Wednesday, March 30, 2011
The Insider - Heard on the Street
Tesco, which owns El Segundo, California-based Fresh & Easy Neighborhood Market and is the leading food, grocery and general merchandise retailer in the United Kingdom where it's headquartered, today launched its @UKTesco customer care/customer service Twitter feed, which is something that should be of particular interest to Fresh & Easy Buzz readers who follow my columns.
Here's why: In my March 18, 2011 column - The Twitter Agenda: Tesco CEO Philip Clarke Meets With the Troops About Social Media - I talked in general about new Tesco CEO Philip Clarke's decision to make social media, particularly Twitter, an important part of the global retail chain's communications strategy.
In the column I also offered some specific discussion about a Twitter feed called @TescoStores, incorrectly reporting it was the property of Tesco, something I corrected in a follow-up column on March 22, 2011, which you can read here: In Twitter Veritas: Tesco CEO Philip Clarke Sets 'The Insider' Straight Via A Tweet.
In my March 18 column I also offered a prediction, saying Tesco would start posting tweets on @TescoStores no later than two weeks from March 18, 2011. Although I was incorrect about the still unknown ownership of the @TescoStores feed, I was right in terms of the timeline I offered in my prediction: Today's launching of @UKTesco is one day shy of two weeks from March 18, 2011. Launch date prediction: right on; name of Twitter feed launched, incorrect.
The story begins on March 18 when I wrote about a meeting CEO Philip Clarke, who took over as chief executive early this month from retired CEO Terry Leahy, held with executives and staffers at Tesco's UK corporate headquarters to discuss the increased use of social media and social commerce at the company.
As I noted in the column and in the March 22 follow up, since taking over as CEO Clarke has made the use of Twitter at Tesco and by Tesco executives a centerpiece of his first month as head of the third-largest global retailing company in the world. Fresh & Easy Buzz first reported on the development in a story in February. See - February 24, 2011 Dormant No More: Fresh & Easy Neighborhood Market CEO Tim Mason is Now Tweeting on Twitter.
The social media focus by Clarke, who launched his own Twitter feed in November 2010 and prior to taking over as CEO this month was head of Tesco's corporate information technology and European retail operations, is a good move by the Tesco chief in that, among other pluses, it serves to distinguish him right our of the gate from former CEO Terry Leahy, who although was far from anti-technology wasn't all that keen on using social media at Tesco, although the retailer did begin using it under Leahy's tenure.
Tesco's El Segundo, California-based Fresh & Easy Neighborhood Market has been using social media, including Twitter and Facebook, aggressively since early 2009.
As I wrote about on March 18 and March 22, Tesco has launched a number of specialty Twitter feeds (many in 2010) for its United Kingdom retail and related businesses, which comprises about 70% of total global sales, but had yet to operate a corporate or customer service type central Twitter feed. That's where @TescoStores came in.
But since @TescoStores doesn't belong to Tesco, as you can read about here, the company created @UKTesco to be its overall customer care/service feed for its United Kingdom operations.
And @UKTesco, although it's not @TescoStores, was launched today, one day under two weeks from March 18, 2011.
I'm told, without equivocation, that @UKTesco belongs to the United Kingdom-based retailer, as it says is the case in the very first tweet posted on the feed: "Welcome to the official Twitter account for Tesco customer care UK. If you've got any queries, let us know, we're here to help. about 6 hours ago via HootSuite."
But it probably wouldn't hurt Tesco to get the Twitter feed "verified" though, using Twitter's simple verification process. You know, just in case there might be a misunderstanding.
- The Insider
[Readers: Read 'The Insider's' past columns, including his news-breaking reporting and analysis on the Sprouts Farmers Market-Henry Farmers Market acquisition-merger, at this link - The Insider.
Friday, March 25, 2011
UFCW Union Local Sets Up Picket Line at Just-Opened Fresh & Easy Neighborhood Market Store in Modesto, California
Thursday, March 24, 2011
Wednesday, March 23, 2011
Tesco Opens First Fresh & Easy Neighborhood Market Store in California's Northern Central Valley Today - in Modesto
[Related Story: March 19, 2011: Preview: Fresh & Easy Neighborhood Market is Headed to Save Mart Supermarket's Hometown of Modesto]
A big crowd of shoppers braved the wind and rain this morning to attend the grand opening of Tesco's first small-format Fresh & Easy Neighborhood Market store in Modesto, California.
The store's not only Tesco's first Fresh & Easy market in Modesto (population 205,000), it's also the retailer's first store in the Northern Central Valley, which runs from San Joaquin County to Merced County, and is home to about 1.3 million people. (We'll explain why it's significant for Fresh & Easy to be opening its first store in the Northern Central Valley in an upcoming piece.)
The Modesto Fresh & Easy store, which opened this morning at 10 a.m. and is the first of four units Tesco thus far has planned in Modesto and nearby Ceres, is located in a shopping center at 1717 Oakdale Road (at Lancey Drive). The store is about a half mile from a Save Mart supermarket and an equal distance from a Raley's Superstore.
