British retailing giant Tesco PLC is striving for a foothold in the U.S. through the merchandising of prepared foods at its new Fresh & Easy outlets.
Tesco PLC’s long-awaited venture into the U.S. is underway. The United Kingdom’s largest retailer, Hertfordshire, England-based Tesco has opened its first 20 convenience-format stores—called Fresh & Easy—in Southern California, Arizona and Nevada. Tesco says it plans to have 50 locations operating by the end of February and about 200 by the end of next year.
While the 10,000-square-foot locations offer about 3,500 items, it is Tesco’s expertise in merchandising prepared foods that will ultimately determine the chain’s future, analysts say.
Fresh & Easy develops all its heat-and-eat and heat-and-serve offerings at a central kitchen and distribution center in Riverside, Calif., and is marketing more than two-dozen of those items. Among the fresh prepared entrées, side dishes and ethnic selections are Sliced BBQ Seasoned Chicken Breast, Teriyaki Chicken Wings, Carnitas (Mexican Style Pulled Pork), Spanish Rice, Chicken Enchiladas with Rice & Beans and Green Thai Style Chicken Curry with Jasmine Rice.
“Retailers have been moving towards fresh and prepared foods since the 1990s and Fresh & Easy could accelerate that evolution,” says Mary Brett Whitfield, senior vice president at TNS Retail Forward, a Columbus, Ohio-based research and advisory firm. “The chain is looking to attract shoppers who want an easy meal solution. Their success or failure ultimately will result from the quality of the foods as the company needs to have repeat and loyal customers.”
She adds that Fresh & Easy’s focus on prepared foods also could trigger similar initiatives by conventional supermarkets.
The Fresh & Easy locations more closely resemble warehouse clubs than traditional supermarkets. Many of the center-store items on shelves in the nondescript buildings, for instance, are displayed in shipping boxes. The easy-listening music piped into the buildings is one of the few elements adding comfort for shoppers.
Stores, which each employ 20 to 30 associates, have no full-service meat or deli counters.
Most fresh meats and seafood are merchandised in modified atmosphere and vacuum packaging and are situated on one-side of an aisle located near store entrances.
Deli foods, including lunchmeats and cheeses, are on the opposite side of the same aisle.
Prepared foods displays are located against the back wall of stores and are adjacent to the meat and deli aisle, while grab-and-go salads and sandwiches are merchandised on end caps near the front registers.
The more than 100 SKUs of raw meats and 18 SKUs of seafood, along with the prepared foods, are mostly unbranded except for a Fresh & Easy logo on the weight-price label.
Most of the packaged deli meats also only carry the Fresh & Easy mark save for a handful of supplier-branded items, including Oscar Mayer franks and wieners, Nathan’s Kosher beef franks, Coleman Natural beef hot dogs, Rocky Dogs chicken hot dogs and Han’s All Natural chicken sausages.
While none of the Fresh & Easy-branded meats are labeled as either “natural” or “organic,” many selections—including beef, chicken, pork, turkey, lamb and veal—have weight-price labels that note that the products were developed without added hormones or antibiotics.
| The Fresh & Easy Prepared Foods Assortment |
| ITEM |
PRICE |
| Sliced Chicken Breast (16 ounces) | $4.99 |
| Meatballs (16 ounces) | $4.99 |
| Sliced BBQ Seasoned Chicken Breast (16 ounces) | $4.99 |
