Monday, June 30, 2008

Breaking News: UFCW Union Launches Preemptive Anti-Tesco Fresh & Easy Brochure Distribution Drop on the Eve of Manhattan Beach Store Grand Opening

Pictured above is the Fresh & Easy Neighborhood Market grocery store at 1700 Rosecrans in Manhattan Beach, California, set to open on Wednesday, July 2. Click here to view more photographs of the store. (Photo: Copyright: Fresh & Easy Buzz.)

The United Food and Commercial Workers union (UFCW) has distributed glossy, full-color anti-Tesco Fresh & Easy Neighborhood Market door-hanger brochures on the door steps of residents who live in the neighborhood surrounding the new Fresh & Easy grocery store set to open in a shopping center at 1700 Rosecrans Avenue in Manhattan Beach, (Southern) California on Wednesday, July 2, Fresh & Easy Buzz has learned.

The large, full-color brochures distributed to neighborhood residents on the eve of the Fresh & Easy grocery market's grand opening on Wednesday have this title: "Don't Be Fooled By Fresh & Easy."

The brochures then go on to call Tesco the "Wal-Mart of the United Kingdom," and detail three past incidents involving food safety issues at Tesco stores in the UK, according to the text of the brochure provided to Fresh & Easy Buzz by a resident of that Manhattan Beach neighborhood who received one of the brochures on his doorstep.

These are the same brochures the UFCW has been distributing to neighborhoods where existing Fresh & Easy markets are located in Southern California, the Las Vegas, Nevada Metropolitan region and in Metropolitan Phoenix, Arizona for some months.

The key points of information (as printed) on the brochures are as follows:

Fact: Tesco caught selling expired and spoiled food
Fact: Tesco caught altering sell by date labels
Fact: Tesco caught selling organic food tainted with Pesticides

Below these bullet points it says: for more information go to:

At the bottom of the brochure in small lettering it says: "Produced by Fresh and Easy Facts, a project of the United Food and Commercial Workers."

Under each of the three food safety bullet points above, there's information about incidents at Tesco supermarkets in the UK in which government authorities found out-of-code food products and organic foods labeled as organic that weren't organic, along with other food safety violations. Tesco settled these issues with British authorities in each case.

Tesco's Fresh & Easy Neighborhood Market USA division hasn't been accused by consumers or government authorities of any of these food safety issues in the U.S., to Fresh & Easy Buzz's knowledge.

UFCW times brochures to Fresh & Easy promotional piece

Tesco's Fresh & Easy Neighborhood Market has distributed its own promotional brochures, including its $5-off coupon good for any grocery purchase of $20 or more, to residents who live in the neighborhood surrounding the new Manhattan Beach store, which is something the retailer does prior to each new store it opens.

The UFCW timed its anti-Tesco Fresh & Easy brochures to arrive on the residents doorsteps at about the same time as the Fresh & Easy promotional brochure and coupon arrived, which demonstrates the union is escalating its campaign against non-union Fresh & Easy Neighborhood Market by going head-to-head with the retailer in the timing of the brochure wars.

Fresh & Easy's doorstep brochure also includes an offer for a free reusable canvas tote bag for every purchase of $10 or more consumers make at the new Manhattan Beach store which opens Wednesday.

Below is a summary of the text of the Fresh & Easy Neighborhood Market promotional brochure distributed to residents:

The tag line on the front of the Fresh & Easy brochure says: "We're in your neighborhood with fresh groceries & low prices."

Inside the brochure it says: "We're a neighborhood-sized market that's quick and easy to shop."

*fresh & wholesome foods
*a variety of prepared meals
*all your favorite brands
*unbelievably low prices

Join us for our grand opening in Manhattan Beach, where we'll be donating $1,000 to a local charitable organization. Check presentation and Ribbon Cutting, 10:00 am on July 2

Store Location:
Rosecrans & Aviation
1700 Rosecrans Ave
8 AM - 10PM
Open 7 Days a week

Dueling brochures

The UFCW union's brochure is designed to most strongly attack the first bullet point on the Fresh & Easy promotional brochure, which says: " (We feature) "Fresh & Wholesome Foods." The website address listed on the UFCW brochure goes into more detail on this issue.

Part of the union's strategy with the current brochures, as has been the strategy with the same brochures used in the past, is to suppress the number of neighborhood residents who will attend the Fresh & Easy store grand openings, along with shopping at a Fresh & Easy in general.

By undercutting Fresh & Easy Neighborhood Markets' positioning that it offers "Fresh & Wholesome Foods" using the counter messages from the past food safety situations at Tesco stores in the UK, the UFCW hopes to suppress the number of shoppers who visit the respective Fresh & Easy stores, thus using it as one of its many elements designed to get Tesco and Fresh & Easy senior executives to sit down and meet with union leaders about potential unionization of store-level employees, which is the union's goal.

Thus far, Tesco has refused to meet with UFCW executives.

UFCW to have a presence at store grand opening Wednesday

In addition to its pre-Manhattan Beach Fresh & Easy store grand opening brochure campaign, the UFCW plans to have union representatives present outside of the Fresh & Easy store at 1700 Rosecrans Avenue on Wednesday morning during the store's grand opening event, which will be attended by Fresh & Easy Neighborhood Market CEO Tim Mason. Additionally, since the store is only a few minutes' drive from Fresh & Easy corporate headquarters, it's likely numerous senior executives will attend the grand opening along with Mr. Mason on Wednesday morning from 8am -to 10am.

The union plans to have representatives outside the store handing out the brochures, along with informing shoppers verbally that Fresh & Easy is a non-union food retailer, unlike competitors Vons, Ralphs, Stater Bros., Gelson's, Bristol Farms and most of the major chains and independents in Southern California.

Ironically, Fresh & Easy's main competitor in the Manhattan Beach shopping center is non-union Trader Joe's. In fact, as we've reported previously, a Trader Joe's grocery store is located literally right across the parking lot at 1800 Rosecrans--which the two grocers share--from the Fresh & Easy Neighborhood Market store.

That a Trader Joe's non-union grocery market is located right in the same shopping center, right next to the Fresh & Easy store, demonstrates even further that Tesco and its Fresh & Easy Neighborhood Market USA chain is the primary non-union retailer target for the UFCW in the Western U.S., as we've previously reported.

For example, neighborhood residents haven't received brochures or any other forms of communication informing them Trader Joe's also is a non-union chain like Tesco's Fresh & Easy. Further, although the UFCW has attempted to organize Trader Joe's store-level workers in the past, the union has failed thus far get one of the chain's stores (its employees) to approve a union petition to date.

In fact, for all appearances it seems the UFCW has decided at least for now to not launch a campaign to further attempt to unionize Trader Joe's, which like Fresh & Easy is a foreign-owned grocery chain. Trader Joe's is owned by members of the same German family who own the small-format Aldi discount grocery chain. It's non-union Aldi USA chain has nearly 900 stores in the Midwest, Mid-Atlantic and eastern regions in the U.S.

In addition to Fresh & Easy and Trader Joe's, Whole Foods Market, Inc. and Wal-Mart are two other key non-union food and grocery retailers in the Southern California market. Smaller chains Henry's Farmers Market and Sprouts Farmers Market also are non-union chains in the market.

Long hot summer: The UFCW campaign heats up

As we were the first to report early this year, the UFCW decided to heat up its campaign against Tesco and its Fresh & Easy Neighborhood Market USA grocery chain late last year, with a target for its more aggressive campaign activity beginning in late spring of this year.

In just the last couple months, in addition to stepping up its grass roots campaign against Fresh & Easy in Southern California, Nevada and Arizona, the union has taken its campaign to the UK, first holding a major press conference with participation and support of a member of the British Parliament in London, then attending and demonstrating at the Tesco PLC Annual General Meeting (AGM) on Friday, June 27. The union's UK campaign is named: "The Two Faces of Tesco."

As we reported in this June 26 piece, the UFCW also obtained the support of presumptive Democratic Party Presidential nominee Barack Obama, who sent a letter to Tesco PLC CEO Sir Terry Leahy urging him to have his top Fresh & Easy Neighborhood Market executives meet with the union's leadership to discuss the unionization issue.The recent UFCW press conference garnered lots of publicity in the UK, as did its presence at the AGM on Friday.

The joint Western USA-UK grass-roots and media campaign is designed to bring maximum pressure to bear on Tesco in order to get it to come to the table and meet with the UFCW regarding the potential unionization of Fresh & Easy Neighborhood Market.

Fresh & Easy Buzz has learned the UFCW will be doing more brochure drops prior to other Fresh & Easy stores opening like it's done with the Manhattan Beach location.

