Tuesday, April 29, 2008

Tesco's Fresh & Easy an Issue in Sacramento, California Mayor's Race A Year Before its First Store in the Capital City Even Opens

As we reported in Fresh & Easy Buzz on March 7, Sacramento native and former NBA basketball star, turned Sacramento developer, turned current candidate for Mayor, Kevin Johnson, is the driving-force behind bringing a Fresh & Easy Neighborhood Market grocery store to the capital city's low-income Oak Park neighborhood, where Johnson was raised.

On March 6, the 42 year old Johnson, who also runs a non-profit community development organization in Sacramento, tossed his hat into the ring as a candidate for mayor, running against incumbent Heather Fargo and a couple other candidates for election this November.

One of those other candidates for mayor of Sacramento is Murial Strand, an engineer by profession, as well as being an environmental sustainability advocate.

Mayoral candidate Strand also is a blogger. Here is what she says in her blog, Murial for Mayor," about why she is running for mayor of Sacramento:

"Why am I running? Because I want Sacramento's sustainable future at the top of the public agenda. After peak oil and climate change, I want a livable future city. Am I qualified? Yes. I have been reading, studying, and thinking about sustainability for 3 decades. Why should you hire me for mayor? So I can facilitate our creation of our sustainable future amid an uncertain and unsustainable present. If you like the ideas discussed below (in her blog), please share them with friends and family."

In her "Murial For Mayor" blog today, candidate Murial Strand has a post titled "Taxes & Investments," in which she asks the question and discusses whether or not the Fresh & Easy grocery store set to be built and opened next year in Sacramento's Oak Park Neighborhood is good for the neighborhood. [Remember, candidate for Mayor Kevin Johnson owns and is the developer of the piece of property where the Fresh & Easy market will be built.]

Candidate Strand says she checked Tesco's Fresh & Easy out online. She says the grocer looks like its aiming at the "Trader Joe's niche," which is a partly correct assessment that we give her an A for since she's an engineer and political candidate rather than a food and grocery industry analyst.

As a note: we've called Fresh & Easy's small-format, basic grocery store and fresh foods convenience-oriented format sort of a mini-Costco meets Trader Joe's before, so not a bad analysis for candidate Strand.

She also comments on Fresh & Easy's policy of giving $1,000 to a local community group for each new store they open. However, she says "they (Fresh & Easy) didn't say exactly who gets the money." What they do is have the store employees vote on which local, non-profit community group to give the thousand bucks to candidate Strand--and readers.

It's not all that much of a donation for a company as large as Tesco, the world's third-largest retailer with over $60 billion in annual sales, but it isn't bad.

Candidate for Sacramento Mayor and blogger Strand then delves a bit deeper into whether or not she thinks a Fresh & Easy grocery store will be good for the city's Oak Park low-income neighborhood.

She says in her research on the grocer, she "saw way too many packaged products with their recipe suggestions."

Candidate strand isn't too impressed with all these packaged products, like the extensive selection of fresh, prepared, packaged items Fresh & Easy stores sell.

She offers her advice to the voters of Sacramento: "The affordable way to eat healthy food is to buy basic ingredients and make it yourself...If I lived in Oak Park and wanted to buy healthy food, I would go to the Co-op (that's the Sacramento food cooperative grocery store) and to the farmers' markets, and occasionally to Trader Joe's."

The mayoral candidate adds: "I like to play the field (shopping-wise). But transportation can be a problem for moms and bus riders. When the city (of Sacramento) was looking high and low to find a grocery store at Stockton & Broadway, I suggested the neighborhood consider organizing a consumers' cooperative store. And there is nothing stopping them from doing this now, investing their rebates in themselves."

You can read Sacramento candidate for Mayor Murial Strand's full blog post in her "Murial For Mayor" blog here. It's titled: "Taxes & Investments."

Act II

As we reported on March 7, a coalition of residents living in Sacramento's Oak Park neighborhood had been trying for some time to get a grocery chain or local independent to build and open a store in the lower-income neighborhood.

They were unsuccessful until Johnson, who owns lots of property in the neighborhood, was able to get Tesco's Fresh & Easy Neighborhood market to commit to opening one of the 19 grocery stores it plans to start opening early next year in the Sacramento region in Oak Park.

Based on our conversations with members of these neighborhood groups, they are pretty happy with Candidate Johnson and Tesco for bringing the Fresh & Easy grocery market to the neighborhood--especially since none of the local chain or independent grocer's they contacted would consider doing so.

The Oak Park neighborhood is underserved by grocery stores that offer reasonably-priced groceries and fresh foods. Such regions are termed "food deserts," and locating in such neighborhoods is a strategy Tesco has said is key to its Fresh & Easy USA venture in California, Arizona and Nevada.

We've visited the Oak Park neighborhood and it is an up and coming area, despite having a bit of a rough history. Lots of new retail has opened--except for supermarkets--and numerous cafes and restaurants are sprouting up throughout the neighborhood.

There's also numerous young professionals moving into the neighborhood, renovating old houses and injecting excitement into the area. A growing arts scene also is developing.

From a business standpoint, we think Oak Park should be a good location for Fresh & Easy. The neighborhood has lots of foot traffic, many residents don't own cars, and there aren't any grocery stores close to the Fresh & Easy sight that sell reasonably-priced basic grocery items and fresh foods.

Fresh & Easy would be wise though to localize the Oak Park store as much as possible to the neighborhood. This is a theme--adding local design elements on top of the basic Fresh & Easy format blueprint and better localizing the store product mix--that we discuss often on Fresh & Easy Buzz. It's an element that's missing in Tesco's Fresh & Easy stores which our analysis tells us is hampering sales at the 61 small-format grocery markets currently open in the Western USA.

A "Fresh & Easy Oak Park Mini Cafe" inside the store would be a smart addition for Fresh & Easy to make in the Sacramento neighborhood store as a way of creating a "sense of place" in-store, as well as creating a neighborhood destination spot, which would result in shoppers lingering longer in the grocery store and purchasing more.

Doing these localization elements will endear the residents of Oak Park--and maybe even candidate for mayor Murial Strand--to Fresh & Easy and the store. It also will greatly enhance sales, as Sacramento consumers are used to and like to patronize locally-oriented food and grocery retailers, even if they are from far away but respect and tailor their stores to the community.

Meanwhile, we have a feeling the Oak Park neighborhood will vote overwhelmingly for Kevin Johnson, regardless of what candidate Strand posts in her blog. He's the guy from the neighborhood made good: NBA all-star, local developer, community activist.

He's also the guy from the neighborhood who came back to it, has bought lots of property in it, and is attempting to develop more retail and other service-oriented business on it for the neighborhood, which includes the Fresh & Easy grocery store.

His non-profit community development organization also is located in the neighborhood and does much charitable work with minority and low-income young people. You can bet candidate Johnson is conducting a "full court press" for votes in Oak park.

This is no knock on candidate Strand; she seems to have much going for her. It's just a dispassionate analysis of one neighborhood in Sacramento; Oak Park.

That neighborhood--Oak Park--has a future Fresh & Easy grocery store, an NBA all-star basketball player...and now a mayoral battle in common. Who says the retail grocery business is narrow and dull? Not us.

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