Many were expecting great things before Tesco opened the first of its Fresh & Easy Neighborhood Markets. Some even spoke about how the format could potentially revolutionize food retailing in the U.S.
As is often the case, the opening of the first stores brought out the critics. A number of analysts wrote reports suggesting that Tesco's entry into the American market was performing well below expectations and that the chain was trying to figure out a fix.
When Tesco announced in March that it was taking a three-month timeout on opening new stores, many were quick to use that as evidence that Fresh & Easy was struggling.
Many openly dismissed assertions by Simon Uwins, the chain's marketing director, in a company blog that Fresh & Easy was taking a short pause to "kick the tyres, smooth out any wrinkles, and make some improvements that customers have asked for."
In the past week, a new light has been shed on Fresh & Easy's performance. A report in the Financial Times made public key findings of consumer surveys conducted by Executive Research in the U.S. The firm, according to the paper, has no relationship with Tesco.
According to the report, "Fresh & Easy is the new cult retailer. At the risk of doing the job of Tesco's public relations department, F&E is already an incredible success story."
Executive Research conducted interviews with 700 customers outside of Fresh & Easy stores in Las Vegas, Los Angeles and Phoenix. Nearly nine in 10 of those interviewed said they would "highly recommend" Fresh & Easy to family and friends. Researchers placed traffic at the stores at between 20 and 30 people an hour.
What isn't known yet is how that traffic and customer goodwill translates into dollars spent in Fresh & Easy stores. According to the Financial Times' report, Tesco has maintained that its sales were above the industry average of $8.70 a square foot. The chain is said to need to hit between $14 and $21 to meet the goals set for individual stores.
Executive Research said stores it sampled were generally doing between $6 and $12 a square foot but that some of the better performing locations were up around $20.
"We estimate that within five years F&E will make sales of $12 billion," wrote Executive Research.
Discussion Questions: How do you rate Fresh & Easy's prospects? What is your reaction to this new research?