Seven Predictions For Tesco's Fresh & Easy Neighborhood Market For 2011

The Insider - Heard on the Street

Since this is my last 'The Insider' column for 2010, I thought I would offer a few, which turned out to be seven - as in "lucky seven, perhaps - predictions for Tesco's Fresh & Easy Neighborhood Market for 2011. They follow below: 1. Store openings

Prediction: Tesco will open 40-50 new Fresh & Easy stores in 2011. All but a handful of the new stores will be in California. The handful of new stores out of the 40-50 will be in Nevada and Arizona.

2. Store closings

Prediction: Tesco will close 5-10 of its worse-performing Fresh & Easy Neighborhood Market stores in 2011, most likely towards the latter part of the year, as part of its strategy to break-even with Fresh & Easy by the end of its 2012/13 fiscal year. Tesco closed 13 poor performing Fresh & Easy stores in November of this year. [See: 13 Closing Fresh & Easy Stores List.] There are currently 155 units in California, Nevada and Arizona.

3. Sales-margin 'Catch 22'

Prediction: Same-store-sales (also called comparable-store-sales) will continue to grow for Tesco's Fresh & Easy in 2011.

However, there will be no significant or material improvement in the fresh food and grocery chain's current negative-38% margin. (comparing the same-store-sales and margin figures both together when Tesco reports its fourth quarter numbers early next year and thereafter is key in order to gauge Fresh & Easy's actual progress.)

The primary reason same-store-sales (called like-for-like sales in the United Kingdom, where Tesco is based) is because the grocer will continue its heavy discounting and the regular use of its 25% and 20%-off deep discount store coupons. The discounting is largely what's responsible for Fresh & Easy's 9.8% gain in same-store-sales for Tesco's recently-ended third quarter, in my analysis.

Tesco is at a "Catch 22" with Fresh & Easy: It needs to reduce the level and frequency of discounting in order to raise its margins; but doing so will most probably result in the loss of those comparable store sales gains. Same-store or comparable-store -sales refers to stores open for at least a year. All but about 40 of the 155 Fresh & Easy markets have been over for a year or longer.

In order to break-even, which is a huge task since Tesco lost over $200 million on Fresh & Easy in its most recently-ended fiscal year, 2010/11, the United Kingdom-based global retailer must dramatically improve that negative-38% margin. For example, most profitable food and grocery chains have a margin that's at least in the positive twenty-percentile range. Whole Foods Market, which has the best margin among all publicly-held U.S. grocery chains, reported a plus-35% margin in its most recently-ended fiscal year.

4. UFCW union 2.0

Prediction: When Tesco launches Fresh & Easy Neighborhood Market into the Northern California region in the first quarter of this year, it will be met by the most aggressive campaign yet launched by the United Food & Commercial Workers (UFCW) union, which has been attempting to unionize the chain's store-level employees since the first stores opened in November 2007.

The UFCW local that represents unionized grocery store workers in most of Northern California, including the San Francisco Bay Area where 10 of the first 12 Fresh & Easy stores are set to be opened early next year, is one of the most organized and aggressive locals within the UFCW in the U.S. The nine-county Bay Area region, home to about 7 million people, is also one of the strongest pro-union regions in America.

Expect a campaign to unionize Northern California, particularly Bay Area, Fresh & Easy store workers to start the day, or a bit before, the first Fresh & Easy stores in the region open, which will be in February or March 2011.

5. North-south logistical divide

Despite the fact it's had a building to house a distribution center in Northern California, in Stockton, for at least three years, Tesco has decided to distribute its fresh food and grocery products to the Northern California Fresh & Easy stores from its 850,000 square-foot distribution center in Riverside County, in Southern California, which on a good day (as in no heavy rain and wind or snow on the Grapevine, the mountain pass that separates Southern California from the Central Valley, on Interstate 5) is an about 10-12 hour drive by 18-wheeler to where most of the Northern California stores will be located - and much longer when there's bad weather like the state has been experiencing for the last couple weeks. Heavy snow on the Grapevine can delay trucks delivering from Southern to Northern California for days.

The primary reason for this decision is because Tesco needs to increase the volume being shipped out of the Riverside County facility in order to make it more efficient - and thus less expensive to operate. Tesco also has been warned that all of the major self-distributing supermarket chains, wholesalers and big distributors in Northern California are unionized by the Teamsters, which plans to organize workers at the Stockton facility should Tesco ever open it.

Prediction: Fresh & Easy has a sub-par logistics system. The grocer is going to experience significant out-of-stock problems at its Northern California stores almost immediately after they start opening -something it even had serious problems with in Southern California, Nevada and Arizona from November 2007 until late 2009 - and still has some problems with today - because it's not prepared systemically for the challenges that the store ordering/processing/warehouse picking/delivery cycle (and turn-around cycle) require in order to properly keep stores in the north, which are supplied from a distribution center so far away in the south part of the state, stocked.

As a result, Tesco is going to be faced with a decision - either fix the problem or get the Stockton facility up and running fast. If the grocer can smoothly distribute to the north from Riverside, it will be a net positive because of the needed new volume it will provide for the facility. For example, in October, 2010 Tesco said it needs 400 stores, which it says it will have by the end of its 2012/13 fiscal year, all being distributed out of the Riverside facility, in order to reach what it's projected to be the efficiencies needed to operate the massive distribution center without losing money.

However, if Tesco can't fix the Northern logistics problem I describe above - or muddles through with out-of-stocks and related problems at the Northern California stores - it would be advised to get the Stockton facility open as fast as possible. If not, the Northern California launch could be a nightmare for the retailer, which has already had enough of those such events with Fresh & Easy. It will have the logistics problems. That's the prediction. How it deals with the problems will determine the success of the launch, along with the first impression it makes as the new grocer in town, in Northern California.

6. Acquisitions out

In my column of June 27, 2010 - The Insider: Will Tesco Acquire Supervalu, Inc. and Change its 'Fresh & Easy' Game in America? - I wrote about the potential of an acquisition of Supervalu, Inc. by United Kingdom-based Tesco.

Prediction: Not only is an acquisition of Supervalu by Tesco not going to happen in 2011 - Tesco has no plans to make any acquisitions in the U.S. next year, unless of course one of those rare 'offers you can't refuse' drops in the retailer's lap.

Tesco's current U.S. strategic plan is to go with Fresh & Easy as a single-play, single-format operation. The retailer believes the Fresh & Easy model is its best bet, because of its low-labor and other associated costs, for making it in America. So far - three years since the first stores opened - that strategy would be fairly judged to be incorrect. But Tesco has now set its course, which of course could change, to break-even with Fresh & Easy as described by the end of its 2012/2013 fiscal year. The strategy and plan as it currently exists doesn't include one or more acquisitions.

7. Change at the top

Prediction: At some point in the year, after March 2011, there will be a couple significant changes in the senior management ranks at Tesco's Fresh & Easy Neighborhood Market, which is headquartered in the Southern California city of El Segundo.

The changes will come in part because Philip Clarke, Tesco's current head of European operations, will take over from retiring chief Terry Leahy as CEO in March of next year. But also because there's some "Fresh & Easy fatigue" that's set in among a few key executives in El Segundo, nearly all of whom came from Tesco in the UK in 2006-2007 to start up the small-format fresh food and grocery chain and have been there ever since.

The pressure is also on the senior executive staff, all of whom have VP titles, beginning next year, as they have only a little over two years to take Fresh & Easy from its current status of bleeding millions of dollars each week to break-even. Some new blood will be needed to tackle that massive project, the outcome of which will determine Tesco's fate in America come the end of its 2012/13 fiscal year.

There you have it - seven predictions for Tesco's Fresh & Easy Neighborhood Market for 2011. I'll keep tabs on my predictions throughout next year. I'll let you know in this same space at the end of 2011 how I did.

Happy New Year. See you in 2011.

