Sunday, July 6, 2008

Sunday Snapshots: Tesco Fresh & Easy Neighborhood Market News and Happenings; Tesco PLC News Roundup...and More

Fresh & Easy Neighborhood Market

Sunday Snapshots: Photographs of Tesco's first Northern Nevada Fresh & Easy grocery market in Reno: Since the title of this piece is "Sunday Snapshots," we thought it only appropriate to start off with a few photographs.

On May 22 we reported Tesco plans to open its first Fresh & Easy groecry store in northern Nevada in a now vacant retail building beign remodeled in a shopping center in the Reno/Sparks Metropolitan region. You can read that report here.

The building became vacant as a result of a remodeling of the Dollar Tree discount store next door, which was moved farther to the left as part of its construction. You also can read this July 1 item we wrote about a bit of confusion going on among the construction project manager and a local newspaper as to what actually is going in the building being remodeled in the shopping center. Hint: it is a Fresh & Easy grocery store.

Fresh & Easy Buzz roving correspondent Reno Tom, who makes Reno his home when he isn't traveling throughout the U.S., particularly the Western U.S., on various business persuits, made a trip over to the shopping center where the building is being turned into a Fresh & Easy while home over the July 4 holiday weekend.

The photograph above shows construction workers working on the building between a Dollar Tree store (left) and a Radio Shack store (right) that will be the future home of the Fresh & Easy grocery store in the shopping center.

The photograph below offers a closer look at the building being turned into the first Northern Nevada small-format Fresh & Easy grocery store.

The Dollar Tree discount store was moved farther to the left (it originally took up the space where the Fresh & Easy store will be) as part of the overall remodeling project in order to make room for the Fresh & Easy store, which will be about 10,000 -to- 13,000 square feet, as well as do expand and remodel the Dollar Tree.

The photograph below shows the brand new Dollar Tree store, including the new entrance. The facade that says "Dollar Tree" next to were the construction workers are tearing off materials for the Fresh & Easy store in photos one and two, also will come off. The Fresh & Easy store will take all that space since the Dollar Tree is now relocated farther to the left, as pictured below.

Food Deserts and Fresh & Easy: Fresh & Easy Buzz has been reporting on and writing alot about the "food desert" issue in the United States, especially as it pertains to the Western USA states of California, Nevada and Arizona ,where Tesco's Fresh & Easy Neighborhood market has its current 62 small-format, combination grocery and fresh foods stores.

As we've written about often, Tesco's Fresh & Easy has as one of its key strategies the opening of Fresh & Easy grocery stores in urban, inner city neighborhoods, which are neighborhoods undeserved by food stores that offer a selection of basic groceries and fresh foods at afforable prices.

Thus far, Tesco has opened two of its 62 Fresh & Easy markets (both in Los Angeles) in such neighborhoods, with current plans to open a third store in a low-income South Central Los Angeles "food desert" neighborhood, along with a fourth store in a San Francisco "food desert" neighborhood, and a fifth store in an underserved neighborhood in Sacramento.

Unlike Fresh & Easy Buzz, the mainstream press hasn't been reporting much on the food desert issue of late, especially in its coverage of Tesco's Fresh & Easy. Therefore, we were pleased to see a story in yesterday's edition of USA Today on the issue. Here is the USA Today piece: Urban, rural communities lack supply of affordable produce.

New Store Openings: Phoenix, Arizona: The next new Arizona Tesco Fresh & Easy Neighborhood market grocery store to open will be in central Phoenix, opening on July 30, Fresh & Easy Buzz has learned. the new Phoenix Fresh & Easy grocery market will be at 635 West Indian School Road. It will be Tesco's sixth Fresh & Easy small-format combination basic grocery and fresh foods store in the city of Phoenix. There currently are 19 Fresh & Easy stores in Arizona, all located in the Phoenix Metropolitan/East and West Valley region. Tesco currently has 62 of its 10,000 -to- 13,000 square foot Fresh & Easy grocery stores in Southern California, Nevada and Arizona, and plans to open at least 30 new stores in the next 90 days.

