March 25, 2015
Store closings part of Fresh & Easy plan to reinvent convenience
It’s easy to see this week’s announcement that Fresh & Easy is closing 50 stores in three states as a sign that Yucaipa’s ownership of the chain is going no better than it did under Tesco.
It would also be easy for many to say they were right when they scoffed at the idea that Yucaipa would succeed by turning Fresh & Easy into the "next-generation convenience retail experience" as promised back in September of 2013. On this site, 62 percent of those responding to a survey said Fresh & Easy was somewhat or very unlikely to succeed under Yucaipa ownership.
![[Image: Fresh & Easy]](data:image/svg+xml;base64,PHN2ZyB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciIHZpZXdCb3g9IjAgMCAxIDEiIHdpZHRoPSIxIiBoZWlnaHQ9IjEiIGRhdGEtdT0iJTJGcHVibGljJTJGaW1hZ2VzJTJGZGlzY3Vzc2lvbnMlMkYxODE3MiUyRmZyZXNoLWVhc3ktc3RpbGwuanBnIiBkYXRhLXc9IjEiIGRhdGEtaD0iMSIgZGF0YS1iaXA9IiI+PC9zdmc+)
Still, Fresh & Easy management insists that it has not wavered in its goal of creating a new form of convenience store. In its announcement that it was closing stores, the company also touted accomplishments such as a re-launch of "an all-new fresh food concept" in Las Vegas as well as the rollout of Click & Collect in the city. The BOPIS service is being used as a test for a possible wider rollout in the future.
With the closings, management says Fresh & Easy will be in better position to remodel existing stores and open locations with the 3,000 to 5,000 square footprint that it believes will enable the stores to provide "a higher level of convenience." The company is working ADMI, the same firm behind the Apple Store, "to create the only fresh food convenience store" in the U.S.
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Recent Discussions
Discussion Questions
Do you think Fresh & Easy is capable of creating a new kind of convenience store? Are Americans ready or reluctant to embrace a “fresh food convenience store” concept?
Poll
The stores were a model for many of us from the grocery side of the industry. We understood what they were and what they could become. However, no one apparently considered the customers. They were not seeing it and were not ready for a smaller fresh food market. So now what? I think they would do better if they modeled the stores after something like a Trader Joe’s.
The stores may not have enough square footage, but consider the idea of the product line and the style that Trader Joe’s uses to relate to the customers. Do this and do not tell the customers it is a fresh food convenience store but a discount model grocery store. That would work for them more than a convenience store.
There’s been no evidence that Americans are calling for a new type of convenience store, particularly one that pushes “fresh.” While the segments of fresh and organic are growing in grocery stores, the growth is at nowhere near the rate one would expect from the interest claimed in surveys.
There are currently five destination drivers for convenience store customers. They are
fuel, alcoholic beverage (principally beer), packaged beverages (soda, energy, water, etc.), nicotine delivery systems (cigarettes, cigars, e-cigs, vapor devices, etc.), and foodservice for those that do it right.
I added the caveat for foodservice because most, if not all, of the other categories are comprised of items manufactured by CPG companies. With foodservice the c-store plays a far greater role in ensuring product freshness and quality.
C-store customers are definitely interested in fresh, and c-stores are working hard to be able to provide a fresh food experience. Part of the issue for c-stores is that their purchase quantities for fresh may not meet the minimums required for frequent delivery (three or more times a week). Some have addressed this by opening their own distribution centers. Others are working with their distributors to find ways to meet the demand for fresh. The potential demand is there for this to occur.
At this point, I wonder if the Fresh & Easy brand has any meaning to consumers. A third iteration of its stores will probably fare no better than the first two. I had high hopes for the chain once Tesco sold it to Yucaipa, but no longer.
It’s hard to judge the prospects for Fresh & Easy without knowing the competitive landscape.Trader Joe’s, Aldi and so forth. It’s also critical that the remaining locations lend themselves to c-store business, not just an assortment of fresh foods that can be bought elsewhere.
Sendik’s (the leading “upper moderate” grocery chain in the Milwaukee market) recently opened a very similar concept called “Sendik’s Fresh2Go.” I’m sure there are other examples of “fresh food convenience stores.” Isn’t Wawa in the same niche?
Fresh2Go has some elements of a c-store (complete with gas pumps) but also maintains the previous location’s focus on a tightly-edited assortment of high-end fresh meat, bakery and produce. From what I can see, even with plenty of nearby competition the store is consistently full of traffic, and the location strategy is a key ingredient.
