British parent Tesco is ready to sell or close the El Segundo-based chain's 199 stores in what has proven to be a very costly ($1.6 billion) and unsuccessful effort to break into the American market. "It's likely, but not certain, that our presence in America will come to an end," Tesco CEO Philip Clarke told the WSJ at Fresh & Easy's headquarters. Leaving the company after 30 years is Fresh & Easy Chief Executive Tim Mason.
Tesco entered the U.S. in 2007, setting up shops in California, Arizona and Nevada, many of them near new housing developments. The British supermarket giant's American dream quickly turned into a nightmare as the subprime mortgage crisis and subsequent recession ravaged many of the areas where Tesco set up its Fresh & Easy shops. The problem in the U.S. wasn't just bad timing. Tesco powered into the market on the back of the idea that it could revolutionize shopping for Americans by creating a smaller store format, seizing upon the trend toward more convenience-compact shops and away from big-box stores.
Fresh & Easy's timing was spectacularly bad, with stores opening right as the U.S. recession was taking hold. But as the Journal points out, it was more than just the downturn. The idea simply didn't take - at least not in large enough numbers. Shoppers could never figure out what kind of store it was: Specialty, convenience or discount.
The stores opened with a huge portion of Fresh & Easy own-brand products, even though American shoppers prefer to buy name brands, far more than their counterparts in Britain do. The shops also opened in places where people drive, so the trip to a larger supermarket--with a wider selection and name-brand offerings--was often only a few extra minutes down the road. Though it attracted a small group of loyalists, Fresh & Easy largely failed to capture the imagination of American consumers who proved unaccustomed to British-style ready meals, self-service cash registers and unfamiliar store layouts.