- 'The Insider'

Below is a linked listing of 'The Insider's' 2010 columns

~October 27, 2010: Save Mart CEO Bob Piccinini Poised to Make it to the 'Bigs' as Member of Golden State Warriors' Ownership Group

~October 8, 2010: Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA

~September 13, 2010: Reading Philip Clarke's Tea Leaves: Might A Mixed Corporate/Franchise Model Be in Fresh & Easy Neighborhood Market's Future?

~September 3, 2010: How the California Grocers Association and its Members Can Snatch Victory From the Jaws of the Defeat of California's Plastic Bag Ban

~August 22, 2010: Challenges & Opportunities: Tesco's Fresh & Easy Neighborhood Market Will Supply its Northern CA Stores From its Riverside County DC in Southern CA

~July 18, 2010: When it Comes to Northern California - its Competitors are Rome Burning and Tesco's Fresh & Easy Neighborhood Market is Nero Playing the Fiddle

~July 13, 2010: A Few Words on The Life and Death of Veteran Southern California Grocer Roger K. Hughes

~June 27, 2010: The Insider: Will Tesco Acquire Supervalu, Inc. and Change its 'Fresh & Easy' Game in America?

~June 12, 2010: Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

~May 20, 2010: Welcome to Discountopia USA

~April 29, 2010: Heard on the Street: There's Something About Albertsons ... In Southern California

Seven 'Mega-Trends' We See Shaping U.S. Food & Grocery Retailing in 2011

1. Food and Groceries 'Everywhere'

Never before in history have American consumers been able to buy fresh food and groceries at so many different format stores and retail venues - supermarkets, neighborhood grocery stores, mass merchants (Walmart, Target, ect.), club stores, convenience stores, drug stores, dollar stores, natural foods and specialty stores, online/home delivery, farmers markets and more.

This "channel blurring" increased even more in 2010, over 2009 - and will continue to increase in 2011 - as mass merchants like Walmart and Target, drug chains like Walgreens and CVS, and numerous other format retailers continue to offer more and more food and grocery items in their stores, along with traditional grocers. This means increased competition, particularly for the traditional supermarket channel. It also means grocers will have to continue to add value, or else the sheer number - and growing - of formats and venues offering variations of what they specialize in - food and groceries - will continue to take away sales. There's only so much share-of-stomach and share-of-pantry, after all.

2. Value, Value, Value

Low price was king, with a handful of retailer exceptions, in 2010. For 2011, price will still be very important - but perhaps just a mere prince rather than a king, in terms of its significance.

While we expect price to remain one of the key factors influencing food and grocery shopping behavior next year, value beyond price will be even more important, in our analysis. By value we mean the ability to add value to the total shopping experience, beyond just offering a low-price message.

Such value comes in many forms for food and grocery retailers of all formats: good merchandising and promotions, exceptional customer service, signature product offerings, community involvement and more. Those retailers that are able to put all the elements of value together in a coherent "value proposition," and communicate the proposition in a clear and comprehensive way to shoppers, will be among the winners in 2011.

3. Health & Wellness

Despite the passage of health care reform legislation this year - and opponents argue because of it - the cost of health insurance and health care will continue to rise by double digits in 2011, according to the federal government and independent analysts. As a result, the health and wellness or prevention message, which has been gaining steam over the last couple years, is even riper for innovative food and grocery retailers to embrace. It's something consumers of all income groups are hungry for.

Grocers like Whole Foods Market, Colorado-based Natural Grocers, Wegmans and others who are currently doing a good job adding value by focusing on health and wellness as part of their overall merchandising and communications programs know this to be the case.

Food and grocery retailers of all formats, in large part because of their ubiquity in society and in communities and neighborhoods, along with the fact they're the primary distributors of food to consumers, are in a position to become a key part of the growing health and wellness movement. And if done well, a strong health and wellness message can be one of the key points of adding value beyond price discounting for food and grocery retailers in 2011.

4. Social Media: The Customer-Advisor

Food and grocery retailers took to social media sites like Twitter and Facebook in a big way in 2010 - and we expect the trend to continue in 2011 in even greater numbers and varieties of use.

This type of interaction with shoppers, particularly among the headquarters folks who run the social media sites, was non-existent less than a decade ago. Instead, nearly all customer-grocer interaction took place at store-level, most often never making its way to headquarters in the case of chains.

However, with the advent and use of social media, the customer-food retailer interaction has now been expanded. The result: Communications and information-sharing between customers, food retailer headquarters people and store-level management is becoming more of a continuous communications loop, at least in the case of those retailers that are using social media to communicate rather than merely to post advertising or related messages.

Food retailers, such as Whole Foods Market, Wegmans, Safeway Stores, Tesco's Fresh & Easy Neighborhood Market and others, are also using their respective social media sites to invite customers and potential customers to offer suggestions on a variety of operational aspects, including where the retailers should locate new stores and what types of new private brand products they should consider developing. In return, followers of these retailers' social media sites are responding to these and other requests for input in droves.

This social media process is evolving into what we believe is becoming a new role for consumers vis-a-vis the food and grocery business - that of a customer-advisor to retailers. It's more for many of these folks than just offering suggestions. They follow up on their ideas with the retailers and want to know if they will be implemented - and if so when.

Never before since the days of the neighborhood grocer, where "everybody" in town shopped, have consumers and customers felt and acted in a more empowered way towards food and grocery retailers than today. This is due to retailers use of social media but also because of increased community involvement, which has been enhanced and made easier because of the widespread use of the Internet, particularly social media sites and blogs.

This new model of customer-retailer behavior is also leading to community members throughout the U.S. wanting more of a stake than ever before in the ways retailers design, build and remodel stores in their respective neighborhoods, including if they gain approval from city and county governments.

Walmart and Safeway Stores understand this fact. Both retailers now set up special websites and seek community input when developing new stores or remodeling existing units in areas and neighborhoods where their might be some controversy. Walmart is currently doing it in Washington D.C., for example, where it wants to build a number of new stores. And Safeway is doing it in the San Francisco Bay Area, where it's attempting to enlarge and renovate stores in a number of cities. Community members can kill or help make these projects happen, in many cases.

An excellent example of the customer or community member as adviser happened this year in Houston, Texas with the H-E-B supermarket chain. Early this year H-E-B announced it plans to build a new 78,000 square-foot supermarket at Dunlavy and West Alabama in the city's Montrose neighborhood. When the final plans for the store were presented, many neighborhood residents didn't like numerous aspects of the store's design, saying it didn't fit the character of their neighborhood. An organized group of residents even protested against the planned store.

However, instead of fighting the residents in court, H-E-B's CEO Scott McClelland and the store design team worked all this year with neighborhood residents to change the plans and store design, resulting in what now appears to be a near-consensus among residents that the store's final plan, just released, fits the neighborhood. Residents offered design changes, additions and deletions, many of which were adopted and modified for adoption. [Local Houston, Texas website Culture Map has followed the long process of working on the H-E-B store's design all year. Read this December 28 piece. Then click hear to read the other stories (look for H-E-B/Montrose), starting with the early 2010 pieces. The contrast from early 2010 to this month is amazing, and a good example of the consumer-retailer collaborative process we're referring to.]

Food and grocery retailers need to take note: Social media has changed much in terms of consumer-retailer interaction. Interactive communication, along with customers as advisers, are both here to stay, unles retailers take down their social media pages. Social media is the new frontier. Retailers that embrace it will be the winners in the years to come.

5. Affordable Indulgence

This holiday season - both when it comes to food and grocery retailing and holiday gift buying -has shown that consumers have a pent-up demand to spend on what we call "affordable indulgences." For example, grocers we've talked to beginning a couple weeks before Thanksgiving, tell us sales are significantly up on specialty and organic food items, premium in-store bakery products, higher-end fresh produce and meats and similar goods. They also tell us they see the "affordable indulgence" trend lasting, albeit not to the same high degree as the holiday season, going into 2011.