Additionally, the union, which represents 1.3 million union grocery clerks in the U.S., Canada and Puerto Rico, plans to increase its picketing at existing Fresh & Easy grocery stores, along with doing more brochure drops in the neighborhoods surrounding those existing stores.

Tesco plans to open at least 30 Fresh & Easy grocery markets in the next 90 days in Southern California, Arizona and Nevada. The UFCW plans to have union representatives at nearly all of those store grand openings to hand out brochures and talk to shoppers about the union issue.

In contrast, there hasn't been any UFCW representative presence of note at recent new store grand openings of Wal-Mart Supercenters, Trader Joe's, Whole Foods Market or other non-union food and grocery retailer-owned supermarkets in Southern California.

Where the UFCW campaign will lead is uncertain at this time. Tesco continues to stick to its position that it's up to store-level employees if they choose to join the union or not, saying it has no problem with the UFCW attempting to organize the workers under the provisions of U.S. labor law.

Tesco also says it doesn't plan on meeting with UFCW executives.

The UFCW sites the fact Tesco stores in the UK are unionized, and says it doesn't understand why this being the case Tesco won't sit down and discuss the issue with U.S. UFCW leaders.

It appears it's going to be a long hot summer in more ways then one in Southern California, Arizona and Nevada.

Southern California Region Market Report: The Coming 'Store Wars' in the High Desert Market; Kroger Co.'s Ralphs Lowers Prices, Ups Value Proposition

From the Fresh & Easy Buzz Editor's Desk: Retail grocery competition is set to seriously heat up in the Southern California high desert market region of Victor Valley.

The market region is a key one for Tesco's Fresh & Easy Neighborhood Market, which has its corporate headquarters and distribution center nearby. The U.S. division of the world's third-largest retailer is adding three new stores in the market in the next few months, with more planned after that.

But Tesco's Fresh & Easy isn't alone in targeting the market for new stores. Employee-owned discount supermarket chain WinCo, which operates big supermarkets featuring low everyday prices, is opening two new stores in the market, after just opening a new store recently in the region.

A SuperTarget, Target's Wal-Mart Supercenter-like combination food, grocery, hard and soft goods format, also is set to open in the high desert region market in Southern California. Target is making a major push into California with its SuperTarget format stores, after having little presence with the format in the nation's largest state since developing the mega-store format some years ago.

Speaking of Wal-Mart, the mega-retailer also is on its way to the market with plans to open five of its big box Supercenters featuring discount food and grocery products in the region. The stores will average about 180,000 square feet, with some being smaller and others exceeding 200,000 square feet in size.

Lastly, not to be outdone, Inland Empire and high desert region food and grocery sales market share leader Stater Bros. supermarkets says it plans to add new stores in the market as well. Stater Bros., which operates about 160 supermarkets in Southern California and is headquartered in the Inland Empire region, is considered to be one of the most price-competitive supermarket operators in Southern California. Stater Bros new stores average 55,000 -to- 70,000 square feet.

Grocery store wars in this Southern California market (Victor Valley) it will be.

The high desert region's daily newspaper, the Daily Press, has a piece this morning which talks about all the new stores from these various players set to open in the market. The piece is reprinted below:

Grocery store wars looming
Expert predicts grocery prices will drop with addition of Wal-Mart Supercenters
June 30, 2008

With the planned introduction of two more WinCos, five Wal-Mart Supercenters, a SuperTarget and three Fresh and Easy Neighborhood Markets - and little population growth predicted - competition between Victor Valley grocery stores is getting intense.

"I suspect that we will see in the upcoming two to three years a very serious grocery store war," said Joseph Brady, High Desert director of the commercial real estate group Colliers International Bradco.

In addition to its locations in Hesperia and Apple Valley, Fresh and Easy recently announced plans to build a store in Victorville at El Evado and Palmdale roads.

WinCo recently opened a store in Apple Valley, where manager Jill Ponder said business has been strong, and the chain has projects under way in both Victorville and Hesperia. The store offers highly competitive prices and bulk foods and is open 24 hours.

With the addition of the Wal-Mart Supercenters, spokesman John Mendez said, High Desert residents can expect to see prices drop at other major grocery stores.

"When you bring a Wal-Mart Supercenter into the equation, we introduce competition into that sphere," Mendez said, describing what has come to be known as the "Wal-Mart effect."

This includes affecting existing chain stores such as Vons, Albertsons and Stater Bros., which has the highest number of local stores, with seven in the Victor Valley.

"We've been serving desert kitchens for 30 years and we don't plan to go anywhere," said Jack Brown, president and CEO of Stater Bros. and a Victorville native himself.

Brown added, "One thing I've learned with the Mojave Desert is that you'd better bring your own water. As far as our competition goes, there's no water to spare."

While there are no current plans to add new Ralph's or Food 4 Less stores to the five existing stores in the Victor Valley, the chain's corporate spokesman Terry O'Neil said the quality, variety and pricing of their food keeps them more than competitive with the newer stores.

Still, O'Neil said, "We always look at what our competitors are doing, whether that means opening new stores, remodeling existing stores or the way we market our merchandise."
Brown said Stater Bros. also plans to continue building new stores as growth dictates.

"One of the great things about America is that the customer will always decide who the winner's going to be," he said.

Brady added, "Hopefully, at the end of the day, the consumer is the one that wins."

Southern California's high desert region market isn't the only part of the geographically diverse and heavily populated Southern California region where competition--especially from a price perspective--is heating up.

The Los Angeles Times is reporting Kroger Co.'s Ralphs supermarket chain, which is neck-to-neck with Safeway Stores, Inc.'s Vons chain for market share dominance in Southern California, is upping its value proposition by lowering the everyday prices on thousands of items, along with initiating other value-based programs. Ralphs currently operates 262 supermarkets in Southern California.

Ralphs also is changing its famous--and hugely successful in the past--double coupon program in Southern California, capping the total amount of savings a shopper can obtain from doubling the manufacturers' coupons in-store.

It seems odd in the current, poor U.S. economy, of which Southern California is currently one of the hardest hit regions in the country, that Ralphs would change the double coupon program while at the same time announcing a new value proposition retail program which includes lowering the prices of thousands of items, along with other everyday and promotional price-oriented programs. After all, coupon use is way up among consumers, and doubling those coupons as in the past with oout capping the shopper total savings would seem to be a strong value proposition as well as competitive tool for the chain in these times.

Therein lies the rub though. Southern California consumers have been increasing their use of manufacturers' coupons dramatically (and their doubling of them at Ralphs) during the current spike in food prices. Word is Ralphs has been hit pretty hard from a margin standpoint from this increase in use and doubling. Therefore, the retailer hopes that by capping the total amount a shopper can save under the program, it will still get a solid bang for the buck in terms of using the double couponing tool as a marketing strategy, whileat the same time also steming its margin hits from it a bit by limiting the overall savings of the most extensive users of the coupons.

Therefore, it appears the retailer (Kroger Co. corporate) decided it was a good time to eliminate the program (the Southern California market is one of the few remaining U.S. markets where double coupon programs still on), and instead adding a multi-pronged new value-based program to the Ralphs' stores.

Kroger Co. just turned in strong sales and profit numbers however for its latest quarter. The retailer's income in the first quarter that ended on May 24 increased by a solid 15%, to $386 million. Quarter sales increased 11% to $23.1 billion. Same store sales for Kroger Co. increased an impressive 5.8% for the first quarter.

Numerous analysts say they believe item price reduction and value propostion programs, similar to the one being initiated at Ralphs, Kroger Co. has initiated in a number of its other U.S. chains or banners played a big part in these solid first quarter sales and profit numbers.

It's important to note this is a Kroger Co. banner-wide and region-wide program overall, with certain tweaks to the value proposition depending on the chain and region. However, many of the elements of the Ralphs' program are specific to the white hot price competition currently going on in the Southern California market.

As we reported in this June 25 piece, Tesco plans to open at least 30 new Fresh & Easy Neighborhood Market small-format, combination basic grocery and fresh foods grocery markets in Southern California, Arizona and Nevada in the next 90 days, beginning on July 2, when the first new Fresh & Easy store opens in Manhattan Beach in Southern California.

About half of those 30 new stores to open in the next three months will be in Southern California. Since Fresh & Easy's positioning is to be a everyday low-price leader on the basic grocery assortment offered in the stores, the addition of these approximately 15 new grocery markets in Southern California, all premised on a value proposition, is only going to heat up the already price competitive environment in the market more so.

Look for more value-oriented programs and item price-lowering by the region's food and grocery retailers throughout the rest of this year. Food price inflation isn't going away soon, which means consumers are only increasingly going to be looking for even better deals, and shopping accordingly.

