Thursday, July 31, 2008

Thursday Fresh (& Easy) Buzz: News and Insight About Tesco's Fresh & Easy Neighborhood Market and Food and Grocery Retailing in the USA

Fresh & Easy Southern California

La Quinta times two: Tesco plans to build its second small-format Fresh & Easy Neighborhood Market grocery store in the Southern California desert city of La Quinta near Palm Springs.

The Fresh & Easy grocery market will be the co-retail anchor, along with a CVS drug store, in a new 10 acre development called Jefferson Square, at Jefferson Street and Fred Waring Drive in North La Quinta, according to J. Scott Fawcett, president of Newport Beach, California-based Marinita Development Co., the project's developer.

Mr. Fawcett says his firm has been working on plans for the center since 2000.

The Jefferson Square center will be 90,000 square feet. In addition to the Tesco Fresh & Easy grocery store and CVS drug store retail anchors, Mr. Fawcett says there will be 10 smaller retail shops which will be leased to a variety of tenants, including a name brand restaurant he says the firm is in negotiations with and therefore can't name at this time.

"We are certain the Fresh & Easy will do very well," Fawcett says. "There are no grocery stores within miles of the residential area (around the center). We're doing this in two phases rather than building everything at once and have them sitting empty."

The first La Quinta Fresh & Easy Neighborhood Market is currently under construction at Calle Tampico and Desert Club drive in the city. It's scheduled to be the first of the two stores in the city to open.

Tesco is putting a major focus on the desert region. It currently has stores open in the nearby cities of Indio, Palm Desert and Cathedral City, with a Fresh & Easy grocery store scheduled to open soon in Palm Springs.

Fresh & Easy Arizona

Four more new Arizona stores set to open: In addition to opening its 20th Arizona Fresh & Easy grocery store yesterday at 7th Avenue and Indian School Road in Phoenix, Tesco has announced an additional four Arizona stores that will be opening soon in the market. Those stores are as follows:

• Dobson and Queen Creek roads in Chandler on Sept. 10.
• Gilbert Road and Southern Avenue in Mesa on Sept. 10.
• Scottsdale Road and Shea Boulevard in Scottsdale on Aug. 27.
• Baseline and Kyrene roads in Tempe on Sept. 10.

The Tempe store will be the first Fresh & Easy market in that city. The retailer currently has stores in Chandler, Mesa and Scottsdale.

As we reported in this piece yesterday, Tesco hopes to have about 37 of the small-format, convenience-oriented combination grocery and fresh foods Fresh & Easy grocery markets opened in Arizona by the end of this year.

With the opening of the new Phoenix store yesterday, Tesco now has 67 Fresh & Easy Neighborhood market grocery stores open in Southern California, Nevada and Arizona. Plans call for about 30 more new stores to be opened by September, 2008.

The right way, the wrong way and the Tesco way: United Kingdom-based international retailer Tesco PLC, parent company of Fresh & Easy Neighborhood Market USA, is well known in the food and grocery industry globally for its methodological, and some say laborious, technological and quality control procedures regarding the process potential suppliers and vendors have to go through in order to produce a store brand item for the retailer.

It seems Ed Debartolo (he's not the former owner of the San Francisco 49ers football team) learned just how extensive and time consuming that process is when dealing with Tesco, the UK's largest and world's number three retailer.

Mr. Debartolo is the owner of Phoenix, Arizona-based Berto's, a $22 million a year specialty producer of Italian Gelato and Sorbet treats.

Despite the process, it appears the end result was good for both Bertos and Tesco's Fresh & Easy. Read a story about the experience in this July 30 article from the Arizona Republic newspaper, written by staff writer Cathryn Creno.

As the great American (he called himself "The Great One") comedian, and host of the long running television show bearing his name, Jackie Gleason used to say...'How Sweet it is.'

