Fresh & Easy

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Fresh & Easy Neighborhood Market Inc.
Type Subsidiary
Industry Retailing
Founded 2007
Headquarters El Segundo, California
Number of locations 160 stores
Area served Western United States
Key people Jim Keys CEO
Products GroceriesGeneral Merchandise
Revenue $630 million
Employees over 5,000
Parent Yucaipa Companies
Website www.freshandeasy.com

Fresh & Easy Neighborhood Market is a chain of grocery stores in the western United States, headquartered in El Segundo, California.[1] Since November 2013 it is owned by Yucaipa Companies.[2] It was a subsidiary of Tesco, the world's third largest retailer, based in the United Kingdom.[3] It had plans for rapid growth – the first stores opened in November 2007 and, after a pause in the second quarter of 2008, the opening program recommenced. While there were over 200 stores in Arizona, California, and Nevada by December 2012, Tesco confirmed in April 2013 that it was pulling out of the US market, at a reported cost of £1.2 billion.[4] On September 10, 2013, Tesco announced they were transferring ownership and operations of more than 150 stores to supermarket-owner Ron Burkle's Yucaipa Companies group.[5] Despite selling the stores, there will be a continued friends card program (www.freshandeasy.com/friends). Fresh & Easy Neighborhood Market Inc. filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court at the beginning of October 2013.[6] The sale will cost Tesco £150m, taking the total cost of its failed US venture to nearly £2bn.[7]

History

On February 9, 2006, Tesco announced that it planned to move into the United States by opening a chain of small format grocery stores in the Western states (Arizona, California and Nevada) in 2007 named Fresh & Easy.[8] The initial planned capital expenditure is up to £250m ($436m USD) per year. After Tesco CEO Terry Leahy announced serious resources had been committed to developing a format that would be popular with American consumers, investors responded with some skepticism with a small drop in the company's share price.[9] The markets were expected to be around 1,400 square metres (15,000 sq ft)—good-sized supermarkets in many countries, but about one-third the size of an average supermarket within the US.[10] By January 2007, Tesco opened its U.S. headquarters in El Segundo, California,[11] near Los Angeles International Airport. The company initially expanded into Southern California, Phoenix, Arizona, and Las Vegas, Nevada.[12]

On April 21, 2009 Tesco reported a trading loss of £142m from Fresh & Easy.[13] On October 4, 2010 Fresh & Easy announced that it was temporarily closing 13 stores because of shrinking populations, high percentage of housing foreclosures and high unemployment rates. The stores were being mothballed, with hope of reopening them when the economy improves. Six of the stores were in the Las Vegas area, six in the Phoenix area and one in Moreno Valley. Most of the closures were "C-level stores," or those doing less than $50,000 USD in weekly sales.[14][15] The business was not expected to break even until 2012-13.[16] However, in the Strategic Review announcement in December 2012, research was showing that the company was not going to make a profit until the end of 2013 or even 2014.

In February 2013 it was reported that despite rumors Tesco will not be selling or closing the chain.[17] The LA Times estimated that the chain has experienced "about $1 billion in cumulative annual losses" prior to 2013.[18] This rumor was based on the fact that Tesco Chief Executive Philip Clarke announced that Tesco would close or sell Fresh & Easy. He announced that for the shareholders of Tesco (http://abclocal.go.com/kfsn/story?section=news/business&id=8906939). Sure enough, Tesco did announce the sale of the chain on September 10, 2013 to Yucaipa Companies LLC (http://www.freshandeasy.com/news/post/2013/fresh-easy-acquired-by-the-yucaipa-companies-llc/).

On September 10, 2013, Tesco announced that billionaire Ron Burkle would acquire 150 of the 200 current Fresh & Easy stores, with 50 stores slated for closure, within the next 3 months.[19] In a statement delivered shortly after the news was released, Burkle confirmed there would be changes to the stores' current format, "to complete Tesco’s vision... [and] make it even more relevant to today’s consumer."[20] On 27 November 2013, the sale to Yucaipa Companies was completed.[2]

Also, In its e-mail announcing the sale, Fresh & Easy said that customers will need to re-enroll in the Fresh & Easy Friends Card Loyalty program. According to the Fresh & Easy Web site, it says, "California state law does not allow the transfer of personal information of Friends Rewards members to the new buyer of Fresh & Easy, so you will be required to re-enroll in the Friends Rewards Program over the next several weeks. By re-enrolling, you will continue to earn points on your purchases, and your existing points and rewards balance will be honored." (http://www.freshandeasy.com/contact-us/faq/friends/announcement/).

