Tesco’s “Fresh & Tricky” shows limits of research
Tesco's US launch of its Fresh & Easy chain shows the limits of research, and the benefits of in-market trial. The launch, like any major innovation, has been tricky more than easy. And not helped by the sub-prime financial crisis of course.
The Fresh & Difficult Launch
Four years after launching, cumulative losses of £574 million have been racked up in getting to 214 stores. And wheras at launch reports suggested "Tesco had talked of building a business the size of the core British chain, which is approaching 2,500 stores", former CEO Terry Leahy more recently " hinted at the possibility that the chain could end up being "hundreds" rather than "thousands" stores." Tesco actually "mothballed" 13 stores last year, in an attempt to break even.
And the company is still working on getting a successful retail formula. In an article in the FT the CEO of Fresh & Easy, Tim Mason, said "[What people who don't get it say is] 'You call yourself Fresh & Easy. You're easy but you don't seem to be that fresh.'" Many changes are being tried out in a test store, the report went on to explain.
But what about the research?
Now, as Fresh & Easy has had some serious teething problems, you could guess that Tesco had failed to research the US market properly, right? Wrong. According to one case study on the brand, there was extensive research. Tim Mason was quoted as saying that Fresh & Easy was “An American store designed for American consumers” (Sunday Times, 10 June 2007).
Firstly, there was immersive, in-home study: "Working closely alongside market research agencies, and with camera crews on hand to record events, the executive team visited a range of US consumers, shopped and cooked with them, discussed their food choices and queried their thoughts on diet and health, etc."
Second, and even more impressive, was a sophisticated and secretive process, where Tesco "Built and then stocked a complete mock-up of a potential Fresh & Easy store inside a warehouse, in order to test out a range of possible formats and layouts on American consumers." To keep things under wraps, the case study explains how "Tesco executives had concealed the firm’s market entry plans by posing as film industry moguls building a film set in a West Coast warehouse"!
Now, both these bits of research make a lot of sense, combining immersive work and prototyping. Both of these are much better than classic focus groups.]
However, despite all these research efforts, three and a half years after launch Fresh & Easy is still not performing up to expectations. So, what went wrong?
Real life beats research
The Fresh & Easy story goes to show how research can only get you so far. It is artificial by definition. Its great to show consumers round a Hollywood film-set style store. But this has problems. First, its not in a competitive context where people have lots of other stores trying to tempt them. Second, how honest is the feedback going to be, when people are secretly smuggled into this undercover operation and asked for feedback?!
No, the best form of research is not research at all. Its in-market learning. The FT article lists the following upgrades to the Fresh & Easy stores, which have been created based on in-market learning:
– Flowers moved from inside the store to the entrance
– In-store bakeries in half the stores at least
– More seasonal fresh produce
– Experiments with fresh coffee to take away
Tim Mason sums this process up: "What we have discovered with experience, and the benefit of being open, is that this [the stuff above] is a cost worth adding".
In conclusion, Fresh & Easy's difficult launch shows that no matter how much clever research you do, you can't beat in-market experience. Better to save time and money on research, and get some real in-market learning if its at all possible.