Sunday, July 27, 2008

Fresh Buzz: Tesco's Fresh & Easy Neighborhood Market, Tesco PLC and Related Food Retailing News and Insight

Tesco to move into Northern California's South Coast region: First store to be in Seaside, in Monterey County

Tesco plans to build and open its first Fresh & Easy grocery store in Northern California's south coast region, in the city of Seaside, which is next door to Monterey, according to a report in the Monterey County The Herald newspaper. Seaside is in Monterey County. Fresh & Easy Buzz verified the local newspaper's report with the city of Seaside.

Fresh & Easy Neighborhood Market signed a lease with the Orosco Group to occupy a 14,000-square-foot building on the shopping center's southwest corner, the center's developer announced Thursday. The building has not yet been built, and a date for the store's opening was not announced.

The grocery store gives the city an anchor tenant to build around as it develops its downtown, said Diana Ingersoll, Seaside's deputy city manager. "I see the store as a catalyst for the rest of the development of the West Broadway Urban Village," Ingersoll said. "It is actually an anchor to our downtown. Fresh & Easy also addresses the absence of a supermarket in Seaside. Safeway in Del Rey Oaks and Save Mart in Sand City are the closest options for the city's residents."

This is an important event in Tesco Fresh & Easy's Northern California plans, as the seaside store is the grocery chains first one to be planned in what is considered the south coast market region.

The Monterey, Pebble Beach, Carmel, Seaside area, along with other south coast cities, are distinct from the San Francisco Bay Area, where Tesco currently has plans to open 21 Fresh & Easy grocery stores thus far, beginning early next year. Plans thus far also call for 19 of the stores in the Sacramento region and one in Modesto in the northern San Joaquin Valley. Many others are planned throughout Northern California.

As regular readers know, Fresh & Easy Buzz always says that when news of a first Fresh & Easy store pops up in a new market region like Northern California's south coast, it means many more Fresh & Easy grocery markets in that region will open as well because Tesco is operating on what we call a "critical mass" retail store strategy with Fresh & Easy. The company's strategy is in every market region it opens stores in to open other Fresh & Easy stores within about 2 or so miles from each other.

That won't happen right away. But you will see more stores for the Monterey-Seaside market region and throughout the south coast area and inland as well in Gilroy and the like. We will try as always to be the first publication that reports them to our readers.

Tesco's Fresh & Easy to San Francisco's Mayor: No thanks in the Tenderloin

San Francisco Mayor Gavin Newsom and Dan Falk, executive director of the Tenderloin Neighborhood Development Corp., which has been trying to bring a grocery store that sells fresh foods and basic groceries to the ruff and tumble San Francisco neighborhood of that same name, recently thought they hit pay dirt when representatives from Tesco's Fresh & Easy Neighborhood Market expressed an interest in locating on of its small-format, combination grocery and fresh foods stores in the "food desert" neighborhood.

Tesco currently has plans to open two of its Fresh & Easy grocery stores in San Francisco next year, as we've previously reported in the blog. One of those stores is in the low-income Bayview-Hunters Point Neighborhood, which like the Tenderloin is currently underserved by grocery stores.

However, as today's San Francisco Chronicle reports, once representatives from Tesco's Fresh & Easy Neighborhood Market visited the proposed Tenderloin neighborhood location at Eddy and Taylor Street, they said no thanks to the Mayor and Mr. Falk.

Unlike Bayview-Hunters Point, which although is low-income has numerous home owners and businesses, the Tenderloin is just that, the part of San Francisco right in the center of the city that is home to prostitutes and pimps, drug dealers and drug and alcohol abusers.

They are the minority though. But a very visable minority.

The Tenderloin also is home to thousands of good, hard working people who live there because its one of the few places they can afford to live in the expensive city. It's also home to numerous hard working Asian immigrants, who live in the Tenderloin and operate small businesses, working 12 or more hours a day, six days a week.

And it is just because so many good people do live in the Tenderloin that it's a shame a decent grocery store won't locate there.

But it also is hard to blame a food retailer if it says no thanks. The handful of mini-marts in the neighborhood, which seem to sell everything except basic groceries and fresh foods at decent prices, experience lots of shoplifting, often have to call the police on a regular basis, and generally employ security at night to protect the store and the decent customers.

According to the San Francisco Chronicle piece, Grocery Outlet, which is a surplus grocery retailer that sells near out of code, excess inventory and other grocery items, along with regular meats and produce, is considering opening a store in the site Fresh & Easy said no thanks to. Grocery outlet is headquartered in nearby Berkeley.

We know the location Fresh & Easy turned down; and can't say we blame them. However, the grocery chain might want to take a second look, as the Tenderloin is slowly changing--more hard working Vietnamese and other ethnic immigrants moving in and opening small businesses, the city is working with developers to build new multi-residential housing (which is what is going to go on the Eddy and Taylor site), and a developer plans to tear down and rebuild a bad strip of Market street and create a discount retail store area where there currently are empty buildings primarily.

Pacifica Dreams and the relativity of 'affordability'

Fresh & Easy Buzz was the first publication we are aware of to report here that Tesco plans to open a Fresh & Easy grocery market in the Pedro Point Shopping center, which is being completely rebuilt, in the coastal San Francisco Bay Area city of Pacifica, where the average home sells for about $775,000.