| St. Louis Style Pork Spare Ribs in BBQ Sauce | $6.99 (a pound) |
| Carnitas (Mexican style pulled pork) (16 ounces) | $5.99 |
| Buffalo Style Chicken Wings (16 ounces) | $3.99 |
| Teriyaki Chicken Wings (16 ounces) | $3.99 |
| Whole Roasted Chicken (35 ounces) | $6.99 |
| Whole Roasted BBQ Chicken (35 ounces) | $6.99 |
| Chicken Burrito (15 ounces) | $2.99 |
| Carne Asada Beef Burrito (15 ounces) | $2.99 |
| Beans, Rice & Cheese Burrito (15 ounces) | $1.99 |
| Butter Chicken with Basmati Rice (17 ounces) | $3.99 |
| Mango Chicken with Basmati Rice (17 ounces) | $3.99 |
| Cashew Chicken with Egg Fried Rice (17 ounces) | $3.99 |
| Onion Bhajis (8 ounces) | $2.99 |
| Vegetable Samosas (8 ounces) | $2.99 |
| Shrimp Sui Mai & Shrimp Pot Stickers (7 ounces) | $2.99 |
| Vegetable Spring Rolls (11 ounces) | $2.99 |
| Spanish Rice (16 ounces) | $1.99 |
| Beef Chili with Beans & Rice (18 ounces) | $3.99 |
| Chicken Enchiladas with Rice & Beans (17 ounces) | $3.99 |
| Green Thai Style Chicken Curry with Jasmine Rice (17 ounces) | $3.99 |
| Macaroni & Cheese (17 ounces) | $2.99 |
| Wild Mushroom Soup (20 ounces) | $2.99 |
| Chicken Tortilla Soup (20 ounces) | $2.99 |
| Butternut Squash Soup (20 ounces) | $2.99 |
| Creamy Tortilla Basil Soup (20 ounces) | $2.99 |
| Mashed Potatoes (17 ounces) | $1.99 |
| Cheddar Bacon Baked Potato (28 ounces) | $2.99 |
| Beef Lasagna (25 ounces) | $3.79 |
| Penne Arrabiata (18 ounces) | $3.99 |
| Spaghetti & Meatballs (18 ounces) | $3.99 |
| Wild Mushroom Risotto (18 ounces) | $2.99 |
| Cheese Ravioli & Beef Sauce (18 ounces) | $3.79 |
| Pepperoni Pizza (16 ounces) | $4.99 |
| BBQ Chicken Pizza (16 ounces) | $4.99 |
| Four Cheese Pizza (16 ounces) | $3.99 |
Decorative signs on the sides of cases and walls also emphasize Fresh & Easy’s focus on healthy eating, conservation and savings. Among the messages are: “Prepared fresh daily in our kitchen, our sandwiches and sushi have no artificial colors or flavors and no added trans fats,” and “We’re working hard to find sustainable sources for all our fresh fish—we’re almost there!”
Other signs state: “At Fresh & Easy we carefully limit our selections of products to make shopping easier and keep prices low every day,” and “At Fresh & Easy there are no loyalty cards and no product coupons. Just honest low prices for everyone everyday.”
The company also stresses its environmental focus with such messages as, “LED lighting uses less energy than fluorescent, so we put it in our freezers, cooler doors and outdoor signs,” “We recycle or reuse all our displays and shipping materials,” and “Fresh & Easy uses one distribution center and fuel efficient trucks, which means fewer more neighborhood-friendly deliveries.”
Another sign notes, “The cows that give us our milk and butter have not been treated with growth hormone rbST (recombinant bovine growth hormone).”
Tesco also claims that it has invested in the U.S.’ largest solar roof installation at its Riverside distribution center, which will save approximately 1,200 tons of carbon dioxide emissions each year.
Freshness, meanwhile, is a key perishables emphasis. Jonathan Garth, a manager of Fresh & Easy’s West Covina, Calif., outlet, says the prepared foods are developed in the central kitchen with daily deliveries to all the stores.
Sushi, he notes, is delivered three hours after it is packaged though other perishables with a longer shelf life are received less frequently.
Garth adds that each store markets virtually identical SKUs with only slight variations made in accordance with the demographics of the local communities.
