Competitor News: Safeway Stores, Inc. Confirms Second Small-Format 'The Market' Unit to Be in San Jose, CA; Fresh & Easy Buzz Nailed it in June, 2008

Pleasanton, California-based Safeway Stores, Inc., which operates about 1,715 supermarkets in the U.S. and Canada, with about 1,000 of those stores located in the Western U.S., today publicly confirmed to Fresh & Easy Buzz a couple news reports published on January 27-28 in two San Francisco Bay Area , California newspapers (and way back in June, 2008 in Fresh & Easy Buzz) that it plans to open its second "The Market" small-format food and grocery store this summer. Those reports are here: Safeway to move into San Jose's 88 tower (Biz Journal); and here: Safeway coming to downtown San Jose, officials say (San Jose Mercury News).

The about 24,000 square foot store, to be called "the market by Safeway," will be located in downtown San Jose, California. It will be the ground-floor retail anchor of the "88," a new condominium tower (pictured at the top) located on San Fernando and Second Streets in the city's downtown, as we reported in our June, 2008 story. Safeway plans to open the store in the building in the mid-to-late summer of this year, it confirmed today.

Fresh & Easy Buzz nailed the San Jose 'The Market' in June, 2008 story

But this development shouldn't be a surprise to Fresh & Easy Buzz readers. We reported the news that Safeway was planning to open its second "The Market" small-format food and grocery market in the downtown San Jose condominium tower in this story [Breaking News: Safeway Stores, Inc. Nearing Negotiation End-Game For its Second Small-Format 'The Market' Store Site; This One in San Jose, California] on June 5, 2008. We even included a picture of the condo tower -- the one at the top of this story -- in the piece.

Additionally, It was over a year ago in January, 2008 when we first reported Safeway Stores, Inc. had hired the San Jose-based Cornish & Cary commercial real estate firm to locate about five sites in the Bay Area for the supermarket chain's initial "The Market" format stores in the region. We identified downtown San Jose as one of five potential sites then, naming the specific site later and then reporting and writing about it more fully in June, 2008.

The downtown San Jose condominium tower site will be the first Northern California or Bay Area site where Safeway will open one if its "The Market" small-format stores. As we've reported on and written about, the grocery chain's first "The Market" format store, "the market by Vons," opened in the fall of 2008 in Long Beach, in Southern California. Safeway is headquartered in the San Francisco Bay Area city of Pleasanton, which is about a 45 minute drive from San Jose.

As we reported in our June, 2008 story about the downtown San Jose "the market by Safeway," it will be bigger than the "market by Vons" in Long Beach. That's because the Long Beach store went into an existing, older and smaller Vons banner supermarket. The San Jose space is being designed from the ground-up in existing retail space on at the bottom of the condominium tower. The Long Beach small-format store is about 15,000 square feet. Plans call for the San Jose "The Market" format store to be about 24,000 square feet, which is still much smaller than the average new Safeway supermarket, which ranges from 45,000 -to- 60,000 square feet.

The San Jose "the market by Safeway" also will feature some expanded sections, particularly basic grocery, produce, meat and non-foods, as compared to the Long Beach "The Market" format store. The reason for this is because although there is a supermarket just a half-block away from where "the market by Safeway" will be located in downtown San Jose, that supermarket, a Zanotto's store, has an upscale and specialty focus, although it also stocks a selection of basic food and grocery products. Zanotto's is a well-established, longtime multi-store independent grocery chain based not far from San Jose in the coastal city of Scott's Valley, California.

In this early December, 2008 story we wrote about how Safeway CEO Steve Burd said the supermarket chain was learning much about small-format food retailing from the Long Beach store. We can tell readers that Safeway plans to put much of what it's learned thus far from that store into changes in the San Jose "the market by Safeway" when it opens this summer. One hint from some recent reporting: Look for a greater selection of basic food and grocery items at value-oriented prices in the downtown San Jose "The market" store, as compared to the Long Beach, California "the market by Vons."

Having "the market by Safeway" so close to its downtown San Jose store could be a problem for Zanottos. The store has struggles in the location and even received a subsidy from the city's redevelopment agency in order to open in 1997.

Safeway continues to plan to open additional small-format "The Market" stores in the San Francisco Bay Area, as well as in Southern California. The retailer is taking a slow and cautious approach its "The Market", using it as fill-in type format while remaining focused on its Lifestyle format supermarkets in terms of its primary retailing focus. [Read the December 12, 2008 story linked below for further details.]

We will have additional reporting, writing and analysis on Safeway's "The Market" and the upcoming new downtown San Jose, California store in a soon to come story.

Linkage - Below are some past, related posts from Fresh & Easy Buzz on Safeway's "The Market."

[December 12, 2008: Competitor News: Safeway CEO Steve Burd Says Small-Format 'The Market' Is 'Good' So Far But Not 'Great;' But Must Be 'Great' in Order To Expand...

June 5, 2008: Breaking News: Safeway Stores, Inc. Nearing Negotiation End-Game For its Second Small-Format 'The Market' Store Site; This One in San Jose, California... March 5, 2008: New Details and Analysis About Safeway's Small-Format Summer SF Bay Area Surprise for Tesco's Fresh & Easy Neighborhood Market...

May 15, 2008: Breaking News: Safeway Opens its First Small-Format 'The Market' Grocery Store Today in Long Beach, California... July 25, 2008: Breaking Competitor News: Safeway Stores, Inc. Plans to Open A Small-Format 'the market by Vons' Grocery Store in Downtown Los Angeles...

July 8, 2008: Southern California Market Report: Safeway Stores,'the market by Vons' Mass-Mails First Advertising and Promotional Flyer to Vons Club Card Members... June 6, 2008: More on Safeway's 'The Market' Format: 20-Year Food Retailing Industry Vet Offers Observations and Analysis on 'the Market by Vons,' Long Beach, CA.]

Breaking Buzz: Tesco's Fresh & Easy Distributes its First Promotional E-Mail Alert Today; Has the Grocer Been Reading Fresh & Easy Buzz This Week?

Tesco's Fresh & Easy Neighborhood Market sent out its first e-mail promotional alert today to consumers who've signed up for the program, which Fresh & Easy Buzz was the first publication to report on in this December 22, 2008 piece [Marketing: Tesco's Fresh & Easy Launches E-Mail Promo Alert Program; Something Fresh & Easy Buzz First Suggested it Do Many Months Ago].

Fresh & Easy's first e-mail alert dated today, January 30, 2009, is a version of its current promotional flyer promoting food and beverage items for this Sunday's Super Bowl. We wrote about the paper, direct-mailed version of that flyer on Tuesday (January 27, 2009) in this piece [Tesco Fresh & Easy's 'New' Advertising Flyer: Minimalism Without Thought or Design Does Not A Retail Advertising Communications Piece Make].

The Fresh & Easy e-mail alert of its Super Bowl promotional flyer, well-timed just two days before the Super Bowl, contains some good prices on game-day food and beverage items, including the grocer's $5.99 mixed-meat grill pack, 24-packs of Coke and Diet Coke for $5.99 each, and an 18-pack of Tourino Beer for $6.99, along with a few other sale-priced beverage, snack and related items, and a few versions of its new 98-Cent Produce packs. Below is the e-mail alert:

From: Fresh & Easy Neighborhood Market
Date sent: 01/30/2009 08:01:26 am
Subject: Check out our big savings for the big game.

Click here to view the promotional flyer contained in today's Fresh & Easy e-mail alert.

Did Tesco's Fresh & Easy read our January 27 piece?

The e-mail alert promotional flyer distributed to cyber-mailboxes today also contains an online version one of Fresh & Easy's discount store coupons. But it's not one of the grocery chain's normal $5 off (purchases of $20 or more) or $6 off (purchases of $30 or more) store coupons. Instead the coupon offered in the e-mail alert flyer today is one good for $10 off total purchases of $50 or more at Fresh & Easy markets. [View today's $10 off online coupon here.]

In addition, the $10 off coupon in today's e-mail alert flyer is good only for three days -- today, Saturday and Sunday, unlike the normally one, two and even three week shelf life the Fresh & Easy discount store coupons normally have.

In our story on Tuesday, January 27, we suggested two things Tesco's Fresh & Easy should experiment with regarding its store coupons. The first one is that instead of using just the $5 off purchases of $20 or more and the $6 off purchases of $30 or more deep-discount coupons, we suggested the retailer should offer store coupons that encourage higher shopper purchasing limits and offer lower percentage discounts. We specifically suggested Fresh & Easy should offer coupons good for $10 off purchases of $50 or more and coupons good for $25 off purchases of $100 or more. [The story linked above explains why we suggest doing this.] It appears the grocery chain is trying one of our suggested versions -- the $10 off purchases of $50 or more -- in the e-mail alert flyer/coupon distributed today.