Manufacturers and marketers of premium and specialty foods also tell us they see the same trend. Many say sales of higher quality and priced packaged goods items started trending up in about September of this year, which means it's more than a holiday season blip on the shopper trading-up radar screen. It's important to note we're not talking about high-priced caviar and $50 bottles of wine. Rather, the trading up we're referring to involves many shoppers buying super-premium ice cream, gourmet condiments, higher-end prepared foods and other "affordable indulgences," products they've in many cases done without over the last three years. It's a cautious but we think real trading-up - but not a return to pre-2007 premium-specialty grocery shopping and purchasing levels.

If we're correct, this trend offers great opportunity in 2011 for those food and grocery retailers who can offer higher-ticket specialty items while still maintaining value. Such items are good both for increasing a retailer's overall shopper market basket purchase size, as well as gross margins. Reasonable pricing and excellent merchandising in-store are the two keys for retailers in taking advantage of this pent-up shopper desire for premium and specialty foods.

6. Private Brands

The growth of retailer-owned private brands grew significantly in 2009 and 2010, in large part because cash-strapped shoppers have been looking for the best prices they can on everything, from soup to nuts to disposable diapers, something that will continue into 2011 but we think in not such a major way as was the case this year, as the economy continues to slightly improve over next year.

As such, we expect moderate but significant percentage growth for retailer brands in 2011. Much of this growth will be fueled by the fact store brands have improved considerably, as compared to manufacturer consumer packaged goods (CPG) brands, over the last couple years.

Additionally, private brand retailer-leaders like Trader Joe's, Safeway Stores, Target and a few others should see their store brand sales grow even more so than the national retailer average because these grocers are doing real packaged goods brand creation and marketing rather than mere private label product creation.

What we won't see in 2011 but perhaps should: Retailers treating their own brands with the same strict set of criteria as they treat manufacturer brands, including using the same shelf-movement standards for private brand as they do for big brands, charging themselves a slotting fee (an in-house scheme of some sort could be created) for new private brand items like they do consumer packaged goods marketers rather than putting the products on the shelf for free, and holding themselves to the same levels of street money and promotional spends as they hold the CPG brand marketers to. If retailers had to play by the same rules with private brand as the manufacturer-marketers that supply them do, we would see a much higher store brand item failure rate - and thus a more true picture - of the real overall success of retailer brands as compared to big brands.

7. Commodity-Food Price Inflation

The price of basic food commodities like corn, wheat and soybeans are going up, along with the price of oil. This will take its toll not only on packaged food items (and transportation costs for distribution in the case of oil) but also on fresh meats and poultry. Major food makers such as Con-Agra, Kraft and others have recently announced that price increases are coming to wholesalers and retailers at the first of next year.

Retailers, particularly mid-level supermarket chains but also discounters and other format operators, can't merely pass these price increases on penny-for-penny to consumers because competition is too stiff. Therefore, as they have this year, grocers and other format food retailers are going to have to continue to absorb a certain percentage of the price increases, which also will hit their own brands because of the commodity hikes, or risk losing sales to the hard discount retail channel.

The continuing bad economy, albeit it should continue to improve some in 2011 as it's already started to do, also will exert added pressure on retailers to not pass on more than a percentage portion of these price increases. As a result of these factors, retailer margins will once again be challenged in 2011, even if some food inflation at the point-of-sale occurs.

[Readers: We invite you to tell us and your fellow readers what you think will be the mega-trends shaping the U.S. food and grocery retailing business in 2011. Just click the comments link below and offer your opinion. Feel free to list one or more industry-shaping meg-trends for 2011 in your comment]

First Look at the Pacifica, California Fresh & Easy Neighborhood Market Store, One of the First Opening in Northern California in Early 2011

Northern California Market Region Special Report

Progress is being made by Tesco in preparing its future Fresh & Easy Neighborhood Market store in the Pedro Point Shopping Center, at 5550 Coast Highway, in Pacifica, California, for an early 2011 opening.

The store, which is located in the coastal San Francisco Bay Area city's Pedro Point neighborhood, is one of the first 12 Northern California region Fresh & Easy markets Tesco plans to open in the first quarter of next year. [See - December 14, 2010: Fresh & Easy Neighborhood Market to Open 5800 Third Street 'Flagship' Store in San Francisco Later in 2011 Than Originally Announced. Also see the links to previous stories at the linked December 14, 2010 piece above.]

According to our most recent information, Tesco is targeting a March 2011 opening for the Pacifica store. However, that could change. It's possible the market could open as early as February, or as late as April 2011.

The store is new construction. The building has been completed since October 2008, as we've previously reported in Fresh & Easy Buzz.

The wood siding and exterior signage, which you can see in the photographs above and below taken today, both were installed in recent weeks. Also note the "Now Hiring" banner sign on the store's exterior. As far as we are aware, these are the first photographs to be published of the store since work has started to prepare for the early 2011 opening.

Workers are preparing to begin work on the store's interior. There are various fixtures and other equipment inside the future Fresh & Easy fresh food and grocery market, awaiting installation.

A number of residents of the Pedro Point neighborhood, where the city's mayor, Jim Vreeland, lives, tell us they're pleased to see Tesco plans to open the store that's been sitting vacant since fall 2008. In fact, the Pedro Point Neighborhood Association plans to invite a member of Fresh & Easy's management team to speak before the group of neighborhood residents early next year, leaders tell us.

Over the last couple years, some Pacifica residents even took to referring to the long-vacant Fresh & Easy store building as "Vreeland's Folly," since the mayor was instrumental in luring the grocer to the store in early 2008. We're told the mayor, who over the last couple years has often been asked by his neighbors when the grocery store will open, is pleased the store will soon open as well.

Fresh & Easy Buzz has reported on and writen extensively about the future Pacifica Fresh & Easy Neighborhood Market store. Below is a selection of those stories:

July 21, 2010: Vacant Fresh & Easy Neighborhood Market Store in Pacifica, California Has the City's Mayor in a Pickle

July 18, 2010: When it Comes to Northern California - its Competitors are Rome Burning and Tesco's Fresh & Easy Neighborhood Market is Nero Playing the Fiddle

October 13, 2008: Pacifica Riptide & Fresh & Easy Buzz Join Together to Offer Pacifica, California Citizen Opinions On the Fresh & Easy Store Coming to the City

October 9, 2008: Pacifica, CA Mayor Jim Vreeland Says He's Excited to Have Fresh & Easy Store Coming to Pedro Point; Says New Center Will Be One of the Best in Town

October 7, 2008: Fresh & Easy Corporate Reps to Meet With Pedro Point Pacifica, CA Neighborhood Residents to Address Concerns Over Store to Open in 2009

June 24, 2008: Upcoming New Markets News: Tesco to Locate Yet Another Fresh & Easy Store in San Francisco Bay Area; 21 Thus Far By Fresh & Easy Buzz's Reporting

[Editor's Note: The photographs above are copyright of Fresh & Easy Buzz. Publications are free to use the photos as long as they provide a photo credit to Fresh & Easy Buzz, along with a link to the blog.]

[Editor's Note: We began our 'Northern California Market Region Special Report' series in April of this year. It's one of a number of special report series' we've done in Fresh & Easy Buzz over the last three years. Taken as a whole, we think the series offers one of the best up-to-date looks at the Northern California market region, which Tesco's Fresh & Easy Neighborhood Market plans to enter in early 2011, that's currently available. Below are the stories in the series thus far. Click on the title to read the story.]