| The Fresh & Easy Meat and Seafood Line-Up |
| ITEM |
PRICE PER POUND |
| New York Steak with Chili, Butter & Cilantro | $12.99 |
| Beef Kabobs | $6.99 |
| Chicken Kabobs | $6.99 |
| Chicken with Provolone & Bacon | $7.99 |
| Boneless/Skinless BBQ Seasoned Chicken Breast Fillets | $7.99 |
| Chicken Fajitas | $6.49 |
| Beef Fajitas | $6.49 |
| Beef Tri-Tip Roast with Santa Maria Seasoning | $7.99 |
| Boneless/Skinless Chicken Escalopes | $7.99 |
| Boneless/Skinless Chicken Breast with Bell Peppers, |
| Cream Cheese & Butter | $7.99 |
| Carne Asada (seasoned beef skirt steak) | $7.99 |
| Half Chicken Seasoned with Herb & Spices | $2.49 |
| Lamb Rib Rack with a Marinated Herb Crust | $16.99 |
| Baby Back Pork Ribs in a BBQ Seasoning | $6.99 |
| Pork Spare Ribs in a Hot & Spicy Seasoning | $4.99 |
| Pork Loin Roast Coated with a Honey & Mustard Glaze | $6.99 |
| Boneless Pork Chops with Apple & Cinnamon Stuffing | $7.99 |
| BBQ Chicken Thighs & Drums | $2.49 |
| Whole Chicken with Lemon & Garlic Rub | $2.99 |
| Pork Sausage Bratwurst | $5.61 |
| Pork Sausage Mild Italian | $5.61 |
| Pork Sausage Hot Italian | $5.61 |
| Pork Sausage Beer & Bratwurst | $5.61 |
| Creole Chicken Sausage | $5.61 |
| Apple Chicken Sausage | $5.61 |
| Turkey Sausage Hot Italian | $5.61 |
| Turkey Sausage Mild Italian | $5.61 |
| Pork Meatballs | $6.58 |
| Ground Beef Patties with Jalapenos | $6.58 |
| Ground Beef Patties with Smoked Bacon & Cheese | $6.58 |
| Ground Beef Patties with Blue Cheese | $6.58 |
| Angus Beef Patties (85-Percent Lean) | $6.58 |
| Angus Beef Patties (80-Percent Lean) | $5.92 |
| Beef Tripe | $1.99 |
| Beef Feet | $1.19 |
| Beef Shanks | $2.49 |
| Beef Short Ribs | $3.99 |
| Boneless Beef New York Steak | $8.99 |
| Boneless Beef Ribeye Steak | $8.99 |
| Beef T-Bone Steak | $8.99 |
| Boneless Beef Filet Mignon | $13.99 |
| Thin Cut Boneless Beef Ribeye Steak | $8.99 |
| Boneless Beef Skirt Steak | $6.99 |
| Boneless Beef Top Sirloin Steak | $5.99 |
| Boneless Beef Tri-Tip Steak | $6.99 |
| Thin Boneless Beef Sirloin Tip Steak | $4.99 |
| Boneless Beef Cubed Steak | $4.19 |
| Thin Boneless Beef Chuck Roll Steak | $3.59 |
| Boneless Beef Chuck Roast | $3.59 |
| Boneless Beef Angus Tri-Tip Roast | $5.99 |
| Boneless Tenderized Beef for Stew | $3.99 |
| Angus Ground Beef (93-Percent Lean) | $4.99 |
| Beef Angus T-Bone Steak | $13.49 |
| Ground Beef (80-Percent Lean) | $2.59 |
| Ground Beef (75-Percent Lean) | $2.19 |
| Boneless Angus New York Steak | $13.49 |
| Boneless Angus Ribeye Steak | $13.49 |
| Boneless Angus Filet Mignon | $20.99 |
| Boneless Angus Tri-Tip Steak | $9.99 |
| Boneless Angus Top Sirloin Steak | $8.99 |
| Boneless Angus Skirt Steak | $9.99 |
| Boneless Angus Beef Strips | $5.99 |
| Boneless Beef Cubed Steak | $5.99 |
| Boneless Tenderized Angus Beef for Stew | $5.99 |
| Boneless Angus Beef Tri-Tip Roast | $7.99 |
| Boneless Angus Beef Chuck Roast | $5.39 |
| Ground Turkey (93 Percent Lean) | $3.18 |
| Boneless Skinless Chicken Breast Tenders | $5.49 |
| Chicken Thighs | $1.19 |
| Turkey Drumsticks | $1.59 |
| Turkey Breast Cutlets | $4.99 |
| Chicken Leg Quarters | $0.79 |
| Boneless/Skinless Chicken Breast (small package) | $4.99 |
| Boneless/Skinless Chicken Breast (large package) | $3.99 |
| Chicken Breast Halves with Ribs | $2.99 |
| Boneless/Skinless Chicken Thighs | $3.79 |
| Lamb Loin Chops | $9.99 |
| Rib Rack of Lamb | $11.99 |
| Chicken Thighs (small package) | $1.69 |
| Chicken Thighs (large package) | $1.19 |
| Chicken Drumsticks (small package) | $1.99 |
| Chicken Drumsticks (large package) | $1.19 |
| Turkey Drumsticks | $1.59 |
| Turkey Breast Cutlets | $4.99 |
| Veal Loin Chops | $9.99 |
| Veal Round Cutlets | $9.99 |
| Whole Fryer Chicken | $1.19 |
| Pork Chorizo Sausage | $2.49 |
| Pig Feet | $1.49 |
| Ground Pork (80-Percent Lean) | $3.48 |
