Wednesday, August 27, 2008

Wal-Mart's Four Phoenix Metro Arizona Small-Format 'Marketside' Community Grocery Stores Nearing Completion; Openings Just Weeks Away

The initial four Wal-Mart Marketside small-format combination fresh food and grocery community markets set to open this fall in the Phoenix, Arizona Metropolitan region are nearly completed, Fresh & Easy Buzz has learned.

This morning the Financial Times newspaper published a story in which it reported that the website for the city of Mesa, Arizona, one of the four Phoenix Metropolitan region cities the first four Marketside stores will open in, has the photograph pictured above posted on the site. That photograph from the city of Mesa, Arizona website which we have posted above shows a near-completed Marketside community grocery store.

The other three Phoenix region initial Marketside stores set to open this fall are in the cities of Chandler, Gilbert and Tempe. [Click here for the addresses and maps showing the locations of all four stores.]

This morning, a Fresh & Easy Buzz correspondent went out to the Mesa, Arizona Marketside site and reports the store looks nearly completed, needing just some minor work needing to be accomplished in order for it to be ready to stock with merchandise.

This afternoon, the correspondent visited the sites of the Chander and Gilbert Arizona stores and reports those stores also are nearly completed. Fresh & Easy Buzz talked to a representative of the city of Tempe building department today who told us the Tempe Marketside store also looks to be nearly completed.

The Fresh & Easy Buzz correspondent reports the Mesa Marketside store (pictured at the top of this piece) is slightly larger inside than a Tesco Fresh & Easy Neighborhood Market store, which tracks with our previous reports. Fresh & Easy stores average about 10,000 -to- 13,000 square feet, while the Wal-Mart Marketside stores average about 15,000 -to- 20,000 square feet.

The Marketside store does look very similar to a Fresh & Easy grocery store on the outside however, the Fresh & Buzz correspondent reports, although he said they have a slightly more upscale look than the Fresh & Easy stores in converted retail buildings do, including the use of natural wood around the outside of the front entrance along with the use of purple European-style awnings. And just like Tesco's Fresh & Easy stores, which do not mention the Tesco name on the store signage, the Marketside stores also omit any mention of "Wal-Mart" on the Marketside store signage.

As we've reported previously in Fresh & Easy Buzz, the initial four Phoenix Metro region Marketside stores are being put in former drug stores which Wal-Mart is converting to its Marketside format. This is a strategy similar to Tesco's, in that the majority of its current 74 Fresh & Easy small-format combination basic grocery and fresh foods stores are located in former retail buildings, many of which were once drug stores, supermarkets and other retail venues.

Additionally, like Tesco, which also is building some of its Fresh & Easy Neighborhood Market grocery stores from the ground up, so to does Wal-Mart plan to carry out a combination strategy in which it will locate some of its Marketside stores in former retail store buildings like it is doing with the first four stores, while also planning to build some Marketside grocery markets from the ground up, as we've previously reported.

In addition to looking at least three additional sites, two of which are likely to be built from the ground up Marketside stores, in the Phoenix Metropolitan area, we've also reported Wal-Mart is looking at potential locations for the combination in-store fresh, prepared foods and grocery markets in the Reno, Nevada region and in both Southern and Northern California. Wal-Mart is looking at putting the Marketside stores in both existing empty retail buildings as well as looking at built from the ground up sites in these regions.

Wal-Mart has confirmed it plans to at least initially opened ten Marketside stores as what it calls an initial pilot. Based on information from our sources, we expect 6-7 of those 10 Marketside stores to be in the Phoenix, Arizona region and the other four to most likely be in California, with the possibility of one in the Reno area in Northern Nevada.

We know though that Wal-Mart is scouting locations for far more than those initial 10 Marketside sites. However, our sources tell us the retailer plans to identify the sites but not sign leases on them until the ten initial stores have opened and have been operating for a while, so that the retailer can evaluate the stores, tweak the merchandising and operations, and evaluate other aspects such as pricing.

Wal-Mart believes doing this is particularly important because the Marketside stores will feature fresh, prepared foods made in kitchens inside the stores. Since this will be the first time the retailer has attempted such in-store fresh food preparation it wants to get it right before rolling out more than the initial 10 Marketside stores, our sources tell us.

Additionally, with the poor U.S. economy which is favoring Wal-Mart's discount Supercenters over all other food retailing formats in the U.S. at present, the retailer has decided to take a more cautious approach with its more upscale Marketside stores than it originally planned when it started developing the stores in early 2007, when the U.S. economy was on much more solid footing than it currently is.

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