December 14, 2010: Fresh & Easy Neighborhood Market to Open 5800 Third Street 'Flagship' Store in San Francisco Later in 2011 Than Originally Announced

December 7, 2010: Sunflower Farmers Market Confirms Our Report It's Headed to Northern California; Roseville Store to Open April 2011

December 9, 2010: Launching Sunflower Farmers Market Into Northern California is a 'Second Act' of Sorts For Founder-CEO Mike Gilliland

November 30, 2010: DeLano's IGA Markets Closing Five Stores in San Francisco & Marin County; Fairfax, Davis Units to Remain Open (For Now)

November 29, 2010: Veteran Grocer Harley DeLano's 'DeLano IGA Markets' Chain On the Verge of Closure in San Francisco Bay Area

November 22, 2010: Tesco's Fresh & Easy Neighborhood Market Plans Five New Stores in Northern California's Sacramento Region

November 12, 2010: Postponed But Not Abandoned: Fresh & Easy Neighborhood Market Gearing Up For Northern California Launch

November 8, 2010 - Fresh & Easy Neighborhood Market's '5800 Third Street' Northern California 'Flagship' Store in San Francisco is Taking Shape

November 5, 2010: Fresh & Easy Neighborhood Market Queuing Up Three Additional Stores in Northern California For Early-to-Mid 2011 Openings

November 3, 2010: Tesco's Fresh & Easy Neighborhood Market Plans New Store in Northern Central Valley, California City of Ceres

November 1, 2010: Tesco's Fresh & Easy Neighborhood Market Planning to Build its First Store in Northern California City of Brentwood

October 30, 2010: Raley's Launches New 'Raley's TO GO' Pre-Packaged, Refrigerated Fresh-Prepared Foods Line

October 27, 2010: Save Mart CEO Bob Piccinini Poised to Make it to the 'Bigs' as Member of Golden State Warriors' Ownership Group

September 26, 2010: While Tesco's Fresh & Easy Neighborhood Market Postponed, Target Opened 42 'P-Fresh' Fresh Food and Grocery Markets in Northern California

September 22, 2010: Sunflower Makes Three: Sunflower Farmers Market's First Northern California Store Will Be in Roseville

September 22, 2010: Tesco's Fresh & Easy Neighborhood Market Planning A New, Third Store in San Jose, California

September 22, 2010: Fresh & Easy Neighborhood Market Plans to Open Two Additional Stores in Northern California in Early 2011

September 21, 2010: A Look Inside Whole Foods Market's Newest Store, A Mall Location in Santa Rosa, California

September 20, 2010: About Today's Walmart Stores, Inc. Smaller Stores Media Frenzy: We Scooped it On July 6, 2010

September 19, 2010: Whole Foods Market Gives Itself A 30th Birthday Present: 299th Store Opens This Week in Santa Rosa, California

September 18, 2010: Keep On Truckin' - Whole Foods Market Celebrates 30 Years This Weekend

September 14, 2010: Eight Plus One: Napa Unit Added to Eight Fresh & Easy Neighborhood Market Stores Opening in Northern CA in Early 2011

September 5, 2010: BevMo Chain Ends Full Time Employment For Store Workers; They Say No Way and Join With UFCW Union to Demand 'A Better BevMo'

September 3, 2010: How the California Grocers Association and its Members Can Snatch Victory From the Jaws of the Defeat of California's Plastic Bag Ban

August 25, 2010: Going Rural: New Fresh & Easy Neighborhood Market Store Planned for Sutter Creek in Northern California

August 23, 2010: Hybrid 'Good Eats' Market-Cafe From Raley's CEO Michael Teel & Company Opens Today in Sacramento CA

August 22, 2010: The Insider: Challenges & Opportunities: Tesco's Fresh & Easy Neighborhood Market Will Supply its Northern CA Stores From its Riverside County DC in Southern CA

August 21, 2010: April 2010 Prediction Correct: February 2011 Target to Open First Eight Fresh & Easy Neighborhood Market Stores in Northern California

August 19, 2010: Tesco Will Open its First Eight Fresh & Easy Neighborhood Market Stores in Northern California in 'Early 2011.'

August 17, 2010: Henry's Farmers Market 'Beats' Fresh & Easy Neighborhood Market to Northern California Despite Multi-Year Head Start; Elk Grove Store Opens Tomorrow

July 29, 2010: Tesco's Fresh & Easy Neighborhood Market Putting Together List of Managers Interested in Transferring to Northern California

July 25, 2010: Safeway to Start Construction on New Pleasanton, California Flagship Store Soon; Thanksgiving 2011 Target Opening

July 22, 2010: 'The Insider' - After Four Years in the High Weeds in Northern & Central California, Kroger Co. is Emerging to Grow its Foods Co Chain

July 21, 2010: Vacant Fresh & Easy Neighborhood Market Store in Pacifica, California Has the City's Mayor in a Pickle

July 18, 2010: 'The Insider' - When it Comes to Northern California - its Competitors are Rome Burning and Tesco's Fresh & Easy Neighborhood Market is Nero Playing the Fiddle

July 14, 2010: Tony Bennett Has Nothing on Whole Foods Market When it Comes to Loving San Francisco...That City By the Bay

July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store

June 28, 2010: Smart & Final to Open its New Format SmartCo Foods Stores in California and Arizona

June 26, 2010: Tesco Planning to Announce in July When First Northern California Fresh & Easy Neighborhood Market Stores to Open

June 14, 2010: Newly-Named Whole Foods Market CO-CEO Walter Robb Comes Full Circle With the Opening of the New Store in Mill Valley CA

June 5, 2010: Sprouts Farmers Market Opens First Northern California Store in Sunnyvale; Strikes Up Partnership With Local Non-Profit Farm

May 29, 2010: Going Rural: Fresh & Easy Neighborhood Market to Build First Store in Los Banos, California

May 28, 2010: First Phase of Fresh & Easy Neighborhood Market-Anchored Condo Development in San Francisco's Bayview Set For Completion in June

May 9, 2010: A Whopping 15 of Whole Foods Market's 41 New Stores in Development are in California - And Nine of The 15 Are In Northern CA

May 8, 2010: Sprouts, and Likely Henry's to Beat Fresh & Easy to Northern California Despite it's Big Head Start

May 6, 2010: Going Smaller & Getting 'Hybrid': Walmart's Smaller Supercenter in Vacant Retail Buildings Strategy Began in 2008

April 19, 2010: Tesco Debating Whether to Launch Fresh & Easy Into Northern California This Fiscal Year... or Wait

[Also: click here , here and here for a selection of past stories on Fresh & Easy and Northern Calfornia.]

New Items Show Fresh & Easy Neighborhood Market's Niche-Specialty Category Private Brand Development Focus

Private Brand Showcase

Tesco's Fresh & Easy Neighborhood Market has gone decidedly niche and specialty products-oriented with three new food and drink items it recently introduced, pegged to the November-December holiday season, under its fresh&easy private brand.

The three new fresh&easy brand products fall clearly into the specialty food and drink category because they are niche-oriented consumer packaged goods items and feature gourmet or organic product attributes, and in case of the coffee also offer a fair trade attribute, along with the organic.

Below is our rundown on the three new items, followed by some analysis on Fresh & Easy's current private brand development focus:

Holiday Blend Coffee

The fresh&easy Holiday Blend coffee - pictured here - is a seasonal item introduced by the grocer for the November-December-New Year holiday period. The special blend coffee features both organic and fair trade coffee beans. [You can read about fair trade here. There are different definitions of what is considered fair trade, along with different certifications. In other words, it's somewhat buyer beware when the words fair trade are used on products.]

Pumpkin Pecan Waffle & Pancake Mix

The recently introduced fresh&easy Pumpkin Pecan Waffle & Pancake Mix is designed to be merchandised in the store all year but has a clear fall and holiday season focus to it, which is why Fresh & Easy Neighborhood Market has introduced it when it has.

The quick-prepare-and-cook product (pictured above) contains the dry mix and pecans, and requires adding eggs, milk, oil/or butter. The private brand specialty pancake and waffle mix is made without artificial colors or flavorings, is free of trans-fats, and contains no high-fructose corn syrup. It currently retails for has $3.99, based on store visits this week.

Cranberry Walnut Loaf

The new fresh&easy brand Cranberry Walnut Loaf specialty bread (pictured below) is made for Tesco's Fresh & Easy by its bread vendor Il Fornaio. The 16 ounce loaf contains cranberries, walnuts, raisins, pecans and citrus.

Interestingly, Walmart recently introduced a nearly identical Cranberry Walnut Loaf under its "Marketside" private brand. See a picture at our story here - December 21, 2010: New 'Marketside' Brand Fresh Food Items From Walmart - Part Deux.