| Boneless Loin Top Loin Pork Chops | $6.99 |
| Pork Center Cut Loin Chops | $4.99 |
| Boneless Pork Top Loin Pork Chops | $4.49 |
| Boneless Pork Loin Chops | $4.99 |
| Boneless Pork Loin Roast | $5.99 |
| Pork Loin Baby Back Ribs | $4.79 |
| Thin Cut Center Cut Pork Loin Chops | $4.99 |
| Pork Tenderloin | $6.99 |
| Pork Country Style Ribs | $2.49 |
| Pork Shoulder Blade Roast | $1.99 |
| Pork Assorted Loin Chops | $2.69 |
| Pork Spare Ribs | $2.89 |
| Pork Center Cut Loin Chops | $5.99 |
| Yellow Fin (Ahi) Tuna Poke | $7.99 |
| Yellow Fin Tuna (Wild Caught) | $11.99 |
| Shrimp Ceviche | $5.99 |
| Cooked Extra Large Shrimp | $9.59 |
| Filleted Mahi Mahi | $11.99 |
| Filleted Atlanta Salmon | $6.99 |
| Filleted Tilapia | $5.99 |
| Filleted Atlantic Salmon with Asian BBQ Sauce | $7.49 |
| Filleted Atlantic Salmon with Shrimp Stuffing & Chipotle Salsa | $7.99 |
| Filleted Striped Bass | $11.99 |
| Filleted Catfish with Blackening Cajun Seasoning | $4.99 |
| Filleted Catfish | $4.99 |
| Whole Tilapia | $3.99 |
| Shrimp & Atlantic Salmon Skewers with Teriyaki Sauce | $6.99 |
| Extra Large Shrimp | $6.99 |
| Extra Large Shrimp (larger pieces) | $7.99 |
| Whole Catfish | $2.99 |
| Whole Rainbow Trout | $4.99 |
Indeed, the major difference between Fresh & Easy outlets in West Covina, Calif., about 18 miles east of Los Angeles, and Lakewood, Calif., about 20 miles south of the city, involve the placing of products.
For instance, an end cap adjacent to the meat aisle at the front of the West Covina store contains packages of sliced bacon and other breakfast foods, such as biscuits, cinnamon rolls and orange juice. The Lakewood outlet, meanwhile, has grab-and-go salads in that space and only merchandises its bacon in the dairy aisle.
In addition, the West Covina store displays spiral-sliced hams in the prepared foods case, while the Lakewood location markets the items in its frozen-foods section.
The frozen-food cases in the outlets are along a wall on the opposite end of the store from the meat, deli and seafood aisle and also contain similar selections of items.
Fresh & Easy-branded frozen proteins include four-pound bags of Boneless/Skinless Chicken Breasts and Chicken Wings, and three-pound bags of Beef Patties and Beef Patties with Blue Cheese.
Among the supplier-branded frozen foods are 24-ounce packages of Foster Farms Fully Cooked Crispy Strips (chicken breast strip fritters with rib meat), and 33.6-ounce packages of Foster Farms Fully Cooked Breast Nuggets (nugget-shaped breaded chicken breast patties with rib meat).
Also available are more than a dozen varieties of private-label seafood, including Salmon Fillets, Tuna Steaks, Mahi Mahi Fillets, Tilapia Fillets, Cod Fillets, Scallops, Breaded Cod Fish Steaks and six types of Shrimp.
Heat-and-eat frozen meals include Fresh & Easy-branded Jalapeno Chicken, Braised Beef, Rosemary Chicken, Chicken Makhani, Methi Malai Chicken, Chicken Teriyaki Bowl, Stir Fry Chicken Rice Bowl and Citrus Chicken Rice Bowl.
Other frozen meat brands include Banquet, Lean Cuisine, Jimmy Dean, Stouffer’s, Amy’s, Lean Pockets and Hot Pockets.
The mix of meat and deli items better enables the chain to attract a cross-section of shoppers, including those seeking entrées, side dishes and convenience foods.
Indeed, Garth describes Fresh & Easy as a cross between Monrovia, Calif.-based Trader Joe’s Co. Inc., which operates small outlets with many store-branded perishables, and VONS, a West Coast chain owned by Pleasanton, Calif.-based Safeway Inc. that carries wide selections of both private-label and supplier-branded proteins.
Stores also have a demo station across from the prepared foods case. An associate says the station usually provides samples of items that are featured in the weekly circular, but also will offer tastings of most other foods upon request.
