Arrival of Fresh & Easy may force competitors to “put food on a pedestal”


From August 2007

By Susan Reda, Executive Editor

Tesco’s Fresh & Easy concept is scheduled to open its doors on the West Coast two months from now. Describing the opening of this 10,000-sq.-ft. store as “much anticipated” might very well be the understatement of the year. Fresh & Easy has received substantial media coverage and has been the subject of scores of meetings among retailing experts and supermarket gurus from coast to coast.

Billed as a convenience destination emphasizing fresh food, Tesco hopes Fresh & Easy will win over shoppers looking for smaller stores that serve up quality food. Specifics about what Fresh & Easy will look like, or precisely which products will be on the shelves, remain under wraps, but Tesco’s high-tech, high-touch method of studying shoppers, combined with its reputation for success in the U.K., has rattled some nerves in the corridors of supermarket headquarters.

Some experts, like Phil Lempert, widely known as the Supermarket Guru and “Today Show” contributor and food trend editor, say U.S. supermarket executives should be worried.

“What Tesco does better than anyone else is they celebrate food,” Lempert says. “They really have the consumer in mind; it’s all about convenience and it’s all about freshness. If I were in their [supermarket execs] shoes, I’d be concerned.”

While Fresh & Easy has the supermarket world’s attention, “it’s difficult to predict how the industry will be affected,” says Michael Sansolo, a consultant who splits his time between the Food Marketing Institute and MorningNewsBeat.

“It would be a mistake to dismiss the Fresh & Easy concept as something that ‘won’t work here,’” Sansolo says. “There were those who thought Wal-Mart would never be successful selling fresh produce -- and we know how that turned out.”

The British are coming
Tesco operates several different store concepts in the U.K., where its share of the grocery market hovers just above 30 percent. In addition, Tesco is reported to be the third-largest supermarket retailer in the world (after Wal-Mart and Carrefour) and is often recognized for industry-leading methods of collecting and using customer data from its Clubcard loyalty program.

So, is Tesco taking a seat at the stateside food table -- or is it about to eat off someone else’s plate?

“It depends,” Sansolo says. “Retailers who have done a good job of focusing on market niches and shopper lifestyles are ready for a new competitor. Those who continue to run their business the same way they did a decade or two ago are most vulnerable. This is an unforgiving marketplace, and shoppers have an increasing number of food choices. No food retailer can afford to be complacent.”

Lee Peterson, vice president of retail and restaurant design firm WD Partners, empathizes with supermarket operators saddled with legacy systems, store designs and business methods, but urges executives to look closely at ways to improve the customer experience.

“It’s an over-simplified truism that retailers have to think like customers,” Peterson says, but “in the case of food retailing it couldn’t be more accurate. People are having a love affair with food, but most are not in love with their local supermarket. How can they be passionate about shelves stocked high with product?”

Peterson believes the supermarket of the future will need to be smaller and more easily accessible, and will need to do a better job at merchandising and “romancing” food as opposed to behaving like an outpost for supply.

“They need to shift the paradigm from a grocery mentality to one that stresses food service,” he says. “The focus has to shift from quantity to quality, the environment has to shift from static to dynamic and supermarkets need to shift from the self-service model to one where employees serve consumers – no easy task in a largely unionized arena.”

Supermarket executives face the daunting challenge of becoming more relevant to young people, Peterson says. The next generation of consumers has become “accustomed to ordering the basic supplies online and picking up fresh food at Starbucks or at a limited-serve restaurant. If supermarkets are not thinking about how to win over this demographic, we’re going to have a lot of dark supermarkets dotting the landscape,” he says.

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