Analysis: Niche, specialty private brand focus

In a recent Private Brand Showcase piece - December 13, 2010: House (Sparking) Cider Rules at Fresh & Easy Neighborhood Market - we noted that based on our ongoing research and analysis, Tesco's Fresh & Easy Neighborhood Market this year has been putting the majority of its consumables private brand development and new item introduction focus in the specialty foods, natural-organic and healthy foods' niche categories rather than into the development of more mainstream or mass market types of packaged food and grocery products. The three items featured in this piece lend further evidence to our observation and analysis.

Its our further analysis the grocer will continue with this niche-oriented specialty products focus in the consumables category next year.

That doesn't mean Fresh & Easy Neighborhood Market won't introduce any new mainstream packaged goods items. Rather it means the Tesco-owned 155-store fresh food and grocery chain will put its focus on the specialty, natural-organic and healthy foods' categories, looking even more and more like Trader Joe's, for example, when it comes to retailer brand development and merchandising.

A key reason we believe Fresh & Easy has been and will continue to put a majority focus on niche and specialty oriented categories with its private brand development is two-fold.

First, the grocer believes doing so will help it to build a larger and stronger customer following based on its private brands and products.

Second, Tesco's Fresh & Easy Neighborhood Market hopes a focus on the specialty-premium, natural-organic, and healthy foods' categories, where the items tend to have higher price-points and gross margins, will help it to achieve two essential goals: increase the average market basket sales in its stores and increase Fresh & Easy's current negative-38% overall margin.

Tesco says it will break-even or show a slight profit with Fresh & Easy by the end of its 2012/13 fiscal year. In order to achieve that it must raise the negative-38% margin to at least something close to plus-20%. That's a tall order for any grocer.

[Private Brand Showcase is a regular feature of Fresh & Easy Buzz. In it we report on, write about and offer analysis and commentary on the fast-growing private or retailer brand (sometimes called private label) movement, along with featuring various private brand products being offered by Tesco's Fresh & Easy Neighborhood Market, along with those of other grocers and retailers operating various types of formats. Below is a selection of 2010 stories in our Private Brand Showcase]

Below is a selection of 2010 stories from our 'Private Brand Showcase'

December 21, 2010: New 'Marketside' Brand Fresh Food Items From Walmart - Part Deux

December 18, 2010: Walmart Launches New 'Marketside' Fresh Food Lines - Plus A 'Fresh' Campaign to Create Brand Buzz

December 13, 2010: House (Sparking) Cider Rules at Fresh & Easy Neighborhood Market

October 30, 2010: Raley's Launches New 'Raley's TO GO' Pre-Packaged, Refrigerated Fresh-Prepared Foods Line

October 16, 2010: Fresh & Easy Neighborhood Market 'Bags' the Humble and Nutritious Plantain For A New Snack Chip Item

October 16, 2010: Fresh & Easy Neighborhood Market's Private Brand Kids' Cereal Wins Bronze 'Pentaward' in 2010 Packaging Design Competition

October 9, 2010: 'Use Me': Should Reusable Packaging Be Part of Tesco's Sustainable Private Brand Offering? A Student-Designer Thinks So

September 27, 2010: First Items in Fresh & Easy Neighborhood Market's 'eatwell' Brand Frozen Foods Line Arriving in Store Freezer Cases This Week

September 4, 2010: Fresh & Easy Neighborhood Market Unveils New fresh&easy 'goodness' Brand Items and Packaging

August 29, 2010: Fresh & Easy Neighborhood Market Expanding its fresh&easy 'goodness' Co-Branded Line; Launching Numerous New Items

August 18, 2010: Fresh & Easy Neighborhood Market Extending 'eatwell' Healthy Foods' Private Brand Into Dry Grocery Category

July 21, 2010: 'Sipsational' & 'Quenchtastic': Safeway Introduces New 21-Flavor Line of Soft Drinks Under 'refreshe' Private Brand

July 17, 2010: New Fresh & Easy Neighborhood Market Clock-Shaped Private Brand Candy Line Hits the Shelves at Fresh & Easy

July 12, 2010: Tesco Launches Private Brand 'Lasagne Sandwich' in the UK Today...With No Apologies to The Earl of Sandwich

June 24, 2010: New Fresh & Easy Clock Logo-Shaped Candies Are A Pretty Sweet Idea

May 11, 2010: Tesco Might Want to Get 'fresh & naked' at 'fresh & easy'

April 2, 2010: Fresh & Easy's New 'EatWell' Healthier Fresh, Prepared Foods Brand to Hit Stores on April 7

April 11, 2010: When it Comes to Fresh, Prepared Foods, New York City's Duane Reade is Simply 'deLish' for Walgreens

February 22, 2010: Food, Drug Retailers With Stores in California, Nevada & Arizona Honored for Private Label-Store Brands' Excellence

Safeway Wants to Grow its Online-Home Delivery Grocery Business - And is 'Giving Away the Store' to Prove it

Can Safeway Stores, Inc. convince grocery shoppers to go online by making them an offer that's hard to refuse?

Pleasanton, California-based Safeway Stores, Inc. is aggressively courting new customers for its Safeway.com online food and grocery ordering-home delivery business by making them an offer that's hard to refuse. That offer: The grocery chain is tempting first-time Safeway.com users with a promotion that includes $15-off purchases of $50 or more, along with free delivery. If a shopper orders the minimum dollar amount required, that's a whopping savings of 30% - plus free delivery - off their $50 grocery purchase. Safeway charges from $6.95-$9.95 for orders under $150, depending on the time slot in which it's delivered.

The $15-off online coupon code voucher is in addition to any online manufacturers' coupons or Safeway Club Card deals a first-time cyber-customer might use.

Safeway has been offering the promotion in the markets where if offers online ordering and home delivery - the San Francisco Bay Area, metro Sacramento and the coastal Monterey-Salinas region in Northern California; Portland, Oregon; metropolitan Seattle, Washington; metro Phoenix, Arizona; Maryland; Washington D.C.; and metro Philadelphia - nearly every week since August of this year.

The promotion works like this: Safeway runs a banner ad or similar advertisement in its weekly advertising circular (see the ad at top) in which it promotes the $15-off purchases of $50 or more discount and free delivery for first time Safeway.com customers, as well as running the ad on its website and social media sites at times. The advertisement includes a promotional code, which the first-time cyber-shopper types into a box on Safeway's online grocery ordering site. The system gives the customer the discount plus a free delivery credit. If a shopper has used the online ordering and home delivery service in the past, the system will reject the deal because it keeps a record of all previous customers.

Giving away the store

The fact Safeway Stores is nearly giving away its gross margin on the promotion, along with eating the cost of delivery - which combined makes it basically a money losing proposition - demonstrates two key things when it comes to the grocery chain and its home delivery service.

First, Because its one of the few major grocery chains in the U.S. doing online ordering-home delivery, it sees the potential to grow the business significantly as a major point of difference via-a-vis its competitors, as well as potentially being a cost-effective niche-oriented way to grow its business overall. Online grocery shopping would have to grow by leaps and bounds in the U.S. in order for it to become a major revenue source for Safeway - or for any other U.S. supermarket chain.

Secondly, Safeway needs to grow its Safeway.com customer base in all of its markets - some much more than in others - to make it more cost-effective. That's why, in part, it's been offering such an aggressive promotion for first-time customers, hoping to give them a low-cost first-taste, then hook them, or at least have them use the service every so often, along with shopping at the grocer's stores.

Safeway's cyber-grocery beginnings

In the late 1990's, when the first dedicated online-home delivery grocers and supermarket-based operations like Safeway's popped up, many members of the media, along with numerous supermarket industry analysts and pundits, were predicting cyber-grocery shopping with home delivery as the next revolution in the business.

Safeway's original online-home delivery operation was called Grocery Works. It was a partnership between the supermarket chain and United Kingdom-based Tesco, which owns and operates Fresh & Easy Neighborhood Market, which has 155 stores in California, Nevada and Arizona, and is launching into Safeway Stores' home market of Northern California early next year.

