Fresh & Easy Buzz Editor's Note: Fresh & Easy Buzz has suggested one of the impediments to Tesco's full success with its Fresh & Easy Neighborhood Market small-format grocery stroes-- thus far 61 units operating in Southern California, the Las Vegas, Nevada Metropolitan area, and the Phoenix, Arizona Metropolitan market--is the stores fail to reflect the local elements of the cities, communities and neighborhoods they operate in.
For example, a Fresh & Easy combination basic grocery and fresh foods market in Orange County in Southern California is identical in its design elements and merchandising product mix as a Fresh & Easy store is in Phoenix in Las Vegas.
These regions although having many similarities in terms of geography and demographics, also have many key historic, cultural and demographic differences.
For example, Orange County is a coastal region, the Phoenix, Arizona market a desert region, and Las Vegas a boom town known for its history of gambling and love of everything new. The Phoenix market also has a nearly 40% Hispanic population, while Orange County has one of the smaller Hispanic populations in otherwise heavily Latino populated Southern California.
Our argument isn't that Tesco should create a different Fresh & Easy grocery store for each region and community. Rather, we've suggested the retailer needs to customize the stores design elements slightly on top of its basic store format blueprint, along with the merchandising mix on a communtiy and neighborhood basis in order to reflect the unique history, culture and demographics of the particular communities and neighborhoods the stores are located in.
There's nothing new about this. Supermarket chains like Safeway Stores, Inc. and mass merchandisers like Wal-Mart do this "neighborhood marketing" all the time, especially in key demographic areas for example where there are significant minority populations like Hispanics. They do this because although the American food retailing market is a mass market--when it comes to marketing and merchandising, it's a niche market.
American isn't called a nation of immigrants for nothing after all. It's a "melting pot" in which people from cultures and countries all over the world come to live. However, most of these immigrants retain many elements from the cultures they left behind when moving to the U.S. Chief among these cultural elements are their food traditions. They buy just as many "American" products as the next person, but also search out and buy ethnic foods common to their former home countries and traditions. This is true of Asians, Europeans and other ethnic Americans of many generations, not just Hispanic-Americans.
It's not just immigrants that food retailers are "localizing" their stores to either. Far from it. It's community residents and consumers in general. Grocery stores designed to appeal to all consumers aren't like say fast food shops in which a one size fits all, cookie cutter format can generally work out fine--although fast foods chains like MacDonalds, Burger King and a few others "localize" there fast food stores considerablly on a community-by-community basis.
Local consumers develop attachments--at least food retailers hope they do--to the grocery stores they shop in. That's why many consumers will shop at a more expensive independent grocery store for example rather than shop at a discount chain branch even though they could save money.
A major aspect of getting consumers to develop these attachments--and hence loyalty which is needed to create and sustain primary customers--is by making the stores appeal to the local community. This includes adding elements inside the store which reflect the community and neighborhood, selling as much locally-produced food products as make sense--if such products are produced locally--and other design and merchandising touches that let the consumer know right away when they walk in the store that it's there "neighborhood market."
This can be done easily by a food retailer like Tesco's Fresh & Easy Neighborhood Market if it understands how important to its success doing so is by adding these local design and merchandising touches right on top of its basic store format. There's no need to reinvent the wheel--or store format blueprint. Safeway Stores, Inc, Wal-Mart, Inc., Whole Foods Market, Inc. and numerous other food and grocery chains do this "localization" as a matter of practice.
The piece below from the food and grocery industry publication Natural~Specialty Foods Memo about British supermarket chain waitrose and the local approach it's taking with its new small-format food and grocery stores in the United Kingdom is a perfect example of our argument about the importance of reflecting community and neighborhood demographics, history and culture in food stores.
Doing so is even probably more important to do in the U.S. than it is in the UK since America is made up of so many "mini countries" withing its communities and neighborhoods due to the country's history, which the British had a hand in helping to create.
June 10, 2008
Special to Fresh & Easy Buzz
Upscale British food retailer Waitrose opened the second of what could be up to 100 of its new small-format "Market Town" food and grocery stores in Buckingham, UK last Thusday.
The first of the new small-format "Market Town" food stores or shops--which Waitrose managing director Mark Price calls "purpose-built" small-format stores because they are designed to be "local," limted assortment food stores with a major focus on fresh foods and locally-grown produce, as well as being located in small or market towns--opened just last month in St. Neots Cambridgeshire.
