Wednesday, July 9, 2008

Southern California Market Report: Five Supermarkets; A New Fresh & Easy, Wal-Mart and Super Target Will All Compete in Hesperia Food Retailing Rodeo

Tesco's Fresh & Easy Neighborhood Market will open one of its small-format, combination basic grocery and fresh foods grocery markets in Southern California's high dessert community of Hesperia on August 6, just ahead of two major competitors--Wal Mart (Supercenter) and Target (Super Target)--which are building mega-combination grocery and general merchandise stores in the city.

Tesco will open its about 13,000 square foot Fresh & Easy grocery market at Main and Topaz streets in Hesperia, which is a city of about 90,000 with an already very competitive food and grocery retailing market, on August 6.

Currently there are five large supermarkets in the city. The stores are run by Stater Bros., Safeway Stores, Inc., SuperValu, Inc., and Kroger Co.

Additionally, Wal-Mart is currently building one if its discount Supecenters in the city. If that's not enough, Target is building one of its Wal-Mart Supercenter-like Super Target stores in Hesperia, which like a Supercenter combines a full-service supermarket and general merchandise discount store under one roof.

The Super Target, which is located in the brand new High Desert Gateway Shopping Center at Main Street and I-15, is set to open October 12.

The new Wal-Mart Supercenter is set to open before the end of 2008 as well.

Target is making a major push into California with its Super Target stores. Historically, the retailer hasn't focused on California with the combination supermarket-general merchandise format mega-stores. Instead, in terms of the Western USA, its located the stores in states like Utah, Montana and Idaho, where real estate is cheaper and competition has generally been not as strong.

However, that's changing, and changing for Target (and its competitors) at the same time Wal-Mart and Tesco's Fresh & Easy also are putting a major new store opening focus on the Golden State.

Over the next couple years, Target will open numerous Super Target stores in California; mostly in Southern California but also in the Central Valley and in Northern California.

The Super Target in Hesperia will anchor a brand new shopping center, the High Desert Gateway Shopping Center at Main Street and freeway I-15, that when the Super target opens this October will have been under construction for about one year.

Thus far, there are 17 other retail stores, shops and restaurants going into the center along with the Super Target. They are: Bath & Body Works * Famous Dave's Barbecue Ribs * Famous Footwear * GameStop* Happy Nail & Spa * Juice It Up! * Nubi Yogurt * Maui Hawaiian BBQ * Old Chicago pasta and pizza * Pacific Dental * Round Table Pizza * Sport Clips * Styles 4 Less * Subway Restaurant * Ultimate Gear * UPS Store.

According to the city of Hesperia and the shopping center's developer the Lewis Group, 7 -to- 10 more new retail tenants will be announced for the center in the next two months. The city of Hesperia says the center is the largest single retail development in the city's history.

With its everyday low price focus, Fresh & Easy should stir up some price competition with the five existing supermarkets in the city when the store opens on August 6.

And when Wal-Mart and Super Target open later this year, expect that price competition to intensify. Although Target discount format stores don't compete on price as much as Wal-Mart discount stores do, when it comes to the food and grocery portion of its Super Target stores, Target tries to match Wal-Mart's prices at its Supercenters wherever the two have stores located nearby.

Hesperia is located right next to Victorville, which is a city with roughly the same population as Hesperia. Victorville's claim to fame is that it's where Trigger, the famous horse of the famous TV cowboy Roy Rogers was born; and where he died. In fact, Trigger (pictured at the top of this piece with Roy Rogers riding him) was so famous, and so loved by the late Roy Rogers and his wife Dale Evans, that the TV cowboy had the horse stuffed, and for years had it on display at the Roy Rogers Museum in Victorville.

Alas, those attending the Fresh & Easy Neighborhood Market grand opening in Hesperia on August 6 won't be able to make the short drive over to Victorville to view the stuffed Trigger when the store opening event ends. Some years ago before his passing, Roy Rogers got a lucrative offer from the country and western themed city of Branson, Missouri to move his Victorville museum, including the stuffed Trigger, to the town which is referred to as the "County and western Las Vegas without gambling."

Roy took the offer, packed up the museum--and Trigger--and headed for Branson. It was an offer he couldn't refuse. No analogy to the horse head in the bed scene in the Godfather movie intended.

Nearby Hesperia will be far from a grocery store museum by the end of this year though--that you can be sure of. With five supermarkets already competing for the food dollars of about 90,000 residents--and with new Tesco Fresh & Easy, Wal-Mart Supercenter and Super Target stores on the way--expect the food and grocery sales competitive environment in the high desert city to be more like a live rodeo, complete with the price promotional equivalent of wild bronco and bull riding events.

For the food retailers competing in that type of competitive market, there will be no time anyway to view either the Roy Rogers memorabilia or a stuffed Trigger himself, even if the famous Roy Rogers Cowboy Museum still was located in nearby Victorville.

The meek may inherit the earth (and we do wish Trigger eternal bliss)--but when it comes to food and grocery retailing in Hesperia come about the Thanksgiving and Christmas holiday season at the end of this year--there will be no time to focus on stuffed famous horses.

Rather, the focus will be on which retailer can sell Thanksgiving and Christmas stuffing mix--and everything that goes with it--for the best price, along with offering the best overall value to the city's shoppers in these current bad economic times.

Let the competition begin. Ride 'Em Cowboy. Or, as Roy Rogers always sang, "Happy trails to you...until we meet again."

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