Fresh & Easy Applies For Liquor Licenses for Four Sacramento, California Stores

In this piece we wrote on Thursday, January 24, "Fresh & Easy Locking-Up Leases for Northern California Invasion," we detailed what we have learned to date from our sources about the number of store site leases Fresh & Easy Neighborhood Market has signed thus far in the Northern California region, where the retailer plans to start opening stores later this year.

We also discussed locations where Fresh & Easy representatives are negotiating for leases but haven't signed any to date, as far as we know. One of those Northern California cities we mentioned in the piece where Fresh & Easy representatives were looking hard to secure store locations is the capital city of Sacramento, and the surrounding metropolitan region.

We can report today that Tesco's Fresh & Easy Neighborhood Market has applied with the state of California for liquor licenses for Fresh & Easy markets at four store locations in Sacramento. Two of the stores are in the city of Sacramento, the other two are in the nearby suburb of Folsom, which is right next to Sacramento.

The city of Sacramento locations named in the company's liquor license applications with the state are:

3311 Northgate Blvd.

3615 Bradshaw Road.

The Folsom store locations are:

25000 Blue Ravine Road.

9522 Greenback Lane.

This brings to nine the number of signed leases for stores to date we can confirm in Northern California. In addition to these four new locations in Sacramento, the other five stores are in the Bay Area: one store is in San Francisco, one in Oakland, one store in San Jose, one in Concord, and one store in Farfield.

Fresh & Easy is negotiating for additional store locations in San Francisco, Oakland and San Jose, and in dozens of other smaller cities nearby. Read our January 24 piece for more detail.

Analysis: The Sacramento metropolitan region food retailing market

Sacramento, which is located in the northern central valley of California, is about 90 minutes from San Francisco and the central city of a metropolitan region consisting of about 2.2 million people. The city of Sacramento's population is close to 500,000.

In terms of the food retailing market, local chain Raley's Superstores is the number one food dollar market share leader in the region. Raley's operates large Superstores under the Raley's banner, smaller but upscale stores under the Bel-Air name, and a few stores under the Nob Hill Foods banner in the region. Raley's, which operates stores primarily in Northern and Central California, and Nevada, has its corporate headquarters in nearby West Sacramento.

Raley's, Bel-Air and Nob Hill stores offer a full selection of basic grocery items. They also sell an extensive selection of specialty and natural/organic foods. Most of the grocer's Superstores, which average from 60,000 -to- 80,000 square feet, have large natural and organic foods store-within-a-store departments in them. In fact, Raley's is one of the pioneer's nationally in natural and organic product merchandising in the supermarket format in the U.S. A number of the Bel-Air and Nob Hill banner stores are smaller, ranging from about 35,000 -to- 45,000 square feet.

Safeway Stores also has a number of supermarkets in the Sacramento metropolitan region, as does Modesto, California-based Save Mart, which bought Albertsons' Northern California Division (over 200 stores) last year. Prior to acquiring the Albertsons' stores, Save Mart, who's corporate headquarters is located only 60 miles away in Modesto, didn't have any stores in Sacramento. With the Albertsons' acquisition, Save Mart doubled its size, and now operates nearly 300 stores in Northern California. It's the number two market share leader in the entire region, behind Bay Area-based Safeway Stores, Inc.

Trader Joe's also has a few stores in the Sacramento metropolitan region. TJ's is super-popular with area shoppers. Cost-Plus World Market, which is a national chain that's headquartered in nearby Oakland, has large specialty foods and beverage departments in its stores, and is very popular among area consumers. Costco Wholesale, it's stores packed with prepared, specialty and natural and organic foods in addition to everyday grocery staples and more, is wildly-popular in the region as well.

There also are numerous big box grocers in the region" Food Maxx, a division of Save Mart, Food-4-Less, a couple Wal-Mart Supercenters and a couple other independent warehouse-style stores, all do battle for the low-price customer in the area. Whole Foods Market, Inc. also has a large store in Sacramento. Further, there are numerous local, upscale multi-store and single-store independents in the region. Most prominent is Nugget Markets, which has about 10 stores in the region. Its stores are full-line, upscale grocery stores which offer lots of specialty, natural, organic and fresh prepared foods.

Fresh & Easy will find a competitive market in the Sacramento region; especially hometown grocer Raley's, which is one of the region's biggest supporters and boosters. Many people consider Raley's as "corporate citizen numer one" in Sacramento.

However, the region is a big automobile commuting area, and the small-format, convenient Fresh & Easy stores could prove popular with shoppers looking for an easier shopping experience than the big box and Superstores that tend to dominate Sacramento and the surrounding area.

However, there's also plenty of upscale competition (along with price-store competition), including Raley's, Bel-Air, Nob Hill, Whole Foods, Trader Joe's, Nugget Markets, World market and independents like the popular Corti Bros., Sacramento's first and longest-open upscale specialty grocery store.

With its basic grocery, low price focus, combined with its prepared and specialty foods semi-upscale focus, Fresh & Easy will need to convince Sacramento area shoppers it offers something they aren't currently getting from their numerous, mostly local-based, food retailers.

Although the region has over 2 million people, it's still "hometown" oriented. For example, even though Safeway Stores is headquartered less than 100 miles away in the Bay Area city of Pleasanton, its never been able to seriously compete with local grocer Raley's, do primarily to the fact that Sacramento-area shoppers are very hometown-guy loyal. To be successful in Sacramento, Fresh & Easy will not only have to execute well at retail, it also will have to get heavily involved in the community and show area residents it's not merely a "foreign" invader.