Fresh & Easy expansion slows down

Only 30 of the 186 stores are making a profit, though annual losses did narrow last year to $245 million from $303.6 million. The El Segundo-based division of British supermarket giant Tesco is now expected to break even in early 2014, a year later than previously expected. Major Tesco shareholders haven't been thrilled by all the red ink, or by the business model. Frankly, the concept is still hard to get your arms around - smaller than a standard supermarket but larger than a convenience store. Not helping is that Fresh & Easy has focused on Socal and the Southwest at a time of stepped-up competition among warehouse outlets, major retailers, smaller boutique chains, and of course the big supermarkets. Oh, and there's been the recession. From the NYT:

"The U.S. is moving in the right direction but I'd like it to move faster," Mr. Clarke said. "I need to demonstrate to shareholders, who have been very patient with us, that we can do it." When Tesco started its Fresh & Easy brand, it saw a chance to fill what it saw as a need for convenient grocery stores in certain areas of the Western United States. But about five years later, only 30 of the 186 stores are making a profit. Mr. Clarke said losses at Fresh & Easy narrowed for the first time in fiscal 2012 but that Tesco would slow down the opening of new stores in the chain and be more cautious about how to expand the business. Instead, Tesco is remodeling the stores it has and will try to attract more customers with fresh flowers, wooden floors, closed refrigerator doors and in-store bakeries.

As you can gather by the video, Tesco has invested heavily on F&E.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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