TESCO GOES WEST (10m version)

Summary

In November 2007, Tesco launched its Fresh and Easy neighborhood markets in California, aiming to introduce a new retail experience tailored to American consumers. Professor Michelle Low studied this innovative venture as part of a research fellowship, gaining insight into consumer behavior and preferences. The concept combined elements of existing retailers, focusing on fresh, healthier food at lower prices. While the initial reception was positive, the long-term sales growth has been mixed. This longitudinal study provides valuable insights into retail innovation and highlights the importance of understanding consumer needs in a rapidly changing market.

Takeaways

• 🏬 Tesco launched its Fresh and Easy neighborhood markets in California in November 2007, marking its entry into the U.S. retail market.
• 👩‍🏫 Professor Michelle Lowe conducted research on retail innovation, focusing on the Fresh and Easy concept as part of her fellowship at the Advanced Institute of Management.
• 🗺️ The Fresh and Easy stores were designed to cater to West Coast consumers, incorporating local shopping preferences and health-conscious choices.
• 📊 Extensive consumer research included observing shopping habits and analyzing preferences for healthier, less processed food.
• 💰 The store aimed to combine the freshness of Whole Foods with the value of Walmart and the convenience of Walgreens.
• 🤐 To maintain confidentiality, Tesco conducted research using cash transactions and built a mock store to test concepts without leaving a traceable record.
• 🌱 Customers responded positively to the Fresh and Easy concept, enjoying the quality of products and overall shopping experience.
• 📈 Despite initial customer satisfaction, the challenge remained in achieving sustained sales growth and building a loyal consumer base.
• 🔍 The research study provided valuable insights into retail innovation and consumer engagement in the evolving grocery market.
• 🚀 Tesco's proactive approach to anticipating consumer trends positioned it ahead of competitors in the U.S. market.

Q & A

What was the primary objective of Tesco's Fresh and Easy stores in the U.S.?

The primary objective was to create a neighborhood shopping experience that offered fresh, healthy food at lower prices, combining the qualities of Whole Foods, Walmart, Walgreens, and Trader Joe's.

Who conducted the research on Tesco's retail innovations and what was her role?

Professor Michelle Low conducted the research as part of her fellowship at the Advanced Institute of Management, where she studied retail innovation and the Tesco venture in the U.S.

What key factors influenced Tesco's decision to enter the U.S. market?

Factors included the changing American attitudes toward local shopping, food quality, preservatives, and environmental concerns, which suggested a demand for a new neighborhood store format.

How did Tesco gather insights for designing the Fresh and Easy stores?

Tesco conducted intensive consumer research, including observing shopping habits, interviewing consumers, and analyzing their food storage practices to inform the store's design.

What unique features did the Fresh and Easy store design include?

The stores were designed to be smaller (about 10,000 square feet), located in local neighborhoods, and stocked with healthier, less processed food at competitive prices.

What challenges did Fresh and Easy face after its launch?

Fresh and Easy experienced challenges in building a solid consumer base, despite customer satisfaction being high; the sales growth was slower than anticipated.

What insights did Professor Low gain from her longitudinal study of Tesco?

She gained insights into the business's operations from conception through to its early stages, highlighting the importance of understanding market dynamics and consumer behavior.

What was the response from consumers regarding Fresh and Easy?

Customers expressed a positive response, noting high satisfaction with the store environment and offerings, which received customer scores higher than other retailers in the U.S.

How did the academic community view the research conducted on Fresh and Easy?

Academics found the research methodologically interesting due to its longitudinal approach, providing valuable insights for teaching and practical applications in business.

What does Professor Bessent suggest about the relevance of this research for the UK?

He suggests that studying successes like Tesco's Fresh and Easy is crucial for UK businesses to learn from their ventures and celebrate their achievements to foster innovation.