Easy Does It

Why Clubcard has not yet stretched across the Big Pond to Tesco’s Fresh & Easy Neighborhood Markets

In early December ’09, the loyalty world thought it heard a very large second shoe dropping when the Financial Times reported that U.K. supermarket chain Tesco was finally going to bring its Clubcard loyalty program tactics to its American startup endeavor: Fresh & Easy Neighborhood Markets.

Tesco had launched Fresh & Easy in the States in 2007, testing smaller-box stores concentrating on value, fresh and more natural products, and quick-purchase access. The concept is something of Whole Foods meets Walmart meets the C-store.

“We offer convenience items that are fresh produced and stored daily, with no added preservatives or trans-fats, no artificial colors or flavors, and so on,” says Fresh & Easy spokesman Brendan Wonnacott of the 10,000-square-foot markets.

“Fresh & Easy appeals to people with a fast-paced lifestyle. They may not necessarily have time to cook a full dinner, but they want something like they can cook at home.” This approach is combined with an everyday low price philosophy, meaning no sales, no manufacturer’s coupons—and no Clubcard-esque points system.

But because Fresh & Easy’s introduction to the States has fallen short of projections, with over 130 stores now operating in California, Arizona and Nevada in the light of more-aggressive earlier projections, some observers wondered how soon Clubcard would be riding in to save the day. It was something of a natural assumption that the card had been dispatched when this job description was spotted in an ad for a new marketing position at Fresh & Easy’s Los Angeles headquarters: “2010 planning for loyalty programme.”

Yet, the marketing position may have been new, but the programme was not—company spokesman Roberto Munoz noted in Supermarket News that the ad referred to the company’s existing friends of fresh&easy loyalty initiative, which obviously is not as well-known as Clubcard. What, then, is this not-so-well-known program?

Launched in late 2008, friends of fresh&easy is a customer-dialogue initiative. In addition to other communication vehicles, it employs an opt-in email effort that offers subscriber-only special deals, coupons and special offers in addition to updates about the market and its community efforts. “It’s a great way to reach your brand loyalists and offer them something a little extra,” says Brendan Wonnacott. Though he declines comment on categorization and segmentation of communications, he notes that “We do have a great opportunity to reach out to people on an individual basis.”

The newsletter is growing “at a very rapid pace,” Wonnacott says. “From the beginning of Fresh & Easy, we’ve been very focused on our brand messaging and focusing on building a strong and loyal customer base through communicating brand value and talking about our stores.”

In conjunction with other communication vehicles, the email newsletter is designed to encourage customer feedback.

“We read every comment we receive and make changes where we can, based on your feedback,” notes the Fresh & Easy web site. “We listen to customers, bloggers, friends of fresh&easy and staff to determine which products are customer favorites.” But only friends have the privilege of voting for their favorites online—and monthly results of friends voting are appear on the site certainly with the intent of marketing as well as communicating customer preference.

Customer dialogue also involves a social media strategy, though it isn’t friends-dependent. “We’ve been doing a lot on digital and social media front,” says Wonnacott. “We’re very active on Twitter, focusing on listening and responding. We have more than 6,000 followers and we get an immense amount of feedback every day—anything from stores to products to employees—it runs the gamut. Through all of the various feedback channels, be it in-store, online, over the phone and in letters, we look for consistent themes, trends and good ideas beyond just sales, but also what customers want in the stores or maybe what products that have been discontinued that they want back. Given our current geographic range, we’re able to field a close-knit team that works together taking in all this information.”

Customer interaction is also encouraged through neighborhood focus—for instance, the localized Shop for Schools program, which generates a dollar donation for each $20 of receipts collected by customers. “Shop for Schools is corporate-wide, but it’s coordinated on the ground in each region,” says Wonnacott. And as part of the expansion strategy, each time Fresh & Easy opens a new store, it donates $1,000 to a local group chosen based on neighborhood nominations.

Neighborhood relevance is facilitated by localized hiring practices. “Our stores are set up inside for employee-customer interaction,” says Wonnacott. “While what we offer in the stores doesn’t differ from store to store, we focus on the neighborhood feel of the store, so we hire from the neighborhood as much as possible. More than 50 percent of our store employees live within four miles of the store they work at.”

So why not a more formal system of tracking specific customer behaviors such as U.K.’s Clubcard offers? For one, outside observers note an interesting corporate obstacle. Data analysis for Clubcard is powered by dunnhumby, of which Tesco is a primary owner, and Fresh & Easy’s U.S. competitor Kroger owns a 50 percent interest in dunnhumby USA. Which is not to say that the expectation of that second shoe dropping has been completely dispelled, with new “Clubcard-emigrating-to-America” rumors afloat, as discussed at the Fresh & Easy Buzz blog.

Yet, from the inside, Brendan Wonnacott points to the freshness of Fresh & Easy leading to a freshness of customer approach. “Fresh & Easy is something that’s completely different from what exists not just in the Tesco family, but anywhere else period,” he says. “Because of the way we structure our everyday low pricing, there’s not a need for a special reward scheme. And as a startup building from scratch, we’re looking at things from a new perspective as we grow, and looking at ways to expand our interaction with customers. A major focus of Fresh & Easy as a company is listening to customers. You can’t change without listening to your customers.”