Additionally, in that Tuesday piece, we suggested Fresh & Easy Neighborhood Market also should play around more with the expiration dates of these coupons. We specifically suggested it take a page from the Sacramento, California-based Raley's supermarket chain and at times offer the $10 off and $25 off coupons with only a three day shelf life -- Friday, Saturday and Sunday -- just like the $10 off coupon it has in its e-mail alert flyer today.

E-mail alert deja vu

In this story we wrote and published way back in May, 2008, Fresh & Easy Buzz suggested Tesco's Fresh & Easy was missing out on a very powerful marketing and promotional tool by not having an e-mail alert type promotional system, like numerous other food and grocery chains have started offering in recent times.

Below (in italics) is a paragraph from our May 4, 2008 piece on the topic:

"Additionally, although we searched for it, we can't seem to find a function on the Fresh & Easy website in which a customer or potential customer can put in their email address and receive the online advertising circular in their email box like one can with Aldi. Adding this function is cheap to do, and Fresh & Easy is missing the boat by not having such a simple yet powerful tool on its website. [If there is such a feature, and we missed it, it means it's hard to find because we searched all over the site for it.]"[Read our complete May 4, 2008 story on the topic here.]

In December, 2008, as we reported here, Tesco's Fresh & Easy started asking consumers via its Web site to sign-up for just such an e-mail alert program, which they said would be coming soon. Today's promotional e-mail is the first alert the grocery chain has distributed that we are aware of.

Digital marketing and promo 2.0

Today's Super Bowl themed promotional e-mail alert flyer from Fresh & Easy Neighborhood Market demonstrates the marketing power of such systems, just as we argued is the case in that May 4, 2008 story.

Unlike nearly all of its competitors, who run weekly advertising circulars, Fresh & Easy's paper and online ad flyer is good for three weeks at a time. This means that unlike its major competitors, Fresh & Easy can't offer as well-timed theme promotions in its flyers as they can.

For example, Safeway, Ralphs, Bashas, Fry's Albertsons and all the others major supermarket chains in Southern California, Nevada and Arizona used a Super Bowl theme in their weekly ads which broke two or three days ago, beginning either on Tuesday or Wednesday depending on the specific chain's ad schedule. Fresh & Easy had to use a Super Bowl theme more than two weeks ago when its ad flyer came out. Events like the Super Bowl don't become top-of- mind with consumers until the week leading up to the event, and don't really become top-of- mind in any real way until a couple days prior to the event, when all the media hype about Super Bowl Sunday is in full bloom.

Therefore, as a result of its good-for-three-weeks nature, the Fresh & Easy ad flyer is a stale media product compared to the weekly ad circulars its competitors use. But now, with the e-mail alert program, Fresh & Easy can turn that stale ad flyer in to a fresh baked and delivered version, at least from an online standpoint. If it wants to do the same with the paper version then it obviously needs to mail it out, timed to arrive in consumers' mailboxes today, which is regularly does with supplemental flyers to its once-every-three-week-distributed regular ad flyer. We suspect, but have yet to check and verify, that Fresh & Easy is sent out a paper version of the flyer to arrive at homes today.

But the online flyer is dirt cheap to distribute. And it can be re-distributed again for near-zero cost. For example, the promotional flyer e-mail alert sent today can be sent a second time on Saturday afternoon as a reminder to stock up for Super Bowl Sunday. And unlike with paper flyers -- which at this point in time do reach more consumers but likely won't a year or two from now when Fresh & Easy bulds-up a bigger e-mail alert data base -- the second e-mail alert doesn't cost any additional money (accept to pay an employee to click "send") to e-mail tomorrow, if the grocer chooses to do so. That's the power of digital/Internet-based marketing. And as Fresh & Easy gets more consumers to sign up for the e-mail alerts, that power will continue to multiple.

Earl-Grey-At-Large: Fresh & Easy Buzz's Sometime Humor Columnist Drops in For A Bit Of Pre-Super Bowl Musing On 'Carnivores' V. 'Vegetarians'

It's only in the mind of Earl Grey that Fresh & Easy Neighborhood Market's fresh meat grill packs, animal welfare group PETA and the Superbowl can all come together in a column. Read what the pond-hopping Earl of Teadom says below.

In the pre-Super Bowl Sunday battle between the "Carnivores" and the "Vegetarians" the score currently is one -to- nothing in favor of the meat lovers.

On the carnivores' side is Tesco's Fresh & Easy Neighborhood Market which has brought back it popular multi-meat Grill Pack this week in what the grocer says is "just in time for Super Bowl Sunday. Billed as a special "game day" grill pack the mighty bundle of fresh meats contains close to five pounds of beef patties, pork sausages and pre-seasoned chicken parts, all ready for the grill on Super Bowl Sunday.

To be more precise: "Fresh & Easy's Grill Pack includes a mixture of six to eight chili-seasoned chicken thighs or drumsticks, four Italian pork sausages and four quarter-pound beef patties," according to the grocery and fresh foods chain.

The fresh meat display cases in the 110 Fresh & Easy food markets in Southern California, Nevada and Arizona are stacked high with the carnivore-friendly meat packs, awaiting Super Bowl Sunday shoppers who plan to get their meat-on for the game.

Meanwhile, over on the vegetarian bench things aren't looking so good, although the all-female players on the team look gorgeous -- and seem to be snacking on healthy veggies.

You see, NBC, the network that's televising the Super Bowl, has rejected a Super Bowl Sunday TV ad from the animal rights and pro-veggie, carnivore-disliking non-profit organization PETA (People for the Ethical Treatment of Animals.) In rejecting the Peta Super Bowl commercial, called "Veggie Love," NBC says the spot is just to sexy, to hot and steamy, for it to show on game day. Bloody fools.

The PETA ad features a number of very attractive woman dressed in lingerie and high heels celebrating the raw and sensual aspects of fresh veggies. The ad, similar to some of the group's previous sexy ads and public service spots, is designed to show how sexy and sensual vegetarianism can be, compared to eating the meat of animals. Both can rather sexy to me though, especially with a cup of good tea.

But meat lovers fear not. The brass at NBC has decided it just can run the PETA ad because it's "way to sexy" to show on Super Bowl Sunday. After all, when was the last time a television network like NBC would allow television programs or commercials that used sex or sensuality as a plot line or premise? Ever watched a soap opera? One doubts the BBC would even blink an eye about such sexy offerings.

There will be no beautiful woman doing things of a non-culinary nature with fresh produce this Super Bowl Sunday; things that might make those of us who do enjoy eating meat think twice about doing so. After all, we all want to be sexy. And it's "Veggie Love" rather than "Love of Meat."

There won't be an ad shown between the grunting, tackling, running, bottom slapping (and passing of the pig skin) this Super Bowl that might convince carnivores to join the other side. (I just realized those words could be considered sexy to some as well.) NBC has ruled against such a mix of football, sensuality and fresh produce on game day this year. So nice we have a TV network to make our decisions for us.

And perhaps that's a good thing for us meat lovers. After all, if that PETA "Veggie Love" commercial played while we were mid-bite into our burger, seasoned chicken thigh or Italian sausage -- the fresh meat from the Fresh & Easy Grill Pack we shall purchase on Saturday while in Gilbert, Arizona doing a tea seminar and then grill-up early Sunday so it will be ready when the game starts -- we might forever more forgo the delights of the flesh (meat) and instead associate all that is sexy and sensual with fresh veggies only, pushing the meat plate aside in favor of the raw carrot, celery, broccoli and cauliflower veggie plate previously sitting completely full on the living room coffee table.

I might even go as far as to return all of the additional fresh meat grill packs we bought for the excellent price of slightly over $1 a pound, exchanging them instead at the local Fresh & Easy market for the equivalent dollar amount of the grocer's new 98-Cent Produce Packs.

But thanks to NBC, this is a dilemma we carnivores will not have to face. We can watch the Super Bowl, a plate filled with burgers, chicken and sausage before us, not fearing that the carnivorous nature of our sexuality will be challenged by a video showing gorgeous and sexy woman demonstrating that not only are veggies delicious and nutritious, but that they also hold the keys to love and sex.

The Super Bowl isn't until Sunday. But the pre-Super Bowl battle between the "Carnivores" and the "Vegetarians" seems to be moving in the direction of a win by the meat eaters.

However, just because the PETA "Veggie Love" commercial won't be shown during the Super Bowl, doesn't mean you can't see it. In fact, with a mere click of your mouse you can view the PETA "Veggie Love" commercial video here. you also can view it by going to the PETA Web site here, where there's also additional information about the video and NBC's decision not to run the advert.

Perhaps if enough meat lovers watch the video between now and Super Bowl Sunday, the pre-game battle between the "Carnivores" and the "Vegetarians" might result in a tie by game time.