Prior to Tesco's Fresh & Easy acquiring the location in 2008 [See - November 6, 2008: Upcoming New Markets News: Tesco Will Open A Second Fresh & Easy Store in Modesto, California], the store was previously a supermarket operated by Modesto-based Save Mart Supermarkets. Save Mart closed the store a few years ago when it built and opened a larger and more modern supermarket half-a-mile away. Fresh & Easy renovated the building into the about 12,000 square-foot market it opened to a solid crown of shoppers this morning.
The opening of the Fresh & Easy store at Oakdale Road and Lancey Drive in Modesto was kicked off shortly before 10 a.m, when Modesto Mayor Jim Ridenour and the store's manager (both pictured here) cut the ceremonial ribbon, which was good news to the crowd waiting outside in the wet weather because they were allowed to enter the store shortly thereafter.
United Kingdom-based Tesco, which is the third largest retailer in the world, is the second major global chain to open a grocery store, Fresh & Easy, in Modesto in the last couple years.
In 2008 Walmart Stores, Inc., the world's largest retailer, opened its first Supercenter in Modesto. That supercenter, which has about 80,000-90,000 square-feet of selling space, also happens to be Walmart's first - and to date only we're aware of - hybrid supercenter located in what was an existing vacant big box building.
The supercenter, which is located on McHenry Drive in Modesto, previously contained a warehouse format supermarket and a drug store. Walmart converted the building into a "hybrid supercenter" in an existing building, something the Bentonville, Arkansas-based global-retailer is now doing elsewhere in California and in other regions in the U.S. The average new construction supercenter is about 170,000 square-feet, although Walmart is currently building some as small as 125,000-145,000 square-feet.
Walmart also has a discount format store in Modesto. The store isn't currently on Walmart's list of those in California it plans to expand and add food and grocery sections to, however.
Despite Walmart's opening of the hybrid supercenter in 2008 and now Tesco's entry into Modesto with its first Fresh & Easy store, the city's dominant food and grocery retailers remain locally-based.
The top grocer in the city of 205,000 is Modesto-based Save Mart Supermarkets, which has seven stores in Modesto - five Save Mart banner supermarkets, one Food Maxx discount warehouse store and a Maxx Value Foods discount supermarket.
Maxx Value Foods, a take off on its bigger cousin Food Maxx, is Save Mart's newest format. The Modesto headquartered grocery chain, which has 241 stores throughout Northern California, northern Nevada and as far south in the Central Valley as Bakersfield and about $5 billion in annual sales, converted a former Save Mart supermarket on Paradise Road in west Modesto into the Maxx Value Foods discount supermarket, which currently is the only one in operation. The format is a test for Save Mart and if it succeeds the retailer could convert some of its older, existing Save Mart stores located in lower income neighborhoods, which Paradise Road in Modesto is, into Maxx Value stores.
West Sacramento-based Raley's is Save Mart's leading competitor in Modesto. It has four stores, all under the Raley's banner. [ See - March 19, 2011: Preview: Fresh & Easy Neighborhood Market is Headed to Save Mart Supermarket's Hometown of Modesto.]
The big turnout at this morning's Fresh & Easy store opening was likely due to a number of factors, including the fact the grocer mailed its weekly ad flyer, which included a coupon good for $10-off purchases of $20 or more and another offering a free reusable canvas shopping bag for purchases of $10 or more, to homes throughout the immediate area, along with to those located in neighborhoods at least as far as two and a half-to three miles from the 1717 Oakdale Road store.
Additionally, Modesto has a very high unemployment rate. the city and Stanislaus County, which it's the county seat of, currently suffers from a joblessness rate of nearly 19%, compared to California's overall 12.4 unemployment rate.
The city and county also have among the highest housing foreclosure rates in the country. Stanislaus County has rated among the top five U.S. counties for residential foreclosures since 2008. The median value of a home in Modesto has dropped by about 40% since 2005.
As a result of these continuing economic struggles, a grocery store grand opening is the perfect venue for the unemployed - a decent outing without a ticket price - and for those looking for a good deal on groceries. A number of shoppers told our correspondent just that this morning.
Lastly, over the last few years grocery store openings have simply become rather popular outings, particularly for the people who live in the neighborhoods where the new stores open. After all, from sociological and anthropological perspectives, grocery stores are far more than merely places to buy food. Their "third places" in which much of the needs of societies and neighborhoods, along with individuals, are met.
Before and after: Pictured above is the inside of the Fresh & Easy store at 1717 Oakdale Road in Modesto on January 31, 2001. Below is the store this morning at the grand opening.
In addition to opening the store in Modesto today, Tesco also opened a Fresh & Easy market in Walnut Creek, which is in the eastern part of the San Francico Bay Area. Walnut Creek is next door to Concord, where the grocer opened a store last Wednesday. Walnut Creek is about 65 miles from Modesto.
There are now seven Fresh & Easy markets in Northern California, all opened between March 2 of this year and today. Four additional stores are scheduled to open in Northern California in April.
With the opening of its two newest stores in Modesto and Walnut Creek today, Tesco's Fresh & Easy now operates 171 stores in California, Nevada and Arizona. The majority of the stores, 122 units, are in California. Of the 122 California Fresh 7 Easy stores, 108 units are located in Southern California. In addition to the seven stores in Northern California, there are seven Fresh & Easy markets in the Bakersfield metropolitan region and seven units in the Fresno area.
[Photo credit: Fresh & Easy Buzz, March 23, 2011.]
