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Fresh & Easy’s 98-cent Sale
Causes More Consumer Confusion

Jim Prevor’s Perishable Pundit, January 13, 2009

What kind of store is Tesco’s Fresh & Easy? With all we have written on the subject, one of the obvious problems of the concept is that we can’t really answer.

At the present moment, Fresh & Easy seems to be aiming for the ambiance of a dollar store. The chain issued an announcement:

NEW YEAR’S RESOLUTION 101:
STRETCH YOUR BUDGET AND STAY LEAN IN 2009

Grocer offers range of 98-cent Produce Packs to start the year off right

Budgets have tightened over the last year due to tough economic times and people are changing the way they shop. People are cooking more at home and are purchasing products with longer shelf life. Fresh & Easy Neighborhood Market has noticed a sharp spike in its sales of canned foods over the past few months, particularly canned fruits and vegetables. In response to the needs of its customers on a budget for fresh quality products, the company is launching a line of 98-cent Produce Packs. Customers don’t have to make compromises to provide fresh fruits and vegetables for their families, particularly in the New Year as people recover from a food-filled holiday season.

“It’s clear customers are trying to stretch budgets but they also tell us they don’t want to compromise on quality or freshness,” says Simon Uwins, Chief Marketing Officer at Fresh & Easy. “We are introducing the 98-cent Produce Packs to help our customers start the year off right without breaking the bank. We’re making changes so customers have more choices in the way they are feeding their families.”

The 98-cent Produce Packs are delivered fresh daily to stores and currently include apples, oranges, peaches and tomatoes. With the new line, customers can always choose from six different fruits and vegetables which will rotate depending on season and availability. “

Now that the holidays are over, people are starting to reevaluate their eating habits to get back on track to better health,” says Fresh & Easy Spokesperson and Registered Dietitian Janice Baker. “When shopping, families need to choose foods that are high in fiber, vitamins and minerals, yet lower in fat and calories. These foods usually keep the stomach full longer as well. Consuming lots of fruits and vegetables is a great foundation to a healthy, well balanced diet.”

According to the Centers for Disease Control (CDC), in 2005, only one in seven Americans exercised enough and ate at lease five servings of fruits and vegetables daily1. Poor diet and a sedentary lifestyle, the CDC reports, can lead to increased health risks such as obesity and diabetes.

From January 2 to January 13, the 98-cent produce packs promoted include Apples — 3 count; Yellow Onions — 2 lbs, and Baja Classic Tomatoes — 1lb. The promotion is difficult to understand as it says, “Excludes all Fresh & Easy apples & tomatoes.” We assume this means the company did a special buy of less expensive apples and tomatoes and the company doesn’t want to sell the normal product at this price. Still very confusing.

And, besides, Fresh & Easy says the whole point of the promotion is “…no one wants to compromise on quality. And we don’t think anyone should have to.” Yet if all the apples and the tomatoes are of equal quality, why should some be excluded from the promotion?

Just as we were trying to figure this all out, we received a letter from one of the nation’s premiere retail produce experts:

Fresh & Easy currently has a big outdoor sign saying that it will feature six 98-cent items each week.

This week it is: 2# cello carrot, 1# roma tomatoes, 2# bag yellow onions, 4 pack of very small peaches, 3 each gala apples, and 1.5# of minneola tangerines.

They have all of the 98-cent items as the first in line in produce with 6 RPCs and signing.

My thoughts:

It is hard to make a price impact with just 6 produce items especially with Fresh & Easy as they sell so much by the package, not by net weight so consumers can’t figure out if it is a good deal or not.

Fresh produce is the opportunity to make a quality statement for the store. Promoting it solely on price means the store misses out on that opportunity. It degrades the produce and the store.

Fresh & Easy now features a grocery end with “Everything under $1”. They have canned tuna mustard, pasta, canned green beans, rice, and pasta all in private label on the end.

As we said, it is turning into a dollar store.

We know value is the hot thing today and, certainly, consumers like a deal. However, one day the store is promoting its green credentials; the next day it’s the place you get stuff for under a buck.

This is no way to build a consistent image.

We also wonder if it is actually addressing the problem consumers experience in shopping for fresh produce at Fresh & Easy.

If it is true as the press release implies — that consumers have been switching from fresh to canned to avoid spoilage in tough economic times — we suspect that what consumers really want is the ability to buy the quantity they need.

Maybe they want one apple, two Minneolas, an onion, two peaches. Whatever the price, people feel cheated and wasteful if they have to throw out half the product because the only option was a prepack of produce.

Let consumers buy what quantity they want, as most stores in America do, and consumers won’t have the same problem with waste. This 98 cent plan may be a solution to the wrong problem.

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