Further, with more new supermarkets coming online in the market--not just from Tesco's Fresh & Easy but also new Wal-Mart Supercenters, Stater Bros. supermarkets, new Vons' and Ralphs' stores, a couple new SuperTarget mega-stores, and many others--that competition is only going to further intensify throughout the Southern California food and grocery retailing landscape.

Sunday, June 29, 2008

2008 Tesco AGM: Activist Groups Dominate; Shareholder Vote Sends Celeb Chef's Chicken Welfare Resolution to the Manure Pile; Not One Motorcycle Stolen

From the Fresh & Easy Buzz Editor's Desk: Tesco PLC, parent company of Fresh & Easy Neighborhood Market USA, had a sometimes intense and other times surreal Annual General Meeting (AGM) on Friday at the National Motorcycle Museum in Birmingham, UK, as predicted.

Along with such nuts and bolts discussions about sales and profits, the UK and world's ailing economies, growing competition from discounters at home like Wal-Mart's Asda and the German fighting tigers, small-format, no frills discount grocers Aldi and Lidl, numerous shareholder resolutions were discussed and voted on at Friday's AGM.

Tesco PLC shareholders passed every one of those resolutions accept one--celebrity chef and animal rights activist Hugh Fearnley-Whittingstall's chicken welfare shareholder resolution, which also just happend to be the one resolution among the many voted on Friday that received the most attention, focus and publicity in the UK and abroad.

The shaggy-haired and increasingly influential UK chef and activist (pictured at left) raised the fees required of him by Tesco to place his chicken welfare resolution, which if passed would have required Tesco to change its broiler chicken procurement and selling policy in the direction of selling more free-range birds, and less chickens raised in small or battery-type cages.

As was predicted by all (including the chef himself), Hugh Fearnley-Whittingstall's shareholder resolution went down to a resounding defeat, as Tesco shareholders gave his resolution--which would have curtailed sales of Tesco's famous "cheap" ~1.99-p chickens at the UK's number one retailer's stores--the bird, as the headline in the UK's Times Online put it Saturday.

Fearnley-Whittingstall's resolution did receive nearly a 10% yes vote (9.88% to be precise) by Tesco PLC shareholders, which was more than many observors thought it would get, but half of what the celebrity chef andpoultry activist was shooting for, which was a 20% shareholder approval vote. The resolution though did what Fearnley-Whittingstall wanted it to, which was to create tons of publicity over the chicken welfare issue, along with putting Tesco in the spotlight on it since it's the nation's leading food and grocery retailer.

Friday's 2008 Tesco PLC AGM also included a variety of critics and activist groups--ranging from members of the U.S. United Food and Commercial Workers union, who are attempting to get Tesco to sit down for a meeting to discuss unionizing the retailer's Fresh & Easy Neighborhood Market grocery stores in the U.S., to the group War on Want, which is claiming Tesco is paying workers at one of its clothing factories in India sub-minimal wages. Tesco denied that charge at Friday's AGM.

From the activist standpoint at the 2008 AGM--which among the many also included groups claiming Tesco isn't doing enough to curb its carbon output and another that argued Tesco is mistreating live turtles in its stores in China--there was a bit of something for everyone this year. For Tesco PLC, we suspect CEO Sir Terry Leahy and his executive team are rather glad it's over, so they can get on with the job at hand, which is selling food, groceries and non-foods.

And when it comes to retailing (and selling goods), Tesco is doing just that in the UK. At the AGM Friday, CEO Sir Terry Leahy stated Tesco now accounts for ~1-p out of every ~7-p's spent at retail in the nation by consumers. That's up from ~1-p out of every ~8-p's just a couple years ago.

Even though its lost a tiny amount of market share in the UK, Tesco still controls about 31% of the retail market in the nation. By comparison, that's about the same amount of market share the UK's number two (Wal-Mart-owned Asda) and number three 3 (Sainsbury's) retailers hold combined. The remaining about 40% of the retail pie is divided up by a cast of retailers, including number four market share leader Morrisons, Somerfield (which looks to be selling to the Co-op) the Co-op chain, Waitrose, Aldi, Lidl and numerous others.

The issues--animal rights, worker rights, the environment, unionization of Fresh & Easy in the USA--aren't going away for Tesco because the 2008 Annual General Meeting is over however. Far from it. These issues and more, along with the numerous activist groups promoting them, remain central to Tesco's job one, which is selling food, groceries, soft goods and hard goods at its thousands of stores in the UK and elsewhere throughout the world.

As the UK's largest retailer and the world's number three retailer, Tesco is square in the sights of numerous groups at home and internationally. Like the World's largest retailer Us-based Wal-Mart, Inc. Tesco PLC will increasingly be targeted even more frequently and aggressively by various interest groups as it continues to expand globally, as well as at home.

As a result, issues like union organizing of its U.S. Fresh & Easy grocery markets, animal welfare, labor conditions at its overseas factories and others will have to be addressed. For global mega-companies and retailers like Wal-Mart and Tesco, social, labor, environmental and related issues are no longer a mere doted line on the organization chart. Rather, these issues share space with growing the companies' number of stores, sales and profits, right on the CEO's job and mission statement.

The UK press also was a significant presence at Tesco PLC's 2008 AGM, covering it nearly as extensively as they tend to cover a U.S.-UK summit meeting between Britain's Prime Minister and America's President.

Below is a selection of some of the British Press' coverage of Friday's Tesco PLC AGM, which lasted about three -to- four hours at the UK National Motorcycle Museum in Birmingham on Friday afternoon, June 27.

>, Sunday, June 29, 2008: Are we falling out of love with Tesco?
It has been an unprecedented British success story with record profits and global expansion. So why is Tesco under increasing fire over the way it does business? Last week Barack Obama and Hugh Fearnley-Whittingstall were the latest to join the chorus of protest. David Smith and Zoe Wood asks why the store has become the focus for such fierce criticism

>, Saturday, June 28, 2008: River Cottage v Tesco - celebrity chef's chicken crusade hijacks investor meeting
· Fearnley-Whittingstall loses poultry welfare vote · Protests over turtles and treatment of US workers (includes video link.)

Chickens took over the National Motorcycle Museum in Birmingham yesterday as the Hugh Fearnley-Whittingstall circus pulled up at Tesco’s annual meeting for a showdown over poultry welfare.

>Hello Magazine UK, Saturday, June 28, 2008: Animal campaigners Jamie and Hugh to be honoured by RSPCA
Their food has won awards. Now celebrity chefs Jamie Oliver and Hugh Fearnley-Whittingstall are to receive another gong – this time from the RSPCA for their animal welfare work.

>The Sunday Times, Sunday 29, 2008: Hugh Fearnley-Whittingstall in farmyard fight with Tesco over chicken welfare: Hugh Fearnley-Whittingstall, the TV chef, wants chickens to have a decent life before becoming dinner – which led to a farmyard fight with Tesco last Friday. Here’s his diary of his war with the supermarket giant

Friday, June 27, 2008

Wal Mart Has Created A New, More Upscale Supercenter Store Design Prototype; Submitting Plans For the Stores Selectively in U.S.

Wal-Mart Stores, Inc. has created a new supercenter design prototype (pictured above), which the retailer is currently submitting plans for to a select number of cities and counties in the U.S., where it hopes to build and open the first of these new design stores.

The prototype supercenter has a completely different look and feel compared to the retailer's existing battleship blue and grey supercenters.

For example, it's much sleeker in design than Wal-Mart's existing traditional big box design, and is rather upscale in its look and feel.

It's still a big box store in that it will feature all of Wal-Mart's traditional supercenter departments, but it also has numerous new features and elements including: glass windows or large skylights on the roof to let in natural sunlight; numerous green building design elements, which Wal-Mart has been using in its prototype "green" supercenters for some time; and energy-efficient lighting systems that turn on when they detect a shopper, and off when shoppers leave the particular area of the store.

The new design prototype supercenter also features new department titles or names throughout the store, less clutter and in-store signage, curved lines rather than the square edges common in Wal-Mart's traditional supercenters, and multiple earth-tone colors used throughout the store instead of the traditional blue and grey-only standard color scheme.

The new prototype also features a new Wal-Mart logo to be placed on the stores. The new logo has two color schemes we've viewed. The first color scheme (pictured below) has blue lettering with a gold/orange star-burst after "Walmart." The second color scheme has "Walmart" in white letters on an orange background, with a white star-burst after.
Wal-Mart, Inc. plans to officially unveil a new corporate logo next week, something that's being anxiously anticipated by company stakeholders, analysts and others. We believe Wal-Mart's new corporate logo might well be the one above, in one or the other color schemes. You read it (and viewed the logo) here first.