Readers: See (click on) the following links - Fresh and Easy Modesto CA, Fresh and Easy Northern California, Modesto California market, Northern California Market Region, Raleys, Save Mart, Tesco's Fresh and Easy in Norcal 2011 - for related stories in Fresh & Easy Buzz.
Tuesday, March 22, 2011
In my most recent column - March 18, 2011: The Twitter Agenda: Tesco CEO Philip Clarke Meets With the Troops About Social Media - I said the Twitter feed @TescoStores belonged to United Kingdom-based global retailer Tesco, which owns El Segundo, California-based Fresh & Easy Neighborhood Market.
In the column I also asked the question: When will Tesco start tweeting on @TescoStores?
I asked that question because the only two tweets on the feed are from April 2009, when it was set up.
I then offered a prediction that the retailer would start tweeting on the feed no later than to weeks from March 18.
I was wrong on two counts.
First Count: The @TescoStores Twitter feed doesn't belong to United Kingdom-based Tesco, according to CEO Philipe Clarke, who said so in a tweet today.
Second Count: Since I was wrong on the above (the premise), it then follows that my prediction that Tesco will tweet on @TescoStores no later than two weeks from March 18, 2011 is also incorrrect.
Below is today's tweet from Tesco CEO Philip Clarke, addressing @TescoStores:
March 22, 2011:"Sorry been rather quiet last few days - family illness. Been asked why @tescostores not tweeted much: would you believe it isn't ours! about 9 hours ago via Twitter for BlackBerry®"
Being the competitor I am, I suppose at the least I still have a shot at the prediction part of my March 18 column being correct, if the person who owns @TescoStores contacts CEO Clarke post-haste and offers to turn over the Twitter feed to Tesco, on the condition the retailer start tweeting on it no later than two weeks from March 18, 2011. Come to think of it, if that were to happen, it also would serve as "column-extender" (think editorial Hamburger Helper) for 'The Insider.'
Despite being wrong on the two counts detailed above, it's good to know my column is being read by people close to Clarke, and that those folks, after reading my March 18 piece, asked the Tesco CEO a mere couple days later "why @TescoStores (has) not tweeted much."
Additionally I'm glad Philip Clarke addressed the topic of my March 18 column in his tweet today. Why? I'd rather make a mistake and learn the why rather than be right but never learn the correct answer.
Therefore I thank the CEO of Tesco for that, vis-a-vis his tweet today. And if the only entity that actually did the "asking" to Clarke was my Friday (March 18, 2011) column in Fresh & Easy Buzz, then I hope he got something more out of reading it, as I hope is the case for all who read it, than just my mistake.
Despite getting it wrong about @TescoStores belonging to Tesco plc, and thus having my prediction invalidated by the faulty premise, had I not done so it's possible we (readers and myself) never would have learned what we learned from CEO Clarke's tweet today.
So I'm actually happier than I normally would be to have been wrong in this particular instance because it's serving as a reminder or simple object lesson for me. That reminder: That as long as you're right most of the time, and in my columns I have been, then it's OK to be wrong every so often - particularly if you take a bit of a risk in being so - as long as you admit your mistake, set the record straight (which I'm doing in this column) and learn from the experience, even if its a minor mistake and experience like a column about Twitter feeds and related subjects.
After all, there's always a silver lining in life and in business, if you allow yourself to be open to discover it and learn from it. I want use that worn out phrase "teachable moment," however, even though I suppose I just did.
Meanwhile, to the owner of @TescoStores on Twitter, you can tweet your offer to give the @TescoStores Twitter feed to Tesco CEO Philip Clarke at: @clarkeptesco.
And to the owner of the Twitter feed, I ask just one favor: If CEO Clarke is interested, please make the offer to give him @TescoStores contingent on his agreeing to have Tesco post at least one tweet between now and no later than March 29 on it. After all, my two week prediction clock, which began on March 18, is ticking away. Let's be clear though: It's not like I'm begging.
- The Insider
Related Column: March 18, 2011: The Twitter Agenda: Tesco CEO Philip Clarke Meets With the Troops About Social Media
>Read past columns by Fresh & Easy Buzz's 'The Insider' columnist at the following link - The Insider
That's Amore: Fresh & Easy Neighborhood Market Introduces New 'Gourmet' Frozen Pizzas For $3.99 Each
Monday, March 21, 2011
Fresh & Easy Neighborhood Market Flooding its Northern California Store Neighborhoods With Margin-Busting Store Coupons
Fresh & Easy Neighborhood Market is flooding the local neighborhoods where its opening its first stores in Northern California with its deep-discount store coupons, specifically the $5-off purchases of $20 or more vouchers, which if used by shoppers to buy the minimum purchase amount offer a healthy 25% savings, resulting in getting $20 worth of groceries for $15.
Tesco's Fresh & Easy is distributing the $5-off purchases of $20 or more store coupons at the Northern California stores in books of four (as pictured at top), with each of the four coupons good for one week. For example, the coupon book currently being distributed at the five Northern California stores the grocer has opened thus far this year contains four $5-off-$20 vouchers good for the following dates: March 14-20; March 21-27; March 28-April 3; and April 4-April 10.
