StORES Magazine - September 2007 - (Page 114) CONSIDER THIS / LOEB RETAIL LETTER Copyright 2007 by Loeb Associates Inc. Used by permission. The British Are Coming BY WALTER LOEB One of the great retail events of 2007 will be the arrival of British supermarket operator Tesco, which is introducing a supermarket hybrid format called Fresh & Easy in three western states. Tesco is the world’s fifthlargest retailer, with revenues of nearly $100 billion last year. In late fall, the company will open about 21 Fresh & Easy neighborhood markets – convenience stores that will feature fresh and healthy foods – in Arizona, California and Nevada. Nearly 30 more are scheduled to open by early 2008, and there could be as many as 200 stores operating by the end of 2009. Walter F. Loeb is a New YorkIt is exciting to read based consultant and member about this “British invaof the NRF board of directors sion,” since it will be a new whose newsletter is published form of grocery retailing. monthly in STORES. Fresh & Easy stores will average 10,000 sq. ft. – smaller than any traditional supermarket format, but more than four times the size of a typical 7-Eleven. This will be a neighborhood grocery store that caters to the close-by community and is geared to generating high sales volume with low pricing and quality fresh produce. This is typical of Tesco’s British grocery stores, which are often located in densely populated areas and depend on frequent deliveries over the course of the day through a sophisticated, computerized replenishment system. Fewer SKUs Quick replenishment is achieved with excellent information systems and specialized trucks that have partitions for fresh, chilled and frozen food. There are fewer SKUs in Tesco stores, and some non-food items, like back-toschool and Christmas merchandise, will be featured only for short periods. The Tesco Clubcard has developed a strong loyalty bond with customers in the U.K., and that approach is likely to be repeated here. The card is also a great source of information on purchases and shopping habits. I think this new entry could soon be strong competition for established food retailers that depend on supplying their stores with daily deliveries from distant warehouses. The company has opened its U.S. headquarters in El Segundo, Calif., and built an 820,400-sq.-ft. warehouse in Riverside, Calif. Tesco has spent years researching the U.S. market; some of its associates actually lived with American families to understand our ways of living and shopping. Watching the new kid Whether it is Wal-Mart’s neighborhood stores, Safeway supermarkets or 7-Eleven convenience stores, everyone will be watching the new kid on the block to determine its competitive power. Target has already spruced up its food offerings; Wal-Mart is considering introducing the Bodega format that is successful in Mexico. The arrival of Fresh & Quick replenishment is achieved with excellent Easy may even affect – if only for a short periinformation systems and specialized trucks that have od – warehouse operators like Costco and partitions for fresh, chilled and frozen food. Sam’s, since customers will try the new offerings. I believe this event will be a real eye-opener for retailing. Zara’s exciting replenishment method in general merchandise and Tesco’s new format prove that retailing is always changing and renewing itself with innovative ideas. Albert Schweitzer said, “Immer Weiter” – always forward – and Tesco’s $1 billion investment over the next two years might be a giant step toward a new era in retailing. WWW.STORES.ORG 114 STORES / SEPTEMBER 2007 http://WWW.STORES.ORG
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