Monday, June 28, 2010

Smart & Final to Open its New Format SmartCo Foods Stores in California and Arizona

City of Commerce, (Southern) California-based Smart & Final opened the first of its new format SmartCo Foods food and grocery stores in Denver, Colorado on Wednesday, June 23 -- and on grand opening day of the 57,000-square-foot store, located at 1442 South Parker Road (at East Florida Avenue) in Denver, Smart & Final's president, Dave Hirtz, made additional news, telling members of the press and others that Smart & Final plans to open SmartCo Foods stores in California and Arizona later this year.

Although he wasn't specific, the first Arizona SmartCo Foods unit is set to be in the Phoenix Metropolitan region, according to our information.

The first California store will likely be in Southern California, where Smart & Final is headquartered, although Smart & Final also has plans to open SmartCo Foods stores in Northern California as well.

Smart & Final, which was founded in 1871 as a cash & carry grocer in downtown Los Angeles, operates its 247 non-membership Smart & Final banner and Smart Foodservice cash & carry stores throughout California, as well as in Arizona, Oregon, Washington, Nevada, Idaho and northern Mexico.

The company also owns the Henry's Farmers Market chain, which it acquired from Whole Foods Market, Inc. in 2008. There are currently 35 Henry’s Farmers Market and Sun Harvest Market (in Texas only) banner stores open and operating in Southern California and Texas.

The farmers market-style Henry's and Sun Harvest stores emphasize natural and organic products and fresh produce but also carry some conventional grocery products, as well as having fresh meat, bakery, deli-prepared-foods, bulk foods and non-foods departments.

Smart & Final is opening its first Henry's Farmers Market store in Northern California, in El Grove near Sacramento, in August. The company is growing the Henry's chain rapidly in terms of opening new stores. [June 5, 2010: Henry's Farmers Market Opening its First Northern California Store in August With A Big 'Local' Push]

Additionally, Smart & Final operates 33 small-format grocery stores under the Smart & Final Extra banner in California and northern Nevada. The Extra stores, unlike the Smart & Final non-membership stores which carry mostly club pack size items, offer about 5,000 SKUs of basic-pack food and grocery items, along with an assortment of club pack grocery products. The Extra stores have fresh produce and meat departments, delis, an in-store bakery and a selection of non-foods.

SmartCo Foods makes the fourth distinct format for Smart & Final, and in fact is a hybrid of its non-membership store format, Henry's and Smart & Final Extra. This was evident at the grand opening of the first SmartCo Foods store in Denver on Wednesday.

The 57,000 square-foot Denver, Colorado SmartCo Foods store, which is in a vacant Albertsons supermarket, is one part supermarket, one part warehouse club, and one-part farmer's market (the produce department primarily).

[Read the Sidebar at the end of this story.]

Smart & Final's planned entry into Southern California and Arizona with SmartCo Foods later this year will add yet another layer of competition into two of the most hyper-competitive markets in the U.S. Smart & Final operates its non-membership warehouse stores in Southern California and Arizona, and its Henry's and Smart & Final Extra stores in Southern California, but the new SmartCo Foods format is significant as a new entry in the markets because its hybrid supermarket/warehouse store/farmers market style format, in a good-sized retail box, is the equivalent of being a new retailer, since it doesn't mimic Smart & Final's other formats.

Smart & Final's push into Southern California and Arizona comes only shortly after we reported that Idaho-based WinCo Foods is planning a major push into Arizona, beginning in Metropolitan Phoenix. [See - April 27, 2010: WinCo Foods' Entry Will Put the 'Ultra' in the Already 'Hyper-Competitive' Metro Phoenix, Arizona Market and May 3, 2010: Winco Foods is 'Moving Fast-Forward' With Metro Phoenix, Arizona Market Entry]

WinCo also announced this month that it plans to build a huge 1 million-plus square-foot distribution center in Southern California as part of its major growth plans in the region.

Employee-owned WinCo Foods launched a major Western USA growth strategy in 2008, as we reported on and wrote about here: December 29, 2008: Competor News: Winco Foods to Expand in California and Nevada in 2009; Put Aggressive Focus on Central Valley, Northern California and Northern Nevada. Read more here.]

For Tesco's Fresh & Easy Neighborhood Market, which has the majority of its current 159 stores in Southern California and Metro Phoenix, Arizona, the addition of Smart & Final's new SmartCo Foods stores in the two regions - along with WinCo Foods' entry into Arizona and planned store growth in Southern California - means yet another competitor to deal with as Fresh & Easy works towards stemming its loses, which were $253 million in the fiscal year ended on February 27, 2010. Tesco estimates a similar loss for fiscal year 2010/11, which end in early 2011.

It also means added competition to all of the other grocers - and in the respective markets overall -particularly those in the value-based and discount niches, in Southern California and Arizona, the degree of which will depend on how many SmartCo Foods stores - and how fast it opens them - Smart & Final plans to open in the two regions.

