It’s a familiar Las Vegas landscape—abandoned homes, for-sale signs and shuttered businesses. In many places, this includes the empty shell of a Fresh & Easy Neighborhood Market, a chain that blitzed the urban Southwest two years ago only to find itself bogged down in the Las Vegas burbs.
Fresh & Easy furiously opened 135 markets in Southern California, Arizona and Nevada, including 26 in Las Vegas—five in just one day. The inviting green-and-white stucco squares spread across the Valley from Centennial Hills to South Boulder Highway. Then came the real estate implosion and jobs crisis. Fresh & Easy expects to report a $279 million loss for 2009—its third straight year in the red.
“We backed down the expansion of our chain a bit because the growth isn’t there in some of those neighborhoods,” corporate spokesman Brendan Wonnacott says.
They don’t plan on closing any stores here, nor abandoning the nine new sites that have been announced. But only one is slated to open in 2010, and a “coming soon” banner on an empty shell at Eastern and Tropicana avenues was long ago replaced with a for-lease sign.
The El Segundo, Calif.-based chain wants to attract suburban shoppers with its urban concept. But right now, suburbia is in upheaval.
“I think what you’re going to see in the next year is a reinvigoration of their marketing, designed to help people understand how to shop the stores,” grocery retail expert Bill Bishop says.
He believes some of its losses are expected start-up costs. But two years after the idea was launched, apparently too many shoppers still don’t get it.
Maybe that’s just Las Vegas. Fresh & Easy is the Americanized concept of British corporate parent Tesco PLC, the No. 1 retailer in the United Kingdom and the third-largest grocery retailer in the world. The markets are small (about 10,000 square feet) and use self-checkouts. The chain employs mostly part-timers at a high base salary ($10 an hour with a promise of at least 20 hours a week so workers can get benefits). Scan the shelves and you’ll find natural foods for the urban shopper at big-box prices.
“It’s a good steppingstone between somebody who needs to shop for a family and doesn’t want to go into the big stores, and someone who needs to buy all-natural foods, like hormone-free milk,” west Las Vegas working mother Krista Blaisdell says. She shops in other places for items she can’t find at Fresh & Easy. And it may be that lack of selection that keeps some away, a problem the chain is trying to correct by bringing in more private labels.
Bishop, chairman of Willard Bishop, an Illinois-based retail consultant, says Tesco is known for turning around disappointing starts, and it has the deep pockets to wait for results. Last year it retained a profit of about $2 billion. The giant is known for its aggressive takeovers, as well as its drive to appeal to all market segments.
Bishop believes Tesco is ahead of the industry. But a key to success will be getting the markets into the right neighborhoods, including downtown. Since Fresh & Easy opened a store at Eastern Avenue and Fremont Street more than a year ago, it has proven to be a welcome addition to the diverse neighborhood.
“You’ll see the downtown guys there who are young and successful shopping next to the guy who’s living in the $60-a-week crack motel,” says Sean Dunn, a clothier who lives in the Urban Lofts off Fremont Street.
“Fresh & Easy is an amazing concept,” real estate developer David Mozes says. “I always tell people it’s like Whole Foods and 7-Eleven had a baby.”