Tuesday, July 15, 2008

Upcoming New Markets News--San Francisco Bay Area: Fresh & Easy Loses Out on San Carlos, CA Store Site to Local Independent Grocer Brothers

Members of the Bianchini family are long time independent food and grocery retailing veterans in the San Francisco Bay Area's Peninsula and South Bay regions.

Many decades ago, the late Al Bianchini was one of the first independents in the region to make a move from operating a mainstream independent supermarket, to more of an upscale and specialty foods-oriented store, as a way to survive against the big chain's which were building and opening stores all around his Bianchini's Market in the high-income city of Portola Valley, near Palo Alto and not far from the Stanford University Campus in the South Bay Area.

When Mr. Bianchini passed away, his sons Chris and Kevin who together already operated an 8,000 square foot grocery store, Foodville Market in nearby San Carlos, which also has an upscale and specialty foods flair to it, took over the larger Portola Valley store from their father.

The Bianchini brothers have done well with both stores, despite even more chain supermarkets opening all around them. In fact, since 2006 the brothers and partners have been searching for a location for a larger supermarket in San Carlos, to replace their current 8,000 square foot Foodville Market. San Carlos has a population of 30,000 residents. However, it's located on the urbanized San Francsico Peninsula and has tens of thousands more residents right on its city borders.

They've now found their dream location. The independent grocer brothers will be moving their Foodville Market into new, expanded digs. They've just signed a 30-year lease for the former Bell Market store in a prime location in San Carlos at 810 Laurel Street. The store was part of the Kroger Co.-owned Cala Foods/Bell Market chain, which Kroger decided to close down a few years ago, selling off individual stores and closing a few it couldn't sell.

The move isn't a huge one for the brothers physically since their current store is located nearby at 616 Laurel Street. However, it's a huge move for the independent grocers in every other way.

At 20,00 square feet, the old Bell Market store is more than twice the size of their popular and very busy current market, which will allow the independent grocers to offer an expanded selection of basic groceries, specialty and natural foods, and in-store service departments to their customers.

The move also is big for the brothers because with the relocation to the former Bell Market site, the grocers will change the name of the store from Foodville Market to Bianchini's Market, so that it reflects the family name and matches the flagship store of that name in Portola Valley, which was founded by their father.

The Bianchini brothers beat out a number of other grocers who were bidding for the old Bell Market store's lease, including Tesco's Fresh & Easy Neighborhood Market, which wanted to put one of its 10,000 -to- 13,000 square foot combination basic grocery and fresh foods grocery stores in the location.

Fresh & Easy Buzz is very familiar with the Bell Market store and location. It would have been a perfect spot for Fresh & Easy in San Carlos, as it is a very high profile and accessible location.

The Bell Market thrived at the 810 Laurel Street location for decades, doing far more sales per square feet than the supermarket industry average. Kroger didn't close the store there because it couldn't sell it. Rather, the building is owned by a landlord who wasn't able to come to terms with any of the potential buyers Kroger had lined up at the time it was closing down its about 25-store Cala/Bell Markets operation in the Bay Area. Rather than keep the one store open, Kroger just decided to close it down.

Laurel Street is considered the happening street in San Carlos. There are other retail stores, professional offices, cafes, and other popular venues along the heavily pedestrian and vehicle traveled street. San Carlos is an upper-income city, where a three bedroom, two bath, 1,300 square foot house sells for about $650,000.

The former San Carlos Bell Market store also would have been a key Bay Area location for Fresh & Easy in that there aren't many other supermarkets or grocery stores nearby, which always was a big plus for the store during the many years it was open in the location.

But Fresh & Easy's loss is the brothers Bianchini's gain. And the partners plan to remodel the old Bell Market store in a first class way.

The Bianchini's have hired famed San Francisco Bay Area food and grocery store architect John Sutti to create a new interior for the store. Sutti and his firm, John Sutti Associates, have designed and built nearly all of the Whole Foods Market stores in the Bay Area, designed markets for upscale Bay Area grocers like Andronico's Markets, Draegers, Mollie Stone and numerous others, and is known for its signature "Sutti touch" when it comes to creating unique store interiors and exteriors, particularly with an upscale flare.

Among the features the Bianchini brothers plan to include in their new 20,000 square foot supermarket is a high-end deli and prepared foods department, salad and other food bars, a top-quality cheese department, and other specialty touches. The store will sell plenty of basic groceries as well, along with lots of specialty and natural foods items.

Meanwhile, all might not be lost for Tesco's Fresh & Easy in San Carlos. The current Foodville Market at 616 Laurel Street, which the brothers Bianchini are leaving for their new 20,000 square foot store once it's remodeled, also is in an excellent location.

Although at 8,000 square feet the current Foodville Market is 2,000 square feet smaller than the 10,000 square feet Tesco likes to have as a minimum for a Fresh & Easy grocery store, that's not really an obstacle because the great location more than compensates for the less than desired minimum 10,000 square feet, in our analysis. Further, finding any place to locate a grocery store in compact San Carlos is very difficult. That's why 616 laurel is a winner.

Additionally, The Bianchini's have shown lots of business can be done in that 8,000 square feet at 616 Laurel. (We've been told by a good source that the brothers are doing over $200,000 a week in their 8,000 square foot Foodville Market.)

With some simple tightening up, Tesco could easily put a Fresh & Easy store in the current Foodville Market building at 616 Laurel without losing much at all in the way of features. In fact, it would be a good thing for Tesco's Fresh & Easy to try, perhaps experimenting with localizing the store to the community while remodeling it.

In fact, since the San Francisco Bay Area is a much different region geographically (denser and more compact) compared to Southern California, Metropolitan Las Vegas and the Phoenix Arizona region where Tesco currently has its Fresh & Easy stores, it's likely there will be many locations, like the current Foodville Market, which are a bit smaller than 10,000 square feet, but would make excellent locations for Fresh & Easy grocery stores. This is particularly true in compact San Francisco, where even 10,000 square feet of available retail space is difficult to find in most neighborhoods.

It would be ironic if, having lost out to the Bianchini brothers for the former Bell Market site in San Carlos, Tesco's Fresh & Easy Neighborhood Market were to turn around and grab the lease on the 8,000 square foot building at 616 Laurel Street which currently houses Foodville Market, and which is not too far down the street from what will become the new Bianchini's Market at 810 Laurel Street, in the old Bell Market store in San Carlos.

Such are the kinds of twists, turns and ironies that help make food and grocery retailing so interesting.

View San Carlos, California's Laurel Street here on Google Maps. Click here to read stories from Fresh & Easy Buzz about Tesco Fresh & Easy Neighborhood Market's upcoming plans for the San Francisco Bay Area.

1 comment:

jessie said...

Sorry to bother you!
My name is Jessie
I am a student studying MSC Marketing at University of Birmingham(England).
Now I am working on my dissertation which is about Fresh& Easy.
I need to conduct some interviews via telephone (since I am in England now)
If you would like to help me, please email me at: jjessie0526@hotmail.com
Also, would you please help me to fill in the on-line questionnaire and forward it?
That will take you only about 5 minutes.
The questionnaire will be anonymous and the result of the questionnaire will only be used for academic purpose.
I need to collect a sample of 200 questionnaires.
Please, please, please help me.

Your blog has many helpful information, it help me to have more insight into F&E.
Finally, thank you very very much for your kindess!
ps. If I am not allowed to post reply like this, please delete it and forgive me.