The Next Idea, Food Innovations & Restaurant Consultants was delighted to see the arrival of Tesco. Tesco opened the first of what will be a fifty store roll-out of its new Fresh & Easy stores. The six stores were located in Los Angeles. Heralded as the biggest grocery retailing event in recent times, the launch pits world class grocery store operator Tesco against the likes of Wal-Mart, Kroger, and Albertson in the US. Short term, fifty Fresh & Easy stores can’t have much impact on the market share of the biggest US grocery chains; at least not in the beginning. But if their smaller, convenience focused format works, 1,000 or more stores is a possibility over the next decade.

It is important to recognize who Tesco actually are, and what they have achieved. In the UK a primary performance measure is Sales Per Square foot of retail space, Tesco has the highest, other measures include Comparative sales on previous year, Labor cost ratios, Margins and so on – guess what – Tesco has the highest in every category. In fact Tesco, while not the largest supermarket chain in the world, may possibly be the most successful. It has utilized the EDLP (Every Day Low Price) strategy for over 10 years, and has successfully engaged its customers into many other services including instore cafes, financial services, apparel, consumer goods, and so on.

Just what has Tesco done? If first impressions mean anything, it seems they have combined low price, quality ingredients, easy to prepare, healthy food, into one offer that will appeal to time starved consumers. If true it means they will have jumped years ahead of their US competitors. According to the announcement, about 50% of the product will be made in Tesco’s own kitchens which give Fresh and Easy a price advantage and product exclusivity too.

The inventory mix reads more like a restaurant menu than a grocery store list of ingredients. That’s a key difference between them and traditional US grocery stores. While, the likes of Wal-Mart have been rolling out a new generation of better quality frozen dishes, meal kits, and pre-cooked meats to simplify meal preparation, Fresh & Easy has taken the prepared meal concept one step further; adding the elements of freshness, health (organic and green), and convenience.