Employees of Fresh & Easy Neighborhood Market are asking customers shopping in the Northern California stores to sign up for its "Friends of Fresh & Easy" e-mail promotional bulletin in order to receive the coupon books. However, the grocer is also distributing the coupon books to shoppers who don't sign up for "Friends of Fresh & Easy," which the retailer uses in a data-base marketing fashion to communicate with and send promotional item announcements to members once or twice a month. The "Friends of Fresh & Easy" bulletins also include an online discount store coupon.
Along with the coupon books, which contain one month's worth (4) of discount vouchers, Tesco's Fresh & Easy is including at least one store coupon - either a $5-off-$20, $6-off-$30 or $10-off-$50 version - in the weekly advertising circular it direct mails to households located around the Northern California stores, something it also does in all of its market regions in California, Nevada and Arizona.
So far this year Fresh & Easy Neighborhood Market has opened five stores in Northern California, in the cities of San Jose, Danville, Pacifica, Concord and Vacaville. On Wednesday the fresh food and grocery chain opens two new stores in the region. Those stores are in Walnut Creek and Modesto. (Click here to read our extensive coverage about Tesco's Fresh & Easy in Northern California - 2011.]
The coupons and profit/loss
We've reported on and written extensively about Fresh & Easy Neighborhood Market's use of the deep-discount store coupons, which offer shoppers 25% and 20%-off total store purchases if used to buy the minimum required purchase amount, since 2008. The discount coupons, which can be used on everything sold in the stores, are Fresh & Easy's primary promotional vehicle, along with its weekly advertising circular. Tesco's Fresh & Easy stores don't except manufacturer's cents-off coupons, like nearly all of its competitors do.
In October 2010 United Kingdom-based Tesco reported a mid-fiscal year loss for Fresh & Easy of $151 million. [See - October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market.]
Tesco has said it expects to report a full-fiscal-year loss of $250-$259 million for its El Segundo, California based chain, which is the same amount (loss) it reported for Fresh & Easy for the previous 2009/10 fiscal year, despite the fact sales at Fresh & Easy Neighborhood Market grew by 47% in the first half of fiscal-year 2010/11, compared to the same period in the previous year, largely as the result of new store openings. Tesco's 2010/11 fiscal year ended in February. It will report its interim 2010/11 fiscal year financials in April 2011.
Our analysis: Thus far, based on the sales-to-profit/loss ration described above, Tesco's strategy in which it says as sales grow at Fresh & Easy losses will decrease has failed to occur.
Tesco also reported a 10% increase in same-store-sales for the half-year, and in December 2010 reported nearly the same figure for Fresh & Easy for its third quarter. For the 13-week period ended November 27, 2010, overall sales at Fresh & Easy Neighborhood Market grew by 38.5% (35% at constant rates), over the same period in the previous year, and same-store-sales, an even more important indicator for retailers, grew 9.8%.
Same-store-sales is a key metric for food and grocery retailers because it measures sales growth for stores opened at least one year, thereby factoring out sales due primarily to rapid new store expansion.
Tesco operated 155 Fresh & Easy markets in California, Nevada and Arizona at the end of its fiscal 2010/11 third quarter. Currently there are 169 Fresh & Easy stores.
These sales growth figures, particularly the same-store-sales increases over the previous like periods, should impact the amount of loss Fresh & Easy Neighborhood Market has for the 2010/11 fiscal year.
But Tesco, based on its estimate that the loss this year will be about the same as the previous year, despite the significant overall and same-store-sales growth, is essentially saying - without outright saying it - that it's strategy of achieving rapid sales growth primarily by opening numerous new stores isn't reducing losses at Fresh & Easy, in our analysis.
If the sales growth strategy was working, for example, we should have seen some reduction in the loss amount in fiscal year 2009/10 compared to 2008/09, which wasn't the case, along with seeing the same phenomenon when Tesco reported the mid-year 2010/11 loss of $151 million for Fresh & Easy, which actually was a higher mid-year loss than for the previous mid-year period, despite the significant sales growth in period-over-period sales. (See the October 10, 2010 story linked above for additional details.)
The coupons and margins
In its mid-year report in October 2010, Tesco also said its trading profit margin for Fresh & Easy Neighborhood Market was a negative-38%. To put this number in perspective, even the worst-performing and less-profitable grocery chains in the U.S. have a margin at least in the plus-high teens -to- plus-low twenties. Whole Foods Market, for example, has a plus-36% gross margin.
It's this particular metric - margin - where the regular and even chronic use of the deep-discount store coupons comes into play for Tesco's Fresh & Easy and it's goal to break-even by the end of its 2012/13 fiscal year, which is two years from now.
For example, unlike manufacturer's cents-off coupons, which retailers like Kroger, Walmart, Safeway, Target and others are reimbursed by manufacturers for accepting, the discounts from the Fresh & Easy coupons come directly out of the grocer's profit margin, meaning each time a shopper uses one of the coupons and the 15%, 20% or so is discounted from her purchases, that percentage comes out of Tesco's hide from a profit margin standpoint.
The regular use of the coupons - Fresh & Easy has had the deep-discount vouchers in regular circulation since 2008 on a near weekly basis - is, in our analysis, a significant contributor, along with a number of other factors, to Fresh & Easy's negative-38% margin, as we've discussed previously in Fresh & Easy Buzz.
