Thursday, October 2, 2008

Wal-Mart Marketside Countdown: Two Days to Go Until the Mega-Retailer's First Four 'Small-Marts' Open in the Phoenix, Arizona Region

Wal-Mart Marketside, Arizona - Continuing Coverage & Analysis

As we've been reporting and writing about in Fresh & Easy Buzz, Wal-Mart, Inc. is set to open its first four small-format combination grocery and fresh foods Marketside stores in just two days, on Saturday, August 4, in the Phoenix, Arizona East Valley region cities of Gilbert, Chandler, Mesa and Tempe.

As we've been reporting for months now, Wal-Mart will place a heavy emphasis on convenience, freshness and low price in the Marketside stores.

The Marketside concept and store format is very "food-centric."

For example, the fresh, prepared foods will be made in kitchens located right in the stores. There also will be seating areas in the markets where about 9 -to- 10 customers at a time can eat-in. Take-out is the major focus of the Marketside prepared foods category though.

The prepared foods sold in Tesco's Fresh & Easy stores are made at a central kitchen facility in Southern California, then shipped to the stores in Southern California, Southern Nevada and Arizona.

Fresh produce, meats and deli will be featured in the Marketside stores as well, just as they are in Fresh & Easy markets.

Nearly all of the fresh produce in Fresh & Easy grocery stores are pre-packaged in plastic tubs or plastic bags.

Wal-Mart's Marketside stores will merchandise a mix of bulk and pre-packaged produce, similar to what Safeway Stores, Inc. does in its small-format "the market by Vons" store in Long Beach, California, which is about 15,000 square feet.

On the grocery side, national and regional brand items and some store brands will share space in the Marketside stores with natural, organic and specialty products.

Marketside will have far more skus of nationally and regional branded items than Fresh & Easy stores do however. About 60-65% of the items sold in Fresh & Easy markets are under the fresh & easy store label.

Additionally, since the Marketside stores range from about 4,000 -to- 6,000 square feet (the four Arizona stores are from 15,000 -to- nearly 18,000 square feet respectively, compared to 10,000 -to- about 13,000 square feet for Fresh & Easy stores), Wal-Mart's small-format markets will carry more total skus across all categories than Tesco's Fresh & Easy stores do. Wal-Mart's Amee Chande, vice president of strategy and marketing for Marketside, says the stores carry in the neighborhood of 7,000 -to- 10,00 skus, which is considerably more than Fresh & Easy stores merchandise.

Additionally, as you can see in the Marketside, Arizona interior store photograph directly above, the Marketside stores use more traditional high profile shelving with attractive wood-trimmed end-cap units, again similar to what Safeway is using in its "The Market" format, rather than the utilitarian warehouse-style shelving used by Fresh & Easy and Trader Joe's, for example.

Another difference between the Marketside stores and Tesco's Fresh & Easy is that while both small-format markets sell beers and wine, Marketside also will sell spirits, which could help the store in terms of increasing its average ring or market basket size since spirits generally are higher-ticket items. Fresh & Easy stores don't offer spirits.

Wal-Mart's Chande also confirms the Marketside stores will be full-service-oriented, which we've been saying for sometime in the blog. For example, the markets will offer full-service checkout and bagging at the front-end unlike Fresh & Easy stores which feature customer self- checkout and bagging, although if asked a store clerk will assist shoppers with checkout.

That full-service model obviously also extends to the Marketside prepared foods category since the foods will be prepared by a chef in the in-store kitchen (some items will be prepared ahead and packaged for quick take-out of course) and additionally the stores have the full-service eating area in them.

Among the features of the in-store kitchen include a wood burning open hearth oven for baking breads, pizzas and related items.

As we've reported, the Marketside store format is divided into sections with names like The Deli, The Bakery, The Garden (fresh produce), The Butcher Shop (meat department) and so on.

Lastly, Chande confirms what we've been reporting since we first wrote about Marketside last year, which is that although the store prices may not be as low overall as at the retailer's Supercenters, the focus is on competitive prices across all categories, including offering 6 -to- 12 basic items like milk, eggs, butter and the like at what Wal-Mart is calling "the lowest" everyday prices.

Below are a few Marketside items and prices Wal-Mart's Amee Chande has released:

Prepared meals and side dishes:

>Family-size chicken tamales over Spanish-style rice, $8
>Family-style penne pasta with sliced grilled chicken breast in creamy alfredo sauce, $8 >Classic-style meat lasagna with ground beef, ricotta, mozzarella and parmesan cheeses, $6 >Garlic mashed red-skin potatoes, $4
>Coconut curry pilaf with mild yellow curry, apricots and almonds, $4.