Fresh & Easy Las Vegas, Nevada Metropolitan Region

New stores: Fresh & Easy Buzz has learned the next new Fresh & Easy Neighborhood Market in the Las Vegas, Nevada Metropolitan region will open on Aug. 21. That new store is at Horizon Ridge Parkway and Stephanie Street in Sin City. Tesco plans to open at least 10 new Fresh & Easy grocery markets in the Las Vegas Metro region between now and the end of the year.

Small-Format Food Retailing: The independent segment

In addition to covering, writing about and offering analysis on Tesco and its Fresh & Easy Neighborhood market USA venture and stores, Fresh & Easy Buzz also reports on, writes about and offers an analytical eye on what we call the small-format food and grocery retailing revolution going on in the U.S. and throughout other parts of the world.

Tesco is a leader in this revolution, both in the U.S. with Fresh & Easy but even more so in Europe, with its Tesco Express small-format combination grocery and convenience stores.

We believe a combination of current trends in the U.S., $4 and soon to be $5 a gallon gasoline, a suburban-to-urban migration pattern in many parts of the U.S., and the need to cut overhead by food retailers (meaning perhaps in many cases building smaller stores) because of the combination of soaring energy costs and high food inflation, offers a bright future for small-format (on average 5,000 -to- 25,000 square foot) food and grocery stores in the U.S. particularly.

Researcher, writer and broadcaster James Kunstler, who wrote the popular 1993 book "The Geography of Nowhere" about suburban and urban migration and related issues, believes suburbs are done for in the U.S., which of course if true would mean many people would become urban migrants. Read an interview with Mr. Kunstler here. There's also a link there to his website which contains a podcast from the author about suburban/urban issues.

The suburban-urban discussion is important to food retailing because an even small but significant migration by consumers to cities will mean the need to build smaller-format grocery stores, which as we know is already happening. In fact, most American urban neighborhoods, regardless of economic level, are currently underserved by food and grocery stores, which makes small-format stores a growth sector even without significant suburban to urban migration trends becoming real.

If suburban to urban migration in significant numbers becomes the case, it also means small-format retailers like Fresh & Easy, Aldi, Trader Joe's and the many other newcomers to the format (Wal-Mart, Safeway and the like) will be positioned to kick of a radical revolution in American food and grocery retailing.

Of course, that paradigm could shift as fast as it becomes reality. For example, maybe with a suburban to urban mass migration movement, Internet-based home grocery delivery will finally come into its own in the U.S.? Its all good food for thought; and strategic planning.

The New Corner Grocers

Speaking of small-format food and grocery retailing in the U.S., it's not just the big guys like Tesco, Aldi, Wal-Mart, SuperValu (Sav-A-Lot), Safeway and others who are either in the game or getting into it. The small, independent guy or gal, the entrepreneur and independent grocer, also are opening new small-format grocery stores throughout America.

The independent grocer, the pioneer of small-format food retailing in the U.S., never went away. Not by any means.

There are ten of thousands of successful multi and single store independent food and grocery store operators in America, and thousands more mom & pop shop and mini mart retailers, along with many more operating natural, specialty and gourmet foods stores. Despite the highly competitive supermarket and mass merchandiser chains in the U.S., the independent food and grocery retailing sector is alive and thriving in America.

Much of the new-wave of independent food retailing in the U.S. is in the small-format segment, where entrepreneurs are creating hybrid formats, mixing basic grocery stores with traditional convenience stores, fresh foods, specialty foods and other twists and variations that it takes an innovator (which usually means an independent) to come up with. And, many of these independents are beginning to open stores in urban neighborhoods in cities across America.

The Portland, Oregonian newspaper has a interesting piece in today's edition about two such independents in Portland, Oregon, both who have recently opened new small-format grocery stores and are looking to create their own respective niches in the market. Read the article here.

Downtown Denver, Colorado also is seeing a number of independents open small-format grocery stores in the city's core. These grocers include: Marczyk Fine Foods, Cook's Fresh Market and Tony's Market, which is the latest to locate in downtown Denver with what will be a 15,000 square foot food and grocery store. read more about what's happening in downtown Denver here.

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