It's official: Fresh & Easy stores shutting down

fresheasy2.jpg British parent Tesco is finally calling it quits on its neither-here-nor-there U.S. chain that just couldn't gain much traction among American shoppers. El Segundo-based Fresh & Easy was rolled out six years ago after extensive research into what consumers like and don't like in a grocery store (remind me not to use those consultants!). The takeaway was that they like convenience, especially during the work week, and they like value. What Tesco came up with was a hybrid operation that offered lots of prepackaged, often precooked fare in a compact space, about one-fifth the size of a conventional supermarket. But Fresh & Easy arrived just as the Great Recession was taking hold, and the company's upfront costs were astronomical. That included an 800,000-square-foot distribution facility in Riverside where they made the prepared foods. The Fresh & Easy folks kept reminding everyone that they had a great new concept in food retailing - and no question the place was clean and inviting. But something was missing: customers. No word yet on how Tesco plans to unload its 200+ stores in California, Arizona and Nevada, but most likely they'll be snapped up in pieces by competitors. Oh, that was another problem: competition, not just from the major supermarket chains, but big-box stores like Walmart and Target and membership operations like Costco. There also were boutique chains like Bristol Farm and Trader Joe's. From the start, some analysts wondered what Tesco executives were thinking. All told, Tesco will be taking a writedown of about $1.8 billion on Fresh & Easy. It'll take a few months to finalize an exit plan. From AP:

While Tesco has done well with its range of compact Metro stores in the UK -- built close to public transport links so shoppers can grab a few items of food on their way home from work -- the idea did not translate well to the U.S. In the American west, most shoppers drive to supermarkets -- sometimes just once a week -- and will look for a broader range of products, said Marc Levinson, author of "The Great A&P and the Struggle for Small Business in America." Levinson added that Fresh & Easy wasn't unique as a store -- and Tesco didn't have time to experiment and work through glitches because of shareholder pressure. The company also underestimated the amount of attention needed to deal with the quickly changing American market, he said. "They clearly had the wrong model for the market they were in," Levinson said. The decision wraps up a painful expansion exercise for the retailer -- but it isn't the first international food chain to have troubles with the vast and diverse U.S. market. Companies from Canada, France and the Netherlands have failed to capture American customers.

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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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