The coupons and Northern California
Tesco had a solid opportunity when it launched into Northern California - a brand new market region for its Fresh & Easy chain - this month to hold back from distributing the store coupons and see if the stores could make it on their own without the chronic use of the deep-discount vouchers.
However, as evidenced by the coupon books and distribution of the coupons in the weekly advertising circulars, Fresh & Easy obviously had decided not to do so. Im fact it's doing the opposite - it's flooding the neighborhoods where the stores are with the coupon books containg four weeks' worth of the deep-discount vouchers.
That's good news for grocery shoppers, as the coupons go a long ways towards bringing down a grocery bill, particular if a customer buys close to the minimum amount required to use the coupon, such as $20 for the $5 vouchers. Fresh & Easy's average market basket size is about $20-$25, according to our research and reporting, which among other things suggests that on average shoppers using the coupons aren't buying much over the minimum purchase amount required to redeem the store vouchers.
Additionally, in the past Fresh & Easy has tried to get away from using the $5-off purchases of $20 or more coupons and instead focus on the $6-off-$30 and $10-off-$50 versions. However, it's found that, particularly in the case of the $10-off-$50 coupons, which it does use at times as online coupons, the use of the version by shoppers is much lower than the $5-off and $6 off versions.
The shoppers we've talked to in Northern California are pleased as punch to get the coupons and coupon books from Fresh & Easy, as is the case with shoppers in California, Nevada and Arizona, many of whom told the grocer when it tried to stop offering the discount vouchers for a few months in 2009 (margin reasons perhaps?) that without the coupons they were either not shopping at the stores at all or doing so much less frequently. Tesco's Fresh & Easy listened and resumed its regular distribution of the coupons, which its done every since, having at least one version of the discount vouchers out in circulation nearly every week since then.
At present, we don't see Fresh & Easy Neighborhood Market coming in with a margin higher than the negative-38% Tesco reported for the California-based chain in October 2010, when it reports its fiscal year financials later this year. If the margin is improved, we except it to be so by no more than a couple percentage points. If Tesco doesn't report Fresh & Easy's margin number for fiscal 2010/11, we expect it's because it's worse than the first-half negative-38%.
The coupons and breaking even
Meanwhile, the coupon books and coupons in the weekly advertising circulars, along with the online vouchers the grocer distributes every two or three weeks, are helping sales at the just-opened Fresh & Easy stores in Northern California, which on Wednesday will number seven units, with five more stores to come between now and the end of April - and more units after that.
Perhaps Tesco has a secret plan to wean shoppers off Fresh & Easy' shopper-delectable deep-discount coupons? Or perhaps it has a companion plan that will bring Fresh & Easy's margin up from that negative-38% number to something in at least the plus-teens by say mid-2012, which is something that if achieved would warrant not only a tip of the hat but also a pat on the back at the same time?
But right now, in our observation and analysis, we don't see anything Tesco's Fresh & Easy Neighborhood Market is doing from operations and mechandising standpoints - combined with the price pressures from its competitors in the highly-competitive markets in California, metropolitan Las Vegas, Nevada and metro Phoenix, Arizona where it has its 169 stores - that indicates there will be a significant upward movement in that negative-38% margin metric in 2011.
October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market
October 4, 2010: Tuesday's Tesco Interim Report Offers A Road Map of Sorts For the Future of Fresh & Easy Neighborhood Market
December 7, 2010: Tesco Reports Solid Third Quarter Same-Store-Sales Growth For Fresh & Easy Neighborhood Market
January 29, 2011: Fry's Food Stores Brings Back 'Competitor Coupon Match' Promotion; Accepting Fresh & Easy Neighborhood Market Coupons in Arizona
November 19, 2010: Kroger-Owned Fry's Store Coupon Jujitsu Ensnares Tesco-Owned Fresh & Easy Neighborhood Market in Arizona
January 18, 2011: Fresh & Easy Neighborhood Market Launches 'Extra-Low Every Day Low Price' Merchandising Program
November 19, 2010: Kroger-Owned Fry's Store Coupon Jujitsu Ensnares Tesco-Owned Fresh & Easy Neighborhood Market in Arizona
February 3, 2009: Competitor News: 'Grocer-Gone-Wild:' Arizona's Fry's and its 'Bring it On' 'Take All Competitors' (Including Tesco's Fresh & Easy) Store Coupon Move
May 20, 2009: Breaking Buzz: Tesco's Fresh & Easy Issues Another New Discount Store Coupon ($10-off $50 Though); We Told You the Coupons Would 'Be Back'
Also, see (click on) the following links - deep discount coupons, store discount coupons, manufacturers cents off coupons, manufacturers coupons, Fry's Food Stores Arizona, Metro Phoenix Arizona market and Arizona Market Region Report - for additional related stories.
Sunday, March 20, 2011
Just-Retired Tesco CEO Terry Leahy's First 'Angel' Investment is Online Educational Start Up Stuck On Homework
We said in our recent coverage about the retirement of Tesco CEO Terry Leahy, who stepped down less than three weeks ago after 14-years as the chief of the United Kingdom-based global retailer, the energetic 55-year-old wouldn't let the British sod get under his shoes for very long, and that he would be launching a new career as a private investor, including as an angel investor. Angel investors provide early funding to start up companies.