Of course, if you are anything like me, you plan on making sure there's plenty of meat and veggies at the table on Super Bowl Sunday, along with plenty of snacks and beverages.

But in case you forget to prepare the fresh veggie tray before the big game, and since I'm providing the link to PETA's sexy, hot and steamy "Veggie Love" video -- the one you won't be able to see in the form of a commercial on Super Bowl Sunday -- you can always take your significant other by the hand during the game's half-time break, head into the kitchen, turn on the laptop computer, click the link to PETA's "Veggie Love" video, and together slice some fresh, raw veggies to go with the Fresh & Easy grill pack meats you already started consuming during the first half of the game.

But if you don't make it out of the kitchen before the second half of the game starts, don't blame Earl Grey -- blame "Veggie Love."

[Editor's Note: Earl Grey, who spent 30 years in a variety of positions in the tea industry in both the United Kingdom and United States, is Fresh & Easy's Buzz's sometime satire/humor correspondent. We call him that for two reasons: He only writes for the Blog sometimes and he is only humorous sometimes.

Earl Grey, who currently works as a freelance tea category specialist and consultant to supermarket chains globally, divides his time between Cheshunt, Hertfordshire, England, where Tesco, which owns and operates Fresh & Easy Neighborhood Market USA, is headquartered, and Lake Havasu City, Arizona, which among other things is home to the original London Bridge, which was rescued by the Lake Havasu Conventional and Tourism Bureau and brought to the city a number of years ago.

Although raised playing and enjoying English-style football in the UK, Earl Grey, who has long lived on both sides of the pond, says he prefers the American version of the game, although he offers no reason as to why that is the case.

Earl Grey says he eats meat and vegetables in about equal quantities. But when we take Earl out to lunch on Fresh & Easy Buzz's dime, it's more like 80% meat dishes to 20% veggies at the restaurant. He loves all meats but also says he enjoys nearly every type of fruit and vegetable. Or as he puts it: I love most of the green ones, a few purple ones, more than one orange one, and veggies of some other colors as well.. Most of all though the carnivorous Earl Grey loves his regular spot of tea.]

Tesco Fresh & Easy's 'New' Advertising Flyer: Minimalism Without Thought or Design Does Not A Retail Advertising Communications Piece Make

Analysis & Commentary

Tesco's Fresh & Easy Neighborhood Market has downscaled the quality and design of the advertising and promotional flyers it regularly mails out to residents of the neighborhoods around its 110 combination grocery and fresh foods stores in Southern California, Metro Las Vegas, Nevada and in the Phoenix, Arizona Metropolitan regional market.

The grocery chain's most recent promotional flyer (dates: January 14 -to- February 3, 2009), its regular every-three-weeks' piece, is a single page of inexpensive-grade white paper with 35 sale items printed in black ink, rather than the full or two-color flyer printed on quality paper Fresh & Easy has been distributing since it started direct-mailing it's promotional pieces in November, 2007, when the grocer's first batch of stores opened. Like all of its direct-mailed promotional flyers, the current single-page flyer includes one (sometimes the flyers have two and even three) of Fresh & Easy's deep-discount coupons -- in this case a coupon good for $6 off purchases of $30 or more.

The current flyer isn't the first one-pager on inexpensive-grade white paper the grocery and fresh foods chain has sent out either. Tesco's Fresh & Easy distributed a similar (printed on the same plain-grade white paper with the text in black ink) one-page supplemental flyer -- which is often something the grocer does in-between its once every three weeks' regular flyer mailings -- just about a week before it distributed the current January 14 -to- February 3 promotional piece. That flyer didn't contain any specific items with specific promotional prices, just some promotional text about items that have low prices on them in-store. Rather, the flyer seemed to be more of a vehicle for the deep-discount coupon, which was the grocer's $5 off purchases of $20 or more version.

Until now, Fresh & Easy's advertising flyers have been graphically (and thus visually) attractive, printed on high quality stock and featuring two or three colors, including its trademark green, as in the color of its "Fresh & Easy" logo. Additionally, the past flyers have been at least two pages in content (front-back with front-back insert inside) and at times more.

The January 14 -to-February 3, 2009 one-page flyer printed on inexpensive white paper has the following tag line at the top: "These days we're all about scoring great deals," which is a good enough tag line in terms of the tie-in between touchdowns (Super Bowl) with scoring good deals (at the grocery store). The flyer's promotional item focus being of course on the upcoming Super Bowl and various related "game day" food and grocery items on sale.

There are eight feature items on the current ad flyer's front page. The items are: the fresh & easy assorted fresh meats grill pack, featured @5.99; 1 lb. package of beef franks @99 cents; Taurino beer @6.99 for an 18-pack; a 24-pack of Coke or Diet Coke @5.99; and Lays brand Ruffles or Tostitos Scoops snack chips (14-14.5 oz packages) @2.99. The flyer's front page also features Fresh & Easy's new "98 Cent Produce Packs" -- in this case a 2 lb whole table carrots pack, a 4-count navel orange pack, and a 2-count package of bell peppers, all at 98 cents.

All of those "front page" feature items are in-line price-wise with what other food and grocery retailers are currently promoting in California, Nevada and Arizona. None are what we would call "super hot." But none are way off-base either. But the Coke and Lays chips can be found on sale for less at a number of competing supermarket chains in the three markets. Nearly all competitor grocers also are offering comparable prices, and some even lower, on the other items. The fresh meat grill pack is a strong deal though. But if shoppers use the $6 off coupon in the flyer the added savings can be considerable, especially if they purchase just $30 (the coupon minimum) worth of the sale items.

In contrast, the back of the one-page advertising flyer printed on the inexpensive white paper contains 27 items, including prepared and frozen foods items, snacks, some basic grocery items, and a few household non-foods items.

The front of the flyer looks not too bad from a design standpoint. However, with 27 items printed on the back side of the page, it looks very cluttered, crowded and not extremely attractive in terms of the layout. If Fresh & Easy is going to stick to this one page flyer we suggest it go back to the design table in terms of the sparse look on the front compared to the overcrowded look on the back of the page. It's just not very visually appealing to the eye. And visual appeal is very important when it comes to direct mail advertising pieces, even if they are on inexpensive paper and minimalist in nature.

We understand what the grocer was trying to do in terms of putting just the eight items on the front page as "feature items," then all of the other (27) items on back as sub-feature and line-item ad items. But it doesn't work. There are simple layout changes that can be made though. For example, there's no need to crowd all 27 sub-feature and line ad items on the back of the one-sheet. Instead a mix can be used on both front and back, for example, so that the single-page flyer looks much more visually attractive. The flyer looks like it wasn't given any design thought at all.

From the look of the last two Fresh & Easy one page, black ink on cheap white paper flyers, it appears clear the grocer is attempting to cut its advertising costs. After all, the non-color single sheet costs significantly less across the board than Fresh & Easy's previous higher quality flyers do. Direct mailing a single page also is cheaper than bulk mailing a multiple page flyer.

But we are reminded of the old saying: "Penny Wise but pound foolish." The penny saved being the immediate cost savings, the pound foolish being the loss of impact of the now one-page, cheap white paper flyer.

Based on experience, we can tell readers that there is a cost savings for Tesco's Fresh & Easy in downscaling from its previous higher-quality, color flyer to the new one-pager on inexpensive white paper. But that savings isn't huge. And we question the cost-cutting in such a vital area (marketing-advertising communication) for the fledgling grocery chain.

Notice how nearly every other supermarket chain is maintaining its full-color, multi-page advertising circulars, nearly all of which are much larger and elaborate that Fresh & Easy's in the first place, despite the current economic recession?

The primary reason for their doing so is because in bad economic times like today, competition gets even hotter in the already highly-competitive food retailing business, especially when it comes to price promotions and ad circulars. Therefore these chains -- Safeway, Bashas, Ralphs, Fry's and most others in Southern California, Nevada and Arizona -- are maintaining the quality and size of their respective weekly advertising circulars (they all do weekly, Fresh & Easy does every three weeks) because of the intensification of this competition.

In fact, a number of chains like as Safeway, which operates about 400 stores in Southern California (Vons banner), Nevada (Vons in southern Nevada, Safeway in northern Nevada) and Arizona (Safeway banner) have expanded both the number of pages and items featured in their weekly ad circulars.

Tesco's Fresh & Easy is a new player in these three markets. Therefore it needs to get its advertising and promotional message out at least as much, and in reality more so ,than these established grocery chains do. But instead of doing so with more frequent and bigger ad flyers, it's cutting back to a one-pager. This doesn't make sense to us in terms of the highly competitive nature of the Southern California, Nevada and Arizona markets. It also doesn't make since to us because all of the major competitors are going full-steam ahead with their respective weekly ad circulars, and as we mentioned above, in some cases even increasing the size and depth of the promotional pieces. It also doesn't make sense because Fresh & Easy needs to get more shoppers in its stores. Ad circulars help to do that.