One of the handful of U.S. cities and counties Wal-Mart has submitted plans to for the new supercenter prototype stores is Cordova, in Shelby County, Tennessee, according to a senior Wal-Mart official.

That plan initially called for the new design prototype supercenter to be a whopping 267,000 square-feet, which would have made it Wal-Mart's largest supercenter built to date.

However, the Shelby County Land Use Control Board rejected the Wal-Mart's plan for the mega-supercenter earlier this year because of extensive objections by nearby residents over its size, along with having concerns about potential noise and traffic issues. The store's size also was objected to by the Shelby County Division of Planning and Development, along with it having some serious concerns about increased traffic on existing roads.

Wal-Mart went back to the drawing board, and on July 10 will present a revised plan to the Shelby County Land Use Control Board for a much smaller 151,908 new design prototype supercenter for the same site in Cordova, in Shelby County, according to the senior Wal-Mart official. Cordova is near Memphis. The supercenter site is at Macon and Houston Levee in Cordova. The county has jurisdiction over planning in Cordova.

The design elements of the revised, smaller 151,908 square-foot supercenter are identical to those of the initial 267,000 proposed monster-store, according to the Wal-Mart senior official. The only change is one of scale, he says.

One of the features of the new design prototype supercenter is that it can be used to build stores of various sizes - as big as the 267,000 square-foot model (and bigger if desired) described above, and as small as about 100,000 square feet, or even smaller. This feature allows Wal-Mart to more easily adapt the prototype to specific neighborhoods - urban settings for example - as well as municipal and county political situations and conditions.

The site for the supercenter in Cordova, in Shelby County, Tennessee, is a 26-acre development which includes numerous other commercial buildings besides the proposed supercenter. Wal-Mart has a contract to buy the land on which the proposed unit would sit and will do so if its plans for the 151,908 square foot new design prototype supercenter are approved by the county land use board, according to the senior Wal-Mart official.

If approved at or not to long after the Shelby County Land Use Control Board meeting on July 10, when Wal-Mart officials will present the revised supercenter plan, we're told by the Wal-Mart senior official the Tennessee new design prototype likely will be the first of the new design Superstores to be built and opened in the U.S.

It's far from certain the revised supercenter will gain approval though. There remains much opposition to it among various citizens and groups in the area, although they've yet to see Wal-Mart's plans for the smaller version supercenter.

The supercenter's opponents' primary concerns are traffic and noise. The county also has concerns because it says it will have to spend a considerable amount of money on road and intersection improvements because of the heavy volume of automobile traffic the new supercenter will generate in the area.

What's significant though, at least for this piece, is that Wal-Mart has created this new age design supercenter prototype. You can bet if this particular new supercenter doesn't get built in this particular part of Tennessee, one of the new design supercenters will be built soon elsewhere in the U.S.

As we wrote about in this April 27, 2008 piece [Going Smaller: Wal-Mart Might have Found A Solution or Two to Much of the Opposition to its Mega-Supercenter Stores in the USA] Wal-Mart has become flexible with its supercenter size recently, when historically it's been rigid over tweaking the size of the mega-stores. For example, the retailer is converting a 105,000 square- foot (about 75,00-80,000 square-feet of selling space) vacant big box retail building in Modesto, California into a "hybrid" supercenter, which will be the first such supercenter for the retailer in the U.S.

Additionally, Wal-Mart is converting a number of its Wal-Mart discount format stores in Southern California's Orange County into supercenters, adding about 30,000 -to- 75,000 square feet to them (the amount depends on the store), which will be used for food and grocery (including fresh foods) product merchandising.

These discount format-to-supercenter "hybrids" will be much smaller than the average 185,000 square-foot Wal-Mart supercenter, but will allow for a full selection of fresh foods and grocery products to be sold in them, which is a top priority for the mega-retailer, since food and grocery now comprise 41% of Wal-Mart's overall sales, according to the most recent category sales numbers from the retailer.

Despite being the world's largest corporation and retailer, Wal-Mart isn't letting that prevent it from innovating. In fact, when it comes to retail format innovation, Wal-Mart is currently innovating more so than it's done at any time in its history.

In addition to the multi-format supercenter concepts mentioned above, along with Wal-Mart's "green Wal-Mart supercenter prototype, the mega-retailer is set to open its new Marketside small-format grocery stores, or what we call "Small-Mart's," in four cities in the Phoenix, Arizona Metropolitan region this fall.

The Marketside "Small-Marts," at about 15,000 square feet, are about the size of the meat department in one of the retailer's 200,000 square-foot supercenters.

The stores are being positioned by Wal-Mart as small community grocery stores with a focus on service. The product merchandising focus in the Marketside stores will be on store-made fresh, prepared foods, fresh produce and meats, and basic and specialty grocery products, including some new store brands to be introduced by Wal-Mart just for the Marketside grocery stores.

Additionally, Fresh & Easy Buzz has learned, Wal-Mart plans to convert more former big box stores into smaller supercenters like it's doing in Modesto, California, in other selected cities, including urban markets.

Lastly on the format innovation front, we've learned Wal-Mart is working on some new design changes, tweaks and upgrades to its 45,000 square foot Neighborhood Market supermarkets.

The retailer hasn't done much in terms of expanding its Neighborhood Market supermarket's store count since it created the format and opened the first store in 1998. However, in the last couple years its opened a higher than historic annual average number of the supermarkets, and plans on continuing to do so for the next few years in select regions of the U.S.

For the last few years, Wal-Mart has been customizing the design of its supercenters in a few regions of the U.S., where doing so has helped it to gain approval for the stores. For example, in Colorado, Wal-Mart has built two supercenters that blend in with the respective communities' mountain setting, using earth-tone colors and brick on the store facades rather than the traditional blue and grey-colored materials it normally uses, as well as adding features like bicycle paths around the store, and even a bicycle shop inside one of the Colorado stores.

It appears to us the new design prototype supercenter is an evolution of that customization as well as a "mass customization" of many elements of the handful of "green" Wal-Mart supercenters the retailer has opened over the last few years in the U.S.

The flexibility of the new design prototype supercenter - to go from say 267,000 square-feet -to- 100,000 square-feet for example - also has an element of "mass customization" in it, which should serve Wal-Mart well.

The fact the new design prototype supercenter is much more upscale and attractive than the basic format supercenter (which wouldn't take much) seems to send a signal from the brawny big box retailer from Bentonville it believes its low and value price positioning won't be hurt by housing such merchandising - the key to the retailer's success - in a more sleek, upscale and considerably more attractive retail box - a box with design lines even.

As far as we're aware, Wal-Mart doesn't intend at this point in time to completely do away with its standard Wal-Mart supercenter battleship blue and grey big box. Although, based on information from our sources, we suspect eventually doing so will be the case for the mega-retailer from Arkansas, especially if the new logo "Walmart" logo it unveils is the one we have pictured in this story., which we believe to be the case.

Thursday, June 26, 2008

Tesco 2008 AGM: Barack Obama Sends Second Letter to Tesco CEO Requesting the Company Meet With U.S. UFCW Union Leaders About Fresh & Easy

U.S. Democratic Party nominee-apparent for President and United States Senator Barack Obama has written a second letter to Tesco PLC CEO Sir Terry Leahy on the eve of Tesco's 2008 Annual General Meeting (AGM), asking the global retail company chief to advise his executives at Fresh & Easy Neighborhood Market USA to engage and meet with leaders of the United Food and Commercial Workers (UFCW) union in order to discuss the union's desire to organize store-level workers at the current 61 Fresh & Easy grocery stores in California, Nevada and Arizona.

The UFCW represents 1.3 million retail clerks at union supermarkets in the U.S., Canada and Puerto Rico. The supermarket chains include the top three in the U.S.: Kroger Co., SuperValu, Inc. and Safeway Stores, Inc., along with numerous others.

In the letter to Tesco CEO Leahy, Senator Obama writes: "I again urge you to reconsider your policy of non-engagement in the United States and advise your executives at Fresh & Easy to meet with the UFCW. I am aware of Tesco's reputation in Britain as a partner to unions. I would hope that you would bring those values to your work in America."

The "again" Senator Obama is referring to in his letter to Mr. Leahy is in regard to the fact this is the second letter to Tesco corporate and its Fresh & Easy Neighborhood Market USA division the Democratic nominee for President has written about the union issue and Fresh & Easy.

As we reported in this February 8 piece, "Leading Democratic Candidate for President Barack Obama Joins Group in Asking Tesco's Fresh & Easy to Put More Stores in Underserved Neighborhoods," Senator Obama wrote both CEO Leahy and Tim Mason, CEO of Fresh & Easy Neighborhood Market USA, urging them to locate more Fresh & Easy grocery stores in underserved or "food desert" neighborhoods as the retailer has said it will, along with urging the executives to meet with UFCW leaders.

