IE Business Daily Business news for the Inland Empire.
The demise of Fresh & Easy should serve as a cautionary tale for any other grocery chain planning to enter the hyper-competitive California market, several retail officials said.
The company, which struggled almost immediately after it entered that market seven years ago, recently announced that it will close or sell its remaining stores, having neither the cash nor the available financing to stay in business.
Fresh & Easy, which was originally owned solely by Tesco, the UK retail giant, operates nearly 100 stores in California, Nevada and Arizona, including more than 50 in Southern Californian and nine in the Inland Empire.
It also operates an 850,000-square-foot warehouse-distribution center in Riverside County.
“While we made progress on stemming our losses and moving the business closer to break even, unfortunately we have been unable to obtain financing and the liquidity necessary to continue to fund the business going forward,” Fresh & Easy spokesman Brendan Wonnacott said in a statement.
“As we start the process [of] an organized wind down of the business, we continue to work to sell all or part of the business.”
Ultimately, Fresh & Easy might not have done enough to distinguish itself from other grocery store chains in Southern California market, one analyst said.
“I don’t think they understood what was unique about the Southern California market,” said Craig Rosenblum, a partner with Willard Bishop, a retail and manufacturing consulting firm in Barrington, Ill. “It’s a very competitive market, and if you’re a regular grocery store you have to tell people how you’re different from the other regular grocery stores, just like if you’re a Latino store you have to differentiate yourself from the other Latino stores.
“I don’t think they did a very good job of that.”
Two years ago, Fresh & Easy filed for Chapter 11 bankruptcy protection and was bought by grocery magnate Ron Burkle’s Yucaipa Cos., with Tesco retaining a minority stake in the company.
Aldi, the German-based grocery chain, better do its research before it launches its planned move into Southern California, said Dave Heylen, spokesman for the California Grocers Association.
“Tesco is obviously very successful in England, but California is a different market,” Heylen said. “I don’t think Fresh & Easy ever understood this market. But other grocers still want to come into California, and that shows how strong this market is.”
