The Power of Retail

Tesco will be opening a new type of food and grocery store in the US which they believe will change the way consumers shop. The new stores will be small neighborhood stores called Fresh & Easy Neighborhood Markets and will sell fresh fruits, vegetables and meats. The stores will offer a large variety of ready to eat meals targeted at consumers who want to eat good food but don’t have the time to prepare them.

Tesco has created this concept after thorough market research concerning how US consumers shop for and cook their meals. The new stores are going to be the size of an average 7-Eleven, around 10,000 sq ft only as compared to the usual 45,000 sq ft that grocery retailers normally cover. Tesco is working hard to convey that these stores will not be “convenience stores” that are common in the US, but will specifically be fresh food supermarkets.

The first of these stores will open in California, Arizona and Nevada later on this year, with the company already having selected 100 sites, 20 of which are in the Phoenix area, one of the fastest growing cities in the US. Globally, Tesco is in the top five retailers of the world and has 2,800 stores in 13 countries employing over 370,000 people.

The Fresh & Easy model exposes a gap in the industry, which has been hampered in the last decade by consumers who now shop at convenience stores, wholesale retailers and specialty stores, in addition to local supermarkets, explained Currie. Shoppers haven’t abandoned the supermarket, he said, but the practice of stocking up with groceries for the long haul is ripe for change.“The supermarket has been fragmented,” Currie said. “There is an opportunity here to redefine the business model.”

Currie said Tesco’s model would incorporate cheaper labor, cheaper real estate and subsequently lower costs at the register. Competitors’ prices are likely to fall in response.