Management

Timothy John Rollit Mason is the former President and Chief Executive Officer of Fresh & Easy.[21] He joined Tesco in 1982 and became a member of the Board in 1995.[22] Mason relocated to the U.S. with his family as part of the assignment of building the U.S. presence. He led the team researching the U.S. market prior to the company opening its first American store. In March 2011, Mason took on new roles as deputy chief executive and chief marketing officer within Tesco, and now spends about a third of his time outside of the US.[23]

It was reported in December 2012 that Tim Mason had resigned from Tesco.[24] He got a large bonus check when he resigned, totalling around £5.7 million. (Source: http://www.theguardian.com/business/2012/dec/05/tesco-tim-mason-resignation). Some criticized the company for giving him such a big payout despite the US stores not turning a profit. (http://www.theguardian.com/business/2012/dec/05/tesco-tim-mason-resignation)

Stores

Fresh & Easy market in Las Vegas, Nevada

Fresh & Easy announced in October 2007 that the first California and Arizona stores would open November 8.[25] However on November 1, 2007, Fresh & Easy opened its first store, in Hemet, California, as a "soft opening". (Soft openings are traditionally done in the retail business to test systems and store staff, and prepare for a larger "grand opening.") The Hemet store, near the company's distribution center, along with five others in Los Angeles and Orange Counties, then had their "grand opening" on November 8, 2007.

Fresh & Easy Neighborhood Market employs 20 to 30 associates per store. Part-time employees are paid a starting hourly wage of $10 USD per hour. Those store employees who work at least 20 hours per week get a health insurance plan, which they also contribute to. Assistant managers, called Team Leaders, currently are paid $13 hour (California). In Arizona, each of these positions pay US$1 per hour less. From April until the end of June 2008, Fresh & Easy took a pause from opening any new stores. That hiatus was lifted with the July 2, 2008 opening of a store in Manhattan Beach, California. As of October 5, 2011, there were 182 stores in Arizona, California, and Nevada.

Parking spaces reserved for hybrid cars at Clovis, California store.
California

On September 8, 2010, Fresh & Easy opened 4 new stores in California, marking the 100th store for the state.[26] By August 2011, with the first Northern California stores open, there were 128 stores operating in California.

Arizona

In July 2007, Tesco announced plans for several Arizona[27] stores. The first Mesa, Arizona, store opened December 5, 2007.[28] There were (as of August 2011) 28 locations in operation in the greater Phoenix area.

Nevada

The first five Nevada stores opened in the Las Vegas Valley area November 11, 2007.[29] There are now (August 2011) 21 stores in operation in and around Las Vegas.[30] Many stores were opened in the locations of former Rite-Aid Pharmacies.

Distribution centers

Tesco purchased a 130,000 square metres (1,400,000 sq ft) distribution center in unincorporated Riverside County, immediately adjacent to the cities of Riverside and Moreno Valley on land that was part of the former March Air Reserve Base.[31] This distribution center has California's largest solar panel roofing system.[32] The company was looking for another distribution center location in Stockton, strategic for the Northern California region,[33] and has considered another distribution center in Phoenix.

Environmental goals

Fresh & Easy states it has made a commitment to building Leadership in Energy and Environmental Design certified buildings. It will recycle or reuse shipping and display products. Its food transportation trailers are hybrid electric-diesel.[34] The Riverside distribution center hosts California's largest solar roof installation.[35] Stores are equipped with LED lights in freezers, coolers and for outdoor signage.[36] Some stores have reserved parking for hybrid cars.

On September 8, 2010, Fresh & Easy opened its first store to be GreenChill certified (Rosemead store). Fewer than 40 of all grocery stores in the USA are GreenChill certified.[26]