There are a number of places where Fresh & Easy could cut back on expenses. But its our analysis that doing so with its direct-mailed advertising piece at this time in the chain's development is a big mistake. Were the stores thriving, which they are not overall, maybe. But even then with market competition the way it is we believe Fresh & Easy's move just invites a loss of traffic to the stores.

Sure the grocer is still kicking out its $5 off and $6 off coupons twice to three times each month via the direct mailed flyers. But such coupons aren't not the same thing from a marketing and merchandising standpoint as using weekly advertising pieces to help drive shoppers into stores -- and keep them coming back each week. Consumers compare rival grocers ads, even more so at present then ever before in recent history, then shop more than one store based on the prices.

The deep-discount coupons also come out of Fresh & Easy's hide -- its retail profit margins. In contrast, all of the items offered at discount in grocer's weekly ad circulars, except store brands and in some cases even those, are the result of promotional allowances given to the respective retailers by the manufacturers and marketers of those branded products in turn for the retailers promoting the given items. Manufacturers even pay the retailer's for the space in the weekly ad circulars. For example, Safeway gets a couple thousand dollars for just a mere line-item ad in its weekly circular; thousands more for a feature item. The weekly ad circulars are actually a profit center for chains like Safeway, Ralphs and others.

Tesco's Fresh & Easy gets these supplier deals as well for the items it advertises in its flyers. But since the majority of those items are its store brand, the deals aren't very significant overall for the grocery and fresh foods chain.

Regarding the deep-discount coupons, when a shopper uses a $5 off Fresh & Easy coupon for a $20 purchase, which results in a 20% savings for the shopper, that 20% comes directly out of Fresh & Easy's profit margin on the items that comprise that $20 purchase. That's a tough nut because after that 20% there isn't much margin leftover.

By relying so much on the store coupons rather than item advertising and promotion, Fresh & Easy is hurting itself in two key ways, as we've suggested in Fresh & Easy Buzz in past stories: It's building a shopper reliance on the coupons (the grocer has been distributing them regularly since the first store opened in the fall of 2007) and it's diminishing its profit margins because instead of infrequent (read promotional rather than regular) distribution, and thus infrequent shopper use of such deep discount coupons, Fresh & Easy customers have them in-hand nearly always and use them regularly.

Just ask Fresh & Easy store employees how much grief (mostly polite grief though) they've been getting from customers in-store because the grocery chain is now trying to distribute the deep-discount coupons only via the direct mail flyers and periodically online at its Web site, instead of giving them away liberally in the stores, which is something the grocer did from November, 2007 until just a couple months ago. Some stores still are giving the coupons out in-store in a limited fashion. Most have stopped though, as directed by company management. Headquarters just doesn't send the stores any, in other words.

Numerous customers have told us, and have commented on various Web sites, including Fresh & Easy Neighborhood market's own Web site Blog and its site on Twitter.com, that they either are no longer shopping in the stores or doing so far less frequently because of the now more limited availability (read not by the handfuls in-store) of the $5 off and $6 off deep discount coupons.

It's our analysis that instead of downscaling to a one page, once every three weeks flyer printed on cheap white paper, Tesco's Fresh & Easy should move away from its reliance on these deep discount coupons to developing and implementing a regular advertising circular program -- a once a week ad circular similar to what Safeway, Ralphs, Bashas, Stater Bros., other chains and nearly even every single-store independent grocer does.

Fresh & Easy should then include the deep-discount store coupons far less frequently in the weekly advertising circulars, and offer them for far less periods of time.

Store coupon mini case study: Raley's

Perhaps the grocer should take a page from the Sacramento, California-based Raley's supermarket chain which in October and November of 2008, and again earlier this month, offered two store coupon versions: A $10 off purchases of $50 or more and a $25 off purchases of $100 or more.

The Raley's deep-discount store coupons are good only for Friday, Saturday and Sunday -- key shopping days and thus days in which all grocers want to take business away from competitors, along with keeping regular customers from going to competitors' stores on. This strategy not only creates a promotional incentive for consumers (coupons good only for three days), it also limits a grocery chain's margin loss exposure to sales only on those three days. And remember they are key shopping days, so the supermarket chain really isn't hurt by limiting the coupon's shelf life to only three days.

In contrast, the Fresh & Easy deep-discount store coupons are good for two or more weeks at a time. Having such long expiration dates on these types of coupons reinforces the "regular" nature of their use. (I don't have to use them today, or tomorrow, or even next Monday since they are good for a couple weeks.)

Many consumers have been "trained" by the way Tesco's Fresh & Easy uses these coupons -- the regular rather than promotional nature of how they distribute them -- to believe the coupons are a regular way of doing business for Fresh & Easy instead of a limited nature promotional device. That's not a good thing for a grocer. And its why so many consumers are complaining about not being given one, two and even at times three of the deep-discount coupons after every Fresh & Easy store purchase, as was the case until a couple months ago.

The Fresh & Easy ad flyer - and store coupons

It's our analysis that if Fresh & Easy moved to a more frequent (weekly would be best) schedule with its advertising circular program, in addition to scrapping the new one-page flyer in favor of something more like what its competitors' are and have been successfully using for years (doesn't have to be the same, creative is good), it could eventually wean consumers (and its present coupon-focused retailing model) away from the regular deep- discount coupons, which we know the grocery chain wants (and needs) to do in a big way.

Fresh & Easy can still use a version of the deep-discount coupons but run them in what now would be the weekly advertising circular less frequently -- say every other week to start. The grocer could also limit the shelf-life of the coupons, say similar to what Raley's is doing with its "Good only Friday, Saturday, Sunday" store coupons. The Fresh & Easy weekly ad flyer could come out each Tuesday or Wednesday, like its competitors ad circulars do, and have the coupon kick-in starting Friday, running through Sunday, for example. The grocer also can experiment with which days the coupon is good for, as well as alternate such days and see what happens.

Doing this also would allow Fresh & Easy to play around more with the coupon "coupon value -to- purchase ratio." One of the key objectives of using such store coupons -- although few grocers use them at all and those like Raley's that use them do so only in a very limited way -- is to get shoppers to buy as much dollar value of groceries as a grocer can achieve if the customer is using the coupons. Doing so reduces the margin loss for the grocer. It also raises the market basket (average size of customer purchase) for the grocer. Achieving the latter is one of the few justifications actually of using such deep-discount coupons.

An example of reaching for the optimum " coupon value to purchase ratio" is: If Fresh & Easy Neighborhood Market store "Shopper A" uses the $5 off purchases of $20 or more coupon, and buys just $20 worth of groceries, that's a 20% savings for the customer -- and in Fresh & Easy's case it's 20% less than the grocer would have made on the purchase had the shopper not used the coupon. But if "Shopper B" uses that very same coupon but purchases $40 worth of groceries, that's a 10% savings for her -- and a loss of only 10% for Fresh & Easy had "Customer B" not used the coupon for her $40 purchase.

Conversely, creating a coupon that offers $10 off $50 or $25 off $100, like Raley's is doing at times, sets the purchase ratio higher by design, which in our analysis and experience is superior. You don't create a consumer reward ($5 off or $6 off) for merely spending $20 or $30 in the store, which is an OK amount for a convenience store but not a grocery market, but rather up the ante -- spend $50, get $10 off, spend $100 (which isn't much at the grocery store today), get $25 off.

Therefore two things are key for grocers in this regard if they use such deep-discount store coupons: That they find the best "coupon value -to- purchase ratio" combination for the coupons, and that they get more shoppers into the stores who's purchases exceed the coupon limit ($20 in the case of the F&E $5 off coupon).

This is why in Raley's case it's using the $10 off $50 and $25 off $100 store coupons. It wants to (1) limit its customer universe of coupon users to those who are willing to buy at least $50 worth of groceries at a single purchase and (2) get as many consumers as possible to use the $25 off $100 coupon (that's why it offers a higher percentage savings than the $10 off $50 version) because even though it features a savings of $5 more, the $100 purchase (double the $50) is worth it for Raley's because the added dollar volume offsets the additional $5 in shopper savings.

Also, the coupons are an infrequent and limited promotional tool for Raley's. It big media-oriented promotional tool is its about 12-page weekly, full-color advertising circular, which it distributes using a combination of direct mailing and insertion in the Tuesday editions of the major daily newspapers in its market regions, which include most all of Northern California and the northern Central Valley. Raley's is a privately-held chain based in Sacramento, California. It operates 130 supermarkets and warehouse stores. The chain had annual sales of about $3.6 billion in 2008.

Fresh & (ad flyer) downscaling

But for now it appears Tesco's Fresh & Easy has decided to downscale its promotional outreach efforts to customers and potential customers by going to its new, one-page advertising flyer printed on inexpensive white paper.