Tesco was the first supermarket chain in the world to create an online grocery store with residential delivery, which it started in the mid-90's in the UK. In the UK Tesco also offers clothing, furniture, consumer electronics and other general merchandise on its online site, similar to Walmart.com in the U.S. The products are shipped to homes via carrier though. Only food and groceries and related non-foods packaged goods are delivered by the retailers directly to residences.

Ironically, Tim Mason, who is the CEO of Southern California-based Fresh & Easy, as well as being a corporate director of Tesco, headed up Tesco's online-home grocery delivery creation and launch as a marketing manager at the chain's UK headquarters at the time.

The Safeway Stores-Tesco Grocery Works joint-venture (Safeway was the majority owner) didn't last long - about long enough for Safeway to go to school on what was a primarily Tesco creation from a technological standpoint, since it was already operating an online/home delivery business in the UK. After less than two years, Safeway bought out Tesco's share, killed the Grocery Works name, and brought the operation in-house, branding it with the Safeway name.

Safeway Stores fulfills the online orders from a series of dedicated Safeway supermarkets in each region rather than using centralized distribution centers. The dedicated stores - there are numerous such units in each of the market regions where Safeway offers its home delivery service, have an area in the backroom where the orders are processed, scanned at a checkout counter and stored for pick up.

A typical order fulfillment scenario works like this: The Safeway.com centralized computer system routes an online shopper's order to the dedicated Safeway store closest to his or her residence. A store clerk then downloads the order and shops for it in the store. Once the order is picked, the clerk then scans it in the back room, bags it, tags it with the customers name and address, and moves on to the next order. All perishables are kept refrigerated or frozen in the store back rooms. Delivery trucks pick up the orders at the dedicated stores for delivery to the customers' homes. Shoppers pay for the groceries with a debit or credit card when they place the order.

Remembering Webvan

The primary reason Safeway went the joint-venture route in the late 1990's with Tesco was because it needed expertise fast, most specifically in its home Northern California market, where at the time Louis Borders, the founder of the Borders Books book store chain, had earlier announced his plans to "revolutionize" grocery shopping the way Borders revolutionized book retailing - except via the Internet and home delivery rather than with a chain of brick-and-mortar book stores - by creating what he called the "Amazon.com" of food retailing - which he named "Webvan." And, Borders said at the time, Webvan would start in Northern California's San Francisco Bay Area, where Safeway is based, and then spread over a period of a few years to at least 26 major metropolitan market regions in the U.S. Tesco had that expertise.

At its high point, at least expansion-wise, Webvan operated in the following U.S. metropolitan market regions: the San Francisco Bay Area; Sacramento, Los Angeles, Orange County and San Diego in Southern California, Portland; Seattle; Dallas; and Atlanta. San Diego.

Webvan gained some of these markets when it bought out rival dedicated online grocer HomeGrocer, which went bankrupt, in June of 2000.

Borders invested millions of dollars of his own money, a small part of his take from the sale of Borders Books, in Webvan, and raised over a billion dollars from investment banks like Goldman Sachs, Silicon Valley venture capital firms Benchmark Capital, Sequoia Capital and Softbank Capital, private investors and companies like Yahoo, which was involved in an online advertising partnership with Webvan as part of its investment.

Webvan, which had its corporate headquarters in Foster City on the San Francisco Peninsula, build a massive (about 1 million square-feet) distribution and order fulfillment center near the Oakland, California airport, hired the best and the brightest from Silicon Valley to create a high-tech online grocery store, invested in the best Sun Micro Systems servers and other high-tech equipment available at the time, had state-of-the art delivery trucks custom-built, spent tons of money on marketing - and launched in the late 1990's.

Jut a few years later, in 2001, the "Amazon.com" of food and grocery retailing - Webvan offered everything on the site that a big brick-and-mortar supermarket offers - went bust, filing bankruptcy and closing the business.

Loses were in the $1 million- $1.5 billion range. Numerous creditors were left hanging, owed mega sums of money. Some creditors received a few pennies on the dollar from the sale of Webvan's trucks and other equipment. Others nothing. The Oakland distribution center was torn down and everything was sold, including half a million dollars worth of custom-made plastic totes the company used to deliver the groceries in, in an attempt to pay those pennies on the dollar to the creditors.

Ironically, Amazon.com bought what was left of Webvan. But not for much money. But it was the start of Amazon's online grocery products offering, as well as the infrastructure for the online-home delivery business it operates today in the Seattle, Washington area, where it's headquartered.

Back to the future

A little over a decade since it launched its online grocery business, Safeway Stores is doing the most aggressive promotion - the $15 off, free delivery new customer deal - and for the longest period of time, we've seen the grocer conduct in many years.

It's a gamble - many shoppers will take advantage of the promo for the big one-time savings, and never use it again.

But Safeway is the only one, or basically one of two players, in the markets where it operates Safeway.com. If it can grow that business, say 8-10% a year for the next decade - and if in those ten years online grocery ordering with home delivery becomes more popular in the U.S., say getting closer to how much it's grown in the United Kingdom over the last decade, it could become a nice little piece of business for Safeway Stores, Inc.

After all, in the UK the nation's top three food and grocery retailing chains - Tesco, Walmart-owned ASDA and Sainsbury's - all operate successful online grocery stores with home delivery. However, after many years of growth, cyber-grocery shopping is essentially flat in the UK.

There are no current indications, in our analysis, that a major growth spurt in the online-home delivery food and grocery segment is on the near-horizon in the U.S. However, that doesn't mean Safeway can't build on its existing business through promotions like the current one and others.

But the proof in the online-home delivery pudding for Safeway Stores, Inc. will be in retaining those first time Safeway.com online cherry pickers. Will they return after getting a hot deal the first-time around? In our analysis only a very small percentage of those first time users will likely use the service a second, or third, time around. But if the universe of trial users created by the hot, multi-month promotion is big enough, it could be worth it for Safeway.

In the meantime, it is Christmas week. Therefore, if you live in one of the market regions where Safeway offers its Safeway.com online ordering and home delivery grocery service, and where it's currently offering the $15-off orders of $50 or more promotion, we know how and where you can get a $50 Prime Rib Roast for Christmas dinner for $35 - and have it delivered to your front door for no extra charge to boot.

New 'Marketside' Brand Fresh Food Items From Walmart - Part Deux

Private Brand Showcase

In the Private Brand Showcase piece linked here - December 18, 2010: Walmart Launches New 'Marketside' Fresh Food Lines - Plus A 'Fresh' Campaign to Create Brand Buzz - we wrote about (and included photographs) three new fresh food product lines, along with some new item line extensions, Walmart Stores, Inc. recently introduced under its fast-growing "Marketside" brand.

Today we thought we would give Fresh & Easy Buzz readers an additional pictorial look at some of the new items not pictured in the story on Saturday.

Pictured above, the items are, from left to right:

>"Marketside Mushroom And Cheese Half-Moons and Grilled Chicken and Spinach Ravioli. The varieties are two of the numerous SKUs (and shapes) in the new"Marketside" brand refrigerated fresh pasta line, which we wrote about in the in the Saturday piece. [See - December 18, 2010: Walmart Launches New 'Marketside' Fresh Food Lines - Plus A 'Fresh' Campaign to Create Brand Buzz

>"Marketside" Chicken Tortilla Soup. This a fairly new item (line extension) Walmart has added to it existing "Marketside" line of ready-to-heat, fresh-refrigerated soups. [See - February 28, 2010: Walmart Introducing New Ready-To-Heat Prepared Entrees, Fresh Soups Under its Marketside Brand]

>"Marketside" Classic Smooth Guacamole. This SKU is a larger version (2/7oz Trays instead of pouches) of the same item we ran a picture of in the piece on Saturday. That item: "Marketside" Classic Smooth Guacamole; but in 6/2oz Pouches instead of the trays. [See the photo at the December 18, 2010 story link above.

>"Marketside" Artisan Petite Cranberry Walnut Loaf. This new specialty bread is one of a number of new varieties Walmart is launching to go with its existing "Marketside" bread, roll and baked goods lines. [See - September 9, 2010: Walmart Introduces 'Marketside' Brand Packaged Fresh-Baked Breads, Sub Rolls and Chocolate Chunk Cookie]

>"Marketside" Roasted Garlic Hummus. The variety is one flacor in the multi-SKU new line of "Marketside" packaged, fresh-refrigerated Hummus.

