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Industry News - February 5, 2008



Tesco Rollout Stalls on the Road to Conquering California

With the announcement last week that Tesco will launch 18 new stores in Northern California, adding to its current total of 37 Fresh & Easy Markets in three states, the U.S. invasion by the British-based grocery giant is well underway.   But now that the grand opening hoopla has died down, reports from the stores that opened in November in the California, Nevada and Arizona markets tell of sparse crowds, empty parking lots and operational problems that are frustrating shoppers. 

Tesco’s CEO is upbeat about the expansion of stores into the Bay Area, which is planned for 2009. But others are not. Richard Guha, analyst at Max Brand Equity, along with shoppers blogging about their in-store experiences, indicate that Tesco’s fast moving rollout may be hitting speed bumps along the way.

Tesco’s CEO Tim Mason recently discussed the Northern California rollout plans. “Our stores have been well received by customers in Southern California, Nevada and Arizona,” says Mason. “Everyone wants fresh, wholesome food at affordable prices and we are confident that Fresh & Easy will be a great addition to the Bay Area.”

Richard Guha believes the rollout is falling short of expectations.

“Based on regular visits to three stores, they are usually empty,” he says. “I can always park right next to the stores. The nearby Trader Joe’s stores are packed and it’s difficult to find a parking space. They (Tesco) are now handing out coupons regularly to encourage repeat visits ($5 off $20 purchases). The self-service checkout is so fraught with problems that store personnel expect problems.”

A search of current blog messages from Tesco shoppers in California found empty stores, mislabeled products and difficult-to-use self-service kiosks. Here is a representative selection of recent blogs:

•  “I have shopped at Fresh & Easy about four times, but yesterday will be the last time. First, they don’t accept coupons and they don’t take American Express. Although the name states it’s Fresh and Easy, every time I shop there the dates on the food are right at the cut off date or past due. I can’t justify spending money on food that I won’t have time to eat before it’s expired. Trader Joe’s is much cheaper, has more variety and is fresher than Fresh & Easy.”

• “Don’t go to Fresh & Easy if you want some sort of “uber” shopping experience.  That’s not what F&E is about. You go there to get the necessary items you need and get out.”

• “Stores in Orange and Anaheim are just about always empty and considerably less busy than Trader Joe’s. I don’t mind the self checkout or the lack of coupons (every time I’ve shopped there they’ve given me a coupon book good for $5 off $20), and their prices on most everything are very competitive.”

• “If you are getting something that has an expiration date three weeks out, there is no way it is fresh! Tesco either has to change the way it does its labeling or launch a monster reeducation program to retrain every consumer on how the expiration dates work.”

Despite all the consumer research Tesco did prior to entering the U.S. market, the retailer may also be falling short in its efforts to micro market by neighborhood and to meet customers’ visual expectations.

“They seem to have gotten much of it badly wrong,” says Guha. “Lots of Mexican products in areas where there are few Hispanics, no Asian products in areas dominated by Asians. All products are on sparse steel shelves in cut cases with concrete floors. It makes the store look like a deep discounter. Tesco is looking at the United States through U.K. lenses, and cannot seem to escape its disdain for the U.S.”

-Joe Skorupa, Christina Zarrello 



Big Lots Creates IT Infrastructure with SAP
Big Lots implements SAP for Retail to help it quickly respond to change and grow ahead of the market on a stable platform. With more than 1,350 stores and around 40,000 store associates, the retailer selects SAP to create an IT infrastructure that will help the company achieve its growth targets. The retailer also hopes to continue to deliver a diverse mix of brand-name close-out merchandise at tremendous value to its customers. In addition, Big Lots leverages SAP for Retail to improve event pricing and automate integrated ordering, payables, inventory, replenishment and tracking processes. 

Giant Eagle Enhances Assortment Planning
Giant Eagle chooses Galleria to enhance assortment planning and optimize space. The grocery retailer uses the Automated Micro Assortment Planner and Automated Micro Space Planner to gain customer centric assortments, communicated through tailored, automated planograms. By creating automated store-specific planograms, this helps ensure that product inventories are based on each stores unique sales patterns. This also helps improve availability and sales within each Giant Eagle store.

Bob’s Discount Furniture Adds Warehouse Management
Bob’s Discount Furniture improves supply chain productivity and visibility by adding RedPrairie’s Warehouse Management. The furniture retailer also improves its labor productivity and throughput with the solution. The warehouse management system was implemented in its Taftville, CT-based distribution center which supports 30 stores across the northeast. Productivity gains have thus far been made through improved picking and put away processes combined with less manual activity.

New Look Implements Inventory Optimization
New Look, a European apparel retailer, selects Quantum Retail’s inventory optimization system, Q, to manage the replenishment of its 600 stores. Quantum Retail’s Q solution has been implemented alongside the retailer’s existing Oracle retail merchandising system. As the rollout of Q continues, it will help rebalance stock throughout New Look’s 600 U.K. and international stores, which will potentially lead to fewer stock outs and improved sales and profit. Future planned phases include multi-channel lifecycle management, initial allocation and reorder planning.  

More Technology News


Elite Eight Tips For Retail IT Execs Working Towards PCI Compliance
By Branden R. Williams, director, PCI Practice at VeriSign

By following certain tips at the start of the PCI journey, and by applying these tips collectively, consistently and across an entire enterprise, retail industry IT executives and their teams can create an environment that lends itself to compliance and minimizes the need for piecemeal, reactionary solutions.

#1 Store Less Data
When organizations store less credit card and other customer data, they reduce not only the chances of having data to lose, but also the scope of assets that fall under PCI regulations and auditing. Organizations must determine where data is stored, what it is used for and whether it is needed. Furthermore, legacy reports must be modified to remove data that is no longer needed.

#2 Understand the Flow of Data
IT executives must know where customer data goes from the point of acquisition - either from a customer or third party - to the point where the data is archived, disposed of or leaves their network. Regular discovery and audits also will ferret out unexpected new or temporary data repositories and ensure they are covered as well.

#3 Encrypt Data
Incorporating encryption at the application development phase and having a company-wide encryption strategy are ideal approaches, particularly because they minimize costs and avoid problems associated with managing multiple keys.

#4 Address Application & Network Vulnerabilities
Organizations must address application and network vulnerabilities by updating point-of-sale (POS) applications, identifying poorly coded Web applications and scanning networks on a quarterly basis. Organizations also must implement strict system development life cycle processes to avoid ad hoc fixes, implement replicable processes and document everything.

#5 Monitor Systems for Intrusions & Anomalies
IT managers must have visibility into the network and the over air communication surrounding it, and this entails looking for known attack signatures, data anomalies and variations in your normal host and network logs.

#6 Improved Log Monitoring & Retention
Log collection, aggregation and reporting must be centralized and complemented by sophisticated log management technology, security information management technology and managed log services.

#7 Segment Credit Card Networks & Control Access to Them
Out-of-band management and continuity capabilities, effective router configuration and significant bandwidth capacity, and back up server capabilities can protect networks from attacks and minimize damage from outages. Furthermore, multi-level network authentication, the practice of disabling network ports in non-secure areas, limits to the number of people who can access the credit card systems and multi-factor authentication for secure network access are also critical tools and tactics.

#8 Improve Security Awareness & Training
Many compromises and PCI audit failures can be avoided by simply improving security awareness, particularly mistakes related to poor password control, improper data storage and overly permissive usage policies. Ongoing training and security education will go far in developing and enforcing processes that ensure adherence to security procedures and policies.


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