Self Service Gets Easy

When Tesco announced it would “set up shop” in the United States, it described its new concept as a convenience format that emphasized simplicity. A simplicity that it said would touch all aspects of the shopping experience, from merchandise displays to the checkout experience.

Two years later, Tesco’s Fresh & Easy Neighborhood Market chain continues to uphold its ‘simple’ model, one that is supported by a convertible front-end that lets shoppers control the checkout experience in the way that best suits them.

When Cheshunt, England-based Tesco prepared to stake its claim on U.S. soil, it set its sights on the West Coast. “This is a region with a fast-growing demographic. It is a large population of nutrition-forward shoppers, and there is also a centralized distribution that could reach all of our desired locations,” explained Doug Rutledge, CIO, Fresh & Easy Neighborhood Market, El Segundo, Calif.

The first Fresh & Easy location opened in November 2007, in Hemet, Calif., and within five months the chain opened 61 stores across Southern California, Las Vegas and Phoenix. At press-time, the chain had 71 stores, and it planned to operate 200 locations by the end of its fiscal year in February 2009.

Each location stands at 10,000 sq. ft. and features 3,700 SKUs comprised in large part by Fresh & Easy private-label merchandise, as well as pre-packaged produce (except bananas), meat, frozen foods and bakery goods. The stores are also outfitted with a simple, yet innovative, front end.

Unlike other retailers that provide a bank of self-checkout units among a fleet of manned stations, Fresh & Easy features “assisted” checkouts, or the equivalent of convertible check-stands.

Fresh & Easy partnered with NCR, Atlanta, to design the ideal checkout model. For Fresh & Easy, this consists of four convertible conveyor-belt units with four bag stations, as well as five smaller footprint, non-belted units with two bag stations. (Due to the smaller footprint of the retailer’s Anaheim, Calif., store, this is the only location that has five two-bag units, and three staffed checkout stations.)

All units accept cash, credit and debit cards. Checks are not accepted.

In addition to simplicity, Fresh & Easy also emphasizes interactivity.

“We designed the units to create an experience where people can interact,” Rutledge reported during the FMI & Marketechnics convention. (The event, sponsored by the Washington, D.C.-based Food Marketing Institute, was held in Las Vegas in May.)

“Associates stand in front of the checkout, and greet the customer,” he said during the session, “Fresh & Easy—Improving Customer Service Through Self-Checkout.” “They are trained to check out customers, but we also allow shoppers to check themselves out if that provides them with the best shopping experience.”

Fresh & Easy shoppers seem to value the model. Currently, 60% of Fresh & Easy shoppers reported they had a favorable experience using self checkout, according to an informal study conducted by a Tesco shareholder.

“Meanwhile, 20% of shoppers said it was a great experience, and 87% say they prefer this ‘assisted’ checkout model,” Rutledge said, adding that its Anaheim store received the lowest checkout scores chainwide.

“While shoppers enjoy the overall design and experience, the [store’s] small space forced us to add less self-checkout options and more staffed units. Responses prove they prefer the self-checkout model.”

Tesco is pleased that more shoppers continue to embrace its new concept, but that doesn’t keep the retailer out of analysts’ line of fire.

Tesco reported that it plans to invest $2 billion over five years in the United States. However, in March, Mike J. Dennis, an analyst from U.K.-based Piper Jaffray, reported that the company was operating approximately 70% behind its original projections.

Despite analyst comments, the company is moving ahead. “Retailers often fail when they operate outside of their home country because they don’t listen to the area’s customers,” Rutledge said.

“You need to ‘localize’ when you enter the marketplace, through learning customers’ tastes and preferences when it comes to assortments and the overall shopping experience,” he said. “You also need a local staff that knows the region. Then you can always adjust the mix from there.”

Fresh & Easy applies this theory to its front end as well. By tweaking its front-end operations, the chain expects to continue supporting a simple, yet satisfying customer experience.

“We are currently working with NCR to continually increase the stability of our hardware and software,” he said. “We need to continue testing the solution and making adjustments to ensure that we are providing the best experience.”