Tesco Fresh & Easy Special Feature
Breaking the US Mega-Market – Fresh & Easy Latest

November 1, 2009

Video interview with Store Design & Planning Director Steve Ryder and report on latest developments.

Interview with Steve Ryder, Store Design & Planning Director at Fresh & Easy

Tesco's US operation, Fresh & Easy is always one of my favourite store visits when I am in the LA, Phoenix or Las Vegas US marketplaces and Steve?s interview and briefing to our international group of delegates prior to hosting us on a personal tour of two Las Vegas stores proved a highlight of our NACS Show visit last week.

Steve is a massively experienced Tesco hand, having worked for Tesco for 30 years in various functions from store design to planning and space management.

As I explained to our group, we were pretty fortunate to have Steve spend time with us as he had been in the US with Fresh & Easy since the very beginning first coming over 4 and a half years ago as part of the original Tesco team to research and develop a new format for the huge and difficult to penetrate US market.

Steve himself built the original mock Fresh & Easy site in a warehouse - he tells me that it still exists - and Fresh & Easy opened their first store on 31st October 2007. The business now has 30 stores in the Arizona - greater Phoenix area, 74 stores in Southern California (with plans to open in Northern California) and 26 stores in the Nevada, Las Vegas market.

How did Fresh & Easy start as a concept?

“Fresh & Easy started with the idea that life had become too complicated and needed to be simpler. Our objective was firstly to make customers? lives simpler by providing quality food at prices shoppers could afford. And secondly by carefully selecting the range.

This began with a carefully selected range so customers can find what they want against what is, conventionally, in the US a huge choice. It had reached the point where too much choice made life complicated ? just try shopping a salad dressing fixture in the US!"

How does F&E fit in the US marketplace?

“The US market breaks down between 3-4,000 sq ft convenience stores at one end, supermarkets of 35-80,000 sq ft and supercentres of 120-200,000 sq ft at the other. There is a gap between 4,000 sq ft stores and 35,000 sq ft plus. In Europe that gap is filled by discount stores but in the US this segment is underserved.

So our goal was to fill this gap and make stores easy to reach located in the neighbourhood and also quick and easy to get round."

What influenced your thoughts in putting Fresh & Easy together?

“Aldi are good at value cues and creating a discount feel and in the US market Trader Joe's offers a shopping experience which is a bit quirky. Wholefoods offers freshness.

My initial observation was that stores here were externally bland - beige, concrete, indistinguishable apart from the logo, very similar looking. So we wanted to use the building as part of the brand communication. Think how Ikea do it - the design is the brand. Tesco in the UK and Central Europe has a distinctive style, when you see the building, you know what the brand is.

Externally at Fresh & Easy we have the three "Gs": "Glass" - visual and environmental benefits, "Green" - corporate colour and "Geometry" - sail shape on the corner of the building. We deliver on these core design objectives in the new build sites but also try to do as much as we can on the re-models too."

What about on the inside?

“The store dimensions are 125 feet by 82 feet with an 8 aisle layout. Aisles are wide by US standards at 7 foot 5 inches and we started with low shelves. These two features combined to give a very spacious feel for US customers.

Departments are grouped logically; fresh first in flow ahead of grocery with frozen food last in flow - customers will shop it last anyway if it is 115 degrees outside!

All the checkouts are self-scanning units but staff are on hand to help so we call the operation assisted self-scanning.

One-touch replenishment is a reality. The warehouse is small and is simply a holding area between the truck and the shelf.

Our grocery shelves are 44 inches deep so you can put a pallet in and it doesn't stick out. So the front of the shelf is sales and the back of the shelf is the ?stockroom?.

The decision to have no ceiling and a concrete floor give the visual cues of discount - the flooring was changed to a warmer terracotta style as we had some customer feedback that it looked too "discount". The minimalist design is intended to highlight the products."

What else has changed since you first opened?

“It is over two years since we first opened. We?ve done a lot of listening to customers and have responded in product and design terms. We had some negative feedback on design - words like 'sterile'. So we responded in two ways:

1) At 60 stores we carried out a re-fresh programme. Made the stores more inviting and informative. We added additional banners, re-designed panels on grocery ends, added messages about meat and fresh meals, added colour to the checkouts and added messages to the walls explaining the key strands of the philosophy.

2) This year, at 120 stores we remodelled stores after 18 months of trading knowledge and in the context of a dramatic change in the economy. We increased frozen food space, refrigerated all beer and added 600 SKUs by increasing the height of the grocery aisles by up to 10 inches - so without increasing congestion.

We also changed the decor again and linked the messages to our first external ad campaign on advertising hoardings, buses and on radio. Messages are linked to delivering honest low prices by reducing capital expenditure, no additives or preservatives in own label products, date coding everything - including loose product, local sourcing where possible, re-use and re-cycling".

How Green is Fresh & Easy?

Our construction complied with standard Californian building codes from the beginning which are amongst the toughest and greenest in the World. As well as the Californian building codes, starting with a blank sheet of paper in 2006 we were also able to incorporate developments from the four UK Tesco environmental stores trialling building and engineering elements at the time. So we haven't had to go back and re-engineer energy savings.

We use the latest energy efficient systems - night blinds on fridges, cold air recovery, sky lights - we can almost get away without any shop floor lighting throughout the day. Overall, we reduced energy consumption by 30% compared to similar sized stores.

Our Cathedral City store in Palm Springs California, which opened in September, achieved Gold standard in the pre-certification for Leadership in Energy and Environmental Design (LEED) by the US Green Building Council (?USGBC?) in recognition of the environmental sustainability of the building?s operations and maintenance".