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With Its Small-Format Grocery Chain Struggling in U.S., Tesco Shutters Some Stores

British retail giant Tesco is finding America hard to win over.

Seven California grocery stores are among 12 under-performing locations nationwide to be closed by Tesco's Fresh & Easy Neighborhood Market in an effort to boost profitability. Other stores are in Phoenix and Las Vegas.

Fresh & Easy opened in the U.S. with much fanfare in 2007 with plans to create a network of hundreds of smaller-format stores on the West Coast. It aimed to have 200 stores open by 2009.

But the chain has been hampered by cultural norms imported from Britain that proved mystifying to U.S. shoppers, said Jim Hertel, a managing partner at food retail consulting firm Willard Bishop.

Some of the stores' private-label products, for example, are even more expensive than their brand-name counterparts, Hertel said. Much of the fresh produce is also tightly wrapped in cellophane for freshness. But most Americans think that "produce in a plastic bag is probably not as high quality as those in bulk," Hertel said.

The chain's computerized ordering system also had some bugs initially, so even low-turnover stores ran out of stock on everyday items.

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British retail giant Tesco is finding America hard to win over.

Seven California grocery stores are among 12 under-performing locations nationwide to be closed by Tesco's Fresh & Easy Neighborhood Market in an effort to boost profitability. Other stores are in Phoenix and Las Vegas.

Fresh & Easy opened in the U.S. with much fanfare in 2007 with plans to create a network of hundreds of smaller-format stores on the West Coast. It aimed to have 200 stores open by 2009.

But the chain has been hampered by cultural norms imported from Britain that proved mystifying to U.S. shoppers, said Jim Hertel, a managing partner at food retail consulting firm Willard Bishop.

Some of the stores' private-label products, for example, are even more expensive than their brand-name counterparts, Hertel said. Much of the fresh produce is also tightly wrapped in cellophane for freshness. But most Americans think that "produce in a plastic bag is probably not as high quality as those in bulk," Hertel said.

The chain's computerized ordering system also had some bugs initially, so even low-turnover stores ran out of stock on everyday items.

Read Full Article