Wednesday, May 21, 2008

New Store Development: Tesco to Anchor New Shopping Center in El Mirage, Arizona With New Store Built From the Ground Up

The small but fast-growing city of El Mirage, Arizona in the Phoenix Metropolitan-West Valley region, is looking forward to a new shopping center, the Mirage Oasis Center, construction of which has just started, in more ways than one.

The new shopping center, which will be located in the southwest corner of Dysart and Greenway roads, is being developed by Phoenix-based commercial real estate developer KORE Group/Watermark properties, which says it turned the first shovel on the vacant land about two weeks ago.

A built from the ground up Fresh & Easy Neighborhood Market will be the retail anchor for the Mirage Oasis center, along with a bank (the city's first within the city limits), and a few other smaller, specialty retail stores.

The developer also says upscale apartments are planned on the site, making it a mixed-use development which will provide a neighborhood residential base for the Fresh & Easy grocery store once the apartments are built and occupied.

The developer is currently negotiating with San Francisco, California-based Wells Fargo to put one of its bank branches in a separate building designated for the bank, and says it has other banking companies interested in the space should Wells Fargo not come aboard.

The center will have three stand alone buildings: one for the Fresh & Easy grocery store, another for the bank, and a third for various smaller retail shops, according to the developer.

There's also a Walgreens drug store right next to the center. The developer and the city hope having a grocery store, drug store and bank right next to each other will allow the shopping center and nearby retail area to become not only a neighborhood shopping destination but also will draw residents from nearby who want to be able to do one-stop shopping.

The city of El Mirage has been working to get additional grocery stores to locate in the community as well as its first bank and other retail businesses. The city is on a retail store recruitment drive because it wants and needs to increase its tax base and revenues from sales taxes in order to fund current and future infrastructure and public works services and programs.

Because the city is in a large metropolitan region, it doesn't have many retail businesses like a bank, or a gas station, within its city limits. As a result, residents spend much of there money at retail establishments outside the city limits, which means the city misses out on the sales tax revenue from its own residents. Many of the city's residents shop at supermarkets and other retail stores in next door Surprise, Arizona, a city of about 150,000 residents.

El Mirage has a current population of about 25,000. However, its location in Maricopa County in the Phoenix West Valley Metropolitan area places the city in close proximity to hundreds of thousands of people. The state of Arizona estimates about 15,000 additional people live within a mile or two of El Mirage, for example, making it a sub-regional area of about 40,000.

El Mirage also is one of the fastest-growing cities in the state. According to U.S. Census Bureau population statistics, the city grew at a rate of about 52% throughout the 1990's. Although growth has slowed somewhat in recent times, it's still in annual double-digits.

Other retail development projects happening in El Mirage include a proposal to build another new shopping center named El Mirage Marketplace at Cactus and El Mirage roads in the city. The proposal calls for building the city's first gas station in the center. There also is talk that a Tesco Fresh & Easy grocery store might be the retail anchor of this proposed new center as well.

In another first for the city, a Burger King restaurant is currently being built near the proposed El Mirage Marketplace shopping center site. When finished, the Burger King will be the city's first free-standing fast food restaurant.

Wal-Mart also recently opened its first store in the city.

Since the shopping center will provide the city with its first bank, which will be next door to the Fresh & Easy grocery store, the location could be a hot one for Fresh & Easy in that the bank should draw customers from throughout the city who might also do some of their grocery shopping at the new Fresh & Easy in the shopping center.

[Free tip of the day: It might be smart for Fresh & Easy to do promotional tie-ins with what will be the city's first, and likely for a while its only, bank since they will be neighbors in the new shopping center. We imagine that bank should do rather well since it will have zero competition within the city limits. Ideas: How about a $25 gift certificate to the Fresh & Easy grocery store next door for every new account opened at the bank? Or, free Fresh & Easy $5 coupons distributed at the bank on a regular basis?]

According to Karen Owens, who is one of the co-project managers for the Mirage Oasis Center development, the center's retail buildings, including the Fresh & Easy grocery market, should be completed in November, with openings possibly happening before the holiday season.

She also says retail businesses like Fresh & Easy in the center should benefit from customers who live just a short ways away in Surprise, Arizona, as its right on the border of El Mirage and just a couple minutes drive from the new shopping center.

As mentioned above, the Fresh & Easy in the new shopping center will be built from the ground up rather than located in a converted, former retail building like the majority of the grocery chain's current 61 stores in Arizona, Southern California and Nevada are.

The built from the ground up stores, built to Tesco's new building Fresh & Easy blueprint, are much more attractive inside and outside compared to the stores in the re-used retail buildings, which have a strip-mall look to them on the outside and aren't very warm or inviting inside.

We expect this fact to make the new Fresh & Easy much more inviting to potential customers in El Mirage.

Additionally, although there are numerous supermarkets within a very short driving distance of El Mirage, as well as a couple located in the city, the fact the new Fresh & Easy is located in the city limits should provide an added incentive for residents to shop the store.

The city's residents and the city of El Mirage want to increase the number of public facilities such as parks and other public venues in the community but can only do so if sales tax revenues are increased. That's why the city is aggressively seeking out new retail development.

The city plans to launch a campaign to encourage its residents to spend their money in town--at the city's first bank, first gas station, first stand-alone fast food restaurant and other retail businesses like the new Fresh & Easy--once these new retail business start opening.

We believe if the city and local businesses launch a campaign that essentially ties shopping in town with new public works projects like parks and similar facilities, which residents are telling the city they want, it could pay big dividends for new stores like Fresh & Easy and others, as well as for existing retail businesses and the city as a whole.

Tesco has a number of Fresh & Easy grocery stores in cities close by El Mirage. Locating the grocery markets close to one another in this manner is what we've described as Tesco's "critical mass" retail store location strategy, placing the stores about 1.5 -to- 2 miles apart in selected regions like the Phoenix Metropolitan/East and West Valley regions.

This retail store "critical mass" strategy is similar to what Walgreens (and Rite Aid) does with its drug stores and Starbucks does with its coffee house/cafes. The idea is to have enough of a "critical mass" of stores close enough together in a market and geographical region as to become sort of the de facto "neighborhood grocer."

As a result of this strategy, it's not surprising that the new Fresh & Easy in El Mirage will be located in the shopping center being developed right near a Walgreen's store. Numerous Fresh & Easy grocery markets are located near Walgreen's and Rite Aid stores in Southern California, Arizona and Nevada.

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