Well...Leahy, who's been doing his homework on potential companies to invest in since he announced in June 2010 he would retire from Tesco in March 2011, has already made his first angel-oriented investment. That investment is in a United Kingdom-based start-up online learning company Stuckonhomework.com, which describes itself as: "A revolutionary video based website designed to provide help for GCSE pupils when they get stuck on their homework." Think of it as and online tutor of sorts.
For those not familiar with its education system, students in England and other parts of the United Kingdom study General Certificate of Secondary Education (GCSE) over two years, from the age of 15, and take GCSE exams at the end of this period. These are the final years of their compulsory high school education. At this point, students can either leave school and get a job, or go on to further studies.
In contrast, in the United States students begin high school in the ninth grade (average age of 14-years-old) and are required to spend four years attending in order to graduate with a high school diploma, although in most states after age 16 a student can take a G.E.D. (General Equivalency) test, and if they pass it are awarded a G.E.D. high school diploma.
Start-up Stuckonhomework.com launches tomorrow, according to its founders, United Kingdom media veterans Helen Royle and Teresa Watts who, among other positions and places, have worked as executives at Britain's ITV and at the BBC.
According to Royle and Watts, the online tutor will operate on a paid subscription model. It's designed to assist GCSE students in England, Wales and Northern Ireland (to start) with their GCSE school curriculum in multiple subject areas, beginning with mathematics.
Neither Royle, Watts nor Terry Leahy have yet announced how much the former Tesco CEO has invested in stuckonhomework.com or how much of an ownership stake his investment represents. That information might have to wait to be known if and when the online learning company goes public.
Having Sir Terry, who serves as an unpaid counselor to British Prime Minister David Cameron and is one the most well-known businessmen in the United Kingdom, backing the start-up is a major plus for the two entrepreneurs. After all, the energetic Leahy is very well connected.
The investment in the educational online start up company also fits with Terry Leahy's focus on education during his tenure as Tesco's CEO. Tesco runs extensive education programs, including in the basics, for its employees, along with offering funding for employees who qualify and want to extend their education at the university level.
As the head of one of the top five companies in the United Kingdom, Leahy also spoke out frequently about the country's national education system, particularly arguing for higher standards in its schools. The majority of employees retailers hire
We recently were told by a good source that in addition to making investments in companies at home in the United Kingdom and in Asia, Leahy, who was replaced as CEO by another Tesco veteran, Philpe Clarke, has been looking at potential investment schemes, including start up companies in the environmental, health, retail, education and other sectors, in the United States, home to Tesco's Fresh & Easy Neighborhood Market, which was Leahy's idea and was launched essentially as a start up in Southern California in 2006. The first Fresh & Easy stores opened in November 2007. There are currently 169 Fresh & Easy markets in California, Nevada and Arizona.
We just happen to know of a couple food and grocery retailing-oriented start ups in the U.S. that might possibly interest Sir Terry, although we have a hunch he's had his fill of those at least for a while. But just in case - our e-mail address is on the blog.
February 25, 2011: A Parting Gift: Retiring Tesco CEO Terry Leahy Exercises Options and Sells Nearly Three Million Shares of Company Stock
February 28, 2011: Changing of the Guard: Clarke Takes Over the Reins as Tesco CEO Wednesday
February 28, 2011: Big Day For Tesco CEO Terry Leahy: Retirement and A Birthday But No Break-Even For Fresh & Easy USA On His Watch
February 23, 2011: Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market
Saturday, March 19, 2011
Tesco's Fresh & Easy Neighborhood Market is preparing to open its first store, pictured above and below, in the Northern California city of Modesto on Wednesday, March 23.
The store, one of four units Tesco's Fresh & Easy currently has planned for Modesto and next door Ceres, is in a shopping center at 1717 Oakdale Road (at Lancey Drive) in Modesto, which has a population of about 205,000 residents and is located in the Northern Central Valley. [The photographs were taken by a Fresh & Easy Buzz correspondent on January 30, 2011. The store is completed and ready to open Wednesday.]
[See the following linked stories for details about the four Modesto and Ceres locations Tesco's Fresh & Easy has plans for stores at currently - May 10, 2008: New Markets: Tesco's Fresh & Easy to Move Into Modesto, California Market; Open its First Store in the City Early Next Year; November 6, 2008: Upcoming New Markets News: Tesco Will Open A Second Fresh & Easy Store in Modesto, California; March 31, 2009: Despite Having Postponed its Northern California Launch Indefinitely; Tesco's Fresh & Easy Planning Third Store in Modesto, California; and November 3, 2010: Tesco's Fresh & Easy Neighborhood Market Plans New Store in Northern Central Valley, California City of Ceres.]
Modesto is a little over an hour's drive from the San Francisco Bay Area city of Concord, where Tesco opened a Fresh & Easy store yesterday. [See - March 16, 2011: Fresh & Easy Neighborhood Market Opens Stores in Concord and Vacaville Today; Makes Five Markets in Northern California.]
Fresh & Easy Neighborhood Market acquired the Oakdale Road and Lancey Drive location in 2008, as we reported in this story - November 6, 2008: Upcoming New Markets News: Tesco Will Open A Second Fresh & Easy Store in Modesto, California.
