Fresh & Easy Neighborhood Market has grown so quickly - a backbreaking 59 stores across California, Nevada and Arizona in just five months, an average of nearly three stores a week - that even Tesco acknowledges its small-format, convenience-focused concept is "on steroids." But now the British retail behemoth is halting the chain's expansion for three months. Is Tesco just visiting the mound, or is Fresh & Easy destined for the bench?
Fresh & Easy's debut in Hemet, Calif., last November was highly hyped. But it was warranted --Tesco said there's room for up to 1,000 Fresh & Easy stores in the United States and pledged to invest $2 billion on the venture.
But in his blog last week, Simon Uwins, Fresh & Easy's marketing director, said, "We're pausing for a breath. After opening our first 50 [stores], we planned to have a three-month break from openings. We've given ourselves a little bit of time to kick the tires, smooth out any wrinkles and make some improvements that customers have asked for."
However, a Piper Jaffray analyst reported last month that Fresh & Easy missed its sales target by 70 percent. Tesco expected the chain to bring in sales of $100 million over six months but pulled in only $30 million, said the analyst. The U.S. economy has thrown Tesco a curveball. Rising food and energy costs and a slumping housing market are curbing consumer spending.
What's more, Jeff Adams, CEO of Tesco's Thai operations, was called in from the bullpen last month to work under Fresh & Easy CEO Tim Mason - another sign the concept is struggling to throw strikes.
For seafood, Fresh & Easy's demise would be a missed opportunity, as it represents a new avenue to market the protein. But it's only the third inning - there's still plenty of game left to play.
Best regards,
Steven Hedlund
Associate Editor
SeaFood Business
Editor's Note: SeaFood Business is collecting 2007 sales figures for the annual Top 25 North American seafood suppliers list, the Top Story of the May issue. If your company is interested in participating in the Top 25 list by providing a 2007 sales figure, please e-mail me at [email protected]. The deadline is Thursday, April 10. Last year, the cutoff for the Top 25 list was $212 million. The Top 25 reeled in a total of $12.6 billion in 2006 sales, up about $1.3 billion from 2005.
