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Marketing Daily offers an interview with Herb Sorensen, global scientific director of shopper insights for TNS North America, in which he addresses what he feels will be Tesco’s main strengths when it begins opening Fresh & Easy Neighborhood Markets in Southern California, Arizona and Nevada. Four key points:

1. “The net economic impact of Tesco in the U.S. isn't going to jostle anyone economically. The industry is big enough so that you can add 100--or even 1,000—new stores. But, intellectually, food retailers will get substantially jostled.”

2. In most supermarkets, Sorensen says, it is “the shopper's job to find the few items they do want, sprinkled in with the tens of thousands they don't want. Tesco's stores will reverse that--they're just going to present shoppers with items they actually want.”

3. “More than 50% of shoppers in a food store buy fewer than five items, but you'd never know that from the way most grocery stores are laid out. And the most common number of any items they buy is one. Tesco's stores will be clearly aimed at the short tripper, and that's smart.”

4. “Tesco has done what I recommend all retailers do--it stopped defining itself by what it sells and started defining itself by the customers who came through its doors. Tesco now sells insurance. It sells vacations. And they are a very astute online retailer. The point is that Tesco knows how to target individual shoppers.”

KC's View:
Actually, Sorensen also makes a fifth point that may be the most important of the bunch…but I saved it for here because it is one that MNB had made over and over and over again:

“Consumers aren't the main source of revenue for food retailers--marketers are,” Sorenesen says. “Typically, the slotting allowances and promotional fees marketers pay for shelf space are a chain's biggest revenue source, followed by revenue earned from ‘float,’ or handling cash, followed by real-estate. And margin, the profit made on sales to customers, only comes in fourth.”

If Tesco can create stores that actually make money based on selling customers what they want to buy, as opposed to stores founded on the corrupting influences of slotting allowances, then the upside potential seems extremely high.