Wednesday, September 10, 2008

Financial Times Follows Fresh & Easy Buzz's Lead in Reporting on Wal-Mart's Plans to Open Marketside Stores in Southern California

Fresh & Easy Buzz was the first publication to report months ago that Wal-Mart is planning to open some of its new small-format Marketside combination grocery and fresh foods markets in Southern California (and Northern California), along with its first four markets set to open in the Phoenix, Arizona market this fall.

We also are the only publication to date (on June 6, 2008) to report Wal-Mart is considering locating a small-format Marketside store in a major new mixed-use development in Reno, in northern Nevada.

We first reported Wal-Mart planned to locate Marketside stores in Southern and Northern California as early as December, 2007. Since then we've filled out that story with numerous pieces about the development.

For example, in this May 18, 2008 story, "Wal-Mart Looking For Sites in California For it's Small-Format 'Marketside' Grocery Stores," we reported on the progress Wal-Mart is making in terms of searching for Marketside store locations in Southern and Northern California.

Fresh & Easy Buzz also was the first to report that among the regions and cities Wal-Mart is targeting in Southern California for its Marketside stores includes San Diego County, including downtown San Diego itself.

Today's edition of the Financial Times newspaper is confirming Fresh & Easy Buzz's enterprise reporting that Wal-Mart indeed has plans to open some of its small-format Marketside grocery stores in Southern California. Specifically, the publication is confirming Wal-Mart plans to open two Marketside stores in the San Diego region, one in downtown San Diego as we reported and the other in the nearby city of Oceanside.

The downtown San Diego location (in the new residential condominium project) is the one we previously reported on in what is often referred to as the city's Gaslamp downtown district.

You can read the Financial Times' report, "Wal-Mart takes on Tesco's US chain," which confirms Fresh & Easy Buzz's reporting of months ago, here.

More Marketside units to come in California

As we've reported previously, the San Diego region is far from the only part of Southern California , and California as a whole, where Wal-Mart plans to open Marketside stores.

In addition, as we've also reported based on information from our sources, Wal-Mart also has plans to open its small-format Marketside grocery stores--which will offer a basic selection of grocery products, fresh foods, and in-store prepared ready-to-eat and ready-to-heat meals and side dishes--in Northern California, with a specific focus on the San Francisco Bay Area.

Wal-Mart has had a difficult time being able to gain approval for its combination food, grocery and general merchandise Supercenters in the Bay Area because of city government and consumer group opposition to the mega-stores which average about 180,000 square feet. Therefore, the retailer hopes in-part to be able to increase its market share in the food and grocery categories in the lucrative Bay Area market by locating the smaller and different style Marketside stores, which don't use Wal-Mart at all as a part of the banner, in the region.

Wal-Mart also believes the somewhat upscale positioning of the Marketside stores, which includes the in-store fresh, prepared foods offering, is "ripe" for Bay Area consumers, who are among the most food-conscious shoppers in America.

The original Marketside development team, led by former Wal-Mart executive David Wild, conducted "Project Marketside" out of Wal-Mart's offices near San Francisco, where the retailer operates its online business from.

It was no accident then Wal-Mart director of new business development Wild chose to do so. He lived in the Bay Area before returning to the United Kingdom to take a CEO job with Britain's leading auto parts and bicycle-maker earlier this year, and took much of the inspiration for the in-store fresh, prepared foods approach for Marketside from a number of the region's grocery chains and independents such as Andronico's Markets, Lunardi's, Draegers, Mollie Stone, Whole Foods Market and even Safeway Stores, Inc. These Bay Area grocers, along with others, are among the pioneers of in-store fresh foods merchandising in the United States.

The San Francisco Bay Area also provided a perfect backdrop for the urban strategy aspect of Marketside, which is to locate the small-format stores in big city's like San Diego and San Francisco, as well as putting them in suburbs like the suburban Phoenix, Arizona cities the first four stores set to open in just weeks are located in.

We also know Wal-Mart has searched for more than one location in the city of San Francisco itself for its Marketside stores, along with looking in San Jose and various Bay Area suburban cities.

Tesco's Fresh & Easy and Northern California

Tesco's Fresh & Easy Neigborhood Market has at least 21 locations to date locked up in the San Francisco Bay Area for its small-format combination basic grocery and fresh foods markets. Further, Tesco is in the process of looking for and gaining leases on additional sites for its Fresh & Easy stores in the Bay Area.

Tesco also currently has leases for about 19 Fresh & Easy stores for the Sacramento Metropolitan region in Northern California. It plans to add more locations in the Sacramento Metro region as well.

The first Bay Area and Sacramento region Fresh & Easy stores were scheduled first to open before the end of this year. Tesco then changed this to having the first stores open in early 2009. However, based on our sources and observation of the states of the various store projects in Northern California, it's our estimation the first Northern California stores won't likely open until at least the beginning of the second quarter of 2009, likely no earlier than April, 2009.

Fresh & Easy and Southern California

Southern California, which Wal-Mart will enter with its small-format Marketside stores, remains Tesco's number one market region for Fresh & Easy. Over half of its current 78 stores are located in the region, as is its corporate headquarters and 800,000-plus square foot distribution center. Tesco also will open many more Fresh & Easy stores in Southern California this year and in 2009.

As is the case with the four Marketside stores opening this fall in Arizona, which are all located one -to- two miles from existing Fresh & Easy markets, the planned Marketside unit in Oceanside, California also is located in that same range.

Locating the Marketside stores close to existing Tesco Fresh & Easy markets is part of (but far from exclusively) Wal-Mart's strategy with its small-format grocery and fresh foods stores.

Wal-Mart wants to see how the format differences--chief among those differences being the Marketside stores will make its fresh, prepared foods in-store (as well as having in-store seating for about 10 customers at a time) rather than having the foods prepared at a central kitchen and then shipped to the stores like Fresh & Easy does--of its Marketside stores play out head-to-head with Tesco's Fresh & Easy.

Since Marketside is merely one-part of a three format food retailing strategy for Wal-Mart--along with its Supercenters and 45,000 square foot Neighborhood Market supermarkets--the retailer plans to observe and analyze the sales at those Marketside stores located near Fresh & Easy grocery markets rather than rollout scores of stores rapidly as Tesco is doing with Fresh & Easy, which is a single food retailing strategy for Tesco thus far in the U.S.


Click Here for a selection of Fresh & Easy Buzz past reports and stories about Wal-Mart Marketside.

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