We believe the move is a wrong one for the grocery chain at this time.

It's been a consistent practice among the vast majority of U.S. supermarket chains, and even independent grocers, beginning with the serious recession in the late 1970's, through the equally serious 1982 recession, and in the less serious but real recession in the early 90's and in the 2001-2002 recession, to not cutback in the areas of retail marketing, promotion and advertising, including downscaling the quality of their advertising circulars and other media in a dramatic way like Tesco's Fresh & Easy has done.

In fact, these have been, and are currently to date in the present serious recession, the last areas the vast majority of U.S. grocers cutback or downscaled in. Instead, grocers look to cut in other places, only doing so in retail marketing, promotion and advertising when most other areas are exhausted.

We shall observe closely when the new Fresh & Easy advertising flyer comes out next week (it begins after February 3) to see if the last two flyers are just an experiment in downscaling or if they are the new norm.

Minimalism is fine - but by design

Lastly, we aren't against minimalism, as long as it is done by design. The one page Fresh & Easy flyer doesn't look like there is much thought or strategy behind it. After all, it's one piece of inexpensive white paper with sale items printed on it in black ink.

If the thought is to go minimal -- which could be a great marketing strategy in this down economy -- why not go minimal by design and strategy?

For example, why not a four page ad flyer in just black and white? Use inexpensive newsprint and make the flyer look like a black and white newspaper. Well designed but minimalistic. Call it the "Fresh & Easy Thrifty Flyer." Tout it as a minimal and simple advertising flyer for tough times. A potential tag line: "We made tor new flyer out of newsprint and are doing it in black and white because by doing so we can bring you even lower prices in our stores during these tough economic times." Use the media to help convey the message.

There are obviously better ideas than ours. It's merely an object lesson in what we mean by minimalism by design. Our point is minimalism by strategic design can be a very good (think about the old Volkswagon automobile ads) strategy and practice, but seldom is it so when its minimalism by default -- such as reverting to using a single page of white paper as a promotional and advertising flyer.

Marketing is everything a retailer does -- from its stores to its advertising flyers -- and more. Integration is key. We don't see any of those things in Fresh & Easy's new flyer: It's just a piece of white paper with the advertised items printed on it in black ink. Something is amiss.

{Tesco's Fresh & Easy also posts its advertising flyer online at its Web site. You can view the current online flyer here.

Nearly all supermarket chains and many independents post their advertising circulars on their Web sites today. When the day comes when grocers can get the majority of consumers to go online regularly for thier ad circulars, that will be a day when all grocers are able to save a ton of money, eliminating the expense of laying out, printing and distributing the promotional pieces. And perhaps reflecting some of that savings to consumers by lowering prices in the stores? But we don't see that day coming in the immediate future.}

When Social Media Goes Bad - Maybe? Tesco and Waitrose Store Workers in the UK Use Facebook Sites to 'Diss' Store Customers

In this piece yesterday [Twitter Me This Batman: Are You Using Twitter? If Not, You Probably Should Be], we discussed the power for grocers (and others) of using social media and social networking Web sites like Twitter and FaceBook, as well as the use of such sites by a growing number of food and grocery retailers.

But like all new and powerful tools, particularly digital ones, there's also a potential downside to the use of social networking sites by grocers, individuals and other businesses.

Two reports out of the United Kingdom last week make this fact abundantly clear.

The first incident involves our very own (in the sense that we write about it) Tesco, which owns and operates Fresh & Easy Neighborhood Market in the Western U.S. A number of UK newspapers, including the Daily Mail and UK Telegraph, reported last week that Tesco corporate executives are investigating an incident in which a number of Tesco store-level employees posted abusive comments about store customers on a "Tesco" discussion forum on the Facebook social networking Web site.

Here are a few of the Facebook comments made by the about 60 Tesco store workers from the story in the UK Daily Mail:

>"Rob Richardson, from Newcastle, moaned about shoppers ‘who keep coming to find you ... even though there’s 20 other staff members about to help them find something’. His reaction? ‘Give me your damn shopping list, you senile old cow, and I’ll do your shopping for you. Just leave me alone!’"

>"One (Tesco store worker), who identified himself (on the Tesco Facebook forum) as Benjamin Clarke, from Leeds, wrote: ‘I had a guy on Saturday ... who complained about the prices of the reduced mini cucumbers from £1.29 to 64p. Hmmm, how expensive. Cheap ****!’He added: ‘I wish these f******s would just stay at home and shop online!"

>"Tesco worker Zara Ashley Earl objected to customers who put their money on the conveyor belt rather than in her hand.‘Do we have some kind of infection that you might catch??? Ignorant b******s ... And they think we are the stupid ones because we work at Tesco.’"

>"And, Tesco store employee Scott Harrop objected to having to serve ‘smelly ppl ... who make me feel sick’." [Note: A Tesco supermarket actually did recetly toss a customer out of a store for having a rather offending odor. Read about it here: Woman horse rider kicked out of Tesco store because she was 'too smelly'.]

None of the Tesco store employees posted the names of the customers on the Facebook page.

Fresh & Easy Buzz confirmed today with a Tesco spokesperson in the UK that the company is looking into the Facebook forum comments made by the store employees, saying the retailer is "taking the matter seriously."

Additionally, according to a Tesco spokesperson quoted in the UK Daily Mail's January 18 story: "A Tesco spokesman said: ‘Facebook is a popular and fun website but if some of our staff have gone too far, we will investigate and take appropriate action if necessary."

The Tesco employees' Facebook group calls itself "Tesco Employees Could Rule The World." It has about 2,000 members. Only about 60 of those 2,000 members made the remarks.

[Read the story, "Red faces at Tesco as dozens of staff post insulting comments about its customers on internet forum," here.]

And Waitrose too...

Ironically, at just about the same time the Facebook comments about customers made by the Tesco workers were discovered on the Web site, similar remarks made by store-level employees of Britain's leading upscale supermarket chain, Waitrose, also were discovered and reported on by the Daily Mail and UK Telegraph.

The Waitrose employees made similar deragatory comments about store customers on a Facebook forum called "Waitrose isn't a supermarket, it's a state of mind," which is a Facebook page devoted to social networking about the grocery chain.

According to a January 21 story in the UK Daily Mail, and another in the UK Telegraph, Waitrose executives are investigating offensive comments made by workers at the Finchley Waitrose store in London, England.

For example, one Waitrose employee called a female customer a "dirty old loon" and said on the Waitrose Facebook site: "You know, the one who you can smell in Fruit & Veg when she is on the drinks aisle," according to the Daily Mail report.

Another worker at the Finchley Waitrose store wrote of his lust for a regular female customer this way: "All the lads know who I mean. The 6ft tall stunner with the massive natural bristols and a boyfriend who looks like he might kill you for looking at her."

The Waitrose employee comments were in response to a question asked on the Website by a fellow store employee. That question asks store employees from Waitrose stores throughout the UK to list what annoys them most about the supermarket. [The Waitrose page was still up on Facebook today.]

In addition to the Waitrose employees of the Finchley Waitrose store that are being investigated by company brass, other store employees from throughout the UK added their own responses/comments to the Facebook question.

Below is what one of those Waitrose store employees, a worker from a store in Manchester, wrote in response to the question about what annoys him most about Waitrose:

His answer: the "Pikey skanks wait till the last minute, gathered around the reduced-stuff bin, or the cake shelves etc, to get the cheapest possible stuff."

Like the Tesco store employees, the Waitrose workers didn't use customer names in their postings either.

[You can read the full UK Daily Mail report: 'Mad, ugly pikeys': Now Waitrose workers use Facebook to insult their customers," here.]

Fresh & Easy Buzz Commentary:

The first basic question one would likely ask about these two situations is why the Tesco and Waitrose store employees used their real names in the posts? The answer is that most people sign up for Facebook using their real names. That's because it's a "friends-type" (like MySpace) social networking site in which people want to connect to each other, and businesses to real consumers, using their real names and identities rather than an assumed screen name. Also, when you post on Facebook you must use the name you signed up with -- your real name -- rather than being allowed to assume an anonymous handle for posting.

The deeper question is why these employees would post deragatory comments -- even general ones without using names -- about store customers when they know a wide-range of people, including their bosses, store customers and company officials, have access to the Facebook sites? But they are employee Facebook sites, and an employee did ask fellow employees what they dislike about the stores, after all.

We will save addressing that broader psychological and sociological question for another time. But we will suggest that for many people, especially those in their teens -to- mid-twnenties, Internet-based social networking is such a common thing that they think nothing about writing whatever is on their mind on their Facebook pages, or Facebook pages of others. It's similar to the question as to why so many folks post near-nude and completely nude pictures on their Facebook and MySpace pages. We will not attempt to answer either of those two questions today since we didn't plan on turning this into a ten thousand word essay. Perhaps we will address those questions another time.