Short answer to the first question—yes. I visited one of the re-merchandised stores in Arizona just before the holidays last year and was impressed with the assortment and the service. This particular store was in an up-and-coming neighborhood and featured a nice selection of prepared foods, a wide variety of produce and proteins (even seafood!), more than 100 types of wines and beers, a great selection of classic candies (Razzles!) and flowers. What it didn’t have was a big selection of center store staples. The staff was very personable, even suggesting where the person in front me at the checkout could find a good sushi restaurant in the area.
On the second question, we’re getting very close to the point where American shoppers accept the “fresh food convenience store” concept. It’s already happening in urban areas with bodegas and upscale retail bazaars like Eataly. There’s a very good chance it will be the store format of the 2020s.
As a someone who lives in New York City I have watched countless delis and bodegas transform themselves into “organic markets.” (There are more organic markets than coffee shops in my daughter’s neighborhood of partially-gentrified Brooklyn.) Sometimes this just involves the change of some signage and maybe some renovations, but many of the markets have improved and expanded their offering of fresh fruits and vegetables—along with healthier and more upscale packaged goods. This is purely anecdotal, but those stores seem to be doing great business and it seems that in some parts of the U.S. there is already a high demand for a “fresh food convenience store” that mom-and-pop stores are struggling to meet.
The Fresh & Easy concept seems to be an idea that would work best in very specific locations, at least for the time being. It is not a concept that is going to take over the world overnight and therefore it makes a lot of sense that they would scale back and focus on getting the right stores in the right locations as they solidify their brand.
Are Americans ready to embrace more fresh food stores? YES. Are they ready to embrace a fresh food convenience store? NO. Americans have a disconnect between fresh food and convenience stores. To succeed, Fresh & Easy are going to need to get out of the c-store business and become a convenient fresh food store.
They may sound like the same thing, but in reality it is a totally different mindset.
Closing stores in poor locations is normal so no surprises. They will probably end up closing a lot more than 50. Perhaps they should focus on opening a new type of convenience store but distance themselves from the existing stores and locations. Those have too much negativity associated with them.
I don’t know if you can turn this format around. People have a preconceived notion already of what the format entails. I don’t know if you can get those people to come back again.
The convenience store format is a hard nut to crack: There are a lot of good convenience store retailers that have already added some element of fresh to their assortment and they are constantly fine tuning it based on customer needs. Fresh & Easy will have to catch up pretty quickly if they want to run in that circle.
If they are faltering this bad at this stage, they won’t make it. Reading the article tells me they don’t know what they are doing, and lost identity and direction totally!
I think the time is ripe for a small-footprint, fresh-oriented, neighborhood food store chain. Just stop calling it a “convenience store” or it will be judged unfairly against that category.
Fresh & Easy is even a pretty good name for such an entity. I think the concept could work as a drive-to in bedroom communities and as a walk-to in urban food deserts and neighborhoods.
Click and collect (which has taken France by storm, apparently) would be a great service differentiation compared with say, Trader Joe’s. Watch this one closely, because it has innovation written all over it.
The comments here were much more supportive than I had expected, though George had preempted reality by recognizing how easy it is to call this a failure; indeed it takes effort to NOT call it that.
At this point it seems the question isn’t really whether “Americans are ready… to embrace a ‘fresh food convenience store’,” but whether or not there are enough of them concentrated together to make it a viable concept. So far, the indications are that there are not.
The chain is in crisis mode whether they want to admit it or not. Nothing, including business, changed with the new ownership. Maybe the best opportunity is to sell the chain and re-open the stores as that chain that everyone recognizes.
I am the quintessential Fresh & Easy customer, as initially described by TESCO: looking for a fresh, prepared meal to pick up on my way home from work, and maybe a couple of other go-withs while there. Add in: my store (so far has escaped closure) is on the way, on a very busy commuter route and minutes from my house; decent prices; a cool little bakery section; a clearance shelf that was fun to poke thru; mostly convenient hours—AND I’m an Anglophile—what was not to love?
Well, the food. It all tasted about the same, which is to say like not much. I didn’t expect to do my week’s shopping there, so the “lack” of grocery store-level product selection never bothered me—I just wanted dinner to actually have some ooomph to it. After coming up “meh” 10 too many times, I gave up and haven’t been in that store for years.
