It's the end of Q1 for Tesco's Fresh + Easy venture, and with North California the next stop in the rollout, it's 50 stores and counting.

But a whispering campaign is gathering momentum, suggesting that all is not well. US retail expert Jim Prevor has been particularly outspoken in his blog, Perishable Pundit.

And last week Piper Jaffray analyst Mike Dennis wrote, in a note to investors, that the 50 stores already trading in Los Angeles, Las Vegas and Phoenix are underperforming. "I have first-hand evidence to suggest there are real problems at Fresh & Easy," he told The Grocer.

Dennis estimates Tesco's sales targets per store are $200,000. In his report he examined the impact if sales were 5% lower than a 10% margin of error. But he concedes Prevor's $50,000 estimate may be more accurate.

Tesco executives would be "doing a jig on the rooftops of the California distribution center" if they were averaging $170,000 a week per store," says Prevor.

And intelligence collected for rival US retailers suggests this figure is much nearer the mark.

Should Tesco be worried? "The $200,000 figure is not a target we've ever quoted," says a Tesco spokesman, adding: "It is ridiculous for an outside commentator to make a judgement on the sales of a business only a little over 100 days old." And CEO Tim Mason says: "We have been incredibly encouraged by the response from our customers and every week brings more good news, as sales, customer numbers and repeat visits are all growing."

But Prevor's celebrated blog is not the only US online voice to criticise Fresh & Easy. Other blogs such as and have had their say.

And the criticisms extend beyond sales. With contributions from hundreds of retail brokers, industry suppliers and logistics experts, as well as disgruntled shoppers, these US internet users provide a near-continual appraisal of the growing pains of Fresh & Easy.

On, a blogger describes being charged $2.49 in Fresh & Easy for Stouffer's products - available for 99 cents at the Ninety Nine Cent Store.

Others criticise the product mix, which "lacks the brands that American consumers look for".

But it's Prevor's blog that's most outspoken. He claims "Tesco is buying at a higher rate than its volume justifies, then donating or dumping excess product".

And he argues there's "a lack of micro-marketing". "Fresh & Easy has a lot of Hispanic items in all the stores I am monitoring, yet Eagle Rock is the only store with 25%+ Hispanic local population."

Prevor even berates Fresh & Easy for not joining the Produce Marketing Association, claiming Tesco is viewed by vendors as an outsider and a freeloader, "the guy who won't chip in to the community fund".

Tesco counters that it's an active member of the California Grocers Association, the Los Angeles County Economic Development Corporation and the Food Marketing Institute.

It also argues the vast majority of the Fresh & Easy team are American, and bring experience from Wal-Mart, Safeway, Kroger.

"Tesco has a decade of experience developing businesses in new markets all around the world. Our strategy is based on listening to and understanding local customers, local staff, local suppliers and local communities."

A lot of comments can be put down to idle curiosity and industry gossip. At last month's National Grocers Association Annual Convention in Las Vegas - where there are eight Fresh & Easy stores - tours were in high demand. On the other hand, and perhaps tellingly, the tours resulted, in some cases, in out-of-town grocers outnumbering shoppers four-to-one.

So should Tesco be worried? With an offer that's designed to appeal to everyone - with one store opening a few steps from the Hollywood Walk of Fame and another in Compton, the well-known scene of the LA riots. - it recognises "the range and selection will likely evolve".

But as well as a growing customer base, it also has converts among the US blogging community. "Most pundits did not 'get' Trader Joe's and most thought the Apple store was silly and narcistic," wrote Mike Tesler, president of Retail Concepts on Retail Wire. "So the more negative I hear the more stock I buy in Tesco."

Philip Dorgan, head of research at Panmure Gordon, adds archly: "I'll wager Tesco will be making more money in the US in three years than Whole Foods is in the UK." n