But then again, they didn't use the names of customers. So is it really a big deal?

The good news is that in both the Tesco and Waitrose cases it was only a tiny percentage of the total users who posted the remarks. In reality probably no more, or even less, than would make such remarks verbally in public. The difference of course is that making such remarks verbally and in public would likelymean just a few people would hear them. But such remarks on popular social networking sites like Facebook can be read by millions, including ones bosses, the press and the store customers themselves.

It's really unchartered waters regarding what Tesco and Waitrose management should do, if anything, to these store-level workers. We aren't sure what we would do either. Since it's a first offense perhaps a strong warning will suffice. And, based on a couple inquiries, it appears that neither Tesco or Waitrose -- or most companies -- currently have a clear policy regarding employee postings on social networking sites, accept in terms of some that don't allow any access at all to the sites from the workplace.

It's also not clear legally if and in what ways employers can restrict what employees write on these sites. Employers can restrict access to the sites at work, of course. But what about from at home? After all that's likely where the store workers made the posts since it's not common to have access to a computer while working in-store.

For example, would it not infringe on an employee's free speech to prohibit her from writing while on the Facebook site at home that "she hates smelly customers," not mentioning those customers by name.? Or can an employer permit a store employee from commenting about his lust for a regular female shopper who frequents the store where he works? We think doing so by an employer would be legally difficult to do.

We do suggest that it's not a wise career move for employees to make even general comments like those made on Facebook about customers, particualrly on a Web site devoted to issues regarding the company they work for. Nor is it particularly good for the company's image, which is an image that should reflect on those who work for it and that they should in their behavior contribute to.

But then again, would the issue be viewed the same way if these employees were allowed to use anonymous screen names? After all, it is an employee Facebook forum. One would think that means employees should be allowed to vent on a wide range of subjects, right? Or should there be restrictions? And what about self-restraint? The viewing of Facebook forums can be restricted only to users. We don't know if the Tesco and Waitrose pages are restricted or open. But if not restricting them would be a simple soultion -- perhaps?

Meanwhile, all of those reading this who have ever worked in a supermarket can probably relate to the types of customers mentioned by some of the store workers. Supermarkets are among the most democratic of businesses. People from all walks of life frequent them. And every supermarket has its own cast of regulars -- and characters.

For example, there might be the eccentric retired man who comes in at least twice daily, sometimes perhaps in his PJ's, because he is lonely and loves interacting with the store employees and customers; the forty-something housewife who perhaps gets dressed up to the nines (including wearing a mini skirt skirt and high heels) to go grocery shopping, enjoying the attention she gets from the young male store employees; or the customer who's always complaining about store prices, telling the store workers how he or she can get this or that item at the supermarket down the street for much cheaper, but yet he keeps coming back into the "high-priced" store each week.

When supermarket employees get together it's not uncommon for them to compare notes on these "regulars." That's actually healthy behavior. But it's probably a good idea, when it comes to social networking sites, for supermarket workers to follow that old adage that you need not always say everything in public (or on a social networking site) that you're thinking --especially when that public is the vast one on Facebook.

But on the other hand, since the sites are "employee sites," why shouldn't the workers be able to offer whatever opinions they desire, especially if they avoid using the names of actual customers? It's not such a simple issue.

[Fresh & Easy Buzz welcomes your comments on the Tesco and Waitrose store employees and Facebook, along with any comments you have in general about the use of social networking sites by grocers and other businesses.

Are the Tesco and Waitrose store employees completely out of line in what they did? Or, do they have the right to their opinions on the Facebook pages? Readers, do chime in and offer your comments. We would particularly love to hear from current and past supermarket workers. Fresh & Easy Buzz has numerous Tesco Fresh & Easy Neighborhood Market store-level workers who read us regularly. Please chime in as well. You can do so anonymously at the "comments" link below. We encourage all readers of the post to comment.

Just click the "comments" link below. Also, you can e-mail this post to friends and foes alike (yes, a form of social networking) by merely clicking on the little folder at left, below. When you do it gives you a "ready-to-e-mail" template. Just fill it in and click. Don't say anything abusive about us though in your e-mail comments...please:)]

Twitter Me This Batman: Are You Using Twitter? If Not, You Probably Should Be

The Fresh & Easy Buzz 'Sunday Supplement'

Last Sunday, January 18, we wrote and published this piece [The UK Telegraph Reports on Tesco Fresh & Easy's Use of Twitter.Com; Since Fresh & Easy Buzz Was First to Report it, We Offer Some Added Value] about the UK Telegraph's story about Tesco Fresh & Easy Neighborhood Market's use of the social networking site Twitter.com. Fresh & Easy Buzz was the first publication to report in September, 2008 on Tesco Fresh & Easy's use of Twitter.

On Monday, January 19, the popular Southern California-based Web site Laist.com picked up our Sunday, January 18 story in the form of a post written by trend-maven, writer and Twitter-user Lindsay William-Ross. Read the Laist.com post by Lindsay William-Ross here.

A number of Fresh & Easy Buzz readers e-mailed us a link to the Lais.com post. So on Monday, January 19, we wrote and posted a follow-up piece about the Laist.com piece. Wait a minute, that's a form of social media networking, isn't it? Our January 19 follow-up piece: Sweet Tweets: Popular laist.com Web Site Picks Up Fresh & Easy Buzz's Buzz On Tesco's Fresh & Easy and Twitter.com; Adds A Little Buzz of its Own.

Fresh & Easy Buzz's Twitter site is here. The Web site Foodimentary - Twitter Grader, which follows, grades and ranks nearly 23,000 (and growing) sites/Blogs on Twitter.com, recently rated Fresh & Easy Buzz at the top of its list, with an overall grade of 98.7. Click here to view Foodimentary - Twitter Grader.com.

Grocers and Twitter

In our original story on the topic on January 18, we discussed the fact that numerous food and grocery retailers, in addition to Tesco's Fresh & Easy, are using Twitter as a social marketing and communications tool designed to talk (and listen) to customers and potential customers. We also listed a few of those retailers. We also suggested those grocers (and other retailers for that matter) that aren't currently using Twitter.com, or that have a Twitter site but barely use it, are in our analysis missing out on what is a very strong and super-inexpensive tool -- Twitter.

It appears others in the form of investors agree with us about Twitter.

New millions for Twitter, Inc.

Reports over the weekend say Twitter Inc. has reportedly raised about $20 million in new investments based on a valuation of the company at up to $250 million.

These reports come from the TechCrunch.com technology Blog and the Wall Street Journal's All Things Digital Blog. Both Blogs, which follow the technology inductry and sector closely, are citing unnamed sources that are saying that the San Francisco, California-based social networking and micro-blogging company has followed up on its previous $20 million in funding with a similar sized round that has yet to be announced.

Both Blogs are very plugged-in to what's happening in Silicon Valley and in San Francisco's new media business community. Therefore the probability that the reports are correct are high in our opinion.

In the summer of 2008 the popular social networking site Facebook.com offered to acquire Twitter for what was about half of its current $250 valuation. It looks like the young twenty-something founders of Twitter knew what they were doing by refusing the Facebook deal and remaining independent.

Twitter has been growing users faster than wild mustard grows in Napa Valley, California after a spring rain, followed by lost of sunshine. Therefore its no surprise investors want to put money into the micro-blogging company despite the recession, and despite the fact Twitter doesn't sell advertising on the site and therefore has no real revenue stream -- yet.

Twitter as a user template

Twitter was originally designed as a social networking tool for individuals to let each other know what they are doing in real time. In fact, one of the site's tag lines is: "What are you doing."

However, numerous companies, non-profit organizations, political campaigns, newspapers and Bloggers have in recent times adopted Twitter for various uses.

For example, newspapers like the Wall Street Journal, Los Angeles Times and many others post news reports and features on their Twitter sites, as do trade publications and Bloggers.

The winning Obama Presidential campaign used Twitter to communicate with voters. Cable News channel CNN used Twitter as part of its coverage of the 2008 U.S. Presidential campaign.

Companies of all sorts -- such as grocery chains Fresh & Easy Neighborhood Market, Whole Foods Market, 7-Eleven and others -- are using Twitter in a variety of ways, both as a social marketing tool as well as for other forms of communication. Corporate use of the site is new and evolving.

The New York City-based Embassy for the State of Israel even used Twitter recently for a citizen press conference regarding its invasion of the Gaza Strip.

Meanwhile individuals remain the backbone of Twitter. And many refer to themselves as "Twitter addicts," posting such mundane messages (called Tweets) like announcements that they are at the grocery store or getting ready to go to bed. Twitter can be used via handheld personal communication devices as well as with desktop and laptop computers. But in many ways it is these mundane messages that make Twitter so interesting. After all, when was the last time a total real life (but not virtual) stranger told you he or she was getting ready to enter the grocery store or turning in for the night?