I would never underestimate Yucaipa’s capabilities and resources to reinvent “C-store” retailing. Closing stores is a natural part of the retailing life cycle in food—whether grocery, QSR or convenience.
In the past, those five categories mentioned in Steve’s comment below drove an overwhelming percentage of C-store volume—emphasis on past. For the current model, they still do. Times are changing folks, incrementally. Maybe instead of gas, you get a free charge (for your Leaf), and instead of Miller Lite you get some local corner craft beer with your sushi.
No matter where products are sold, then need to be relevant to what consumers want. They (the customers) define relevant and the price they’re willing to pay for it. If you envision the C-store business with the same energy that Uber challenged the taxi business model, it may lead us to a very different definition and format for “fresh and easy.”
They may have had an easier time rebranding completely. Hard to get customers to take a second look when the original set up of the stores in the first generation was not so exciting.
Two good questions but in the wrong order. You would have hoped that Tesco started out by answering question two, but given the outcome it would appear not. Of course, they may well have seen a gap in the market but failed to ask themselves whether there was a market in the gap.
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The stores were a model for many of us from the grocery side of the industry. We understood what they were and what they could become. However, no one apparently considered the customers. They were not seeing it and were not ready for a smaller fresh food market. So now what? I think they would do better if they modeled the stores after something like a Trader Joe’s.
The stores may not have enough square footage, but consider the idea of the product line and the style that Trader Joe’s uses to relate to the customers. Do this and do not tell the customers it is a fresh food convenience store but a discount model grocery store. That would work for them more than a convenience store.
There’s been no evidence that Americans are calling for a new type of convenience store, particularly one that pushes “fresh.” While the segments of fresh and organic are growing in grocery stores, the growth is at nowhere near the rate one would expect from the interest claimed in surveys.
There are currently five destination drivers for convenience store customers. They are
fuel, alcoholic beverage (principally beer), packaged beverages (soda, energy, water, etc.), nicotine delivery systems (cigarettes, cigars, e-cigs, vapor devices, etc.), and foodservice for those that do it right.
I added the caveat for foodservice because most, if not all, of the other categories are comprised of items manufactured by CPG companies. With foodservice the c-store plays a far greater role in ensuring product freshness and quality.
C-store customers are definitely interested in fresh, and c-stores are working hard to be able to provide a fresh food experience. Part of the issue for c-stores is that their purchase quantities for fresh may not meet the minimums required for frequent delivery (three or more times a week). Some have addressed this by opening their own distribution centers. Others are working with their distributors to find ways to meet the demand for fresh. The potential demand is there for this to occur.
At this point, I wonder if the Fresh & Easy brand has any meaning to consumers. A third iteration of its stores will probably fare no better than the first two. I had high hopes for the chain once Tesco sold it to Yucaipa, but no longer.
It’s hard to judge the prospects for Fresh & Easy without knowing the competitive landscape.Trader Joe’s, Aldi and so forth. It’s also critical that the remaining locations lend themselves to c-store business, not just an assortment of fresh foods that can be bought elsewhere.
Sendik’s (the leading “upper moderate” grocery chain in the Milwaukee market) recently opened a very similar concept called “Sendik’s Fresh2Go.” I’m sure there are other examples of “fresh food convenience stores.” Isn’t Wawa in the same niche?
Fresh2Go has some elements of a c-store (complete with gas pumps) but also maintains the previous location’s focus on a tightly-edited assortment of high-end fresh meat, bakery and produce. From what I can see, even with plenty of nearby competition the store is consistently full of traffic, and the location strategy is a key ingredient.
Short answer to the first question—yes. I visited one of the re-merchandised stores in Arizona just before the holidays last year and was impressed with the assortment and the service. This particular store was in an up-and-coming neighborhood and featured a nice selection of prepared foods, a wide variety of produce and proteins (even seafood!), more than 100 types of wines and beers, a great selection of classic candies (Razzles!) and flowers. What it didn’t have was a big selection of center store staples. The staff was very personable, even suggesting where the person in front me at the checkout could find a good sushi restaurant in the area.
On the second question, we’re getting very close to the point where American shoppers accept the “fresh food convenience store” concept. It’s already happening in urban areas with bodegas and upscale retail bazaars like Eataly. There’s a very good chance it will be the store format of the 2020s.