Ready-to-Eat Sandwiches, burritos and wraps:

>Pepperoni and salami with provolone and balsamic vinaigrette, $4
>Fire-grilled chicken burrito with cilantro rice, black beans, chicken and cheddar cheese, $4


>Marketside brand fresh ground Ccffee, $4.98 per pound
>Black Angus choice beef rib-eye boneless steak, $10.98
>Ready-to-steam baby green zucchini, $4.48 (8 oz)
>Mixed fruit bowls, $2.98 (10.5 oz)

Looking at the prices, they aren't "door openers" by any means. The prepared foods item prices are good, especially if they taste as good as the descriptions of them and ingredients in them would suggest.

However, the "grocery items" prices are comparatively on the high end, particularly the $10.98 per pound choice beef rib-eye steak and the $4.48 (8oz) baby green ready-to-steam zucchini. All zucchini is essentially ready-to-steam. You just wash it and steam it.

This week numerous supermarkets throughout the Western U.S. have non-baby zucchini on sale for 99 cents -to- $1.19 per pound. Paying an over $3 premium for baby zucchini seems a bit odd in this current economy, especially considering how well Wal-Mart knows what the market will bear at present.

The sample size of the items and prices is tiny though. Therefore we will wait and see further what the overall pricing scheme is when we are able to survey the Marketside stores.

Meanwhile, as we reported earlier today, Tesco opened two more Fresh & Easy markets in the Phoenix area today, bringing its store count in the region up to 26. The grocery chain has confirmed it plans to open at least 37 Fresh & Easy stores in the Phoenix and Valley regions.

The clock is ticking with only two days until the opening of the first four Marketside food and grocery stores in Gilbert, Chandler, Mesa and Tempe, Arizona -- all of which are only about 1 -to- 2 miles from Fresh & Easy markets in each of those cities, by the way.

It will be interesting to see if Arizona shoppers who are used to Wal-Mart as a "Mega-Mart" retailer decide to spend their money at what now also is a "Small-Mart" retailer.

Perhaps with everything else in life shrinking -- the paycheck, the savings and checking accounts, the size of automobiles -- consumers also will decide its time to "get small" when it comes to grocery shopping. If so, Arizona will be ground-zero for the battle of the "Small-Marts" -- not just between Tesco and Wal-Mart either -- but also Trader Joe's, and perhaps soon Safeway with its first "The Market" format store in the state.

Below are the addresses of the four Marketside stores opening on Saturday, October 4:

>Gilbert: northwest corner of Elliot and Cooper roads
>Chandler: southwest corner of Ray and McQueen roads
>Mesa: northwest corner of Sossaman and Baseline roads
>Tempe: northeast corner of Rural and Elliot roads

Click here for map directions for each store location.


Related stories from Fresh & Easy Buzz:

October 2, 2008: Arizona Market Report: Fresh & Easy Opens Two New Stores; Marketside Opens in Three Days; Analysis of One Of the Most Competitive Markets in the U.S.

October 1, 2008: 'The Promotional Pundit:' Fresh & Easy Buzz Analyzes, Offers Suggestions and Grades Tesco Fresh & Easy's Bi-Weekly Advertising Flyer

September 30, 2008: News & Analysis: Tesco Reports Half-Year Financials; Reports Loss For Fresh & Easy USA and Sales Per Square Foot Averages

September 29, 2008: 'Will it Play In Peoria?' Wal-Mart Will Open its Fifth Arizona Marketside Store Later This Year in Peoria, Arizona

September 29, 2008: Wal-Mart Offers its Own 'Peek' Inside it's Small-Format Marketside As Part of A One-Week Countdown to the Stores' Oct. 4 Openings in Arizona

September 29, 2008: Special Report: Wal-Mart, Inc. Studying Second Small-Format Food and Grocery Store Concept; the 'Bodega' or Modern Version of the Corner Grocery Store

September 26, 2008: Real Estate Group Selling the Four Wal-Mart Marketside Small-Format Grocery Stores Set to Open on Oct. 4; Plus Data on the Store's Exact Sizes

September 26, 2008: Fresh & Easy Buzz Gets A Peek -- And it Was Only A Peek -- Inside One of the Four New Wal-Mart Marketside Stores Opening in Arizona On October 4

September 26, 2008: News & Analysis: Employees At Two More Fresh & Easy Grocery Stores Could Soon Request UFCW Union Recognition From Tesco's Fresh & Easy

September 24, 2008: Breaking News: Wal-Mart to Open its Four Marketside Food and Grocery Markets in the Phoeniz, AZ Metropolitan Region on October 4