More grocers discovering Twitter - but most haven't yet

On the food retailing front vis-a-vis Twitter, we've recently found a few additional retailers using the micro-blogging site in a significant way, in addition to those we named in our January 18 piece. These grocers include: New Seasons Market, a chain of nine natural foods markets in the Portland, Oregon region; Elwood Thompson's, an innovative natural foods grocer in Virginia; Locali Conscious Convenience, the new hybrid grocery-convenience store that just opened in Southern California, and which we wrote about here on Wednesday, January 21.

Other food and grocery retailers using Twitter include: Wal-Mart; Wegmans, the New York state-based supermarket which was just-named as the fifth best company to work fro in America by Fortune magazine in its annual "100 Best Places to Work" ranking; and the Meijer grocery and general merchandise chain.

The folks at the retail industry consulting firm RetailNet Group have compiled a spreadsheet directory in which they list the Twitter sites of various retailers and retail-related companies, publications and other entities. Click here to view the RetailNet Group Twitter spreadsheet.

Keith Anderson of RetailNet Group says users can add the names of retailers that have Twitter sites but aren't listed as of yet on the directory. In other words it's a user-generated list, which in fact is an additional form of social networking. Anderson and two other staffers at the retailing industry consulting firm have their own Twitter sites. They are:

>Keith Anderson: http://twitter.com/keith_rng/
>Aaron Chio: http://twitter.com/AaronChio
>Tim O'Connor: http://twitter.com/timoc_rng/

They frequently post interesting information about the firm's research and other retailing topics, including in the food and grocery sector, at their Twitter sites. It's worth a look.

The vast majority of food and grocery chains, as well as independents, have yet to start using Twitter of other social media sites like Facebook, however. We think they are missing the consumer cyber-communications boat by not doing so. Of course, using Twitter and other sites is one thing -- using it well is another. Retailers and other businesses need to walk a fine line between using the sites too much for marketing, offering a blend of it along with useful and helpful consumer information. Also: making marketing-related communications useful and helpful, which they can be.

Infant Twitter: Human and social evolution

Twitter.com is only in its infancy. The site keeps getting deeper and richer -- and users keep finding new ways to communicate on it. In large part that's what makes the site so interesting -- that like the human organism and society it keeps evolving.

But then that's no accident. Fresh & Easy buzz believes that a major part of the popularity of social media and networking Internet sites is because they represent the latest stage of human evolution. Not to get too deep from an Anthropological standpoint but human and social development is all about groups: cultures, societies, voluntary and complex organizations and the like. Social media is evolving and in many cases redefining social organization.

It's no replacement for face-to-face interaction. But it is adding elements to social organization (both informal and formal) that were not dreamed of just a few years ago. And social media retains many aspects of the human experience, albeit via an electronic device and computer screen, which is why it attracts so many.

Social media also is starting to revolutionize the way business, politics and media is done. And it will do so even more. It will require businesses to be more transparent -- and already is -- and will allow businesses, if they use it right, to gain more and richer information and feedback from consumers than ever thought possible.

It's also starting to allow consumers to have far more influence over business, politics and media than has ever been the case. Bottom-up is becoming the new black. Top-down the new Edsel. These facets will only continue to increase as more people -- and companies -- use social media, and as new uses are discovered for sites like Twitter, Facebook and others. It's a brave -- but fun and productive -- new world.

Fresh & Charitable: Tesco's Fresh & Easy Extends Deadline For Schools to Register For School Fundraiser Program

Fresh & Easy Buzz was the first publication to report on December 17, 2008 in this linked story [Fresh & Easy Neighborhood Market Launches 'Shop for Schools' Fund-Raising Program to Aid Schools Near its Stores] that Tesco's Fresh & Easy Neighborhood Market was launching its "Shop for Schools" school fundraising program. Numerous other Blogs and mainstream media publications have since reported on the development, following Fresh & Easy's announcement of the program in this press release on January 7, 2009.

Tesco's Fresh & Easy has now extended the registration deadline to January 30 for schools in Southern California, Metro Las Vegas, Nevada and the Phoenix, Arizona Metro region -- the three Western U.S. markets where the grocery chain has its 110 small-format grocery and fresh foods markets -- to sign up for the program.

The "Shop for Schools" sign-up works like this: "All eligible Kindergarten through 8th grade schools within a three-mile radius of a Fresh & Easy store can participate in the program. For every $20 spent at a Fresh & Easy store, participating schools can get a $1 cash donation," according to Fresh & Easy Neighborhood Market chief marketing officer Simon Uwins. [You can read additional specifics at our December 17, 2008 piece at the link above.]

The program begins on February 1, 2009, ending on March 31, 2009.

[Note to Fresh & Easy Neighborhood Market: We think the program time period is a bit short, just like the school registration period was, which is why the company has extended it. We suggest you consider extending the program period -- say instead of ending it on March 31, run it until at least April 15-16. And since April 15, 2009 is income tax deadline time -- and since income tax revenues to state and city governments are going to be much reduced this year over last because of the recession -- such timing, ending on April 15 or 16 instead of march 31, would be good.

Additionally, schools get most of their revenue from property taxes. Those revenues are going to be way down as well because of the foreclosure crisis and the housing valuation crunch. And nowhere is this going to be more true than in Southern California, Nevada and Arizona, which are three of the top U.S. regions for foreclosures and reduced housing value over the last year. That extra two weeks will help the schools -- which are going to need all the help they can get.]

Tesco's Fresh & Easy says it's already "signed up hundreds of schools in Southern California, Arizona and Nevada in the program."

"We have seen an incredible response to our 'Shop for Schools program'. Schools are telling us they are searching for ways to raise money especially in the current (down) economy," said Fresh & Easy chief marketing officer Simon Uwins. "With school budgets so tight, we are proud we can help our neighbors."

According to Uwins, the "Shop for Schools" program is designed to work like this: "Registered schools will mobilize parents and students to collect Fresh & Easy (store) receipts and then submit them for verification. Fresh & Easy will cut a check to the school for the amount raised. The money raised can be used for whatever the school needs most. The school in each state that raises the most money will receive a $5,000 cash bonus from the company. [Our linked December 17, 2008 piece at top offers additional details.]

Grocers raising money for schools and students is "old school," which we like. Supermarkets throughout the U.S., including in the west, have been and are running similar fundraising programs, ranging from cash donation programs and others to the popular "Apples (computers) for Schools" program, in which free Apple Computers are provided to schools. It's good to see Tesco's Fresh & Easy join in the school fundraising process.

Additional information about the grocery chain's "Shop for Schools" program is available at:
www.freshandeasy.com/shopforschools.

Neighbors by Location Only: Will Mega-Drug Chain Walgreens' New Focus on Consumables and 'Affordable Essentials' Rob Sales From Tesco's Fresh & Easy?

Competitor News and Analysis

On December 22, 2008 we reported on the development that former Tesco Fresh & Easy Neighborhood Market co-vice president of retail operations Brain Pugh had been hired by the mega-drugstore chain Walgreens in the new position of vice president of format development-Walgreens.

The primary focus of Pugh's new position at the drug chain, which has thousands of stores throughout the U.S., is to focus on growing and strengthening Walgreens' consumables (food and grocery) household products (toilet paper, cleaners, ect.) and health and beauty care merchandising and retailing program. [Read the story here: Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position.]

In the December 22 story we also wrote about an additional two new hires the drug chain announced at the same time. Those new hires were: Jeffrey Zavada, as vice president and chief sales officer, and Colin Watts, as vice president and president of the Walgreens' Health and Wellness disease management business.

In September, 2008 Walgreens, which is headquartered in Deerfield, Illinois, made an additional major hire, bringing in Kim Feil as its new corporate chief marketing officer.

Ms. Feil, Brian Pugh and chief sales officer Colin Watts were all hired in large part because of their experience in consumer packaged goods marketing, merchandising, operations and sales.
The Hiring of these folks for that experience was not by accident.

Beginning in about the spring of 2008, and intensifying in the early summer of last year, Walgreens made a strategic marketing and merchandising decision to put a greater focus on consumables and related consumer packaged goods marketing, merchandising and sales in its drug stores, including dramatically increasing the number of food, grocery, household and health and beauty care items it will sell in its stores under the retailer's own store brands. These store brands include the Walgreens' brand (across all product categories including food, grocery and beverage) and its Deerfield Farms brand, which is for consumables only.

In the last month Walgreens has been introducing numerous new food, grocery and consumer packaged goods items in its drug stores under these store brands. The retailer also has been promoting consumables and household packaged goods items much more aggressively in its weekly advertising circulars, which are distributed in Sunday newspapers and via direct mail to households, with a particular focus on essential products, including grocery items.