WinCo Foods plans to open numerous new stores in Southern California and Arizona over the next five years.

Based on the fact Smart & Final is opening five SmartCo Foods stores in Metro Denver between this month and December (five month period), and plans to have 20-25 over the next couple years, it's likely the retailer's plans for Southern California and Metro Phoenix are similarly ambitious. It takes numerous stores in a region in order to achieve any efficiencies and critical mass, after all.

Sidebar: A Look at the First SmartCo Foods Store in Denver, Colorado

City of Commerce, (Southern) California-based Smart & Final opened its first new format SmartCo Foods store (pictured above) on June 23, at 1442 South Parker Road (at East Florida Avenue) in Denver, Colorado. The store is the first of five SmartCo Foods stores Smart & Final plans to open this year in Metropolitan Denver. The retailer says it plans to open between 20-25 SmartCo Foods stores in Colorado over the next couple years.

SmartCo Foods is a brand new format for Smart & Final, although more correctly it's a hybrid of the retailers current three formats - its small-format Smart & Final non-membership warehouse stores, it's natual and organic foods-focused Henry's Farmers Market, and its Smart & Final Extra smaller-format supermarkets.

The 57,000 square-foot Denver SmartCo Foods store, which is in a vacant Albertsons supermarket is one part supermarket (Smart & Final Extra), one part warehouse club (Smart & Final club format), and one-part farmer's market (Henry's).

The format and store offers basically everything a regular supermarket does in terms of departments and products, although the SKU count is a bit less (about 30,000 total SKUs) than traditional supermarkets operated by say Safeway Stores or Kroger offer. But in addition to regular pack groceries, SmartCo also features a club-pack department (pictured above), which is nearly as big as the 15,000 -to- 20,000 square-foot flagship Smart & final banner non-membership stores the retailer operates.

Additionally, borrowing from the Henry's Farmers Market format, the produce department in SmartCo Foods is expansive, and is designed to look like a version of a farmers market. The department offers both conventional and organic fresh produce items. Another leaf SmartCo Foods takes from Henry's is that the store features a bulk foods department. SmartCo also offers nearly the complete selection of the retailer's Sun Harvest private natural and organic brand, which includes products across all dry grocery and perishable categories.

The supermarket-side of SmartCo is influenced in part by Smart & Final's Extra format, as well as by the traditional American supermarket fromat in general.

Here's a look at what the store offers in terms of its departments and features:

The produce department - offers a selection of fresh fruits and vegetables, including both conventional and organic items, with a focus on value pricing. In an effort to support local Colorado growers, SmartCo Foods says it's making an effort to carry locally-grown produce, which is something its Henry's Farmers Market chain focuses on.

The meat department - is staffed by trained meat cutters. It features Cattleman’s Finest (a private brand Smart & Final uses) beef products as well as a broad selection of high-quality pork and poultry products, and fresh and frozen seafood. The meat department is self-service style. Most of the fresh meat is packaged in the department.

The in-store deli - offers ready-to-eat prepared sandwiches and other grab-and-go items, a variety of fresh salads, entress and side dishes, along with a large assortment of deli meats and cheeses.The in-store bakery - features a full-selection of breads, muffins, pastries, cakes and cookies baked fresh in-store daily.

Bulk foods - features bulk bins filled with a variety of grains, healthy snacks and other unpackaged items.

Health & Beauty - offers a full selection of conventional health and beauty products as well as Smart & Final's Sun Harvest brand vitamins, supplements and beauty care products made with natural ingredients.

Foodservice & Business - carries a large assortment of practical products, which include: catering supplies, paper and party products, straws, cutlery, portion cups, hot cups, cold cups, clear cups, serving trays, and commercial-strength cleaning supplies. The department is positioned to small business foodservice operators as well as consumers.

Warehouse Savings - features club-pack items offered primarily on an in-and-out basis, value-priced. The products include: paper goods, beverages, packaged foods and groceries and more.

At 57,000 square-feet (the other four stores set to open this year range from about 45,00o to the same size) SmartCo is Smart & Final's largest store format to date. The Smart & Final non-membership stores and range from about 15,000 -to- 20,000 square-feet, the Extra stores aren't much larger, and the Henry's and Sun Harvest stores are in the 20,000 -to- 35,000 square-foot range.

The other four Colorado SmartCo Foods stores soon to open are located at:
>5141 Chambers Road in Denver
>3615 West Bowles Ave. in Littleton
>16746 E. Smoky Hill Road in Centennial
>1750 North Main St. in Longmont

The SmartCo Foods website is here. Check out the opening week ad specials, like whole chickens for 59 cents a pound, $1.49 per-gallon milk , eggs for 79 cents a dozen and more here.

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