Fresh & Easy presses on with plans for Valley

Published online on Monday, Oct. 26, 2009

A British company that dreams of changing the way Americans shop for groceries says its plans for the Valley are back on track after a recession-driven delay.

Tesco, a giant grocery and retail chain often compared to Walmart, says it will open six of its small-scale Fresh & Easy grocery stores in the region by the end of February. They are among 12 stores the company expects to eventually open in Fresno, Reedley and Lemoore.

Some analysts have watched Fresh & Easy’s expansion plans with skepticism. The delayed openings and doubts over whether the stores are meeting their sales goals have left them waiting to see how the newcomer performs.

“That market is pretty finicky,” said Scott Testa, a professor who follows the retail business at Cabrini College in Philadelphia. “They have to bring their A game.”

Fresh & Easy entered the U.S. market two years ago by opening stores in Southern California. The stores average 10,000 square feet — about the same size as a Walgreens or Trader Joe’s. They have smaller selection of foods than a traditional supermarket, and they emphasize healthy food and freshly prepared meals. Their target customer is anyone who lives in the neighborhood who wants a quick, convenient stop, regardless of income or other demographics.

Fresh & Easy has 130 stores open in Nevada, Arizona and California, including stores in Delano and Bakersfield.

But the recession has slowed Tesco’s aggressive expansion. The company first acknowledged it wanted to open stores in the Valley last year but put the rollout on hold in April. A newly built store at Tulare and R streets in downtown Fresno, on the site of the former Old Fresno Hofbrau, and several leased locations have been sitting empty for months.

Several analysts have expressed doubts that the stores are meeting sales goals. Tesco reported this month that its American division will likely lose $259 million this fiscal year.

But company executives said they aren’t worried.

“Of course, you’re going to lose money until you open enough stores,” said Simon Uwins, Fresh & Easy’s chief marketing officer. The company has reduced the pace of expansion from three to six weekly openings to one, he said.

In the Valley, the Lemoore Fresh & Easy will open first, Uwins said. He declined to identify which five other stores will open in the Valley by the end of February. Fresh & Easy typically announces store openings about a month beforehand, company spokesman Brendan Wonnacott said. Uwins said that the downtown Fresno store “will certainly be one of the early ones.”

Fresno Redevelopment Agency project manager Lupe Perez said the company told the agency the downtown store would be the first in Fresno to open. The RDA has pledged $100,000 to the store to pay for enhancing the exterior beyond the company’s typical design, Perez said. That money will be given to the company when the store opens, she said.

Fresh & Easy has posted job listings online for the downtown store and the Lemoore store, at Lemoore Avenue and Cinnamon Drive. Each store will employ 20 to 25 people.

Established U.S. competitors are not likely to sit still as Tesco expands, Testa said.

“You’re going to have companies like [Vons owner] Safeway that really know the market come out with a similar format,” he said.

Safeway is testing a small-scale store in Long Beach and San Jose called The Market, and Walmart is testing its small “community grocery” Marketside stores in Arizona.

Save Mart, the Valley’s dominant grocery chain, declined to comment on whether it has plans for a similar format.