At the time, Senator Obama was still struggling against multiple Democratic Party candidates, with Senator Hillary Clinton thought to be the favorite, for the Democratic party Presidential nomination.

The UFCW originally supported former U.S. Senator John Edwards to be the Democrat's 2008 nominee. Mr. Edwards was Senator John Kerry's Vice Presidential running mate in 2004. They were defeated by the George W. Bush-Dick Cheney Republican ticket.

However, when Mr. Edwards dropped out of the race earlier this year, the UFCW put its support behind Senator Obama, helping him with significant fund raising and grass roots support to defeat Senator Clinton for the Democratic Party nomination, which he will officially be given at the Democratic party convention later this summer.

As we've reported on Fresh & Easy Buzz, to date Tesco has refused to meet with UFCW executives to discuss the potential unionization of Fresh & Easy Neighborhood Market workers in the U.S. U.S. labor laws don't require a company to do so.

The second letter from Senator Obama to Tesco, asking CEO Leahy to have his senior executives meet with UFCW representatives, comes on the eve of Tesco's Annual General Meeting (AGM), which is tomorrow in the UK.

As we reported in this June 22 piece, "Vocal Cast of Critics and Advocacy Groups to Attend Tesco's Annual General Meeting On Friday, June 27," Joseph Hanson, the Washington, D.C-based president of the UFCW union, plans on attending Tesco's AGM tomorrow at the Motorcycle Museum in Birmingham, UK.

Commenting on Senator Obama's letter to Tesco CEO Sir Terry Leahy, Mr. Hanson says: "Senator Obama's support for our campaign is welcome and timely. Tesco's UK investors should now be asking Sir Terry Leahy at the company's AGM whether it is really in Tesco's long-term business interests to continue its policy of non-engagement with union and community groups in America.

"Tesco's business conduct in America is on the radar of the man who could be the next president. It really is time for investors to start asking Tesco's chief executive hard questions about the company's business judgments."

As we reported in this June 4 piece, "News and Analysis: UFCW Union Takes its Tesco Union Organizing Campaign Across the Pond to the United Kingdom Beginning Today," The UFCW launched a public relations campaign in the UK on June 4 designed to bring Tesco and its Fresh & Easy Neighborhood Market USA division to the table to discuss the union issue just ahead of tomorrow's AGM, which union president Hanson will attend, along with numerous aids and supporters.

The UFCW's UK campaign, Senator Obama's second letter to CEO Leahy, the planned press conference and demonstration at tomorrow's annual meeting, and the union's campaign back home in the U.S. since November of last year, all are designed and coordinated it would appear to bring maximum pressure on Tesco agree to sit down at the table and talk with UFCW leaders.

Thus far though Tesco has kept to the same position and statement it's had all along regarding the union issue, which is that the UFCW is free to organize Fresh & Easy Neighborhood Market store-level employees within the bounds of U.S. labor laws, and that it is up to the store employees as to whether they want to organize a petition drive and ultimately join the union.

In a recent statement a Tesco spokesperson added: "We are a good employer, we are paying good wages, offering good benefits. It is down to individuals (at Fresh & Easy Neighborhood Market) if they want to join (the union) but the signs are there is very little interest among our staff."

The UFCW, led by union president Hanson, will be outside Tesco's annual meeting tomorrow in full force. A press conference is planned, which may feature union supermarket clerks from unionized U.S. supermarkets, along with one or more British politicians who are supporting the UFCW, as well as others.

We have it on good source that Tesco CEO Sir Terry Leahy, Fresh & Easy Neighborhood Market CEO Tim Mason and other company senior executives have been taken by surprise at how aggressive the UFCW has been in terms of Tesco's Fresh & Easy USA.

However, good research (like just asking two or three industry people over lunch), which the chain claims it conducted for nearly two years before opening the first Fresh & Easy grocery market, would have shown them that in the Western USA, nearly every major supermarket chain and most medium -to- larger independent food and grocery retailers are union except for Wal-Mart (which has very little food retailing presence in California for example), Trader Joe's (which isn't a major market share player), Whole Foods Market, Inc. (which despite it huge success still remains a minor market share food retailer), and a handful of other niche players.

All the top market share chains in California, Nevada and Arizona--Safeway (Safeway and Vons banners), Kroger (Ralphs and Foods Co), SuperValu (Albertsons, Bristol Farms), Stater Bros., Bashas, Save Mart, Raleys and many others are unionized supermarkets.

Speaking of research and Whole Foods Market, remember Senator Obama's now somewhat famous "Arugula moment" (the fancy salad green) comment during the Democratic primary campaign just a couple months ago, in which he said something to the effect of "have you seen how much the price of Arugula has gone up at Whole Foods," during a speech and talk in front of an audience about soaring food prices in the U.S.?

His opponents, all now defeated by him, jumped all over the now Democratic Party Nominee for President for that statement, implying he was elitist for even mentioning Arugula in a crown of middle-income (and higher income) voters and consumers who perhaps they suggested were more likely struggling to pay for a head of iceberg lettuce rather than Arugula. Although we're sure there were many in the crowd who could afford Arugula without taking much of a financial hit at all.

Well, were told Senator Obama knew well the soaring cost of Arugula at Whole Foods because back home in Chicago (where Mrs. Obama does most of the grocery shopping), and when alone in Washington D.C., he likes shopping at non-union Whole Foods from time-to-time (although that's not likely been the case since he started running for President), as we do, although we also shop at and support union stores and employees as we're sure he does as well.

After years of trying to organize Whole Foods Market store workers unsuccessfully, the UFCW has to all appearances given up on the cause, as it seems to have done with Wal-Mart and Trader Joe's.

Perhaps in part that's why Tesco and its Fresh & Easy Neighborhood Market USA chain is square in the union's sights; it sees an opportunity to focus primarily on one non-union food retailer early in its development in the U.S. In contrast, the union waited for years and years after the respective chains were established before attempting any serious organizing of Wal-Mart, Whole Foods Market and Trader Joe's workers.

For example, Whole Foods Market, Inc. CEO John Mackey, who describes himself as a combination Libertarian and social liberal with a free-enterprise entrepreneurial bent, has stated for years he has no intention of sitting down with UFCW union executives to discuss unionizing Whole Foods stores. In fact, whether correct or exagerated, Mackey claims unionizing the Whole Foods stores would ruin the company's culture and the "team" approach to running the stores he says is the major key to the retailer's success.

In the case of Whole Foods and Trader Joe's, the store level employees have made it pretty clear they don't want to belong to the union. With Wal-Mart it's a much more complex issue which we don't have time to go into here.

On the other hand, all of the unionized supermarket chains mentioned above, negotiated the latest round of contracts for their respective Western U.S. division operations with the UFCW in record time, and never even intimated they would like to be non-union, generally saying the professionalism and status of their unionized store clerks, unlike John Mackey's view, is a major contributor to their respective succeess as food and grocery retailers.

Finding itself with the UFCW, as well as the possible 2009 President of the United States, focusing on it like a laser beam, the question is what will Tesco do?

Will it hold firm like Whole Foods Market, Inc. and Trader Joe's have done? Will it fight unionization of its Fresh & Easy Neighborhood Market USA stores using nearly any and every means possible like Wal-Mart has done? Or will it decide to sit down with the UFCW union's leaders and begin a conversation as the possible next President of the United States is asking the company to do?

Perhaps tomorrow's AGM will shed some light on which or any of those decisions Tesco ultimately decides to make, depending on if a significant number of substantial Tesco PLC shareholders discuss and offer strong points of view one way or the other on the issue.

2008 Tesco AGM: Sir Terry TV: View an April Corporate-Produced Video Interview With CEO Sir Terry Leahy About Tesco's Last Quarter Financial Results

From the Fresh & Easy Buzz Editor's Desk: Tesco PLC, parent company of Fresh & Easy Neighborhood Market USA, holds its Annual General Meeting (AGM) tomorrow at the UK Motorcycle Museum in Birmingham.

Tesco PLC reported its most recent to date financial results on April 15 of this year.

On the eve of the 2008 AGM, you can view a corporate video interview (not conducted by an independent journalist) with Tesco PLC chief executive Sir Terry Leahy about the group, across all retailing formats and categories, as well as including comments on its UK and international retailing business, including Fresh & Easy Neighborhood Market USA.

Highlights of the video interview (there's also a link here for a podcast and written transcript of the interview) include:

Results & strategy
US - Fresh & Easy
Retailing services
Capex & property
Tesco in the community
Current trading and outlook

Click here to view the April 15, 2008 corporate video interview with Tesco PLC CEO Sir Terry Leahy, as well as having access to the podcast and interview written transcript links.

