Interesting Fresh & Easy Article
Below is an interesting article published by the Arizona Republic on Tuesday. Based on the published numbers of $267 million in first half sales from 130 stores, Fresh & Easy’s full year sales should be approximately $534 million or $4.1 million per unit. The average Fresh & Easy store is 14,000 square feet so their average sales per square foot would be approximately $293. This figure does not seem that bad. I would not have guessed that Fresh & Easy had sales volumes approaching $300 PSF based on how dead most of the stores have been when I have visited. That being said, $300 PSF is probably off-target for Fresh & Easy as their store size is only 14,000 square feet as opposed to 50,000 square feet for a traditional grocery store where $300 PSF in sales is more in line with average expectations.
As the article mentions, Fresh & Easy has begun aggressively advertising. I have heard several radio ads recently. Its about time.
Fresh & Easy to open stores despite poor quarterly sales
After recession tripped company’s original plan, Tesco wants new markets to overturn losses
by Max Jarman – Oct. 6, 2009 05:47 PM
The Arizona RepublicBritish retailer Tesco PLC continues to move forward with development of its Fresh & Easy stores in Phoenix and two other locations in the United States, despite heavy losses.
The $96 billion-a-year company reported Tuesday that the U.S. operation, which was launched in 2007, lost $135 million in the first half of this year. That followed a $226 million loss in 2008. Tesco said it expects to lose about $260 million in the U.S. this year.
The company attributed the loss to the cost of maintaining an infrastructure that was designed to support many more stores than the company now has open.
Fresh & Easy Neighborhood Market operates 130 stores in three target markets – metro Phoenix, Las Vegas and Southern California.
The company projected to have hundreds of stores open by now but had to severely scale back its development plans because of the recession.
Still Tesco’s Chief Executive Terry Leahy said in a statement Tuesday that Fresh & Easy is making good progress in the U.S. and that the company is pleased with the results.
The U.S. stores posted first-half sales of $267 million, up 115 percent from a year ago.
"Customers are enthusiastic about the offer, particularly the fresh food prepared in the Fresh & Easy kitchen," Leahy said.
The company opened 30 stores in the past year and plans to pick up the pace to a projected new store per week.
Fresh & Easy now has 30 stores in the Phoenix area, with more planned.
Spokesman Brendan Wonnacott was unable to name any specific future locations in the Phoenix area but confirmed more stores are on the way.
"We don’t announce a store until we’re within 30 days of opening," he said. One location the company is not ready to announce is the former Wild Oats Natural Marketplace at 40th Street and Camelback Road in Phoenix.
For now, Fresh & Easy will stick to established markets in metro Phoenix, Las Vegas and Southern California. Eventually, the company plans to move into Northern California and other states.
Long-term plans call for a nationwide string of no-frills neighborhood markets.
Wonnacott partially attributed the increase in first-half sales to a midyear change in focus that saw Fresh & Easy alter its marketing to reflect more advertised weekly specials instead of everyday low prices.
Recently, Fresh & Easy launched its first major media campaign aimed at establishing its brand. The campaign includes radio ads and billboard with slogans such as "wholesome foods, not whole paycheck."
"The campaign focuses on explaining to customers how Fresh & Easy can offer both high-quality products and low prices," Leahy said.
There is also a nice little company snapshot in the right column adjacent to the article. I have copied it as pasted below:
Related Posts:
- Fresh & Easy Closing 13 Stores
- Fresh & Easy Display Ad Spotted in the Wild
- Fresh & Easy Real Estate Director Making Empty Threats
i think its fairly obvious that Tesco (and FnE) picked the best markets to enter and laid out premiums to do so. i think its fairly obvious the real estate crash and subsequent recession has more or less decimated these market. i love FnE, as a matter of opinion. i think a lot of people in these markets like to act like FnE is beneath them, yet FnE does pretty good sales. either way, a 2 year old company that doesnt make money? im shocked! and a company that is doubling its stores every year on a CASH basis isnt making money? shocker! i could get into how i think they could retool their stores slightly. and that they could probably squeeze out a slightly smaller footprint store. but with the recession it may turn out that FnE starts to earn a loyal customer base. only time will tell.
I agree with your statements about profit expectations of a new company expanding at a rapid rate. I must say though that the quick smell test of the store (ie. site visit) don't appear to indicate success. I have been in more than one F&E store in SoCal without seeing a single other customer over a 15 minute or so period. I too like the concept. I just don't like their location choices (for the most part). I'm not in the grocery business but I think they should focus on more densely populated urban centers with generally younger demographics. Most grocery shoppers are not ready for self check-out, in my opinion. Specifically, I think F&E should be aggressively targeting college towns because the format would be an ideal match for the demographic. I realize that there are only a handful of targets in this area but it is a start. They could also focus on some college-commuter and post-college trade areas such as Fan Francisco, Hermosa/Manhattan Beach, Pacific/Mission Beach, Newport Beach, etc.
I agree with your statements about profit expectations of a new company expanding at a rapid rate. I must say though that the quick smell test of the store (ie. site visit) don't appear to indicate success. I have been in more than one F&E store in SoCal without seeing a single other customer over a 15 minute or so period. I too like the concept. I just don't like their location choices (for the most part). I'm not in the grocery business but I think they should focus on more densely populated urban centers with generally younger demographics. Most grocery shoppers are not ready for self check-out, in my opinion. Specifically, I think F&E should be aggressively targeting college towns because the format would be an ideal match for the demographic. I realize that there are only a handful of targets in this area but it is a start. They could also focus on some college-commuter and post-college trade areas such as San Francisco, Hermosa/Manhattan Beach, Pacific/Mission Beach, Newport Beach, etc.
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