Marketing from the Grocery Aisles: Swimming in the Ocean

While perusing the web, looking for what’s new in supermarkets, I happened on an article about Fresh & Easy, a chain of markets that specializes in fresh, wholesome food for modern consumers. Its 157 small-format grocery stores are located around Las Vegas, Phoenix, and major California metropolitan areas.

The chain’s latest marketing campaign touts “a new kind of market,” emphasizing affordable organic, daily delivery of fresh foods, handmade prepared foods, no “unpronounceables” (food with artificial flavors and colors), and wide range of meal solutions.

Visiting their site, there’s no doubt they offer an alternative to traditional supermarkets with a large variety of “gourmet” made-on-the-premises takeout, tantalizing organic fruits and vegetables delivered daily, and a selection of healthier foods.

clip_image002The key challenge the stores faced was profitability. Tesco, the world’s third largest retailer, based in the United Kingdom, opened the initial store in November 2007. By October 2013, the Fresh & Easy Neighborhood Market Inc. filed for Chapter 11 bankruptcy. The loss to Tesco is estimated to be close to $2 billion.

Fortuitously, the stores were purchased by the California-based Yucaipa Companies Group, which is stalwartly marketing them, along with strengthening their commitment to being environmentally conscious by recycling and reusing shipping and display products, using hybrid-electric diesel trailers for transporting food, and installing LED lights in freezers, coolers, and outdoor signage.

Still a Fish in a Blue Ocean

In the case of Fresh & Easy, innovation, quality products, and doing something the next “guy” wasn’t didn’t translate to profits.

If you look at the Blue Ocean Strategy, being advanced by W. Chan Kim and Renee Mauborgne, the goal is not to beat the competition, but to make them irrelevant. Because the need to acquire food and subsequently eat — whether harvesting it from the backyard, frequenting a restaurant or swinging by the local grocery store — is a daily and persistent need, people can be less fussy about where they get their next meal.

If they’re on the go, a stop by a fast food joint might suffice. On the way home from work, with hungry kids waiting, the choice might be to zip into a local grocery store. If on a tight budget, they might wait until the weekend, driving a little further to a discount superstore.

clip_image004People who are concerned with their health, and willing to pay a premium, are more prone to visit specialty and natural stores like Whole Foods, PCC Natural Markets, Earth Fare, and Trade Joe’s. Fresh & Easy also appealing to this market. However, because Fresh & Strong isn’t strong in all four areas of the Blue Ocean theory – eliminate, raise, reduce, and create – they weren’t able to successfully create an “uncontested market space,” where they could beat the competition.

While Fresh & Easy offers “homemade” (more appropriately “store-made”) dishes, which are additive free, ready-to-eat or need-to-heat, this unique factor may not be enough of a differentiator to sway consumers to choose Fresh & Easy over other, possibly more conveniently located, stores. For instance, if you want to eat something other than their prepared meals, you still have to pick out the ingredients, take them home, break out the mixing bowls, select a pot or pan, turn on the stove or oven, cook, and cleanup afterwards. If going this route, any local grocery store will suffice.

The uniqueness of Fresh & Easy’s prepared meals, coupled with the increased quality and healthiness of products elevates what’s available through national grocery chains. However, the percentage improvement may not be strong enough to influence consumers to pay more or possibly drive a few extra miles. A friend recently commented on Facebook that she drove a several miles to another grocery store because she liked the song playing on the radio, and didn’t want to stop.

Or more telling, because Fresh & Easy are small, neighborhood stores, they have a more limited selection of goods or don’t stock less common items. Walk into a national or regional brand grocery store, and you can choice from half a dozen (if not more) brands of soup, pasta, and canned goods. A smaller store might only stock two or three brands.

One of the other benefits of going to a larger or full-service store is the ability to grab a greeting card, household supplies, cosmetics, party supplies, and esoteric items like cheesecloth, fabric dye, wild bird seeds, and firewood… or browse through aisles of wines, bottled drinks, ethnic foods, and freezer cases of nearly everything imaginable from frozen okra to turducken.

Finally, while Fresh & Easy is extremely environmentally conscious and green, these choices aren’t a competitive advantage. Consumers may choose to visit their stores because they also want to reduce their carbon footprint, just as they might purchase a hybrid over a traditional car. But, when it comes to the core product – food – being green isn’t a differentiator. It’s a commitment, which is of interest to most consumers, but maybe not a factor in convincing them to regularly shop at a Fresh & East.

No doubt, Fast & Easy will continue to elevate their competitive differentiators, thereby cultivating an enthused and loyal customer base, and becoming more profitable. It’s interesting to read how grocery stores, like Fresh & Easy are evolving, going from offering staples, canned and frozen goods to unique, healthy prepared meals, much like Starbucks, take-and-pizza chains, and convenience stores.

Open Water in Food Packaging

With consumers’ taste and health concerns constantly shifting, and a zeal for “what’s next,” companies are constantly innovating, changing packaging, and introducing foods from “other lands.”

Think back. Ten years ago, how often did you mention in casual conversations gluten, quinoa, goji berries, tangelos, coconut water, chia seeds (not the ones for making pets), and purple potatoes?

According to Food Production Daily, the top trends in fresh food packaging include:

Multi-packs: To increase purchases, multiple pieces of fruit or vegetables are offered in a single package. It’s now common to see multiple peppers, brussels sprouts, string beans, and avocadoes in a bag or package with a fancy label attached, providing meal ideas. Costco and other discount stores have always taken this approach, along with manufactures of light bulbs, underwear, and batteries.

Combo packs: Everything you need for a dish, such as a Caesar or chopped salad (lettuce, dressing, dried fruit, etc.), guacamole (avocado plus fixings), and pumpkin pie (mini pumpkin plus condensed milk, spices, etc.) is placed in a single bag, box or carton. The toy industry has leverage the concept of multi-pack with kits that include everything you need to build motorized vehicles from Legos, sew dolls, create beaded jewelry, and cook food in mini kid-safe oven.

Attach utensils: It sounds insignificant, but attaching or concealing within the lid a fork to a salad or spoon to a can of soup has been shown to increase purchases. No doubt with consumers eating on-the-run, and opting for meals like those offered through Fast & Easy, adding an eating utensil makes a ready-to-eat or -heat product more appealing

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