For example, among the numerous food, grocery and non-food consumer packaged goods items in its advertising circular this week include two new products under the Deerfield Farms brand -- fresh butter and a line of packaged cheeses. Essentials. And perishables as well. Walgreens also is now promoting fresh milk and often eggs and fresh bread nearly every week in its advertising circular, as well as essentials such as toilet paper, soap, paper towels and cleaning products, for example.

Even more so the drug chain has increased the number of food and grocery items -- both store brand and national brand -- it runs in its advertising circular each week. This reflects Walgreens' evolving strategy over the last few months of adding additional national, regional and store brand skus of food and grocery products to its stores. This is a strategy and practice the retailer says it will continue.

In fact, beginning February 8, Walgreens is launching a major marketing and merchandising program it's calling "Affordable Essentials." The program, which will focus on consumables, household and related packaged goods "essentials" like milk, bread, toilet paper and the like, is designed to capture an increased share, including from supermarkets, of the dollars consumers are spending on basic or essential packaged goods products during the current recession.

"We've zeroed in on the last things people cut back on when they're in a (financial) pinch," chief marketing officer Kim Feil said at Walgreens' annual shareholders' meeting last week, on Wednesday, January 14.

Ms. Fell described Walgreen's "Affordable Essentials" marketing and merchandising program this way: The drug chain has selected one item from key basic or essential product categories (milk, bread, eggs, laundry detergent, toilet paper, aspirin, disposable diapers, ect.) that recent marketing research shows consumers purchase even in tough economic times like the present. The combined items will then become an "Affordable Essentials" market basket of products. Beginning on February 8, and running indefinitely, Walgreens will offer the items in the "Affordable Essentials" market basket at significantly reduced everyday low prices. The retailer will then tout the affordable market basket of essentials in-store and via all of its various advertising media.

The "Affordable Essentials" product market basket (it's a market basket in the sense of a collection of items rather than an actual physical basket of the goods) will contain a mix of Walgreen's store brands and national brands. The drug chain plans to include plenty of national brands because consumer use of manufacturer's cents off coupons has sored in its stores since about the middle of last year, as it has in other drug stores and in supermarkets throughout the U.S. By offering a strong selection of national brands as part of the program, along with the store brands, Walgreen's believes it can gain added sales since the manufacturers' cents off coupons serve to lower the cost of the items further for consumers but don't impact the retailer's profits because its paid back by the manufacturer.

Walgreen's focus on basic or essential products fits with much of the market-based research and retailer-based scan data currently available. The data is showing consumers are focusing on purchasing basic food, grocery and non-foods packaged goods items at present to a degree not seen in decades. The closest many market researchers and retailers we've discussed the data with say they've seen was the recession of the early 1980's. Most say however the trend towards essential or basic item purchasing is currently even stronger than during that serious recession.

As an example, the market research firm America's Research Group has been conducting regular shopper surveys over the last few months. What it's found, including in its latest survey conducted a little over a week ago, is that shoppers, pressured by debt, credit card bills and fear of losing their jobs, have been reluctant to buy anything beyond essentials. The percentage of shoppers who say in the surveys they are focusing more on essentials has increased progressively since the middle of 2008.

"Retailers are experiencing their most challenging time in three decades," C. Britt Beemer, CEO and founder of the Charleston, S.C.-based America's Research Group consumer research firm says about the results of its latest survey conducted a little over a week ago. "Our survey confirmed that consumers are in deep hibernation, and there is no sign that they will wake up this spring or that the retail outlook will pick up anytime soon," Beemer adds.

At the January 14 annual meeting, Walgreens' CEO Greg Wasson said consumer spending is going to be a challenge for all drug retailers and others throughout 2009, and could get even tighter than it currently is."

He announced that in response to this new consumer behavior Walgreens is moving 29 corporate vice presidents into the field instead of stationing them at its Deerfield, Illinois headquarters in a new local merchandising and operations program. The purpose of the change is to be able to better respond and adapt to local consumer trends and to be better able to focus the stores on their local markets, he said at the meeting.

The Walgreens - Fresh & Easy Connection

There are two interesting and related ironies about Walgreens' new focus on food, grocery and non-foods packaged goods items in relation to Tesco's Fresh & Easy Neighborhood Market.

The first one of course is that former Fresh & Easy chief operations executive Brian Pugh, who left his employ with Tesco's Fresh & Easy on a rather mysterious note (according to some company employees) in September, 2008, as we reported in this story, is now in charge of beefing-up Walgreen's store presence and sales of consumables, including store brands. Consumables, and particularly consumables under its fresh & easy store brand (about 60-65% of the grocery items sold in the stores are under the brand), are the near-100% focus of the Fresh & Easy stores. The stores carry only a very limited assortment of non-foods items.

Just by itself Pugh's moving from Tesco's Fresh & Easy to Walgreens isn't that unique of a development. After all, retailing executives, category managers and others change employers all the time.

But the related irony is that Tesco's Fresh & Easy, of which Brian Pugh was in charge of the retail operations aspects of from the time it started in the Western U.S. until September, 2008, has used Walgreens' as a model in terms of its "critical mass" store location strategy in the Western U.S. markets of Southern California, Metro Las Vegas, Nevada and Metropolitan Phoenix, Arizona. That strategy, like Walgreens in the same three markets where it has hundreds of stores, is one of locating stores rather close together (about two miles apart in concentrated rings) so as to create a retailing critical mass. The strategic goal of such as strategy being to become the de facto "neighborhood grocer" in the area -- in Fresh & Easy's case -- and the defacto "neighborhood drug store" in the specific areas -- in Walgreens' case.

This is a strategy Walgreens has been using for years in various U.S. markets. A few years ago it began turning this strategy into super-high gear in California, Nevada and Arizona. Tesco took notice of it. In large part Tesco used Walgreens (as well as Starbucks' store location strategy) as its model for this "critical mass" store location strategy.

As part of this strategy, numerous Fresh & Easy markets are located next to or just across the way from Walgreens' drug stores. In fact, the two retailers have gone into, and are further going into, numerous shopping centers as co-anchor tenants.

We've talked to a number of retail commercial real estate professionals who work with Tesco's Fresh & Easy. When they started doing so, they were given as one key criteria to identify potential Fresh & Easy store locations based on where Walgreens drug stores were located, as well as to identify locations where Walgreens plans to put new stores in the three markets. As a result, many of Tesco's & Fresh & Easy Neighborhood Market combination grocery and fresh foods stores are located next to or within walking distance (like across a shopping center) to a Walgreens' unit.

Taken together, we therefore find the two related developments become much more interesting -- and gain some added irony.

With Walgreen's new emphasis on consumables development under the leadership of former Tesco Fresh & Easy vice president of operations Brian Pugh, along with the retailer's "Affordable Essentials" program which begins in a couple weeks, it's feasible that if the mega-drug chain is successful, it will end up taking considerable sales in the basic food and grocery categories away from those many Fresh & Easy stores that are located next to or very near Walgreens' units.

With so many Walgreens drug stores in Southern California, Arizona and southern Nevada -- Fresh & Easy's three market regions with its 107 stores -- if successful with its new consumables and "Affordable Essentials" push, the mega-drug chain could likely take grocery share away from numerous other food and grocery retailers in these markets, not just Fresh & Easy. Fresh & Easy is worthy of singling out though because of the facts we laid out above -- the fact so many of the stores are in close proximity to Walgreens' drug units.

It's also worth noting that Walgreen's has found it needs to focus more on consumables and the essentials program because it's found itself losing sales most particularly to Wal-Mart Stores, Inc.'s Supercenters, which has been the only major discount retailer to increase sales during the recession. Despite that fact, Walgreen's same store sales did increase by slightly over 4% over the previous year in its most recent quarter.

Walgreens hopes its more aggressive focus on consumables and the "Affordable Essentials" grocery and non-foods packaged goods program starting on February 8 will bring more shoppers into its stores. Then once in the stores for those "Affordable Essentials," the drug chain hopes customers will pick up some higher margin items while shopping.

We've argued since about the middle of 2008 that in this current and severe recession nothing is more important for retailers than to create, execute and communicate a unique value principle. Walgreens appears to be moving towards this with its ongoing increased focus on consumables and essentials. It will be interesting to see the depth and focus of the new program beginning on February 8.

Linkage: Related stories from Fresh & Easy Buzz:

>Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position

>Drug Chain Walgreens to Slow New Store Growth; Despite Tesco Fresh & Easy's Recent Announcement to Do Similar, We Suggest An Analogy is Misplaced

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

>Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team

>Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 5

>Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

>Tesco's Fresh & Easy 'Taking a Pause' From New Store Openings: A Full Review In the Works

>Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department

>Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK

>Vegas Baby!: Tesco Announces Ten More Fresh & Easy Grocery Stores For The Las Vegas Metro Region; it's All About 'Critical Mass'