Sunday, April 13, 2008

San Francisco: Cool Bay Breezes, A City Full of History, Cable Cars--And A 'Fresh & Easy' State of Mind

"No city invites the heart to come to life as San Francisco does. Arrival in San Francisco is an experience in living."

-American writer and poet William Saroyan, who once lived in San Francisco and was born about 200 miles away in the then small Central Valley farm town of Fresno.

"The coldest winter I ever spent, was a summer in San Francisco."

-American writer, humorist and riverboat captain Mark Twain. Twain lived in and worked for a number of years as a newspaperman in San Francisco.

If you're going to San Francisco, be sure to wear some flowers in your hair. If you're going to San Francisco, you're going to meet some gentle people there. For those who come to San Francisco, summertime will be a love-in there. In the streets of San Francisco, gentle people with flowers in their hair.

-From the 1967 song San Francisco (Be Sure to Wear Some Flowers in Your Hair) written by John Phillips of the rock band the Mama's & the Papa's and sung by Scott Mckenzie in 1967 during the Summer of Love in the city's Height-Ashbury District. The song reached number 4 on the Billboard top 100 list.

"We the peoples of the United Nations determined to save succeeding generations from the scourge of war, which twice in our lifetime has brought untold sorrow to mankind, and to reaffirm faith in fundamental human rights, in the dignity and worth of the human person, in the equal rights of men and woman and nation's large and small, and to establish conditions under which justice and the respect for obligations arising from treaties and other sources of international law can be maintained; and to promote social progress and better standards of life in larger freedom...

-From the Preamble of the United Nations Charter. The United Nation's was founded and its charter signed in San Francisco, California on June 26, 1945.

"One day if I do go to heaven...I'll look around and say, 'It ain't bad, but it ain't San Francisco.'"

--The late Pulitzer Prize winning newspaper columnist for the San Francisco Chronicle, Herb Caen, from one of his thousands of columns. The late Herb Caen, aka Mr. San Francisco, was the city's biggest fan but also its sharpest and most respected critic. When Herb passed away in 1997, he was America's longest-running newspaper columnist. So beloved was Mr. Caen, that on the day of his passing, the city by the bay stood still when its residents heard the news. Hundreds of thousands of people memorialized Herb's passing in a celebration of his life called "Herb Caen Day" in San Francisco a week or so after his death. A mention of their name or business in Herb Caen's column was to modern day San Franciscans' what finding gold was to the city's residents during the famous California gold rush. Treasure.

San Francisco, CA--The Fresh & Easy Buzz team found ourselves in San Francisco last week on business. With a little down time between business meetings, appointments, lunches and dinners, we also found ourselves drifting into a "Fresh & Easy" state of mind.

Therefore, after a breakfast meeting and with a couple hours to kill before our next meeting, we decided to take a walk from the hotel, over to the site in the city's Bayview-Hunter's Point low-income neighborhood where Tesco plans to open next year one of its thus far two confirmed San Francisco Fresh & Easy Neighborhood Market small-format grocery stores. The second confirmed location is at Silver Avenue & Goettingen in the city.

After all...the sunshine was breaking out, despite a very chilly (common for the city) Bay breeze, and the Fresh & Easy construction site was about a 25 minute walk from the hotel...just the perfect distance to get the heart pumping; at least pumping faster then sitting in the hotel room working on a laptop computer would do.

That site, on San Francisco's Third Street corridor (Third Street & Carrol Avenue) is a large, mixed-use but primarily residential condominium building being constructed by a partnership of Goldman Sachs Urban Investment Group and Noteware Development.

Fresh & Easy will be the ground-floor retail anchor of the new residential development.

We can report progress is being made on both the residential portion of the development and on the ground floor Fresh & Easy grocery market.

In talking to a construction foreman at the sight, as well as using our own eyeballs, we estimate the Fresh & Easy store to be about 13,000 -to- 15,000 square feet in size.

It's slightly larger than most of the 61 Fresh & Easy grocery stores currently open in Southern California, Arizona and Nevada, which average about 10,000 -to- 13,000 square feet. It's also brand new construction. The majority (but not all) of the 61 grocery markets currently operating have been located in former retail supermarkets or drug stores, which Tesco has gutted and turned into Fresh & Easy Neighborhood Market stores.

We first visited the site some time ago when construction was just beginning. Much has been done since then, including on the Fresh & Easy portion. According to a spokesperson for the developer, Tesco's Fresh & Easy has purchased the approximately 15,000 square foot retail portion of the development at 5800 Third Street from the developers.

Back to the hotel, and off to meetings, then a lunch event...and more meetings. Our 'Fresh & Easy' state of mind" was essentially over for the duration of the business trip...or so we thought.

During a brief conversation with one of the participants after our lunch meeting, we learned the city of San Francisco had recently completed a study which among other things suggested the city of about 800,000 residents could support about 1.8 million additional square feet of full-service retail grocery in the 43 square mile city and county.

The 'Fresh & Easy' state of mind' was now reactivated. And, of course, when we had a little bit more down time, we talked to a city of San Francisco spokesperson so we could get the skinny on the study.

The study says the neighborhood in the city in most need of additional full-service grocery stores is the Bayview Hunter-Point neighborhood, where the ground-floor Fresh & Easy grocery market-- which will offer both basic groceries and fresh foods--is being constructed. We were aware of the shortage of grocery stores in the neighborhood--but being empirically-oriented, research always improves the knowledge base.

Additionally, according to the "Mayors' Report," which was released on April 1, the residents of Bayview-Hunter's Point spend about $14.5 million annually on groceries in other San Francisco neighborhoods and even in nearby cities because of the lack of stores that sell basic groceries and fresh foods in the neighborhood.