As we noted in the story on Saturday, Walmart Stores, Inc. is developing additional new "Marketside" private brand fresh food lines, and preparing to introduce some of those new lines, along with numerous new item line extensions, in the first half of 2011.

Stay tuned.

Related Stories

March 31, 2010: Walmart Adds Additional Marketside Fresh Food Items to Marketside.com Not Long After Our February Reports

March 9, 2010: Walmart Adds Two More SKUs to its Marketside Ready-To-Heat Fresh, Prepared Entree Line

March 2, 2010: Walmart Launching New 'Marketside Fresh Garden Salsa' Line Under its Fast-Growing Fresh Foods Store Brand

February 28, 2010: Walmart Launching New Value-Added Pre-Packaged Fresh Produce Line Under its Marketside Fresh Foods Brand

[Private Brand Showcase is a regular feature of Fresh & Easy Buzz. In it we report on, write about and offer analysis and commentary on the fast-growing private or retailer brand (sometimes called private label) movement, along with featuring various private brand products being offered by Tesco's Fresh & Easy Neighborhood Market, along with those of other grocers and retailers operating various types of formats. Below is a selection of 2010 stories in our Private Brand Showcase]

Private Brand Showcase 2010

December 18, 2010: Walmart Launches New 'Marketside' Fresh Food Lines - Plus A 'Fresh' Campaign to Create Brand Buzz

December 13, 2010: House (Sparking) Cider Rules at Fresh & Easy Neighborhood Market

October 30, 2010: Raley's Launches New 'Raley's TO GO' Pre-Packaged, Refrigerated Fresh-Prepared Foods Line

October 16, 2010: Fresh & Easy Neighborhood Market 'Bags' the Humble and Nutritious Plantain For A New Snack Chip Item

October 16, 2010: Fresh & Easy Neighborhood Market's Private Brand Kids' Cereal Wins Bronze 'Pentaward' in 2010 Packaging Design Competition

October 9, 2010: 'Use Me': Should Reusable Packaging Be Part of Tesco's Sustainable Private Brand Offering? A Student-Designer Thinks So

September 27, 2010: First Items in Fresh & Easy Neighborhood Market's 'eatwell' Brand Frozen Foods Line Arriving in Store Freezer Cases This Week

September 4, 2010: Fresh & Easy Neighborhood Market Unveils New fresh&easy 'goodness' Brand Items and Packaging

August 29, 2010: Fresh & Easy Neighborhood Market Expanding its fresh&easy 'goodness' Co-Branded Line; Launching Numerous New Items

August 18, 2010: Fresh & Easy Neighborhood Market Extending 'eatwell' Healthy Foods' Private Brand Into Dry Grocery Category

July 21, 2010: 'Sipsational' & 'Quenchtastic': Safeway Introduces New 21-Flavor Line of Soft Drinks Under 'refreshe' Private Brand

July 17, 2010: New Fresh & Easy Neighborhood Market Clock-Shaped Private Brand Candy Line Hits the Shelves at Fresh & Easy

July 12, 2010: Tesco Launches Private Brand 'Lasagne Sandwich' in the UK Today...With No Apologies to The Earl of Sandwich

June 24, 2010: New Fresh & Easy Clock Logo-Shaped Candies Are A Pretty Sweet Idea

May 11, 2010: Tesco Might Want to Get 'fresh & naked' at 'fresh & easy'

April 2, 2010: Fresh & Easy's New 'EatWell' Healthier Fresh, Prepared Foods Brand to Hit Stores on April 7

April 11, 2010: When it Comes to Fresh, Prepared Foods, New York City's Duane Reade is Simply 'deLish' for Walgreens

February 22, 2010: Food, Drug Retailers With Stores in California, Nevada & Arizona Honored for Private Label-Store Brands' Excellence

[Photo credit: Photo courtesy of Sophistisishe.com.]

Glassell Park-Los Angeles Store Workers Catalysts For New UFCW Campaign to Unionize Fresh & Easy Neighborhood Market

Workers at the Glassell Park neighborhood Fresh & Easy store in Los Angeles, who say they have an employee-majority in favor of joining the UFCW union and becoming a union shop, speak out to fellow employees at other stores in the video above, which is part of a new multi-faceted campaign to unionize the Tesco-owned chain.

Breaking Buzz - News & Analysis

[Related Story - December 20, 2010: UFCW Union Launches New 'Fix Fresh & Easy' Neighborhood Market Website and Social Media-Based Campaign]

In July of this year we broke the news that a majority of employees who work at the Fresh & Easy store at 4211 Eagle Rock Boulevard in the Glassell Park neighborhood in northeast Los Angeles, California agreed among themselves to join the UFCW union, and formally requested recognition from executives at Tesco-owned Fresh & Easy Neighborhood Market's corporate headquarters in El Segundo, California.

Read our story here - July 24, 2010: Employees at the Glassell Park-Eagle Rock Fresh & Easy Neighborhood Market Store in Los Angeles Seeking Union Recognition From Tesco

Fresh & Easy Neighborhood Market, through the company's head of human resources, told the worker-majority at the Glassell Park store they would have to go through a federal government monitored open ballot election, which is what most non-union U.S. companies tell employees to do if they want to join a union, winning a majority of votes from all the employees, in order to be recognized by Tesco as a union shop. The Los Angeles store, like the other 154 small-format Fresh & Easy markets in California, Nevada and Arizona, employs 20-25 workers, not including the store manager.

Since we published our piece in July, employees at the store in Los Angeles, which was one of the first units in the chain to open three years ago, had been considering their next move.

A spokesperson for the Glassell Park store worker-majority recently told Fresh & Easy Buzz that although they still have a majority of store employees in favor of joining the UFCW union, they've decided for now they don't want to move for a union election for a variety of reasons.

Among the reasons the worker-majority has decided not to move for an election is the fact that as part of the election process, employers are allowed to bring in labor consultants (which unions refer to as union busters), who along with company executives can hold meetings with workers, where they can attempt to convince the employees to vote against unionization in the election prior to voting day. The union is also able to lobby the employees to vote for unionization as part of the election process, according to U.S. federal labor law.

The results of such an election - pro or con - are binding only for the one store. However, the outcome has a major influence on weather an entire chain remains non-union or becomes unionized. Therefore, the stakes of the outcome of such an election are high for all parties involved - Tesco's Fresh & Easy, the store employees and the UFCW union.

Instead of moving for a formal vote, the workers at the Eagle Rock Boulevard Fresh & Easy market in Los Angeles instead plan to try to convince the management of Tesco's Fresh & Easy Neighborhood Market to recognize their majority desire to become members of the UFCW union using means other than an open ballot election - at least for the near-term.

Earlier today we reported on a new website and social media-based campaign launched today by the UFCW union. [See - December 20, 2010: UFCW Union Launches New 'Fix Fresh & Easy' Neighborhood Market Website and Social Media-Based Campaign

The campaign, called Fix Fresh & Easy, is in large part the result of the success the employees of the Glassell Park, Los Angeles, Fresh & Easy store have had in gaining a majority towards their goal of becoming a union grocery store.

The Fix Fresh & Easy website and campaign are also in large part the result of the decision the store workers have made to not seek a formal union/non-union election.

The store's employees and the UFCW union have decided for now that rather than moving for an open ballot election at the Glassell Park Fresh & Easy market, they will instead launch a multi-faceted campaign, building on the recent success of the Los Angeles store workers' success in gaining a majority.

The new Fix Fresh & Easy website and social media-based campaign is part of that multi-faceted organizational effort and public relations campaign.

On another website set up by the UFCW, FreshandEasyVoice.com, which is linked at the new Fix Fresh & Easy website, employees of the Glassell Park store have authored and posted an open letter to their fellow Fresh & Easy Neighborhood Market store employees, informing them they've gained a union majority at the Los Angeles store, and inviting them to join in the campaign to unionize, following the Eagle Rock Boulevard store employee model. You can read the open letter here.