Tesco 2008 AGM: Charges of Tesco's Exploiting Workers at Indian Factory Heat Up On the Eve of Corporate Annual General Meeting

From the Fresh & Easy Buzz Editor's Desk: United Kingdom-based Tesco PLC's Annual General Meeting (AGM) is tomorrow, Friday, June 27. Tesco owns Fresh & Easy Neighborhood Market in the USA.

As we wrote about in this piece on June 22, "Vocal Cast of Critics and Advocacy Groups to Attend Tesco's Annual General Meeting On Friday, June 27," numerous critics of Tesco PLC's corporate policies, as well as a variety of advocacy groups, are preparing to make their voices heard both inside and outside this year's AGM, which is being held at the United Kingdom's Motorcycle Museum in Birmingham this year.

In our piece titled and linked above (or click here to read it), we reported one of the advocacy groups attending the Tesco AGM will be the non-profit organization War on Want, which says it will have a representative from one of Tesco's factories in India at the annual meeting tomorrow to deliver what it claims is a less than positive report about worker conditions at that factory.

Today, Britain's Evening Standard newspaper is reporting on an investigation that claims Tesco PLC, the United Kingdom's largest and the world's third-largest retailer, is exploiting workers at the Indian factory mentioned above.

Below is the headline and opening paragraphs of the report in today's Evening Standard:

Tesco accused of using 'slave labour'
Robert Mendick and Jonathan Prynn, Evening Standard
26 June 2008

Tesco is accused today of exploiting workers who are paid an average 16p an hour.

A damaging investigation alleges that Britain's biggest retailer - which made a £2.8bn profit last year - is being supplied by an Indian factory where textile workers earn, on average, £8.75 for a 54-hour, six-day week. The lowest paid receive less than £7 a week.

A researcher flown in from India will present the figures at the retail giant's annual shareholders' meeting tomorrow in an attempt to maximise Tesco's embarrassment.

Click here to read the entire Evening Standard story. You also can read the press release distributed today by the non-profit anti-poverty group War on Want here.

Phoenix, Arizona Metro Market Report: More Competition in an Already Hot Market as Pro's Ranch Markets Plans Two New Stores in Phoenix Metro Market

Studies conducted by U.S. organizations such as the Mexican-American Grocers' Association, Food Marketing Institute, the UCLA School of Business and others show fresh produce to be one of the top reasons Hispanic consumers give for choosing a supermarket. Variety, abundance (bulk rather than pre-packaged) and quality are the three key attributes most given by Latino consumers in these studies when it comes to the fresh produce category. Price is important but not at the top of the list. Value, top quality and super-fresh produce at a reasonable price, is what's most important. This is evidenced by the fact Hispanic consumers spend a higher proportion of their incomes on food than all other ethnic groups in the U.S. Above is Pro's Ranch markets famous "Ranchie the Bull" mascot in a store produce department with a produce clerk.

Southern, California-based multi store independent grocer Pro's Ranch Markets plans to open two new stores in the Phoenix, Arizona Metropolitan region, Fresh & Easy Buzz has learned.

Pro's Ranch Markets, which is owned by Southern California grocery retailing veteran Mike Provenzano Sr. and his sons Michael, Steve, Rick and Jeff, currently has four of its large, discount supermarkets, which put an emphasis on Hispanic food retailing, in the Phoenix region. The two new stores will bring that total to six of the supermarkets in the market, which average 55,000 -to- about 80,000 square feet in size.

The growing independent food retailer today is opening its first supermarket, a 79,000 square foot discount powerhouse with a special emphasis on Latino products along with basic supermarket offerings, in Albuquerque, New Mexico, its first location in that state.

The New Mexico store is the independent retailer's tenth location. along with the just-opened New Mexico store and the four units in the Phoenix, Arizona region, there are four Pro's Ranch Markets in the Central Valley, California cities of Bakersfield (2), Delano and Arvin, and a store in El Paso, Texas.

When opened, the two new Phoenix area stores will bring the growing multi-store independent grocer's total store count to 12.

Mike Provenzano Sr. says the grocer plans to open additional stores in Arizona and New Mexico, as well as in California, and perhaps in other western states.

The Pro's Ranch Markets stores put a major emphasis on merchandising produce and fresh meats, with huge departments for each category, and selling the items as cheap as possible.

The stores have numerous service departments; particularly a number with a Hispanic merchandising flair. These include: an in-store bakeries which features huge tortilla machines that churn out homemade tortillas throughout the day and evening, as well as offering in-store baked Latino breads and pastries; in store seafood on fresh ice departments which include a seafood taco bar; fresh salsa bars; both self-service and old-fashion service meat departments; in-store fresh, prepared foods departments; and homemade specialties like in-store made chorizo and other Latino favorites.

The stores' produce departments carry all basic fresh fruits and vegetables, along with scores of Hispanic specialty produce items, nearly all merchandised in bulk and piled high farmers' market style.

The markets carry a complete selection of tradition foods, groceries and nonfoods as well. Although the supermarkets are geared from a merchandising aspect to Hispanic or Latino shoppers, their overall positioning also encourages shoppers of all ethnic backgrounds to shop the stores for groceries and fresh foods at discount prices.

About 40% of Arizona's population is comprises of Hispanics or Latino's, which makes "Hispanic-oriented supermarkets" actual mainstream rather than specialty since nearly half of the state's entire population is of that ethnicity.

As a result of this fact, food retailers who focus their merchandising and positioning to Hispanic consumers in Arizona are equal competition for general food and grocery retailers like Safeway, Bashas, Frys, Wal-Mart, Tesco's Fresh & Easy and the other food retailing chains and independents in the market.

Tesco currently has about 20 of its 61 small-format Fresh & Easy Neighborhood Market combination basic grocery and fresh foods markets in the Phoenix Metropolitan/East and West Valley regions of Arizona, with many more new stores set to open in the market in the next 90 days.

As we write about regularly in Fresh & Easy Buzz, Arizona, and especially the Phoenix Metropolitan market, is arguably the most competitive food and grocery retailing market in the U.S. at present. That market keeps getting even more competitive as food retailers large and small continue to add new stores in the area, heating up even further what alrady is a white hot competitive food and grocery retailing market.

Wednesday, June 25, 2008

Fresh & Easy Buzz Analysis: Tesco Plans to Open At Least 30 New Fresh & Easy Stores Over Next 90 Days Beginning On July 2

Tesco plans to open between 30 -to- 37 new Fresh & Easy Neighborhood Market grocery stores over a 90-day period beginning on July 2 when it opens its first new store, in Manhattan Beach, California (pictured above), since taking a three month new store opening pause which began in Early April, Fresh & Easy Buzz estimates based on information the retailer published in this press release yesterday.

Tesco currently has 61 of its small-format (10,000 -to- 13,000 square foot) combination basic grocery and fresh foods grocery markets open in Southern California, the Phoenix, Arizona Metropolitan region, and in the Las Vegas, Nevada Metropolitan market area.

In the press release, Tesco announced it will hire an additional 750 new employees over the next 90 days for the new Fresh & Easy Neighborhood Market stores it plans to open during this time period. Most of those new employees will be at store-level.

Additionally, in the press release, Tesco says it employs an average of 25 workers per store.

[Note: In all its previous press releases, Tesco's Fresh & Easy Neighborhood Market has said it employs and average of 20 workers per-store. We assume the average is 20 -to- 25, and the retailer has decided to use 25 rather than 20 now. If not, it would then appear Fresh & Easy Neighborhood Market has either revised the average, or has recently increased the number of employees it has on a per-store basis. You will see below why we mention this. It's not to knit-pick.]

Based on this data in the press release--hiring 750 employees over the next 90 days; the majority of which we know to be store-level hires from our sources--it's a good estimation that Tesco will be opening about 30 -to- 37 new Fresh & Easy stores beginning on July 2 and for the 90-day period following that.

Here's the math: 25 employees per-store on average; hiring 750 new employees over the next 90 days; equals 30 new stores during that three month period. At 20 employees average per-store, it works out to about 37 new stores. Therefore, we estimate Tesco will open between 30 -to- 37 new Fresh & Easy grocery stores over the next 90-days beginning on July 2.

This data confirms what Fresh & Easy Buzz has been reporting since we were one of the first publications to report on March 29 in this piece, "Tesco's Fresh & Easy 'Taking a Pause' From New Store Openings: A Full Review In the Works," that Tesco's Fresh & Easy Neighborhood Market USA was taking a three month new store opening pause from early April until the end of June.

What we've been reporting since then is that beginning in early July, Tesco would resume its rapid new store opening pace with Fresh & Easy at roughly the same frenetic clip it's been opening the stores at since November, 2007, which has been the opening of a new Fresh & Easy grocery store about every two and one-half -to- three days.