Then it was back to business...But our 'Fresh & Easy' state of mind' was still there; just in the back of the mind at present.

The next day, when an hour or so of downtime presented itself, we decided to call the Mayor's Office of Economic and Workforce Development and ask how things were going Tesco Fresh & Easy-wise in the city by the bay. You know: Are they continuing to scout out more store sites in San Francisco besides the two already leased, and the like? Triangulate data and confirm, we believe.

We had talked to that department's (and the city's) director of neighborhood development, Amy Cohen, before about Tesco's Fresh & Easy and the city. Ms. Cohen was instrumental in getting Tesco to agree to locate a store in the Bayview-Hunter's Point development we visited the day before and reported on above.

Before Tesco decided to locate a Fresh & Easy grocery store in the neighborhood, a coalition of community groups along with the city had been trying for over a decade to get a supermarket chain to open a new, full-service supermarket in the neighborhood. They all said no thanks. Tesco was the first, and only, to say yes when it decided to choose the Bayview-Hunters Point neighborhood as one of its first 18 Bay Area sites last year.

Ms. Cohen was out, but we talked to a department spokesperson, who confirmed what one of our Bay Area commercial real estate sources had told us weeks earlier, which is that Tesco is looking for additional store locations in the city of San Francisco for its Fresh & Easy grocery stores beyond the two locations it's already announced it will open sometime next year.

When we spoke with Ms. Cohen a little over a month ago or so, she told us she was working with Tesco to identify neighborhoods in San Francisco, like Bayview-Hunters Point, which are in areas where that additional 1.8 million square feet of additional needed retail grocery space identified in the Mayor's report is located. In other words, those urban "food deserts" in San Francisco where residents are underserved by grocery stores that offer a good selection of basic grocery items and fresh foods like produce and meats.

The trip was almost concluded, save for a dinner event to attend that night.There would be people from both the Bay Area food and grocery and commercial real estate industries at the somehow we didn't think our 'Fresh & Easy' state of mind' was completely vanquished yet...and we were right.

At the dinner, which was held in the East Bay Area city of Pleasanton, we had conversations with two local grocery industry folks who work closely with Safeway Stores, Inc., which has its corporate offices in the that very same city of Pleasanton.

In conversation, we asked the two long-time Bay Area grocery industry veterans what they were hearing about Safeway's new, small-format grocery stores, which the grocery chain plans to start opening (the first four or five as a test) in the South Bay Area region this summer. From what we've been able to determine thus far, the stores will be located in San Jose and in the nearby cities of Mountain View, Sunnyvale, Redwood City and perhaps another.

Tesco plans to open 18 stores in the San Francisco Bay Area beginning in early 2009. Four of these stores will be in the South bay Area: two in San Jose, and one each in Mountain View and Sunnyvale. Plans call for more stores in the Bay Area, including the South Bay Area, as well.

Our local sources confirmed for us that they are hearing what we've been hearing: that Safeway still is on track to open four and maybe five of the new small-format (about 20,000 square feet based on what we've learned thus far) this summer. Most local observers don't expect the first store to open before July, with the other three or four opening over the rest of the summer.

Our dinner party sources also confirmed for us what other sources have been telling us for a few months now--and which we've reported here in Fresh & Easy Buzz--which is expect some interesting design elements and lots of fresh, prepared foods items--including some organic--in the new small-format stores.

As we reported some months ago, In October, 2007 Safeway hired Anthony Gilmore, the former regional president of Whole Foods Market, Inc's Northern California region to a corporate executive position at the company. His charge is to help innovate the design and merchandising elements of Safeway's new (and remodeled) Lifestyle format supermarkets, as well as lend his expertise in those departments to the design and merchandising of the new, small-format grocery stores.

It's not Gilmore's first time at Safeway. He got his start at the grocery chain decades ago as a courtesy clerk.

Under Gilmore's leadership at Whole Foods' Northern California, the supernatural grocer built and opened some of its most unique and popular U.S. stores over the last few years.

These markets include: the grocer's huge, 77,000 square foot flagship store in the South Bay Area city of Campbell; the Potrero Hill neighborhood store in San Francisco, which is the ground-floor anchor of a huge residential complex and among other things features an in-store market bistro restaurant and wine bar with an outdoor patio where a DJ spins tunes for customers; and the unique European Market Hall-style store in downtown Oakland, which is smaller than most new Whole Foods stores but because if its "food hall-like" design doesn't seem like it. All three of the stores were opened in 2007.

Each of these store's fit the neighborhoods they're located in perfectly in most ways. Expect to see some of Gilmore's touches in the new Safeway small-format grocery stores set to start opening this summer in he South Bay Area. Most specifically, look for them to be designed with their respective communities and neighborhoods in mind, with unique local touches in each one.

Further, look for a combination limited assortment basic grocery but also natural and specialty foods (both fresh foods and dry) picked using Safeway's extensive knowledge--and consumer database--of the Bay Area market, along with Gilmore's knowledge of the more upscale and natural foods consumer which he gleaned while running Whole Foods in the market.

Read our March 5, 2008 piece, "New Details and Analysis About Safeway's Small-Format Summer SF Bay Area Surprise For Tesco's Fresh & Easy Neighborhood Market," for some good background and analysis. (click here to read the piece.)

Bags and laptop packed, checked out of the hotel room, and in a state of mind more focused on getting home than on business or Fresh & Easy, we listened to some Sinatra on the player, followed by some 60's rock--including a little "British Invasion" band stuff-- then some cutting-edge 2008 San Francisco sounds recommended to us by a young, hip San Franciscan...Going from a business and Fresh & Easy state of mind, to a music-infused, near-ethereal state of least until the following morning, when it would be off to another western U.S. state for quick trip.

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