Thursday's Los Angeles Times had a large article on the impending departure of Fresh and Easy (Tesco) from the U.S. market.
I kind of like them, but their failure is not surprising. Their first year in the U.S., they lost about $2 million/store/year. This year, they're on track to lose another $1 million/store/year.
Why? Profit margins are thin in the grocery business. Tesco's market strategy seemed to be targeting young adults without children. Their stores are small and quick to get into and out of, but don't have many national brands and don't accept manufacturer's coupons. Serving sizes are scaled to the one- or two-adult dinner. Somewhat pricey, too.
For the wealthy and childless, this can work. But that means lots of foot traffic that doesn't buy a whole lot of food. Add to that the decision by Tesco to place many Fresh and Easy stores in poorer, underserved neighborhoods, and it seems like a mismatch between target clientele and store locations.