Numerous publications have written during the current three month new store opening pause that it was likely Tesco would open fewer stores once the break ended. However, Fresh & Easy Buzz has stated all along that would not be the case.

Rather, we've said, as the data from yesterday's press release and our analysis indicates, Tesco would start its rapid-fire new store opening machine back up once the three month pause ended and resume opening new Fresh & Easy stores once again on the average of about one new store every two and one-half -to- three days, which opening 30 -to- 37 new stores over the next 90 days in fact equates to. I other words, the pipeline is full and ready to be opened.

With a current store count of 61 Fresh & Easy stores, opening about 30 -to- 37 new stores over the next three months will give Tesco 91 or slightly more Fresh & Easy stores by early fall, 2008, with about three more months to go in the year still remaining to open more.

Initially, Tesco said it planned to have 200 Fresh & Easy stores open and operating in the Western USA by the end of 2008. Earlier this year the company revised that number downward, saying it would have more like 150 stores opened by the end of 2008.

In large part, Tesco revised that number down from 200 to 150 stores because initially it planned to start opening the nearly 50 Fresh & Easy stores Fresh & Easy Buzz has identified thus far that will open in the new markets of Bakersfield, Fresno, the Sacramento Metropolitan region and the San Francisco Bay Area, this year. However, the retailer has said those stores won't start opening until early 2009.

Tesco has confirmed 19 stores in the Sacramento region and 18 stores in the Bay Area. Fresh & Easy Buzz has reported on five stores to open in Bakersfield and five in Fresno, as well as three new stores (in addition to the 18 already confirmed) we've discovered in the Bay Area: two in the city of Vallejo and one in the city of Pacifica.

Even if Tesco has 100 Fresh & Easy stores open by say October 1, that would still leave 50 new stores to be opened between October 1 and December 31, in order to achieve the 150 stores open by the end of 2008 estimate.

In our analysis that's not likely to happen for a couple reasons.

First, it would mean opening a new store nearly every day, which we don't think Fresh & Easy plans to do; one every three days is hectic enough.

Second, October -to- December is the holiday shopping season--Thanksgiving and Christmas--which is the busiest time of the year in food and grocery retailing, making it difficult if not near- impossible to open that many, or close to that many, stores during the season.

We do believe it possible Tesco could open an additional 30 new stores during those remaining months of 2008 however, which would give the retailer in the neighborhood of 130 stores opened by the end of the year, which is close enough to 150 for even the most ambitious food retailer or pickiest analyst.

As we've mentioned numerous times on Fresh & Easy Buzz (which includes on its team more than one U.S. food retailing historian), we can't recall another grocery retailer in modern food retailing history that's embarked on as rapid of a new store opening blitz as Tesco has with its Fresh & Easy Neighborhood Market USA venture, especially in a concentrated market region like the Western U.S. In fact, in only three Western USA states--California, Arizona and Nevada thus far--for that matter, limiting the geographic region even more.

Of course, doing so is key to Tesco's Fresh & Easy retail marketing and positioning strategy for the small-format Fresh & Easy grocery stores. It's what we call a "critical mass" store opening and location strategy: opening up as many stores within two miles or so of each other in selected markets as fast as possible with the goal of becoming in a sense the de facto neighborhood grocer in those cities and neighborhoods.

The question is: Has the three month new store opening pause given Tesco's Fresh & Easy Neighborhood Market enough time to improve and optimize its marketing, merchandising and operations in its stores so as to better compete for primary shoppers along with creating the means to generate needed new consumer trial?

Our analysis is no it hasn't. However, Tesco is viewing Fresh & Easy as a work in progress. Therefore "getting it right" right now isn't as important as getting more stores open "right now" is for the retailer. Remember, "critical mass" is crucial to Fresh & Easy's overall strategy.

Of course so are sales, margins and profits, as they must be to any food retailing chain. But the logic within Tesco in the main is those will come later.

Also what will have to come later in our analysis is a re-evaluation of many of the Fresh & Easy Neighborhood Market store locations in all three current market regions--Southern California, Las Vegas and Phoenix, Arizona Metro market.

Most of these Fresh & Easy stores are located in retail store buildings formerly owned and operated by supermarket chains like Albertsons and Ralph's, and in former Rite Aid drug stores, as well as in various former big box retail stores of various retail types.

These various stores were closed by their respective retail operators for various reasons; among them being sales underperformance in the locations.

Fresh & Easy, being a different format than say the Albertsons and Ralphs stores could eventually perform well in these locations. Additionally, in those former non food retailing locations, a food retailer might succeed where a non-food retailer failed. However, we know many cases in which Fresh & Easy stores in these locations aren't currently performing very well, particularly in the Las Vegas market, but in the other two markets as well.

That's not Tesco's primary concern at present however. Rather, "critical mass" is the focus, which is why starting once again on July 2, with the opening of the new Fresh & Easy grocery store in Manhattan Beach in Southern, California, followed by one new Fresh & Easy grocery market opening about every three days for the 90-days following that, Tesco will once again be on a Fresh & Easy Neighborhood Market new store opening tear.

Tuesday, June 24, 2008

Competitor News: Wal Mart Launches New 'Marketside' Website; Announces First Four Stores in Arizona to Open in the Fall Rather Than Summer

Wal-Mart has launched a new, colorful website for its Marketside small-format (15,000 -to- 20,000 square foot) community grocery stores and announced today its first four combination grocery and fresh foods stores in the Phoenix Metropolitan/East Valley region cities of Gilbert, Mesa, Chandler and Tempe will open in the fall rather than this summer as the retailer originally had planned.

View the new Wal-Mart Marketside website here.

Fresh & Easy Buzz first reported last year Wal-Mart would open the first four of the new Marketside format stores in these Arizona cities. Wal-Mart confirmed this two months ago when it created the website where it listed job postings and began excepting online applications for store manager and assistant manager positions at the four Marketside stores in these four Arizona cities.

Wal-Mart originally planned to open at least one or more of the four stores this summer, according to our sources. In fact, it was hoped the first store would open before August 4, when David Wild, Wal-Mart's senior vice president for business development and the head of the Marketside format development team, leaves the company to become CEO of Halfords, a United Kingdom-based car part and bicycle retailer.

Based on Wal-Mart's announcement today, that's not going to be the case. Wal-Mart offered no specific month or date this fall when the first store would open; just that they will open in the fall of 2008.

As we've reported previously, Wal-Mart's Marketside will have its own offices in Tempe, Arizona, rather than being operated out of Wal-Mart corporate headquarters in Bentonville, Arkansas. Starting on June 30, Marketside will open a recruiting office to hire for the Arizona stores at this address: 800 E. Southern AvenueTempe, AZ 85282. Marketside has already been accepting applications and conducting interviews for positions. But the opening of this recruiting office will kick the process into high gear, according to our sources.

The new Marketside website positions the stores as we've been reporting for months now, as small "community grocery stores" with a focus on fresh foods and basic grocery items. In fact, on the new website, Wal-Mart describes Marketside this way "Marketside is a small community grocery store owned by Wal-Mart Stores, Inc."

Interestingly, Tesco originally planned to name its Fresh & Easy USA division and stores, Fresh & Easy Community Market, but changed it to Fresh & Easy Neighborhood Market after the retailer said research with focus groups demonstrated a preference for "Neighborhood" over "Community" in the name. [This has been publicly stated by both Tesco PLC CEO Terry Leahy and Tesco Fresh & Easy Neighborhood market CEO Tim Mason. Tesco makes no mention on the Fresh & Easy website that Fresh & Easy Neighborhood Market is owned by Tesco, like Wal-Mart does mention about Marketside being owned by Wal-Mart on the new Marketside website.]

Ironically, Wal-Mart's original small-format supermarket (at least small-format for Wal-Mart at the time at 45,000 square feet), which it continues to expand in terms of store count, is called Wal-Mart Neighborhood Market. Wal-Mart built its first Wal-Mart Neighborhood Market store in 1998, which was the last time it launched a new format until now with Marketside.

The Marketside website plays up the stores' and its workers "passion" for food, especially fresh foods, with pictures and text about food and Marketside's commitment to offering "the freshest food available in-store and the best customer service."

As we've reported, the Marketside stores will have in-store kitchens where the fresh food items will be prepared, along with a seating area that will sit about 10 customers at any one given time. Take-out is expected to be the big draw for the fresh in-store, prepared foods in the stores however.

Tesco's Fresh & Easy Neighborhood Market makes its fresh, prepared foods at a central kitchen in Southern California and ships the items to its current 61 stores in Southern California, Nevada and Arizona.

