Tesco observer

Luis of the Fresh Produce Industry Discussion Group has been in Tesco Fresh & Easy stores on more than one occasion and submitted several posts to the discussion board on his observations. This post and continuing thread is his latest offering and I reprint some of it in this space:

Many readers probably know from other sources that Fresh-n-Easy started to discount perishables (i.e. prepared foods, meats and FV's) a while ago. This is done with a wireless hand-held unit and a portable sticky label printer. Some quick observations: It began with some sort of calibration procedure, starting at 75% of full price and being re-labelled to 50% and then a very deep 25% discount over a one day period (three labels on top of each other). Then, after a few days of that, the discounts started to take place over a period of around two days before item expiration, starting again at around 75% and stopping at around 50%. You see employees re- labeling items all the time and the greater time window seems to have improved the velocity of the items. Items are most discounted at expiration but seemed to be in fairly good condition. Kind of a balance between inefficiency to the retailer and of margin of safety for the consumer. Gives the store a bit of an auction feel. We'll see what that does to the image but is one heck of an experiment.


Luis later added:

To follow up, Tesco is also modifying assortment and display as well. May be they are starting to figure out they are selling to a bunch of cowboys (kidding).
Half of the original prepared food cooler in one of the stores is now dedicated to chilled wine. A few end isle displays midway through the store feature "loss leaders" (what an oxymoron) such as beer and paper products at attractive prices. Same with Oreo cookies, 7-up, Doritos and so on, at the front entrance with the items changing weekly. Still no widespread advertisement. Not sure the wider community knew about deals like the dozen roses $9.99 around Valentines. A fascinating thing is that the stores are still somewhat of a tabula rasa (blank slate) with very little inventory and could be "morphed" very quickly. Still too much food going to the food bank but Tesco is showing flexibility.


TK: Also note here news of a Piper Jaffray study on the Fresh & Easy concept. From the news story about the report, citing Mike Dennis of PJ:

But Piper's Mike Dennis warned: 'The Fresh & Easy concept is not right and they need to quickly find out what the issues are and reset the concept.' Dennis said it could cost Tesco £400m to exit the US - a dramatic move the supermarket insists it is not contemplating. Dennis claims the 50 Fresh & Easy stores opened so far are averaging sales of only $170,000 (£86,500) a week. He thinks Tesco was aiming for closer to $200,000 initially, rising to $270,000 later.'The overall indication seems to be negative,' he said. 'This begs the questions of how bad it could be for Tesco's Fresh & Easy stores across California, Arizona, Nevada and what it would mean to Tesco's long-term growth rates and international strategy in the US.