Analysis: Fresh & Easy Did Not Understand American Culture

BELLEVUE, Wash. -- Not understanding the American consumer and an insistence to do things its own way led to Fresh & Easy Neighborhood Market's U.S. demise, according to The Hartman Group.

In 2007, when Fresh & Easy entered the U.S. market, the research firm predicted that it would need to overcome significant challenges to achieve long-term success. Fresh & Easy is a division of British-based Tesco plc.

"We believed then, and said it repeatedly in the following years, that Tesco had an innate desire -- an arrogance if you will -- to do things their way rather than make adjustments that catered to the needs and expectations of American shoppers," read The Hartman Group report. "Despite Tesco's vaunted success in the European marketplace, the resulting retail experience in Fresh & Easy was artificial, sterile and increasingly without a relevant proposition."

The report added that in 2007, former Tesco CEO Terry Leahy claimed in a Wall Street Journal interview that the company did in fact understand the American culture. "Our team went over to live in the United States," he said then. "We stayed in people's homes. We went through their fridges. We did all of our research, and we're good at research."

However, The Hartman Group responded by noting, "Apparently, they are not as adept at reading consumers as they would like to believe. … [W]hat Tesco failed to understand is the importance of consumer culture."

In addition, the report concluded that food retailers, be they large or small, mass or specialty, are "always a local thing. They're (quite literally) part of the fabric of the local community. This doesn't mean that broader, corporate strategies or initiatives can never be effective, but you have to nail down the local part before you can expect to be successful."