The new website also makes an effort to reinforce the message that Marketside prices will be value-oriented, rather than having high prices like some publications have been suggesting recently in various stories using the angle that Wal-Mart plans to open upscale and high-priced small-format stores.

Wal-Mart's positioning for Marketside--fresh, quality foods at affordabel prices--is clear from reading this key introductory statement on the website reprinted below:

Welcome to Marketside

"Marketside provides fresh, innovative answers to the daily question, "What's for dinner tonight?" Our unique product and shopping experience will change the way you shop for — and think about — fresh food, and our prices will keep you coming back."

It's clear Wal-Mart is positioning Marketside as a small, community grocery store as it calls it, featuring basic groceries and fresh foods with a clear value proposition.

Our sources have told us all along, and we have reported, that the Marketside stores will be slightly upscale but also will offer value pricing, which is Wal-Mart's stock in trade across all of its formats.

The new Marketside website also has photographs of the uniforms (burnt red-color grocery aprons with Marketside in gold lettering) store-level employees will wear. The uniforms, which are in the same colors used in the website and in other Marketside design and marketing elements and materials (hint: look for these to be the design colors used in and outside the stores) are designed to depict "freshness," which is the key marketing and positioning element for Marketside.

The website also features a sign up area here called "Stay in the Know," where consumers can sign up to receive a Marketside newsletter on a regular basis as well as receiving email up dates about Marketside.

The new Marketside website incorporates Wal-Mart's earlier job listing-only website (, including having listings in its "Join Our Team" section for the new store-level Pantry Controller and Meal Specialist positions Fresh & Easy Buzz was the first publication to report on in this piece yesterday, along with the store manager and assistant manager positions.

As Fresh & Easy Buzz reported in this piece on May 18, "Wal-Mart Looking For Sites in California For it's Small-Format 'Marketside' Grocery Stores," Wal-Mart is looking throughout California for future Marketside store sites.

In addition, in this June 6 piece, "Is A Wal-Mart 'Marketside' Small-Format Grocery and Fresh Foods Store Coming to Reno, Nevada?,"we reported Wal-Mart is interested in locating a Marketside store in this new and upcoming commercial development in Reno, Nevada.

In this piece, "Wal-Mart USA Chief Eduardo Castro-Wright Confirms Fresh & Easy Buzz Reportage on 'Marketside,' Adds Information From the WM Corporate Side," from our coverage of Wal-Mart's annual meeting on June 6, Wal-Mart CEO Eduardo Castro-Wright himself confirmed Marketside would have a value pricing proposition along with its more upscale fresh foods focus and basic grocery offerings.

It's obvious to Fresh & Easy Buzz that Wal-Mart plans to use Marketside as part of its three format--Supercenters, 45,000 square foot Neighborhood Market's and now Marketside--food and grocery retailing strategy in Arizona to become the market share leader in the state.

It's also obvious that although doing some things differently than Tesco with its Fresh & Easy, Wal-Mart plans to use Marketside, along with its other formats, to attempt to strike a serious competitive blow to the start up Fresh & Easy chain.

It looks like readers and others will have to wait until the fall to see the Fresh & Easy vs Marketside battle begin (the first four Marketside stores are very close to existing Fresh & Easy stores) rather than this summer.

That gives Tesco time to open more Arizona Fresh & Easy stores as well, which it will soon start doing after ending its three month new store opening pause on July 2 when a new store opens in Manhattan Beach in Southern California. New Arizona stores will start opening shortly after that date. Their currently are about 20 Fresh & Easy grocery markets open and operating in Arizona.

The launching of its new Marketside website by Wal-Mart though is a clear indication things are getting serious with the world's largest retailer when it comes to its new Small-Mart development, Marketside. After all, fall is just around the corner.

Upcoming New Markets News: Tesco to Locate Yet Another Fresh & Easy Store in San Francisco Bay Area; 21 Thus Far By Fresh & Easy Buzz's Reporting

Tesco's Fresh & Easy Neighborhood Market USA has inked a deal for another new store location in Northern California's San Francisco Bay Area even before the small-format grocer's first store has opened in the region.

Fresh & Easy Buzz has learned from the California Department of Alcoholic Beverage Control that Tesco has applied for an off-sale beer and wine license for a new Fresh & Easy store at 5550 Coast Highway in the San Mateo County city of Pacifica, which is just 12 miles south of San Francisco (and five miles from San Francisco International Airport) on the coastal peninsula. [Read and learn more about Pacifica here.]

The application, filed by Fresh & Easy Neighborhood Market, Inc., which is Tesco's U.S. corporate entity for its Fresh & Easy combination basic grocery and fresh foods markets, is still pending approval by the California ABC.

But that's merely a procedural formality generally. Unlike obtaining licenses for the off-sale retailing of hard liquor in California, obtaining an off-sale beer and wine license in the state is normally a matter of applying and paying a fee for retailers, except in situations where a particular city or neighborhood objects to having another store which sells beer and wine. In those cases, an appeal process can delay a retailer from obtaining the license, as well as even having it denied in some instances.

The Fresh & Easy store at 5550 Coast Highway is part of a new shopping center currently being developed in Pacifica, according to the city mayor's office. A city spokesperson said the city and its Chamber of Commerce have been trying to lure additional food retailers to the coastal city for some time, and were pleased Tesco is locating one of its small-format Fresh & Easy grocery markets in the city.

The Pacifica store will be Tesco's first Fresh & Easy grocery market to be located in San Mateo County. Thus far, the retailer has confirmed 18 San Francisco Bay Area locations for its Fresh & Easy small-format, convenience-oriented grocery stores.

In addition, Fresh & Easy Buzz has discovered two other planned locations, both in the East Bay Area city of Vallejo, in addition to this latest store site in Pacifica.

That brings the total number of Fresh & Easy combination basic grocery and fresh foods markets to 21 to date for the San Francisco Bay Area.

Tesco plans to open its first Bay Area stores at the earliest at the end of this year. However, it's most likley the first stores in the region won't start opening until early 2009.

Here is a list of the 18 San Francisco Bay Fresh & Easy store locations confirmed thus far by Tesco:

>Antioch: Somersville & Buchanan roads; Lone Tree & Golf Course
>Concord: Clayton & Ygnacio Valley roads
>Danville: Diablo Road & Interstate 680
>Fairfield: Beck Avenue & West Texas Street
>Hayward: Mission Boulevard & Rousseau Street; A Street & Hesperian Boulevard
>Mountain View: Middlefield Road & Rengstorff Avenue
>Napa: Jefferson Street & Imola Avenue
>Oakland: 73rd & Bancroft avenues
>Oakley: Laurel Road & Ohara Avenue
>San Francisco: Third Street & Carroll Avenue; Silver Avenue & Goettingen Street
>San Jose: Bird & Minnesota avenues; Almaden Road & Curtner Avenue
>Sunnyvale: Tasman Drive & Fair Oaks Avenue
>Vallejo: Oakwood Avenue & Springs Road
>Walnut Creek: Ygnacio Valley Road & San Carlos Drive

Read here about the two additional Fresh & Easy grocery store locations, both in Vallejo, that Fresh & Easy Buzz has discovered, along with this new store location in Pacifica.

With 21 Fresh & Easy store locations locked-up in the San Francisco Bay Area--and more to come--before even the first store is opened, Tesco is demonstrating it plans to be a serious food and grocery retailing player in the nine county, seven million resident-strong region.

As we regularly write on Fresh & Easy Buzz, Tesco's retail store strategy with its Fresh & Easy grocery markets is all about "critical mass"--opening stores within about two miles of each other in the market regions it picks to enter, like it's doing currently in Southern California, the Metropolitan Las Vegas, Nevada region, and in the Phoenix, Arizona Metropolitan market.

The strategy is no different for the upcoming new San Francisco Bay Area Market. That strategy also includes opening a thus far confirmed 19 stores in the Sacramento region, which is connected by major roads to the Bay Area. It's about a two hour drive from San Francisco to Sacramento, for example. Further, the closest Bay Area county is only about a 40-minute drive from Sacramento.

Under this "critical mass" retail store strategy--think Starbucks for coffee retailing and Rite Aid and Walgreens in drug retailing for example--Tesco will be locating more stores in both the Bay Area and Sacramento regions of Northern California. In fact, Fresh & Easy Neighborhood Market representatives are currently out in the markets negotiating additional leases at present. You will read about those new store locations here first.

Note: For a Chronology of various reports, stories and analysis Fresh & Easy Buzz has written about Tesco Fresh & Easy's march from Southern California to Northern California, read this piece, "Fresh But Never Easy: Tesco's Long But Rapid South-North March in the Nation-State of California."