FreshandEasyVoice.com, which is targeted to Fresh & Easy Neighborhood Market store employees primarily, also offers additional organizational information and serves as a companion website to Fix Fresh & Easy.com, which is geared to a wider audience.

The tone of the store workers' letter strikes tones consistent with the new campaign to "Fix Fresh & Easy," in that it offers considerable positive comments about the grocery chain, suggesting that if it were unionized, Fresh & Easy Neighborhood Market would then be even better than it already is.

This is a new approach from the UFCW union in two ways. First, unlike its ongoing campaign over the last three years, this new, element takes a much more positive and consultative approach. It's our analysis that this is the case in part because the new focus is employee-led, building on the ability of the Glassell Park Fresh & Easy store employees gaining a majority in favor of unionization.

This employee-led element, along with the new focus on "Fixing Fresh & Easy," could mark a significant turning point for the UFCW in its three-year effort to organize employees of United Kingdom-based Tesco's 155-store fresh food and grocery chain.

The UFCW union has been criticised by a fair number of shoppers for some of its organizational tactics, like heavy store picketing, which the union doesn't plan on stopping although it's doing it much less frequently than it did in the past, suggesting Tesco is a purveyor of unsafe food, based on past cases of outdated products being discovered in its stores in the United Kingdom, and other more aggressive tactics. The UFCW has said it's had to use these tactics because Tesco has been spending tons of money and playing hardball in its fight to prevent the stores from being unionized, despite public statements from company executives saying that if the employees want a union it's up to them to vote on in.

It's too early to tell if the new focus, adding a more positive element to the traditional organizational tactics, will work. But one thing is for sure: The new developments at the end of 2010 mark the beginnings of renewed efforts by the UFCW union to organize Fresh & Easy store workers, as well as to build support for those efforts among various stakeholders, including Tesco shareholders, the media and shoppers. And as we reported earlier today, the UFCW union plans to put an added focus on organizing Fresh & Easy store employees beginning fairly early in 2011.

Stay tuned. Fresh & Easy Buzz will be covering the UFCW-Tesco Fresh & Easy Neighborhood Market unionization topic and issue closely, along with offering extensive analysis, as we've been doing for three years.

Reader Resource

Click here, here and here for a selection of our past stories about the UFCW union and its campaign to unionize store-level employees at Tesco's Fresh & Easy Neighborhood Market. Note: Click on the green "older posts" and "newer posts" links at the bottom of each page for additional posts.

UFCW Union Launches New 'Fix Fresh & Easy' Neighborhood Market Website and Social Media-Based Campaign

The UFCW union has created the video above, which it calls: "An xtranormal conversation at Fresh & Easy headquarters," as part of its new Fix Fresh & Easy social media-based campaign. The brief video features the Robot Theater robots, the voices of which you may have heard before.

Breaking Buzz

[Related Story - December 20, 2010: Glassell Park-Los Angeles Store Workers Catalysts of New UFCW Campaign to Unionize Fresh & Easy Neighborhood Market]

The United Food and Commercial Workers (UFCW) union today launched a new website and social media-based campaign called Fix Fresh & Easy as part of its efforts to unionize store workers at Tesco's 155 Fresh & Easy Neighborhood Market food and grocery stores in California, Nevada and Arizona.

The new Fix Fresh & Easy website, along with a companion Facebook page, Twitter.com feed and YouTube channel, will focus on what the union believes to be wrong with how Fresh & Easy is operated, along with suggesting ways in which it thinks those problems can be "fixed."

We first learned about the new website and companion social media sites this morning, when we discovered the Fix Fresh & Easy Twitter feed had followed our Fresh & Easy Buzz feed on Twitter.com. (You can view our Twitter.com feed here on the blog, at the top, right.)

This morning the UFCW also posted a December 15, 2010 story from Fresh & Easy Buzz - Fresh & Easy Neighborhood Market's California WIC Voucher Expansion Program Stalled - as the second entry on its new Fix Fresh & Easy website, along with posting the piece on the two social media sites, with a caption saying: "Here's an easy way to fix Fresh & Easy. Accept WIC at all your locations - it's good for our community and brings in more revenue to your stores."

The premise of "Fix Fresh & Easy" is to use the various online sites to suggest ways in which Tesco's Fresh & Easy Neighborhood Market can be "fixed," with the central way obviously being to unionize the chain, since that's the UFCW's goal and overall objective.

The "fix or improve fresh & easy" angle is a new strategy for the UFCW in its efforts to unionize the grocer's store-level employees in California, Nevada and Arizona.

For example, in 2007 (the first Fresh & Easy stores opened in November 2007) the UFCW, which represents about 1.3 million unionized grocery store and related industry workers in the U.S., Canada and Puerto Rico, launched a website called fresh & easy facts, in which it asks consumers to pledge not to shop at Tesco's Fresh & Easy stores because they are non-union, along with offering information as to why people shouldn't shop at the stores.

The website still exists (click here) but hasn't been updated since June 2008. For example, that's when the last article about Tesco was posted in the website's news section. Other sections of the site haven't been updated for a similar amount of time.

The tact of the new Fix Fresh & Easy website however is much different.

We're told the UFCW plans to use the site to point out various problems with how Tesco's Fresh & Easy Neighborhood Market, which continues to lose hundreds of millions of dollars annually, is operated, and to offer ways those problems can be "fixed." Readers of Fresh & Easy Buzz, which is and independent publication and isn't affiliated with the UFCW, Tesco or any other business or organization, know we have and continue to point out those many problems, often offering prescriptions for improvement, in our analysis and commentary-focused pieces in the blog.

The Fix Fresh & Easy website posting of our story about Fresh & Easy's stalled expansion of its acceptance of WIC Vouchers beyond one store, with the UFCW's caption that if the grocer accepted WIC at all its stores it not only would not only be good for the communities it serves but also good for added sales, is suggestive of the "fix" focus the UFCW plans to take with the new tactic and online sites.

If so, and we're told it is the case, it signals a change in strategy for the grocery clerks' union, in that it has decided to combine what could be a more positive, consultative approach with the use of the more traditional organizing and public relations tactics it's thus far used in its attempt to unionize Tesco's Fresh & Easy Neighborhood Market.

The new Fix Fresh & Easy website and companion social media sites come at a key time for both the UFCW and Tesco's Fresh & Easy. Tesco is preparing to launch its U.S. fresh food and grocery chain into Northern California early next year. The region, particularly the San Francisco Bay Area, has among the strongest and most aggressive food and grocery retailing locals in the United States.

These Northern California UFCW locals, as we've reported and discussed in the blog before, are planning a major campaign and organizing drive targeted at non-union Fresh & Easy beginning in early 2011, about a month or so before the first batch of 12 stores are set to open. Ten of the 12 stores are in the San Francisco Bay Area, as we've previously reported. The other two units are in nearby Vacaville and Modesto.

We've also recently learned the UFCW plans to ramp-up its overall campaign and store-level organizing efforts to unionize Fresh & Easy's store-level workers, starting early next year.

The main focus of the new efforts will be in California. But increased efforts will also take place in the metro Las Vegas, Nevada and metro Phoenix, Arizona regions, where the other Fresh & Easy markets are located. There are currently 106 Fresh & Easy Neighborhood Market stores in California (Southern California and the Bakersfield and Fresno regions in the Central Valley), 28 units in metro Phoenix and 21 markets in metro Las Vegas, for a total of 155 stores.

According to sources, the new Fix Fresh & Easy website and companion social media sites will be an integral part of the UFCW's store-level employee organizational efforts and overall campaign to unionize Fresh & Easy Neighborhood Market in 2011.

Stay tuned.

Reader Resource

Click here, here and here for a selection of our past stories about the UFCW union and its campaign to unionize store-level employees at Tesco's Fresh & Easy Neighborhood Market. Note: Click on the green "older posts" and "newer posts" links at the bottom of each page for additional posts.