Merchandising Disconnect

When a retail concept struggles, it is typically the proposition offered to the consumer — or the execution of that proposition — that is the problem. In its new foray into the American retail scene — Fresh & Easy Neighborhood Markets — Tesco seems to have problems with both concept and execution.

Fresh & Easy is not just a name; it encapsulates in its name the proposition that Tesco wishes to make to consumers.

The execution side of Tesco’s problem is obvious. Although “fresh” is an attribute most consumers desire, much of the Fresh & Easy offering doesn’t strike Americans as fresh. In the vaunted prepared foods or ready-meals department, food prepared in a commissary and sitting cold in a plastic platter seems significantly less fresh than the offering of many other retailers.

Some upscale retailers have on-site chefs to produce fresh food to order. One doesn’t have to go to that extreme to realize the difficulty of Fresh & Easy’s value proposition. Take something as common as a rotisserie chicken. A typical supermarket does several things to persuade customers its offering is fresh:

  • You physically see the chicken cooking on the rotisserie.
  • From time to time, when chickens are being removed from the rotisserie, the scent of roasting chicken is evident.
  • The chickens are mostly sold warm.

Compare this with the execution of fresh at Fresh & Easy where the stores offer a cold chicken, cooked at some unidentified time. Few Americans will perceive that to be a fresh offering.

Sandwiches are another example. My local Publix has a fresh sandwich program built around Boar’s Head product but including many others. Deli associates will prepare a sandwich to my specifications — from how thin I want the meat sliced to the combination of ingredients to how much of any condiment I want — and they do it right before my eyes. At Subway, they do the same, but I also see them bake the bread.

How does Fresh & Easy present a fresh sandwich? They make it to their specifications — not mine — on a date they don’t identify and wrap it in plastic to ship and preserve it. The sandwich sits on a shelf until someone buys it, during which time it might have been squeezed and manhandled a few times.

So Tesco struggles in part because its execution of fresh isn’t persuasive to consumers.

Even more intriguing is the use of the word “easy.” Tesco meant by that two things: First, the store would be conveniently located and second, the store — being small — would be easy to shop.

Yet one wonders if this is a solution to an actual problem. There is no evidence consumers find shopping difficult. In fact, lots of people love shopping. Fresh & Easy opened in LA; surely Tesco knew about Rodeo Drive. People have a lot of fun there; malls and open- air centers are focal points for enjoyment and socializing.

The problem is not that shopping is hard to do. Even speaking strictly of food, we’ve done countless surveys and focus groups throughout the years, all designed to measure consumer attitudes toward shopping and shopping venues, and we have never heard a complaint about the difficulty of shopping in and of itself.

Some people may complain about the mismatch between their needs and an individual store. We’ve heard people say they hate going into a giant super center when they need only a quart of milk. We have mostly heard a lot about the tedium of shopping. Quite often, food shopping is a chore — just not fun.

Many retailers have addressed this tedium in different ways. A small-format store such as Trader Joe’s combines a quirky Hawaiian shtick with unusual, gourmet products, all at a good price in a house brand consumers have grown to trust, creating passionate devotees. Costco keeps things intriguing with its “treasure hunt” aspect, whereby consumers come looking for what will be available that wasn’t there before. Whole Foods offers an ethos of sorts that creates a sense of place, making it a comfortable venue for people of a certain disposition. Even a Wal-Mart Supercenter adds a fun side trip into clothes and music or fishing gear and hiking boots — depending on one’s interests.

People may complain they’re too busy, but that doesn’t really translate into finding a store that requires a few less steps. It translates into wanting to abandon tedious tasks.

So the winning strategy is actually not Fresh & Easy; it is Fresh & Fun — yet Tesco’s concept is cold and sterile. Much of the discussion about its pre-packed, private-labeled produce has focused on the excess packaging and the oddity of date-stamping produce. The real loss of this approach is it precludes great merchandising.

Merchandising is more than the sum of its parts. Individual items merchandised well combine with other such well-merchandised items to tell a story. It may be of bounty, seasonality, extravagance or a gathering of excellence from all over the globe. Produce, beyond the product itself, contributes crucially by being the place great retailers reveal their story. Produce provides a tapestry of color and scent unfurled like a flag declaring one’s beauty and truth.

Yet at Fresh & Easy, the most beautiful part of the store is boxed and bagged or wrapped in plastic. Fresh & Easy forecloses the possibility of great merchandising by transforming produce into another packaged good. It certainly doesn’t feel fresh and even if it is in some sense easy, it certainly is not any fun.