Fresh & Easy Neighborhood Market is a chain of grocery stores in the western United States, headquartered in El Segundo, California. Since November 2013 it is owned by Yucaipa Companies. It was a subsidiary of Tesco, the world's third largest retailer, based in the United Kingdom. It had plans for rapid growth - the first stores opened in November 2007 and, after a pause in the second quarter of 2008, the opening program recommenced. While there were over 200 stores in Arizona, California, and Nevada by December 2012, Tesco confirmed in April 2013 that it was pulling out of the US market, at a reported cost of £1.2 billion. On September 10, 2013, Tesco announced they were transferring ownership and operations of more than 150 stores to supermarket-owner Ron Burkle's Yucaipa Companies group. Despite the sale of the stores, there will be a continued friends card program (www.freshandeasy.com/friends). Fresh & Easy Neighborhood Market Inc. filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court at the beginning of October 2013. The sale will cost Tesco £150m, taking the total cost of its failed US venture to nearly £2bn.
History
On February 9, 2006, Tesco announced that it planned to move into the United States by opening a chain of small format grocery stores in the Western states (Arizona, California and Nevada) in 2007 named Fresh & Easy. The initial planned capital expenditure is up to £250m ($436m USD) per year. After Tesco CEO Terry Leahy announced serious resources had been committed to developing a format that would be popular with American consumers, investors responded with some skepticism with a small drop in the company's share price. The markets were expected to be around 1,400 square metres (15,000 sq ft)--good-sized supermarkets in many countries, but about one-third the size of an average supermarket within the US. By January 2007, Tesco opened its U.S. headquarters in El Segundo, California, near Los Angeles International Airport. The company initially expanded into Southern California, Phoenix, Arizona, and Las Vegas, Nevada.
On April 21, 2009 Tesco reported a trading loss of £142m from Fresh & Easy. On October 4, 2010 Fresh & Easy announced that it was temporarily closing 13 stores because of shrinking populations, high percentage of housing foreclosures and high unemployment rates. The stores were being mothballed, with hope of reopening them when the economy improves. Six of the stores were in the Las Vegas area, six in the Phoenix area and one in Moreno Valley. Most of the closures were "C-level stores," or those doing less than $50,000 USD in weekly sales. The business was not expected to break even until 2012-13. In the Strategic Review announcement in December 2012, research was showing that the company was not going to make a profit until the end of 2013 or even 2014. An article in the Los Angeles Times estimated that the chain has experienced "about $1 billion in cumulative annual losses" prior to 2013.
In February 2013 it was reported that despite rumors, Tesco would not be selling or closing the chain. This "rumor" was based on the fact that Tesco Chief Executive Philip Clarke announced to shareholders that Tesco would close or sell Fresh & Easy.
Tesco announced the sale of the chain on September 10, 2013 to Yucaipa Companies LLC. In fact, Tesco was not so much selling the chain as "essentially paying Mr. Burkle's Yucaipa Cos. to take on [Fresh & Easy's] liabilities" at a cost to Tesco of £150 million (approximately $235 million), while also providing the transferred chain with an £80 million loan. On November 27, 2013, the sale to Yucaipa Companies was completed. Yucaipa acquired 167 Fresh & Easy stores and closed approximately 40 of them.
In a statement delivered shortly after the news was released, Burkle confirmed there would be changes to the stores' format, "to complete Tesco's vision ... [and] make it even more relevant to today's consumer." In June 2014, Fresh & Easy initiated a reintroduction campaign, emphasizing "affordable organics," made-on-the-premises takeout, freshness, and the avoidance of artificial colors and flavors.
In its e-mail announcing the sale, Fresh & Easy said that customers would need to re-enroll in the Fresh & Easy Friends Card Loyalty program because "California state law does not allow the transfer of personal information of Friends Rewards members to the new buyer of Fresh & Easy"; after re-enrolling, "existing points and rewards balance will be honored."
Management
Timothy John Rollit Mason is the former President and Chief Executive Officer of Fresh & Easy. He joined Tesco in 1982 and became a member of the Board in 1995. Mason relocated to the U.S. with his family as part of the assignment of building the U.S. presence. He led the team researching the U.S. market prior to the company opening its first American store. In March 2011, Mason took on new roles as deputy chief executive and chief marketing officer within Tesco, and now spends about a third of his time outside of the US.
It was reported in December 2012 that Tim Mason had resigned from Tesco. He got a large bonus check when he resigned, totalling around £5.7 million. Some criticized the company for giving him such a big payout despite the US stores not turning a profit.
Stores
Fresh & Easy announced in October 2007 that the first California and Arizona stores would open November 8. However on November 1, 2007, Fresh & Easy opened its first store, in Hemet, California, as a "soft opening". (Soft openings are traditionally done in the retail business to test systems and store staff, and prepare for a larger "grand opening.") The Hemet store, near the company's distribution center, along with five others in Los Angeles and Orange Counties, then had their "grand opening" on November 8, 2007.
Fresh & Easy Neighborhood Market employs 20 to 30 associates per store. Part-time employees are paid a starting hourly wage of $10 USD per hour. Those store employees who work at least 20 hours per week get a health insurance plan, which they also contribute to. Assistant managers, called Team Leaders, currently are paid $13 hour (California). In Arizona, each of these positions pay US$1 per hour less. From April until the end of June 2008, Fresh & Easy took a pause from opening any new stores. That hiatus was lifted with the July 2, 2008 opening of a store in Manhattan Beach, California. As of October 5, 2011, there were 182 stores in Arizona, California, and Nevada.
On September 8, 2010, Fresh & Easy opened 4 new stores in California, marking the 100th store for the state. By August 2011, with the first Northern California stores open, there were 128 stores operating in California.
In July 2007, Tesco announced plans for several Arizona stores. The first Mesa, Arizona, store opened December 5, 2007. There were (as of August 2011) 28 locations in operation in the greater Phoenix area.
The first five Nevada stores opened in the Las Vegas Valley area November 11, 2007. There were 21 stores in operation in and around Las Vegas in August 2011. Many stores were opened in the locations of former Rite-Aid Pharmacies.
Distribution centres
Tesco purchased a 130,000 square meters (1,400,000 sq ft) distribution centre in unincorporated Riverside County, immediately adjacent to the cities of Riverside and Moreno Valley on land that was part of the former March Air Reserve Base. The company was looking for another distribution centre location in Stockton, strategic for the Northern California region, and has considered another distribution centre in Phoenix.
Environmental goals
Fresh & Easy states it has made a commitment to building Leadership in Energy and Environmental Design certified buildings. It will recycle or reuse shipping and display products. Its food transportation trailers are hybrid electric-diesel. The company contracted for the installation of a rooftop solar power system for its Riverside distribution center, capable of generating 2.6 million kilowatt hours per year -- enough to supply a fifth of the depot's power needs and prevent the emission of 1,200 tons of carbon dioxide pollution per year; the contractor believed that it would be the largest such system in the world at the time. Stores are equipped with LED lights in freezers, coolers and for outdoor signage. Some stores have reserved parking for hybrid cars.
On September 8, 2010, Fresh & Easy opened its first store to be GreenChill certified (Rosemead store). Fewer than 40 of all grocery stores in the USA are GreenChill certified.
References
External links
- fresh&easy Official website
- Retail Case Study: Anatomy of A Tesco Fresh and Easy Neighborhood
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