Snapshots: Tesco PLC News

UK planning scheme to favor small shops over mega-stores: Although Tesco operates lots of its small-format Tesco Express banner convenience-style grocery stores at home in the United Kingdom, and continues to open new ones, it's building far more new, larger format stores like it's combination grocery and general merchandise Tesco superstores and hypermarts (a similar but smaller version in the UK of a Walmart Supercenter in the U.S.) than the more petite Express versions currently. These are mega-stores for the UK at 50,000 -to- nearly 80,000 square feet, even though they are less than half the size of a U.S. Wal-mart Supercenter or SuperTarget store, which average about 180,000 square feet.

However, new powers for local municipalities in the UK are being introduced which would make it more difficult for retailers like Tesco, Wal-mart-owned Asda, Sainsbury's and others to build these larger stores. The new city planning powers being drafted are said to target directly what are called "Tesco Towns" in the UK, named after the fact the nation's leading retailer has or soon will have a Tesco store--and in most instances multiple Tesco stores--in every city and town in the UK.

The new planning tools will allow municipalities to favor smaller format stores over larger ones, and are designed to provide an advantage to local small shops over the out of town mega stores. Read about the new planning scheme being developed in the UK here

Two of Tesco's key competitors for higher-end, premium food and grocery segment sales in the UK are the venerable Marks & Spencer (M&S) and the ultra chich Waitrose. Marks & Spencer has long been Britain's top retailer market share-wise for the higher-end food dollar. However, under the leadership of managing director Mark Price, Waitrose, which is owned by the John Lewis Partnership which also operates department stores, Waitrose has ben making significant inroads on M&S. Meanwhile, even though Tesco is a discount supermarket, it's offerings include substantial selections of specialty, premium, natural and organic food and grocery products across all categories. Tesco also is a leading specialty and premium wine retailer in the UK.

This week, M&S issued a profit warning. In the 13 weeks to June 28, sales at its British stores (open more than a year) fell 5.3 per cent. At the same time it announced the departure of Steven Esom, head of its food business. Marks & Spencer chairman and CEO Sir Richard Rose also is coming under heated pressure from all stakeholders to turn food and grocery sales around fast.

Click here to read more. Read the UK Daily Telegraph's take on M&S, which once was the UK's biggest and most profitable retailer before the rise of Tesco, in this thoughtful, lively and informative opinion piece.

Meanwhile, Tesco is looking to M&S's misfortune to increase its slaes in the premium, high-end retailing segment despite the souring UK economy. M&S is famous for its store brand specialty and premium food products. However, both Tesco and Waitrose are making strong moves to rest sales away from M&S and its priovate label brand, with there own higher-end store brands. If the current M&S numbers are any indication, it looks likes it working, although numerous other factors are a at play, including a big shift by shoppers to small-format, no frills German disount grocerys Adi and Lidl's UK stores.

Booth's; England's last remaining independent supermarket chain fights on: Not since the civil war has Preston been such a seedbed of rebellion and defiance. The Lancashire town is home to Booths, England's last remaining independent supermarket chain, which is bravely holding back the march of the multiples from some of the north's most sought-after locations. The 160-year-old chain is battling on with just 26 stores compared with Tesco's 3,751 and a turnover that is a tiny fraction of Britain's biggest supermarket. Read this full article by Sarah Butler in the UK (The Gaurdian newspaper) here

Today, just four supermarket chains control 75% of the total food and grocery dollar spent at retail in the United Kingdom. Those chains are: Tesco, Wal-Mart-owned Asda, Sainsbury's and Morrisons. California alone, which with 38,000 residents is nearly as populated as the UK, has thousands of supermarkets and natural foods stores operated by reginal independent chains, as well as by independent grocers who own one or more stores.

In contrast, regional supermarket chains--ranging from those that do billions of dollars a year in sales and have hundreds of stores to much smaller ones, along with multi and single-store independents--are thriving in America.

We read with a certain sadness of the near demise of the independent chain and grocer in the UK. After all, it has always been the independents that are the innovators, the risk takers. Without them the industry is sure to stagnate.
In fact, a good mega-supermarket chain CEO will tell you he or she prefers a vibrant independent grocer segment, as it is where they pick up new ideas and innovations for their chain. We wish Booths much continued success--and independence. Not only do we think having an independent chain like Booths is good overall for UK consumers, we also think its good for the nation's food retailing industry as a whole.

