the fundamentals of wholesome foods at affordable prices is the same all over.”

Asked about promotional spending, Uwins said Fresh & Easy has been careful because of its lack of critical mass.

But it's been advertising for several months on radio in Phoenix and Las Vegas, where its stores have achieved a deeper density than in Southern California, “and we're always looking for different ways to get our message out, including using our website and the fliers that go out to the neighborhoods around the stores.”

However, Bishop said, it's possible that despite listening to consumer comments and making changes, Fresh & Easy management may believe that it knows what American consumers want better than the Americans do.

“They're foreign merchants, coming in without totally understanding the needs and tastes of U.S. consumers; at the same time, they're trying to introduce a new concept, and they're implementing programs — like letting displays of fresh products run down till they're almost empty — that work outside the U.S., but not here, and they may not feel the need to change is apparent.

“It's hard to argue with Tesco's success. But even a company like Safeway thought it could impose its programs from the West Coast when it moved into Chicago with Dominick's, or Philadelphia with Genuardi's. Many consumers didn't like the changes it made, and Safeway was forced to change the way it did business in those cities,” Bishop explained. “That reveals the power of embedded culture in driving decision-making. When you enter a new market, you do what you know till you're faced with different results, and there's a natural evolution to stick with what works and change what doesn't — but you don't know what doesn't work until it doesn't work.”

Uwins defended Fresh & Easy from the criticism that management thinks like a British company.

“I would say we're more American than British,” he told SN. “The Fresh & Easy concept was not imported from anywhere — it was developed primarily from research we did and discussions we had with people here, so it was actually developed by Americans rather than by us.

“One of the great things about this company is, we developed it from scratch and designed it to deliver what people here told us they wanted.”