Tesco Responds to Fresh & Easy Speculation

In an announcement on its full-year results, UK supermarket chain Tesco said it was “very encouraged” by the start Fresh & Easy has made since opening in the U.S. in November 2007, according to talkingretail.com.

“While it is still early days, the response of customers to our offer has surpassed our expectations – with our research regularly confirming that they like the quality and freshness of our ranges, as well as the prices and the convenient locations of the stores,” the company said on the Web site.

Tesco said its sales were ahead of budget, and sales densities are already higher than the U.S. supermarket industry average. The best Fresh & Easy stores were exceeding $20 per square foot per week.

Tesco added: “We are seeing strong growth in the early stores as we step up, as planned, our marketing programs and as we build awareness of the brand. Fresh foods and own-brand products have sold particularly well, confirming that the core of our offer has already gained acceptance with customers.”

However, the company said the deteriorating property market – particularly in Arizona and Nevada – has meant it would defer some of the third-party developments in which Fresh & Easy had planned to open prototype stores later this year.

“Nevertheless, we still expect to open around 150 stores this year,” Tesco said. On the decision to pause the rollout of Fresh & Easy for three months, Tesco CEO Terry Leahy said in a video interview: "It was always going to be the case that we were going to pause for a few weeks. It makes a lot of sense just to wait a few weeks, tidy things up, then start again."

More importantly, customers loved the concept, Leahy said. "It’s the best feedback we’ve had from any format we’ve opened anywhere."

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