Sunday, June 22, 2008

Update on the Tesco/Wal-Mart battle

Here are a few links on Tesco's Fresh & Easy and their upcoming battle with Wal-Mart's Marketside stores:

This item says that F&E is revamping its interior to be "warmer" and increasing the signage in the store.
A Tesco spokesman said the design has been "tweaked" and, while it will maintain its clean look and feel, the changes should help shoppers "dash in and find the milk or whatever other products they want to find quickly and easily".
They also report on the restarting of store openings after a three-month pause to rethink the format, and on F&E's increase in private-label (adding another 250 PL products to a mix that was already about 50% PL).

Here's an interview with Tim Mason, the head of F&E, that has a bunch of interesting stuff. He explains the "pause", and discusses the increase in PL, acceptance of packaged fruit and veggies, and comments on the competition from Marketside and Safeway (Market by Von's):
You always have to assume that competitors will respond. Running small stores is a very difficult thing to do if you think how long Tesco took to running Express [its UK convenience chain] before turning it into a scale business. That is because it is different and there are different policies and procedures. I have been to the Safeway, it is a very pretty store.
Interesting interview -- worth a read.

And finally, this is an article suggesting that Wal-Mart is planning to go up-market with its Marketside stores:
Wal-Mart has indicated that its new Marketside grocery stores will be built around a “premium” rather than low-cost offering, suggesting its new small format stores will be less focused on price than the rival Tesco-owned Fresh & Easy chain. [...]

Job advertisements for the new Wal-Mart business say the stores will deliver “unique solutions for time-starved consumers in a premium fresh/convenience oriented format” – an indication of the pricing position of the new 15,000 sq ft stores.

Wal-Mart has already indicated that the neighbourhood stores will be focused on delivering “meal solutions”. Store planning documents indicate that food will be prepared and served on the premises, in contrast to the minimalist utilitarian approach of Tesco’s hard discount Fresh & Easy stores.

I think this is particularly interesting, because my opinion of Wal-Mart is that they have a track record of great success in pummeling rivals on price, but have been less successful in situations where they have less of a price advantage and have to compete on other factors. Examples are Germany, where fair trade laws restricted price-cutting; UK, where Tesco cuts prices just as well or better; and China, where, well, importing goods from China is not an advantage.

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