The building was most-recently home to a Save Mart supermarket, which was the anchor retailer in the shopping center. However, the Modesto-based chain, which is the second-largest grocer in Northern California after Safeway Stores, Inc., closed it some years ago after building and opening a bigger and more modern supermarket a little over half-a-mile away at 2601 Oakdale Road (at Floyd).
Save Mart, which operates 241 stores in Northern California, northern Nevada and as far south as Bakersfield in the Central Valley and has about $5 billion in annual sales, is headquartered in Modesto, where it's one of the city's top private sector employers.
Save Mart Supermarkets is privately-held. It's majority-owner is Bob Piccinini and his family. Picinini is a Modesto native and resident. His father Mike and a partner, Nick Tocco, founded the chain in the 1950's, opening the first store in Modesto. In the 1980's, shortly after he became president of Save Mart, Picinini, who is chairman and CEO of the chain, bought out the Tocco family in order to have a controlling interest in Save Mart.
Save Mart had about 40 stores, all in and near Modesto, when Bob Piccinini took over the chain in the 1980's. Today the retailer's 240-plus stores are located throughout Northern California and northern Nevada, and in the Central Valley from Stockton and Modesto south to Bakersfield.
Four years ago Piccinini's Save Mart bought the Albertsons Northern California division from then-owner private equity firm Cerberus. The stores, which are located primarily in the San Francisco Bay Area but also in the Sacramento region and elsewhere in Northern California, were re-branded Lucky about a year later.
The Lucky name has a long history in Northern California, where supermarkets under the banner operated for decades. However, Albertsons Inc., which was acquired by Supervalu, Inc., Cerberus and CVS Pharmacy a number of years ago, acquired American Stores in the 1980's and a few years later changed all of the Lucky banner stores in Northern California to Albertsons. When Save Mart bought the division from Cerberus, rights to the Lucky name and brand were part of the deal. Save Mart decided to change all the Albertsons banner stores back to Lucky, rather than using Save Mart, because research found the Lucky brand still had significant equity among consumers in Northern California.
Save Mart is the dominant grocer in Modesto, both in terms of number of stores and market share. It operates five Save Mart banner supermarkets, a Maxx Value Foods hard-discount format supermarket (on Paradise Road in the western part of the city), which so far the only store in what is a smaller-sized version of its Food Maxx discount warehouse format, and one Food Maxx discount warehouse store in Modesto.
Another privately-held and fairly local (90 minute drive from Modesto) chain, West Sacramento-based Raley's, is Save Mart's leading competitor in Modesto.
The other leading major chain food retailers in Modesto are: Walmart (one supercenter and a discount format store), Safeway, Winco Foods, Trader Joe's, Costco, Grocery Outlet and 99 Cents Only, all with one store each respectively in the city.
Modesto also has numerous multi and single-store independents that operate stores of various different formats, from upscale (O'Brien's Markets; two stores) and mid-range (Sam's Food City), to hard-discount (Cost Less Food Co.; three units).
Additionally, a new independent and locally-owned grocer, Green's Market, which specializes in in-store prepared ready-to-eat and ready-to-heat fresh-prepared foods, opened a small-format store this month in downtown Modesto. The store also offers a selection of fresh produce, perishables and groceries, putting a emphasis on locally-produced, natural/organic and specialty-oriented products.
Raley's, which operates stores under the Raley's (superstores), Bel-Air, Nob Hill (supermarkets) and Food Source (discount warehouse format) banners, has four Raley's superstores in Modesto.
And like Save Mart, one of Raley's four Modesto stores is located about half-a-mile from the soon-to-be-opened Fresh & Easy store at Oakdale Road and Lancey Drive.
The photo above of the inside of the Fresh & Easy store at 1717 Oakdale Road in Modesto, which is set to open March 23, was taken by a Fresh & Easy Buzz correspondent on January 30, 2010, shortly after work began on the store's interior.
The Save Mart supermarket that's a little over half-a-mile from the Fresh & Easy location at 1717 Oakdale Road is about 40,000 square-feet. The nearby Raley's superstore is about 50,000 square-feet. In contrast, the Fresh & Easy market at Oakdale Road and Lancey Drive is, like all of the grocer's fresh food and grocery markets, 10,000-12,000 square-feet.
The Fresh & Easy store opening at 1717 Oakdale Road on Wednesday isn't the first location the grocer acquired in Modesto. Rather, as we were the first publication to report nearly three years ago in this story - May 10, 2008: New Markets: Tesco's Fresh & Easy to Move Into Modesto, California Market; Open its First Store in the City Early Next Year - that honor goes to the Sylvan Square shopping center in Modesto, where Tesco signed a deal to put a Fresh & Easy market in half the building, which is about 30,000 square-feet, that formerly housed independent grocer Michotti's Marketplace, which closed in early 2008.
Fresh & Easy originally planned to make the Sylvan Square center store its first unit in Modesto. However, that was back in the days when Tesco planned to launch into Northern California in early 2009 rather than early 2011. [See - May 10, 2008: New Markets: Tesco's Fresh & Easy to Move Into Modesto, California Market; Open its First Store in the City Early Next Year. Those plans have changed, however. Fresh & Easy decided last year to make the Oakdale and Lancey store its first in the city.
