Over three months ago, our piece, Tesco Observations From A Retail Pro, included an observation on Fresh & Easy from one of America’s premier experts on produce retailing:
I would have included as big negatives the fact that Fresh & Easy is 100% self checkout, will not take checks, will not accept manufacturers’ coupons, and will not accept American Express.
We elaborated on this observation by pointing out how this translated into less competitive pricing for some customers:
Pricing is going to be a problem. The ongoing PRODUCE BUSINESS Wal-Mart Pricing Report typically finds that supermarket chains are 20% over Wal-Mart on prices. So a pledge to beat supermarkets by around 20% is a pledge to get into Wal-Mart’s pricing levels — and we simply didn’t see that as our correspondent did not. Add to this pricing level that we can’t use manufacturer’s coupons or get 2% cash back with our AMEX Plum Card and there is no bargain here.
Well it looks like someone is starting to pay attention. Fresh & Easy and American Express have issued a joint release:
FRESH & EASY NEIGHBORHOOD MARKET STORES
ACCEPT AMERICAN EXPRESS
American Express® Cardmembers Enjoy Convenient Cashless Payment at All
Fresh & Easy Neighborhood Market Locations
Fresh & Easy Neighborhood Market today announced all stores will now accept American Express cards.
Fresh & Easy currently has 59 stores throughout Southern California, Arizona and Nevada and focuses on providing fresh, wholesome foods at affordable prices to all types of neighborhoods. Fresh & Easy customers will be able to enjoy the speed and convenience of payment with the American Express® Card, and will also have the opportunity to earn a variety of types of rewards with every purchase.
“We developed the Fresh & Easy concept by listening to what Americans wanted in a grocery market,” said Fresh & Easy CMO Simon Uwins. “Our customers asked us to accept the American Express Card in our stores and we listened.”
“The acceptance of the American Express Card at Fresh & Easy Neighborhood Market stores means convenience for our many mutual customers and is another great way to have a chance to earn valuable rewards every single day — even while shopping for groceries,” said Tom Pojero, senior vice president and general manager, merchant acquisition, American Express Merchant Services. “We believe that acceptance of the American Express Card will be welcome news to our Cardmembers.”
The most interesting line in the release is this: “We developed the Fresh & Easy concept by listening to what Americans wanted in a grocery market,” said Fresh & Easy CMO Simon Uwins. “Our customers asked us to accept the American Express Card in our stores and we listened.”
There are only two choices: Either Tesco’s much vaunted consumer research efforts were a bust and it didn’t pick this up before opening or Tesco’s consumer research efforts did pick it up before opening and Tesco intentionally chose to disregard the will of the consumer until now.
To us it seems like an act of arrogance. American Express is commonly accepted by competitors in the region so, as with so much of what Fresh & Easy does, not accepting the card early on was an attempt to force consumers into doing things the Fresh & Easy way.
In 2008 though, you don’t get to force consumers to do anything. You just get to decide which consumers you are willing to lose as customers. Among other things, Tesco thought it was okay to lose customers who…
… like branded product,
… like bulk produce,
… like service deli,
… like hot rotisserie chicken,
… want someone to check them out, and
… like to pay with their American Express card.
When they realized not enough customers were left to sustain the store, Fresh & Easy started backtracking. Now Fresh & Easy offers to check you out and will take AMEX. We can expect more changes to come.