While analysts say it is too soon to judge Fresh & Easy, some note that the chain appears well positioned for growth and will likely adapt to its different markets.
“Tesco is very savvy and will tweak things to meet the needs of its customers,” says Marcia Schurer, president of Culinary Connections, a Chicago-based food-industry consulting and marketing firm. “Other chains that specialize in prepared foods, such as Wegmans and Ukrop’s, have had 20 years to build their selections and change their formats when necessary.”
With its long and successful history, Tesco is a strong candidate to make solid inroads into the U.S.
| Fresh & Easy Prepared Salads & Sandwiches |
| ITEM |
PRICE |
| Turkey Provolone Sandwich (10 ounces) | $3.79 |
| Combo Meat Torta Sandwich (10 ounces) | $3.99 |
| Tomato, Basil & Mozzarella Sandwich (10 ounces) | $2.99 |
| Steak & Blue Cheese Sandwich (10 ounces) | $3.99 |
| Ham & Swiss Sandwich (9 ounces) | $3.99 |
| Chicken Salad Sandwich (8 ounces) | $2.84 |
| Tuna Salad Sandwich (8 ounces) | $2.84 |
| Roast Beef Sandwich (9 ounces) | $3.99 |
| Chicken Breast Caesar Wrap Sandwich (10 ounces) | $3.79 |
| Smoked Salmon & Herb Cream Cheese Bagel (8 ounces) | $3.99 |
| Beef Salad (11 ounces) | $4.77 |
| Chicken Salad (10 ounces) | $2.99 |
| Mango Curry Chicken Salad (10 ounces) | $2.99 |
| Egg Salad (10 ounces) | $1.99 |
| Potato Salad (10 ounces) | $1.99 |
| Chicken Caesar Salad (11 ounces) | $3.69 |
| Field Green Salad (9 ounces) | $1.99 |
| Beet Salad (9 ounces) | $2.84 |
| Italian Chopped Salad (11 ounces) | $3.69 |
| Cranberry Blue Cheese Pecan Salad (10 ounces) | $3.99 |
Among the world’s largest retailers, Tesco, which began operations in 1924, dominates the United Kingdom grocery landscape with almost double the market share of its nearest supermarket rival.
Tesco sells prepared foods, ready-to-eat meals, ready-to-cook meals and case-ready meats in each of its four store formats in the U.K.: Express convenience stores of up to 3,000 square feet; Metro locations of between approximately 7,000 and 15,000 square feet that are primarily situated in town and city center locations; Superstores of between approximately 20,000 and 50,000 square feet that are intended to be one-stop shopping destinations; and Extra stores, most of which are at least 60,000 square feet and offer the widest range of food and non-food lines.
The company operates 3,200 stores in 13 countries and employs more than 400,000 workers. About 1,800 of the locations are in the U.K.
“Tesco cares about its customers in England and will find a way to keep them happy in the States,” Schurer notes. “It is a matter of getting the initial kinks out of the system and building a sales history to see which products are preferred by shoppers.”
By operating its own kitchen and distribution center, Tesco can more easily and quickly make adjustments to its operations, Schurer adds.
“If things don’t work they will change what’s on the shelf,” she states. “Fresh & Easy is not a big store so it is not hard to make modifications to the outlets.”
Tesco reports that it is investing $2 billion over five years in its U.S. debut. The company also notes that prior to the launch of Fresh & Easy, a team of researchers spent time in the homes of U.S. consumers looking at shopping and cooking patterns.
“They discovered shoppers wanted fresh, wholesome foods that were affordable and available in their local area,” Tesco notes.
TNS Retail Forward reports that Fresh & Easy’s convenience-focused format represents a potentially significant threat to the U.S. food retailing industry.
The firm estimates that Fresh & Easy by 2011 could have 500 stores and annual revenues of $4 billion, with sales increasing to $10 billion by 2015 and positioning the company among the top-10 U.S. supermarket retailers.
Fresh & Easy, which has less than a third of the square footage of the average U.S. supermarket, has the opportunity to almost double space productivity per square foot compared with industry averages, TNS Retail Forward states.
Stores, the firm notes, are likely to attract the value shopper through affordability, as well as the upscale shopper through a gourmet offering.
The biggest challenge for Fresh & Easy, Whitfield adds, is getting consumers comfortable shopping at stores with unfamiliar formats.
“Consumers also will be looking for new tastes and assortments so there will be the continual task of introducing additional items to maintain customers’ interest,” she states.
