Get ready to kiss Fresh and Easy goodbye

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.

Gentrification Orientation

I think F&E had a gentrification orientation, but maybe didn't understand the local market. I checked out the one on Adams in South Central - interesting. It was a little like a cross between Whole Foods and Trader Joe's. The way it was set up, it wasn't for the neighborhood. There was covered parking, and that led to the main entrance. So I figured it was intended to be a destination for the new loft-dwellers who lived around 10 to 20 blocks away.

Many things were wrapped in plastic or in a box, which I find weird. I'm more used to picking out things and bagging them.

They had a lot of health foods, which was nice. The problem is, learning to eat these foods is like a freaking research project. You eat X to get effect Y. Well, that requires that the people have access to the information, either through magazines, friends, books, or videos.

Personally, I'm mostly out of the health food media stream. I know some people who are on top of it, but for the most part, it's just passing me by. First off, I don't really hang out with many white people anymore, and F&E had the white health food. (There's other ethnic groups health food fads, too, believe it or not.) Secondly, I don't read up in the magazines, or the LA Weekly anymore, so I don't see the fads being advertised. Third, I'm not paying attention to the food section of the news as much, so I'm losing that source too.

Here's an example of a food fad I didn't know: kale. I've been eating it for years, generally cooking a big pot with a half pound of bacon and some water. So when people mentioned it, I thought that's what they were talking about. I didn't know it was considered a "superfood", and bacon was the last thing to cook with it. (Since i cut back on meat, I used salt, potatoes, butter and chilis as flavor.)

So, if they were going to have a tough time selling to me - a college educated mostly-vegetarian - it would be harder to sell to someone more typical of South Central LA, who probably doesn't speak English.

The other thing was, as mentioned above, the prices were designed to work for singles and couples, not families. Families tend to buy bigger, and also cook more to save money, so they want X pounds of something for $1 or $2.

Older folks buy small portions of premade food, but it seems like they also buy nostalgia, and will get ethnic foods or old-timey foods, not trendy foods.