Tesco’s Opening Gambit

Editor’s Note: Kevin Coupe, founder of MorningNewsBeat.com, went to Hemet, Calif., to check out the inaugural Fresh & Easy Neighborhood Market store. Here are his on-the-scene observations.

Finally. They’re open.

I thought that if Tesco was going to go to all this trouble to travel 6,000 miles from home to open a new chain of food stores, the least I could do is travel 3,000 miles to the small city of Hemet, Calif., to see what they’re up to.

Let me answer the essential question first: If they opened a Fresh & Easy Neighborhood Market near me, would I shop there?

The answer is: I don’t know. But I certainly would give Fresh & Easy every opportunity to earn my business, mostly because the offering is just so different from those of most traditional supermarkets.

You walk in, and one of the first things to strike you is the general sparseness of the facilities. It isn’t stark or unattractive, but it is utilitarian at almost every turn, much more so than the U.K. Tesco Express or Tesco Metro stores I’ve visited.

When Fresh & Easy merchandises fresh produce, it is almost all prewrapped, except for the bananas and a few melons, in a style that is reminiscent of what Tesco has done back home. The prepared meals—whether sandwiches or ready-to-heat burritos and soups—all come in clear plastic packaging with a simple declarative label—this is a Fresh & Easy product, not available anywhere else. The packaged grocery comes in cut cases, so that replenishing stock is simple, and the low-cost image is reinforced in the same way that a membership club does it, though the sizes tend to be medium—not as small as in a c-store, and not as big as in a club.

The place is loaded with help, which probably is an opening-week gambit as opposed to how it will be staffed a few months from now, and the folks working there are engaging and helpful. There’s lots of sampling. The front end consists of nine self-checkout lanes.

The store is roughly 50% private label, with national brands sprinkled in where they will offer credibility, such as in cookies and cereal. But mark my words—if Fresh & Easy pans out and is as successful as Tesco wants it to be, you’ll see a diminishing selection of national brands.

In fact, that’s my sense of the whole enterprise. I suspect that these are just Phase 1 in a much longer-range plan. I know people who believe Tesco will have 5,000 of these things in five years; I know others who think they just won’t work. I’d guess the reality will be somewhere in the middle—they’ll work, but they are part of a broader strategy for how and where Tesco wants to engage with U.S. customers.

What else can I tell you? Well, the pre-wrapped grapes that I ate were crisp and neither too tart nor too sweet, so score one for Fresh & Easy. And the sushi was excellent—always a good indicator of whether a store is getting the freshness thing right. Fresh & Easy also is offering its own version of Two Buck Chuck—several wines going for $1.99.

One final thought: Tesco leadership should be complimented for doing something different. Will it be the right formula to attract U.S. consumers, especially in the vastly different markets where it plans to put the stores? I have no idea. But Tesco is nothing if not crafty and innovative, and I suspect that as its strategy and tactics unfold, it will prove to be interesting to consumers and challenging to its competitors.