British retail giant Tesco, said it will likely exit the U.S. after announcing a review of its El Segundo, California- based business Fresh & Easy unit in the country and the departure of the beleaguered business’s leader.
All options are being considered for the 199-store chain, including a sale, closure or partnership, Chief Executive Officer Philip Clarke said today on a conference call. Tesco has hired investment bank Greenhill to assist with the review.
Despite award winning Private Brand packaging and design as well as significant preparation and focus from the retailer at the launch of Fresh & Easy profit was elusive and the American customer seemed unimpressed.
“It was a discount store and it had high costs and it just proved too difficult to shift people from their traditional buying habits in big supercenters and supermarkets into a small store,” said Clarke, who was speaking from Los Angeles.
“A difficult, but right decision is being taken,” Black said. “We see this review as one of the most high profile and perhaps defining moments in Philip Clarke’s position as CEO.”
Tim Mason, Tesco’s former marketing director who has led Fresh & Easy since its inception, will leave today after 30 years at the U.K. company. Mason was promoted to deputy CEO of Tesco after Clarke’s predecessor Terry Leahy stepped down in 2010.
“We made our decision about Fresh & Easy and it felt like the right time for Tim to leave,” Clarke said on the call.
Mason built the Fresh & Easy from the ground up after several years researching the market during Leahy’s tenure as CEO, targeting the West Coast with a series of neighborhood urban stores in a market dominated by big-box supermarkets. The grocery chain distinguishes itself with a focus on budget priced, healthy food and a high penetration of Private Brand products such as numerous ready-meals unfortunately the American customer has yet to latch onto the ready meal concept.