Today's San Francisco Chronicle has a good profile of the coastal city, which is famous for its rugged coastline, beaches and cool, misty fog.

Among the changes going on in Pacifica, which is just a few miles from San Francisco and considered its "affordable alternative," include adding lots of new retail in addition to the small-format Fresh & Easy grocery store. Read the Chronicle piece about the Bay Area's coastal oasis here.

A walk to work in downtown L.A. on the wild side

On Friday we reported on Safeway Stores, Inc.'s plans to open what will be either its second or third small-format "The Market" grocery store in downtown Los Angeles. In Friday's piece, we discuss the growing numbers of both professionals and younger than average age retirees that are moving to downtown Los Angeles from the suburbs to either be closer to where they work or to make a lifestyle shift from suburban to urban living.

Patrick McMahon, a staff writer for the Los Angeles Times newspaper is just one of those suburban to urban migrants.

In a viewpoint story in today's Times, "A walk to work on the wild side: Life in the city center exercises the body and the senses," Mr. McMahon, who lives in downtown Los Angeles' popular 7th Street Lofts, which have a 55,000 square foot Ralphs Fresh Fare supermarket on the ground floor, describes his life in downtown Los Angeles, which includes a mere 10-block walk to work for him at the Times' building.

It's a far different life than where he lived previously: "For two years, my home was a tiny one-bedroom house on stilts way up above Mulholland Drive on Pacific View Drive. It overlooked a woodsy glen, and downtown lights twinkled in the distance at night. Great neighbors, a fine landlord, privacy and silence added to its appeal." Read the story here.

Downtown Los Angeles is changing, and the food retailers like Ralphs and soon to be Safeway with its small-format "the market by Vons" that get their first have the best chances of succeeding. The same is true of San Francisco's Tenderloin neighborhood. While not changing as fast as downtown L.A, it is changing none the less. First movers there will come out on top as well.

Small-Format Food Retailing Revolution in the U.S.

A small-format, combination natural foods market, convenience store and gas station sprouts in North Carolina

Matthew Johnson, a successful Moorsville, North Carolina oral surgeon and real estate developer, says he always wanted to be able to shop at a combination small grocery/convenience store that sold healthy, fresh and premium foods, along with basic groceries, as well as offering a fueling station out front.

So, the oral surgeon, real estate developer and now grocer decided to design and open just such a store himself. Mr. Johnson recently opened the first 6,000 square foot Johnson Family Markets, a 6,000 square foot combination natural foods market, convenience store off of Interstate 77 in Moorsville, South Carolina, near the city of Charlotte.

Sitting in his medical office next door to his new store, Johnson, 42, says he'd always wanted a healthy convenience store, “kind of like a smaller version of Trader Joe's, with the ability to get gas.” So he built it himself, in Mount Mourne Springs, a development designed to evoke the open-air shopping centers he'd enjoyed while serving with the Army in Germany, according to a story in Friday's Charlotte Observer newspaper.

As we've been suggesting for months in Fresh & Easy Buzz, there is a small-format food and grocery retailing revolution going on in the U.S. It being led by both big chains like Tesco, Trader Joe's, Safeway, SuperValu, Inc, Aldi and others, along with smaller regional grocers and independents, including entrepreneurs like Matthew Johnson, who like innovators often do, combine concepts and formats to create something new and whole out of more than one existing part.

Read the full story about the first small-format hybrid Johnson Family Market here.

A tale of two Fresh & Easy store concepts

Tesco will open a new Fresh & Easy Neighborhood Market grocery store at the corner of Canon Street and Catalina Boulevard in San Diego, California's Point Loma neighborhood.

The Point Loma neighborhood store, pictured above, is a built from the ground up Fresh & Easy neighborhood market, rather then being one that's in a converted retail building like nearly all of the current 63 Fresh & Easy grocery stores in California, Nevada and Arizona are.

Fresh & Easy Buzz has visited two built from the ground up Fresh & Easy stores, one in Las Vegas and the other in the Southern California desert region. Compared to the Fresh & Easy markets in the remodeled buildings, the built from the ground stores are much more attractive and inviting. They have skylights that let in lots of natural light and also are much more energy efficient than the renovated building markets are.

In many ways, it's a tale of two store concepts within one company: the built from the ground up Fresh & Easy markets and the current majority of the 63 Fresh & Easy stores, which are located in the remodeled retail buildings.

Tesco PLC News Report

Very expensive out-of-date food products for Tesco

Tesco PLC, the parent company of Fresh & Easy Neighborhood Market USA, was recently fined ~133,400-p (British Pounds) for selling out-of-date-food in one of its Tesco Extra stores in the United Kingdom city of Coventry, according to a June 6 report on the Coventry Telegraph newspaper web site.

This isn't the first time in recent years Tesco has been fined for selling out-of-date food in its stores in the UK. Tesco is based in the United Kingdom and it that country's number one retailer.


empanada said...

"Point Loma, which is a city near San Diego in San Diego County"

No, Point Loma is a neighborhood within San Diego city limits.

Fresh & Easy Buzz said...

We did catch that--and fixed the sentence in the piece empanada. Appreciate being read so closely in San Diego though. Thanks.