Tesco Claims a Victory for Fresh & Easy Discounting

(MoneyWatch)  Tesco's strategy of focusing on the value element at its Fresh & Easy stores may be paying off as it's reporting that fruit and vegetable sales have increased more than 11 percent since it introduced 98-cent produce packs in January.

As reported here previously, the produce packs are six-item mixed and changing fruit and vegetable selections packaged together at the 98-cent price. Produce packs were Fresh & Easy's response to customers who had been buying fresh product but had shifted to canned fruit and vegetable as they tightened spending. Fresh & Easy contends the increase in produce sales demonstrates that people still want quality fresh items but are looking for alternatives as price becomes more of an issue, and it certainly implies that Fresh & Easy has found a way to provide what they seek.

The produce version isn't the first pack product Tesco has offered. Last year, it offered what it termed grill packs for barbecue season as a grab and go convenience for shoppers who were anxious to get the fire started back home. The company revived the grill pack in January for the Super Bowl with a heavy emphasis on price. The "game day" grill pack offered almost five pounds of beef patties, pork sausages and seasoned chicken for $5.99, a price good only through Feb. 3.

Tesco has struggled to create an identity for Fresh & Easy. Beginning last year, it narrowed a diffused selling proposition that had Fresh & Easy trying to please a range of consumers from the affluent to the working class. It redecorated stores, changed the assortment and now is developing promotions that appeal directly to middle-class consumers who retain concerns about their health and lifestyles but who have become more judicious about spending money in an uncertain economic environment.