Brand Mix

Although I'd known about Tesco's planned launch into the U.S. for quite some, I had totally missed the brand architecture angle until I read the post today on Branding Strategy Insider.

As Mark Ritson points out, Tesco has shifted from its normal "branded house" approach where everything is branded Tesco. In fact, Fresh & Easy doesn't make any reference to Tesco, not even buried deep on the web site, as far as I could tell.

Mark explains this shift as: "The need to build a fresh brand around a very specific set of needs in the US market, plus the parochial nature of US consumers, has resulted in the creation of a new brand for its US venture: Fresh and Easy."

I agree with that but I also think it was a recognition on Tesco's part that it was never going to be successful entering the market as another mainstream player (J Sainsbury had tried that route and failed when it acquired the Shaw's supermarket chain in 1983 only to sell it after 20 years of unsuccessful effort).

Instead it has tried to do something different, something competitors won't be so likely to do and, hopefully for them, something consumers will add to their shopping route. Fresh & Easy stores are only a quarter of the size of the traditional US supermarket, based on the Tesco Express local stores format that has worked well in the UK. Innovations include a “kitchen table” of freshly prepared hot foods, check-out registers that require customers to scan their own goods and over half of the products sold under Fresh & Easy’s own label.

Some analysts are very bullish about this approach. TNS Retail Forward estimates that Tesco could be a $4 bn retailer in the United States with 500 stores by 2011, moving up to $10 bn by 2015 which would make it one of the top 10 supermarket retailers in the country. Starting niche doesn't mean that you can't end up huge eventually. "The combination of Fresh & Easy's smaller stores, self service tills and ready-to-cook meals has direct appeal among U.S. shoppers whose primary concern is convenience," says Jennifer Halterman, senior consultant at TNS Retail Forward. "There is demand for this type of concept, and we expect other U.S. retailers to be watching Tesco closely for ideas on how to tap into this buoyant market. Fresh & Easy's smaller store size gives it an ideal formula to replicate quickly throughout the United States."

Such a strategy suggests, even demands, a different approach to branding as well. Rather than use the Tesco brand, unknown in the U.S. but still suggestive of more of the same old thing, it decided to support the effort with a name purposed to support its intentions and its point of difference.

Makes sense to me.