FRESNO, Calif. -- The U.K.'s Tesco grocery giant lost more than $250 million in 2009 on its U.S. small-grocery chain even as it slowed the growth of the venture. Yet, Tesco CEO Sir Terry Leahy still believes the Fresh & Easy Neighborhood Market chain will be a success for one very specific reason: Convenience "is a relatively underinvested segment of retailing" in the United States, he said.
Speaking at the National Retail Federation's 99th annual Convention & Expo in New York, Leahy expanded on the thought. "Convenience is the fastest-growing sector of retailing around the world. One exception, interestingly, is the U.S.," he said, according to a report in
Supermarket News. "We felt there was an opportunity in the U.S. [in] this broad area of convenience, so we invested in Fresh & Easy. We believe—hope—this will be a sector that will grow into the future."
With people facing time constraints, convenience stores such as Tesco Express and 7-Eleven; ready-made meals and snack foods; and self-scanning terminals are all answering the call for convenience, Leahy said, according to a
Retail Wire report.
As if to underscore Leahy's view, Fresh & Easy opened three stores in Fresno, Calif., the same day and announced two more sites would open in the area in February.
"Fresh & Easy is excited to be a part of the revitalization of downtown Fresno because everyone deserves access to fresh, wholesome food at affordable prices," said Fresh & Easy CEO Tim Mason in a statement. "We are thrilled at the wonderful reception we have received from our new neighbors in this wonderful community."
Among the new stores' features are self-serve checkout stands, prime parking spaces set aside for shoppers with small children or those who have hybrid vehicles, and freshly prepared foods that are among the chain's top sellers, according to a report in
The Fresno Bee.
Burritos, clam chowder, teriyaki chicken and rice dishes are shipped in daily from Riverside, Calif., where the food is prepared, spokesperson Brendan Wonnacott told the newspaper. "This is by far the most popular part of the store," he said. "From day one, we've had a huge demand for these type of products."
Fresno State marketing professor Bill Rice described Fresh & Easy as "a step below" Whole Foods. "It's trying to fit that person who would like to eat healthier, but not pay the extravagant costs," he told the paper. "It has a good shot of making it."
But it's the chain's focus on convenience and a smaller format—the typical store is roughly 10,000 square feet—has kept the concept front and center for convenience store retailers.
Fresh & Easy now operates about 135 stores in Southern and Central California, Phoenix and Las Vegas. The company had hoped to have 150 stores opened by the end of its fiscal year last February, reduced from its original goal of 200 sites.
In October, Tesco said the Fresh & Easy division would lose about $259 million in 2009, or about $2 million for each of its stores, as previously reported in
CSP Daily News. Fresh & Easy was said to be struggling with the overhead of a large infrastructure designed to support hundreds of stores and a price war that has broken out in the supermarket industry.
At that time, Leahy put a positive spin on the losses. "We have been making good progress in developing the Fresh & Easy business, despite the prolonged weakness in the California, Nevada and Arizona economies," he said in a statement.
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