Speaking of competiton: As mentioned above, Wal-Mart-owned Asda and Sainsbury's are Tesco's top two competitors in the UK. Sainsbury's, a venerable British retailer as is the family, including Lord Sainsbury, who founded the chain, was almost taken over last year by the United Arab Emirant Kingdom of Qatar's soveriegn fund. The fund was established decades ago by the middle eastern oil-rich country as a way to invest its oil revenues, which have been soaring even more in the last few years, in various corporations and enterprises throughout the world.

Last year, the Qarari's bought up a huge chunk of Sainsbury's stock, which led to talks between the retailer's board and the fund's managers about a takeover. Most UK analysts thought it was a done deal. However, early this year the qatari's pulled out of the deal to acquire majority ownership in Sainsbury's.

Now, the oil-rich fund is back at it. Over the last month or so the Qatari's have bought up stock equalling about 26% of Sainsbury ownership, leading UK analysts to once again speculate a takeover move is in play. We aren't so sure.

The fact is, the oil-rich monarchy has so much cash on hand from sales of near $150 a barrel oil, that its literally having a hard time finding corporations and enterprises to invest all its money in. Have the Qatari's decided this time to take over Sainsbury's? Or is the fund just buying up a huge chunk of the retailer's stock once again in order to drive the share price up, cash out, and make a couple billion dollars more like it did last time around? Read what the UK Times newpaper has to say in this report: Qatari's make fresh swoop on Sainsbury's shares.

Speaking of Tesco competitor Sainsbury's: It appears a store checkout clerk is so in love with her job at the Sainsbury's branch, she decided to hold her wedding in store. Jane Clark, a 42 year old Sainsbury's store worker, and 32-year old Kenneth Sutherland, have tied the knot at the store where Ms. Clark works. Read all about the in-store nuptuals in this report, "Couple say supermarket 'Aisle do,'" from BBC news UK. No word if Ms. Clark had her wedding day off, or if she merely had the ceremony during her lunch break and then went back to checking customer grocery orders.

More Snapshots: Tesco PLC News Linkage:

You can't beat Tesco's meat says industry: Tesco is SuperMeat Retailer of the Year.Yes we have bananas, but they will cost you more today: Tesco passes on costs as it hikes the price of biggest selling product. Jack Sprat, he has some fat; but no rage: Jack Sprat: supermarket rage is pointless. Chef Hugh's (Fearnly -Whittingstall) chicken welfare campaign to go store-level with battery farming demonstration at West Reading, England Tesco store: Chicken welfare demo to take place at Tesco store. A British free-range egg farmer has lost his battle to force Tesco to remove his picture from the retailer's free-range egg cartons. However, cageless egg farmer Ian Chisholm isnt' giving up his fight just yet. Read what he is up to in this piece from London's Metro paper and website: Tesco won’t beat me says egg farmer. More here: Farmer loses Tesco egg box battle.

More Tesco linkage: Britain's Prime Minister Gordon Brown and both houses of Parliament have strongly condemed the recent rigged election and despotic rule of Zimbabwe dictator Robert Mugabe. In fact, Britain has spoken with the loudest voice of all democratic nations thus far in terms of calling for Mugabe to step down. As part of that protest, the UK governemnt has called for corporations to stop doing business with the nation as a form of boycott. Tesco, which has done business with the African country under Mugabe's depotic rule by sourcing certain goods and products from Zimbabwe, has announced it will no longer do so until the country's political crisis is solved. Read about it here: Tesco suspends Zimbabwe trade. And here: Tesco stops trade with Zimbabwe.

Food retailing and geopolitics: Tesco, along with UK supermarket chains Sainsbury's, Waitrose and Sommerfield, have admited sourcing food from Israeli-owned settlement farms located on Palestinian territory in the contintious Israel-Palestian region of the Middle East. Doing so is a non-no in the UK. Read this report from the 'Illicit' settler food sold in UK stores.

Regulation UK-style: The United Kingdom's "Competition Commission," which regulates retail competition in the nation, recently passed a new "competition test" designed to prohibit any one retailer from opening an "excessive" number of stores in a given British city or town. Since Tesco has the most stores of any retailer in the nation, and the most multiple stores throughout the country, the regulation is aimed primarily at the retailer, as well as to a lessor degree at the other three UK "big four" retailers: Asda, Sanisbury's and Morrisons. Tesco has decided to appeal the commission's ruling. Read a report about the UK regulatory commission's new "competition test" and Tesco's appeal of it in a recent story from the Times Online: Tesco launches legal challenge to competition test.

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