In the UK, the Times reports that Tim Mason, who is running Tesco’s Fresh & Easy operation in the United States, says in an interview that the company “got it wrong” in the US despite its much vaunted market research.
“We may have assumed that certain elements of the Fresh & Easy brand would do the work for us and we would not have to go down and dirty on price. That may have been a mistake,” Mason says.
Mason and Simon Uwins, Fresh & Easy’s marketing director, tell the Times that they misjudged the importance of price to US customers, that while they “went into people’s houses, talked to them about food and food shopping (and) went into their kitchens and poked round pantries,” they never went into their garages and basements, where they would have found “huge freezer chests bulging with stockpiled meat bought on special offer.”
“There’s less loyalty in the American market,” says Mason. “A Brit has to hear it a few times before you accept that people make up their mind where to go each week when they check out the special offers round the kitchen table.”
The Times notes that consumer focus on price has gotten even more intense with the recession, which has slowed Fresh & Easy’s expansion: “There are 113 Fresh & Easy outlets and plans to have 200 branches have been put back at least six months.”
“We may have assumed that certain elements of the Fresh & Easy brand would do the work for us and we would not have to go down and dirty on price. That may have been a mistake,” Mason says.
Mason and Simon Uwins, Fresh & Easy’s marketing director, tell the Times that they misjudged the importance of price to US customers, that while they “went into people’s houses, talked to them about food and food shopping (and) went into their kitchens and poked round pantries,” they never went into their garages and basements, where they would have found “huge freezer chests bulging with stockpiled meat bought on special offer.”
“There’s less loyalty in the American market,” says Mason. “A Brit has to hear it a few times before you accept that people make up their mind where to go each week when they check out the special offers round the kitchen table.”
The Times notes that consumer focus on price has gotten even more intense with the recession, which has slowed Fresh & Easy’s expansion: “There are 113 Fresh & Easy outlets and plans to have 200 branches have been put back at least six months.”
- KC's View:
-
Chalk one up for the folks who have been saying from the beginning that Tesco was misjudging the US marketplace. And let’s hear a giant raspberry for the people who figured that Tesco’s track record suggested that it knew what it was doing, even if the stores themselves made that a hard position to take.
(Let’s be honest here. The Content Guy – and at moments like these, it helps to refer to oneself in the third person – was part of the latter group. Mea culpa, mea culpa, mea maxima culpa.)
Now, to be fair, Tesco didn’t know when it started opening stores in the US that a recession would hit the country and affect customer behavior. It also didn’t know that California, where it opened most of its original stores, would in many ways be ground zero for where the economic impact would be felt.
But it is a little staggering to read that the market research was either incorrect and/or insufficient…and it makes one think that Tesco had such a strong idea about what kind of stores it wanted to open that it forced the research results to fit its preconceptions.
It remains to be seen whether Tesco can resuscitate the Fresh & Easy brand, whether it can convince shoppers that its stores are low-priced enough that they are worth trying again.
If it can't…well, maybe it can sell the 113 locations to Walmart for its Marketside format.