Waitrose's upscale supermarkets in the UK average 20,000 -to- 30,000 square feet and follow the supermarket format of offering a little bit of everything in terms of food, groceries and non-foods, all with an upscale and gourmet focus in Waitrose's case of course.
The grocer's supermarkets also are located in, and targeted to, all areas in the UK, but primarily urban and suburban regions.
In contrast, the geographical focus of the "Market Town" small-format stores are small towns. The merchandising focus is to devote about 50% of the total store square footage to fresh foods and fresh produce, selling as much locally-produced produce as possible, and the other half to a limited assortment of groceries, specialty, gourmet, natural and organic products, and a smattering of non-foods items.
The next Waitrose "purpose built" small-format "Market Town" food store is set to open in July in the town of Brackley, Northamptonshire.
Here is what Waitrose chief Price said about the Buckingham "Market Town" store opening on Thursday, June 5 in his "The Grocer's Blog" on Waitrose's website on Friday, June 6:
"Thursday was a particularly enjoyable day as we opened our first purpose-built 'market town' branch in Buckingham. This is an approximately 10k square foot format for smaller retail sites that specialise in fresh food and local produce. The branch looked fantastic and feedback from customers was incredibly positive. The reception we got in Buckingham gives us great confidence that we're in a good position to roll out new Waitrose shops into towns and villages we previously thought might not have suitable sites."
Price says what Waitrose is aiming to do with the "Market Town" small-format food stores is to refelct the ambience of a traditional British food shop, as well as being as "local" in product assortment, design features and elements, and service-orientation as possible.
"Our brand has traditionally had a 'sweet spot' of around 20,000 square feet, but in a competitive environment we need to be more flexible and improve the potential of the smaller shops in our estate," Price says about one of the key reasons Waitrose developed the "Market Town" format stores.
"The 'Market Town' format will allow us to achieve that, as well as giving us new opportunities to grow the business. We are going back to the grass roots of the traditional town food shop, which aims to reassert the sense of community and service associated with our brand." Price says.
The local and community aspect is key to the success of the small-format "Market Town" format, according to Price.
"By engaging with the community in our research, as well as providing local information and more local produce, we want our customers to get a real sense that this is their shop. We have always taken pride in being a fresh food specialist, and in the support we offer small and local producers. With this concept we have dedicated more space to fresh foods and more locally sourced products than ever before," Price explains.
Below are the key format distinctions or innovations of Waitrose's small-format "Market Town" stores:
>They have A small food store or shop design, look and product selection, tailored to the needs of the particular town the store is located in.
>Local is key to the format. For example, the stores sell nearly 200% more locally-produced food and beverage items compared to traditional Waitrose supermarkets, which already sell lots of local goods.
> More emphasis on fresh foods with over half the food store or shop dedicated to fresh products, as we mentioned above.
>Each store will have a community bulletin or information wall that will feature local information regarding the town, pictures of local food producers, and related information and graphics, all with a community emphasis.
>A new convenient bakery design, unique to the "Market Town" format, and designed to be a modern version of a traditional small food shop bakery.
>Waitrose Deliver, the retailer’s online shopping service, will be available in the small-format stores so that customers can have their grocery orders delivered to their homes if they desire, just as is the case with small town grocers.
>The "Market Town" format features a different layout than Waitrose's supermarkets, including having fresh and frozen foods merchandised next to each other and seasonal fruit and vegetables merchandised side-by-side in the produce department.
Waitrose could open as many as 100 of the small-format "Market Town" grocery shops in small towns throughout the UK in the next couple years, according to managing director Price.
Each store will reflect the unique aspects of the town it's located in, says Price. The 50% fresh foods, 50% other format will be the same for all of the small-format food stores. However, each store's design elements and product selection will reflect the community it's located in to a large degree, just like a neighborhood independent grocery shop does, according to Price.
The "Market Town" small-format stores are natural for Waitrose historically in that the supermarket chain, which is today owned by the John Lewis Partnership, began in 1904 as a small grocery shop named Waite, Rose and Taylor in West London.
That first shop, pictured here, was much smaller than 10,000 square feet. However, it's local roots and specialty-orientation is what's provided the base merchandising philosophy behind Waitrose to this day--not to mention the derivation of its name.
Therefore, in a sense Waitrose is merely going "back to the future" with its new small-format "Market Town" food shops.