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Fresh & Easy to close 7 stores in California

The subsidiary of British retailer Tesco has found that some of its retailing quirks don't translate well in the U.S., an analyst says.

January 11, 2012|By Shan Li, Los Angeles Times
  • Seven California grocery stores are among 12 underperforming locations nationwide to be closed by Tescos Fresh & Easy subsidiary in an effort to boost profitability. This Hollywood store is not on the list.
Seven California grocery stores are among 12 underperforming locations… (Christina House, For The…)

Like the redcoats of yesteryear, British retail giant Tesco is finding America hard to win over.

Seven California grocery stores are among 12 underperforming locations nationwide to be closed by Tesco's Fresh & Easy Neighborhood Market in an effort to boost profitability.

The stores in California — in Anaheim, Bakersfield, Baldwin Park, Fountain Valley, Fresno, Hemet and Ontario — will close within the next few weeks, along with four stores in Phoenix and one in Las Vegas, company spokesman Brendan Wonnacott said.

"At this time, there is simply not enough growth in sales and customers at those stores to keep them open," Wonnacott said. "We will reopen them when economic and business conditions warrant."

The El Segundo-based chain plans to retain the leases on the closed stores, Wonnacott said. The 200 or so affected employees will be offered jobs at other locations.

Fresh & Easy, a subsidiary of Tesco, opened in the U.S. with much fanfare in 2007 with plans to create a network of hundreds of smaller-format stores on the West Coast. It aimed to have 200 stores open by 2009.

But the chain has been hampered by cultural norms imported from Britain that proved mystifying to U.S. shoppers, said Jim Hertel, a managing partner at food retail consulting firm Willard Bishop.

Some of the stores' private-label products, for example, are even more expensive than their brand-name counterparts, Hertel said. Much of the fresh produce is also tightly wrapped in cellophane for freshness.

But most Americans think that "produce in a plastic bag is probably not as high quality as those in bulk," Hertel said. "People who shop produce are used to picking up a tomato and squeezing it."

The chain's computerized ordering system also had some bugs initially, so even low-turnover stores ran out of stock on everyday items.

"When you start to stack those kinds of things up, there are differences, and those differences didn't really translate well," Hertel said. "It may have worked in the U.K., but it didn't translate well here."

More than three years later, the chain operates 184 stores in California, Arizona and Nevada.

Wonnacott said the economy has hampered some of the company's plans, especially in markets such as Los Angeles, the Inland Empire and Phoenix where "entire developments didn't end up coming to fruition where we intended to put stores," Wonnacott said.

Despite the store closings, Wonnacott said, Fresh & Easy will maintain a brisk pace of expansion, with an average of 50 stores opening per year.

More than two dozen new stores will open their doors through March, including seven smaller-format Express stores in Los Angeles and Orange counties and five stores in Sacramento.

shan.li@latimes.com

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