Disastrous Grocery Experiment Was Not So “F & Easy” After All

It may have seemed like a good idea at the time – a small, easy-to-get-in-and-out-of grocery store offering a combination of prepared foods and everyday necessities. Kind of like a Whole Foods in a convenience store setting. What could possibly go wrong?

Well, just about everything. The British grocery company Tesco has finally confirmed what’s long been expected – it’s pulling out of the U.S. and unloading its Fresh & Easy chain.

Fresh & Easy opened its first store in Southern California in 2007 and quickly expanded to more than 200 locations in California, Arizona and Nevada. But many observers, then and now, say the concept may have been doomed from the start. Tesco took great pains to pledge that it was developing a unique format that would prove popular with American shoppers by catering to their unmet needs.

But critics say the company misjudged what Americans want, and failed to deliver what it promised. “It really felt like aliens that crash-landed here in their Tesco-mobile and didn’t even look around to see what Americans liked,” one former customer recently told the Los Angeles Times. Many of Fresh & Easy’s prepared foods aren’t actually “fresh”, in that they’re produced and packaged off site, not unlike the “fresh” food on offer at your local gas station convenience store. Even its produce is packaged and shrink-wrapped. And shopping there isn’t always “easy”, unless you happen to live near one. The stores are best suited for a quick “fill-in” shopping trip if you need to grab a few things – but most shoppers, especially those with families to feed, will still have to make an additional trip to a traditional grocery store to stock up on everything else they need.

Tesco stuck with Fresh & Easy for five and a half long years, losing well over a billion dollars, before finally announcing this morning that it’s cutting its losses. “The quicker we’re out of the U.S., the better,” Tesco CFO Laurie McIlwee told Bloomberg. “We’ve tried very hard and looked very long at how long it would take to get to profitability and an acceptable level of returns in the U.S.,” he told CNBC, “and frankly there are better opportunities to invest capital elsewhere and get a better return.”

Contrary to some erroneous reports out there this morning, the move doesn’t mean Fresh & Easy is closing. Tesco is merely confirming that it’s “exiting the market”, an expected move after it announced in December that it was conducting a “strategic review” of the chain (read: “‘Whole Foods Quality With Walmart Pricing’ Doesn’t Quite Work Out”). Shutting down the chain remains an option, but McIlwee says unnamed parties have made offers within the past week. Fresh & Easy has “attracted a lot of interest” from potential buyers, he told Bloomberg. “There are a fair few businesses that want to buy Fresh & Easy in its totality as a trading business, so it would be all the stores, all the distribution centers and the campus. So we feel quite positive about how the business is going.”

That runs counter to some speculation that Tesco would likely sell off the business piecemeal to a company like ALDI, which might be interested in acquiring certain locations and converting them to their own stores. Whatever the result, McIlwee says it will likely be another two to three months before any transaction is finalized.

If Fresh & Easy does survive in its current form, that would confirm what the chain has been saying all along – that it has “no plans” to close (read: “One Doomed Grocer Digs In, Another Gives Up”). But then the chain didn’t really have a choice – it couldn’t exactly jeopardize its business by acknowledging that there was a chance it could disappear, so it engaged in a bit of truthiness in assuring customers that it had no plans on going anywhere.

Meanwhile, in something of a Hail Mary attempt to generate some buzz, Fresh & Easy formally announced just yesterday that it’s launched a new ad campaign that’s either edgy or crude, catchy or downright annoying, depending on your perspective. Using a shortened version of its name that sounds like something else entirely when you say it out loud (“F & Easy” – har har), the ads feature a song (watch the video above) that sings the praises of “F & Easy” – as in, “shopping at Fresh & Easy is so ‘F & Easy’.”

“Clever and funny!” read one commenter’s review on Fresh & Easy’s Facebook page. “Hope the humor helps save your store!” writes another. But others aren’t as impressed. “Sort of cute, but mildly offensive,” writes one commenter. “Very tacky,” says another. “You can take me off your list of loyal customers now,” writes one particularly offended customer.

Depending on what Tesco and any potential buyer ultimately does with the chain, offended customers pledging never again to shop at Fresh & Easy may well find that promise will be an easy one to keep.