As a someone who lives in New York City I have watched countless delis and bodegas transform themselves into “organic markets.” (There are more organic markets than coffee shops in my daughter’s neighborhood of partially-gentrified Brooklyn.) Sometimes this just involves the change of some signage and maybe some renovations, but many of the markets have improved and expanded their offering of fresh fruits and vegetables—along with healthier and more upscale packaged goods. This is purely anecdotal, but those stores seem to be doing great business and it seems that in some parts of the U.S. there is already a high demand for a “fresh food convenience store” that mom-and-pop stores are struggling to meet.
The Fresh & Easy concept seems to be an idea that would work best in very specific locations, at least for the time being. It is not a concept that is going to take over the world overnight and therefore it makes a lot of sense that they would scale back and focus on getting the right stores in the right locations as they solidify their brand.
Are Americans ready to embrace more fresh food stores? YES. Are they ready to embrace a fresh food convenience store? NO. Americans have a disconnect between fresh food and convenience stores. To succeed, Fresh & Easy are going to need to get out of the c-store business and become a convenient fresh food store.
They may sound like the same thing, but in reality it is a totally different mindset.
Closing stores in poor locations is normal so no surprises. They will probably end up closing a lot more than 50. Perhaps they should focus on opening a new type of convenience store but distance themselves from the existing stores and locations. Those have too much negativity associated with them.
I don’t know if you can turn this format around. People have a preconceived notion already of what the format entails. I don’t know if you can get those people to come back again.
The convenience store format is a hard nut to crack: There are a lot of good convenience store retailers that have already added some element of fresh to their assortment and they are constantly fine tuning it based on customer needs. Fresh & Easy will have to catch up pretty quickly if they want to run in that circle.
If they are faltering this bad at this stage, they won’t make it. Reading the article tells me they don’t know what they are doing, and lost identity and direction totally!
I think the time is ripe for a small-footprint, fresh-oriented, neighborhood food store chain. Just stop calling it a “convenience store” or it will be judged unfairly against that category.
Fresh & Easy is even a pretty good name for such an entity. I think the concept could work as a drive-to in bedroom communities and as a walk-to in urban food deserts and neighborhoods.
Click and collect (which has taken France by storm, apparently) would be a great service differentiation compared with say, Trader Joe’s. Watch this one closely, because it has innovation written all over it.
The comments here were much more supportive than I had expected, though George had preempted reality by recognizing how easy it is to call this a failure; indeed it takes effort to NOT call it that.
At this point it seems the question isn’t really whether “Americans are ready… to embrace a ‘fresh food convenience store’,” but whether or not there are enough of them concentrated together to make it a viable concept. So far, the indications are that there are not.
The chain is in crisis mode whether they want to admit it or not. Nothing, including business, changed with the new ownership. Maybe the best opportunity is to sell the chain and re-open the stores as that chain that everyone recognizes.
I am the quintessential Fresh & Easy customer, as initially described by TESCO: looking for a fresh, prepared meal to pick up on my way home from work, and maybe a couple of other go-withs while there. Add in: my store (so far has escaped closure) is on the way, on a very busy commuter route and minutes from my house; decent prices; a cool little bakery section; a clearance shelf that was fun to poke thru; mostly convenient hours—AND I’m an Anglophile—what was not to love?
Well, the food. It all tasted about the same, which is to say like not much. I didn’t expect to do my week’s shopping there, so the “lack” of grocery store-level product selection never bothered me—I just wanted dinner to actually have some ooomph to it. After coming up “meh” 10 too many times, I gave up and haven’t been in that store for years.
I would never underestimate Yucaipa’s capabilities and resources to reinvent “C-store” retailing. Closing stores is a natural part of the retailing life cycle in food—whether grocery, QSR or convenience.
In the past, those five categories mentioned in Steve’s comment below drove an overwhelming percentage of C-store volume—emphasis on past. For the current model, they still do. Times are changing folks, incrementally. Maybe instead of gas, you get a free charge (for your Leaf), and instead of Miller Lite you get some local corner craft beer with your sushi.
No matter where products are sold, then need to be relevant to what consumers want. They (the customers) define relevant and the price they’re willing to pay for it. If you envision the C-store business with the same energy that Uber challenged the taxi business model, it may lead us to a very different definition and format for “fresh and easy.”
They may have had an easier time rebranding completely. Hard to get customers to take a second look when the original set up of the stores in the first generation was not so exciting.
Two good questions but in the wrong order. You would have hoped that Tesco started out by answering question two, but given the outcome it would appear not. Of course, they may well have seen a gap in the market but failed to ask themselves whether there was a market in the gap.