Over the last year Tesco has made a significant splash in the US with almost every major US retailer making the pilgrimage to the west to check out Fresh & Easy, and to developed competitive strategies. It’s hard to say who came first (the chicken or egg) whether its Walmart’s Marketside concept the new Giant to Go, or Food Lions recent announcement of a test for the “Quick & Easy” convenience/prepared meal aisle in 17 stores, the impact of Tesco’s Fresh & Easy entrance into the US is unmistakable.
In a February 22, 2009, in the Sunday Times of London writer William Kay of Los Angeles, reported this story: Tesco admits: We got it wrong in US
The head of Tesco’s US operation, Fresh & Easy, has said its early market research was mistaken and it may make big changes to the stores.
“We may have assumed that certain elements of the Fresh & Easy brand would do the work for us and we would not have to go down and dirty on price. That may have been a mistake,” said Tim Mason, head of Tesco’s US business.
Ahead of Fresh & Easy’s launch in November 2007, Mason trumpeted the in-depth research that was done to identify a gap in the West Coast grocery market.
Marketing director Simon Uwins said: “We went into people’s houses, talked to them about food and food shopping. We went into their kitchens and poked round pantries.”
Unfortunately, Mason now admits, they did not poke around their garages, where they would have found huge freezer chests bulging with stockpiled meat bought on special offer.
“There’s less loyalty in the American market,” said Mason. “A Brit has to hear it a few times before you accept that people make up their mind where to go each week when they check out the special offers round the kitchen table.
“In a key moment at a focus group, one man told them that he had stopped shopping at Fresh & Easy because they no longer sent him a flier promoting the latest special offers.
“We came out of that meeting and said we had better make sure we hit everyone in the area with fliers.”
Recession has slowed expansion. There are 113 Fresh & Easy outlets and plans to have 200 branches have been put back at least six months.
In a March 2, 2009 article in the Wall Street Journal by Cecilie Rohwedder entitled “Tesco Tries to Hit a U.S. Curveball” gave further insight into the strategic shift.
Tesco’s response to the recession includes its Buxted line, a budget brand in the meat aisles of its stores with black and brown labeling. The Buxted Value Chicken Breasts include some bone and rib meat, so they aren’t trimmed to the same standard as the store’s Fresh & Easy Chicken Breasts, but at $2.99 a pound, they cost $2 less. Buxted pork chops, tuna steaks and ribs are also cheaper.
As a next step, Mr. Mason is considering adding bread with preservatives, which is cheaper than the purer but pricier breads now in the store.
Tesco is also introducing aggressive price promotions involving selected products. Its initial strategy was to offer what retailers call “Every Day Low Price” — in Fresh & Easy’s case, prices that were 10% to 25% below those at regular grocery stores. Now boldly colored shelf signs point out the “extra low price” on individual items, while large ceiling boards boast of “budget prices.” Fliers that once focused on themes now push the latest special discounts.
So lower prices, promotions and all the typical tricks of US grocers combined with BUXTED a budget line. So what is Buxted? At first glance it almost appears to be on of the very expensive contrived brand names from a Branding or Naming Agency, or perhaps a reference to street slang for “busted”. But Tesco has been using the name for some time; it is closer in origin to Kirkland form Costco.
According to Wikipedia: Buxted is a village and civil parish in the Wealden District of East Sussex in England. The parish is situated on the Weald, north of Uckfield; the settlements of Five Ash Down, Heron’s Ghyll and High Hurstwood are included within its boundaries. At one time its importance lay in the Wealden iron industry, although its main industrial base today is in the wholesale poultry trade.
So Buxted is a real place in England, and was once home to the poultry industry. An unusual name but certainly an interesting way to dramatically shift the strategy of Fresh & Easy. It creates a two-tier structure remarkably similar to many retailers around the world: Walmart, Loblaws, etc.
Will it be enough to survive this economy or will the dreadful economy and poor sales spur Tesco and Fresh & Easy to Private Brand innovation?