References

  1. ↑ "FreshandEasy.com Terms & Conditions." Fresh & Easy. Retrieved on July 15, 2010.
  2. ↑ 2.0 2.1 "Tesco completes sale of US business Fresh & Easy to investment firm Yucaipa". Retail Week. 2013-11-27. 
  3. ↑ Denise Winterman (September 9, 2013). "How one supermarket came to dominate". BBC. Retrieved 2013-09-14. 
  4. ↑ "Tesco profits fall as supermarket pulls out of US". BBC. 2013-04-17. 
  5. ↑ http://www.latimes.com/business/money/la-fi-mo-ron-burkle-fresh-easy-purchase-20130910,0,5222140.story
  6. ↑ http://www.latimes.com/business/money/la-fi-mo-fresh-easy-bankruptcy-20130930,0,2946957.story
  7. ↑ http://www.theguardian.com/business/2013/oct/01/tesco-us-chain-fresh-easy-bankruptcy
  8. ↑ "Tesco to enter United States". Retrieved 2006-03-13. 
  9. ↑ Staff writers (February 9, 2006). "Tesco plans foray into US market". BBC News. Retrieved 2010-01-16. 
  10. ↑ Britain's Tesco to Open Its First U.S. Stores in Southland, Los Angeles Times May 20, 2006.
  11. ↑ "Upscale British retailer moving into South Bay, retrieved July 20, 2007". 
  12. ↑ Dineen, J.K. "Tesco signs deal for Fresh & Easy store in Bayview". San Francisco Business Times, December 11, 2007, accessdate=2008-06-28. 
  13. ↑ "£3bn Tesco faces growing losses from US Fresh 'n' Easy stores". Thisismoney.co.uk. Retrieved 2012-09-09. 
  14. ↑ "13 Fresh & Easy Stores to Close". Supermarketnews.com. Retrieved 2012-09-09. 
  15. ↑ "Fresh & Easy to close six stores in Las Vegas". Lvrj.com. 
  16. ↑ Wood, Zoe (February 25, 2011). "How Tesco chief Sir Terry Leahy changed the way Britain shops". The Guardian (London). 
  17. ↑ Mike Hornick (02/04/2013). "No closure plans, Fresh & Easy says". The Packer. 
  18. ↑ Li, Shan. "Five years in, Fresh & Easy markets are a flop". Los Angeles Times, March 21, 2013, accessdate=2013-3-22. 
  19. ↑ "Tesco sells Fresh & Easy to Yucaipa" (Press release). Tesco PLC. 10 September 2013. Retrieved 11 September 2013. 
  20. ↑ http://www.bloomberg.com/news/2013-09-10/tesco-to-sell-fresh-easy-to-burkle-s-yucaipa-in-u-s-exit.html
  21. ↑ "EXECUTIVE PROFILE* Tim J. R. Mason". businessweek.com. Retrieved 2007-12-03. 
  22. ↑ "Board of directors". tescocorporate.com. Retrieved 2007-12-03. 
  23. ↑ "Financial Times report, July 19, 2011". Ft.com. Retrieved 2012-09-09. 
  24. ↑ "Tesco's Tim Mason to receive £5.7m following resignation". Retrieved 2012-12-11. 
  25. ↑ Cathryn Creno (October 12, 2007). "British grocer Tesco will open first U.S. stores soon in Calif., Ariz.". azcentral.com (The Arizona Republic). Retrieved 2007-10-13. 
  26. ↑ 26.0 26.1 "Fresh & Easy Opens First Store With CO2 Refrigeration System in Southern California". Reuters. September 8, 2010. 
  27. ↑ "Arizona Republic, July 20, 2007". Azcentral.com. Retrieved 2012-09-09. 
  28. ↑ "The fresh&easy Neighborhood Market". newszap.com. December 2, 2007. Retrieved 2007-12-03. 
  29. ↑ Zoe Wood (November 11, 2007). "Tesco has a flutter in Vegas". London: guardian.co.uk. Retrieved 2007-12-03. 
  30. ↑ "Stores – Fresh & Easy". Freshandeasy.com. Retrieved 2012-09-09. 
  31. ↑ "I-215 LAND DEAL: Great Britain's largest grocery chain buys 88.4 acres (358,000 m2) in an Inland business park". Retrieved 2007-07-20. 
  32. ↑ "Tesco to install solar roofing system, SAN DIEGO, June 22 (UPI)". Upi.com. Retrieved 2012-09-09. 
  33. ↑ Josh Fineman (December 4, 2007). "Tesco Is a `Manageable Threat' to Safeway in U.S. (Update2)". bloomberg.com. Retrieved 2007-12-03. 
  34. ↑ "Transicold Newsletter". Penndda.com. Retrieved 2012-09-09. 
  35. ↑ "Fresh & Easy Neighborhood Market Announces Date for First Store Openings". PR Newswire. October 9, 2007. Retrieved 2007-12-03. 
  36. ↑ "Fresh & Easy Neighborhood Market Keeps it Simple and Keeps Prices Low". PR Newswire. November 1, 2007. Retrieved 2007-12-03. 

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  • Annual revenue GB£62.54 billion
  • Employees 552,004
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