September 23, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

September 15, 2008: Wal-Mart Expanding its Discount Store-to-Supercenter Conversion Program As Part of its Strategy to Grab Even More Food and Grocery Sales Market Share

September 15, 2008: Wal-Mart's Chief Merchandising Officer Reiterates CEO's Words that it's 'Keeping Tabs' On Tesco's Fresh & Easy Today at Bank of America Conference

September 12, 2008: Thinking Out Loud: We Reply to A Reader's Request About Retail Strategy; Tesco's Fresh & Easy and Wal-Mart's Marketside

September 12, 2008: CEO's Can Say the 'Darndest Things': Wal-Mart CEO Lee Scott Says He Has Faith Tesco Will Succeed With Fresh & Easy; It's A Small-Mart World After All

September 10, 2008: Fresh & Easy Planning to Introduce Over 200 New Store Brand Items By the End of the Year; Prepared Foods, Coffees and Teas, Snacks Among the Selection

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

September 7, 2008: Analysis & Commentary: Should Tesco's Fresh & Easy Put An Asterisk Next to its Motto? Yes; Unless it Corrects Four Operational Omissions

August 27, 2008: Wal-Mart's Four Phoenix Metro Arizona Small-Format 'Marketside' Community Grocery Stores Nearing Completion; Openings Just Weeks Away

August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

August 11, 2008: Arizona Region Market Report: Which Food Retailer Will Seize the Opportunity Offered by the Lack of a Grocery Store in Downtown Tempe, Arizona?

August 11, 2008: Wal-Mart's Small-Format Marketside Strategy is Currently Neither A 1,500 Store, $10 Billion A Year Mega Plan, Nor A Mere Four Store Test

August 9, 2008: Proximity Matters: More On the Upcoming Tesco Fresh & Easy-Wal-Mart Face Off in the Metro Phoenix, Arizona Market

August 8, 2008: Analysis & Commentary: Wal-Mart's Marketside As Part Of it's Multi-Format Category-Killer Strategy Spells Trouble For Tesco's Fresh & Easy

August 7, 2008: Pie in the Sky or Pie in the Face to Tesco's Fresh & Easy: Does Wal-Mart, Inc. Plan to Build A $10 Billion A Year 'Small-Mart' Empire?

July 29, 2008: Metro Phoenix Arizona Market Report: Tesco Opens Store Number Twenty in Phoenix Market; We Use That Milestone to Offer A Market Overview and Analysis

July 25, 2008: Metro Phoenix Arizona Market Report: Tesco Opens Store Number Twenty in Phoenix Market; We Use That Milestone to Offer A Market Overview and Analysis

June 26, 2008: Phoenix, Arizona Metro Market Report: More Competition in an Already Hot Market as Pro's Ranch Markets Plans Two New Stores in Phoenix Metro Market

June 24, 2008: Competitor News: Wal Mart Launches New 'Marketside' Website; Announces First Four Stores in Arizona to Open in the Fall Rather Than Summer

June 23, 2008: Competitor News: Wal-Mart's Marketside On A Hiring Tear; Getting Closer to Opening Small-Format Fresh Food & Grocery Stores in the Phoenix, AZ Region

June 20, 2008: Competitor News: Wal-Mart Executive in Charge of Small-Format 'Marketside' Format Development Leaving to Join UK Bicycle Retailer Halfords Group PLC

June 16, 2008: Wal-Mart and Tesco: The Cross-Atlantic Competition Continues to Heat Up; Almost Hot Enough to Make Uber-Cool British Secret Agent James Bond Flinch

June 8, 2008: Arizona Region Market Report: First Signs of A Weakening Might Be Starting to Show in the 'White-Hot,' 'Super-Competitive' Arizona Market

June 6, 2008: Wal-Mart USA Chief Eduardo Castro-Wright Confirms Fresh & Easy Buzz Reportage on 'Marketside,' Adds Information From the WM Corporate Side

May 18, 2008: Wal-Mart Looking For Sites in California For it's Small-Format 'Marketside' Grocery Stores

February 12, 2008: Wal-Mart's New Logo For It's 'Marketside' Small-Format Grocery Stores Unveiled

January 18, 2008: Wal-Mart and Safeway vs. Fresh & Easy

January 16, 2008: Wal-Mart and Safeway Stores Could 'Box' Tesco in With New Small Format Stores

January 14, 2008: Citigroup Supermarket Industry Analyst Confirms Wal-Mart Small Marts in Arizona

January 14, 2008: Wal-Mart Confirms it Will Test New Small Store Format Later This Year

January 13, 2008: The Battle of the Retail Titans Begins: Wal-Mart to Open Small Format Stores in Arizona

{Photo credit: photo second from the top: Andrea Bloom,]

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