It will be interesting to observe how the two family-owned and locally-based chains, particularly Save Mart, which is Modesto born, bred and based, behave from a competitive standpoint when the Fresh & Easy store at 1717 Oakdale Road, which essentially will be in the middle of the Raley's and Save Mart stores, both being only about half-a-mile away, opens on Wednesday.
Save Mart Supermarket's is known to get very aggressive with new (and existing) competitors coming into its home-base Modesto territory. Among the defensive moves the local chain could make, for example, is to except Fresh & Easy's discount store coupons at its Oakdale Road Save Mart store, like Kroger-owned Fry's is doing in Arizona, as we detailed in this recent story - January 29, 2011: Fry's Food Stores Brings Back 'Competitor Coupon Match' Promotion; Accepting Fresh & Easy Neighborhood Market Coupons in Arizona.
As an example of Save Mart's competitive streak, in December 2010, when it converted a Save Mart store on Paradise Road in west Modesto into its first (and currently only) Maxx Value Foods discount supermarket, the grocer launched a price and promotional war campaign against a nearby store owned by Modesto-based multi-store discount grocer Cost Less Food Co., targeting the Cost Less store on Carpenter Road in Modesto, which is the retailer's closest unit to the Maxx Value store on Paradise Road. Modesto-based Cost Less Food Co. has eight stores. Seven units are in the Central Valley and one store is in Jackson, which is in Amador County in the foothills.
Save Mart's price war campaign started with a full-page advertisement in the local daily newspaper, the Modesto Bee. In the advertisement Save Mart published a price-comparison survery that stated its prices on a chosen market basket of groceries is cheaper than the same one at the Cost Less store, showing receipts for comparable items purchased at both stores in the ad.
A few weeks later Cost Less fired back, running not a one page but instead a double truck ad in the paper, offering a survey with twice the number of items Save Mart used in its market basket sample and showing that its Cost Less store on Carpenter Road is the cheaper of the two stores, based on purchases of like items at both stores.
These types of surveys depend on the items a retailer selects to include in the market basket. And since its a self-selection process it can be easily manipulated. Consumers should beware of such surveys and retailers should be cautious in using them.
In December Save Mart Supermarkets also started running (and continues to do so) a weekly full-page ad for its Paradise Road Maxx Value Foods store in the paper's Wednesday food section, which is something Cost Less has been doing for a number of years. The ad, just like Cost Less Foods' full-page advertisement, features about 10-12 "loss leader" food and grocery items offered at or below cost.
Two other possible defensive moves Save Mart Supermarkets could make vis-a-vis the nearby Fresh & Easy market at 1717 Oakdale Road would be to offer to match or beat all advertised and everyday prices at the Fresh & Easy, which is something Save Mart already does at its Food Maxx discount warehouse stores, where its policy is to meet or beat the prices of all its competitors.
Additionally, since Save Mart is headquartered right in Modesto (about a 10-minute drive from its own and the Fresh & Easy store on Oakdale Road) it can easily offer store-specific deals at the Oakdale Road store only, targeted to Fresh & Easy, like it's doing with the Paradise Road Maxx Value Foods store against Cost Less.
Or...Save Mart could nothing more than it's already doing, which in some ways would be bad news for Fresh & Easy since it would signal that Save Mart doesn't find the new entry owned by the world's third-largest food retailer, Tesco, a serious threat to its store half-a-mile away and its hometown dominance in Modesto.
Save Mart operates supermarkets and Food Maxx units in the Fresno and Bakersfield areas where Fresh & Easy Neighborhood Market has 14 stores, so the chain is familiar with the Fresh & Easy format and operations.
Raley's, in addition to being a superstore operator, is a pioneer and leader in ready-to-eat and ready-to-heat fresh-prepared foods merchandising, a category that comprises a significant portion of Fresh & Easy's offering.
Raley's introduced a new line of pre-packaged refrigerated ready meals and sides in October of last year, which it's added to its already extensive selection of packaged and bulk deli-style merchandised ready-to-eat and ready-to-heat fresh-prepared foods. [See - October 30, 2010: Raley's Launches New 'Raley's TO GO' Pre-Packaged, Refrigerated Fresh-Prepared Foods Line.] The new pre-packaged line was launched in part because of Tesco's moving into Northern California this year.
All of Fresh & Easy's fresh ready meals and sides are pre-packaged. We expect Raley's to defend its prepared foods turf at the nearby store once the Fresh & Easy market at Oakdale and Lancey opens. We also expect Raley's, like Save Mart, to defend its turf across all categories at the Modesto store.
It should be an interesting competitive triangle; the Fresh & Easy market at 1717 Oakdale Road, the Oakdale Road Save Mart store and the nearby Raley's superstore, all located about half-a-mile from each other. And it begins on Wednesday, March 23, when the first Fresh & Easy store in Modesto opens at 1717 Oakdale Road. Stay tuned.
[Readers: Click on the following links - Fresh and Easy Northern California, Tesco's Fresh and Easy in Norcal 2011, Northern CA Launch, Northern California, Northern California Market Region, Fresh and Easy San Francisco Bay Area and Northern California Special Report - for related stories about Tesco's Fresh & Easy Neighborhood Market in Northern California.]