Friday, April 29, 2011

Tesco's Fresh & Easy Neighborhood Market Celebrates the Royal Wedding In-Store With Cupcakes Fit For A Princess

Promotional & Special Event Merchandising

Fresh & Easy Neighborhood Market, which is owned by United Kingdom-based Tesco, celebrated its British pedigree and heritage today by featuring "fresh&easy princess cupcakes" in its 175 fresh food and grocery stores in California, Nevada and Arizona, in honor of the wedding of Prince William and Kate Middleton, who are now officially know as the Duke and Duchess of Cambridge.

The Fresh & Easy stores we visited today, as well as others in the chain, were displaying the cupcakes - which are white cake, with pink icing and pink curls, and contain no artificial colorings or flavors - prominently.

Point-of-purchase signs touted the hand-held sweet treats' connection to today's Royal Wedding.

Fresh & Easy Neighborhood Market has sold the pink "princess cupcakes" in its stores since 2008. It's a product ready-made to merchandise and promote for today's big event, if ever there was such a product. 

Some customers we observed and talked to in the stores today thought the "fresh&easy princess cupcakes" were created by the grocer specifically for Kate and William's wedding today. They were surprised when told by store employees that not only are they available year-round in the Fresh & Easy stores but have been for quite some time.

Therefore, not only was it a good idea for Tesco's Fresh & Easy to promote the "princess cupcakes" today, in order to have some fun, create a little in-store excitement and grab some impulse sales, it also, at least where we observed it, served to introduce a number of shoppers to a ready-to-eat sweet treat they weren't previously aware was available at the grocery chain.

Additionally, knowing the pink cupcakes are always available in the stores might just bring some of those shoppers back to Fresh & Easy to buy them for their own special - and not so special - occasions, particularly if there's a "princess" or two - or even a budding Kate Middleton - living in the house. After all, part of being a princess is getting what you want, when you want it.

Fresh & Easy store workers also served as human billboards for the "fresh&easy princess cupcake" promotion today, wearing shirts like the one pictured above.

The message on the shirts: "The Royal Couple is Here;" featuring a picture of two "princess cupcakes" below it, is eye-catching and, as we observed more than once today, led a number of shoppers to ask: "Where are the princess cupcakes?"

The human billboards therefore served a positive merchandising purpose, along with creating some fun and excitement in-store around the Royal Wedding.

Thursday, April 28, 2011

Sunflower Farmers Market Goes 'Live' With New Website - First California Store Opens May 11

Breaking Buzz

Boulder, Colorado-based Sunflower Farmers Market just went "live" with a fresh and redesigned website [view here] which is part of the farmers market-style grocery chain's new graphic design makeover.

The makeover began with a recently debuted new logo (at top), is now followed by the new website launched today, and will soon be seen in the form of redesigned labels on all the private brand products offered in the 33 Sunflower Farmers Market stores in Colorado, Arizona, New Mexico, Nevada and Utah, a process vice president of marketing and IT Steve Black says the grocer has about 50% completed.

The refreshed and redesigned Sunflower website offers a number of new or expanded features, including: added nutritional information, meal ideas, recipes and coupons; additional information about the grocer's offerings and activities; and a special focus section for Sunflower's "Silly Savings Club."

And in two weeks, the Sunflower Farmers Market brand and banner will fly for the very first time in the Golden State, when the Colorado-based grocer, which also has corporate offices in Arizona, opens its first store in the Northern California city of Roseville, near Sacramento, on Wednesday, May 11.

The store is in the Roseville Square shopping center, at 424 Roseville Square in the city.

The opening of the flagship store in Roseville - and Sunflower Farmers Market is brewing up a big grand opening for May 11 - will be followed by the opening in October 2011 of a second Sunflower market in Northern California - in Modesto. Modesto is in the Northern Central Valley, about a two hour drive from Roseville.

Tesco's Fresh & Easy Neighborhood Market opened its first store in Modesto on March 23. [See - March 23, 2011: Tesco Opens First Fresh & Easy Neighborhood Market Store in California's Northern Central Valley Today - in Modesto.

The Modesto Sunflower Farmers Market store will be in the city's popular and busy McHenry Village shopping center, at McHenry Avenue and Briggsmore Avenue, located in a vacant building currently undergoing renovation by the grocery chain.

We first reported, as part of our April-through-December 2010 , that Sunflower Farmers Market was planning to open a store in Modesto. The retailer confirmed our story earlier his year, which we reported in a piece on March 24, 2011: Sunflower Farmers Market is Headed to Modesto as Part of Northern California Push.

The 28,000 square-foot Sunflower Farmers Market store will be the anchor grocery market in the busy shopping center.

The building became available as the result of its most-recent tenant's (Philips Lighting and Home) decision to move from it to a smaller building in the shopping center, which it did this month. But it has a multi-decade history of housing grocery stores.

Prior to the lighting and home retailer moving into the building in 2002, it housed a New Deal supermarket, which closed in 2002. Prior the the New Deal store, a Lucky Supermarket operated in the building for many years.

The New Deal supermarket in McHenry Village was part of what at its peak was a chain - New Deal Markets - of about 18-stores, owned at the time by Canada-based Provigo's Market Wholesale Grocery Company, a then-major wholesale grocer in Northern California.

New Deal Markets was founded in 1933 in Modesto by Walter and Charles Heckendorf. The brothers named the chain after President Franklin Roosevelt's depression-era "New Deal" economic assistance and social reform program. The Hekendorf  family owned and operated New Deal Markets, which had stores in Modesto and a number of surrounding cities, for over five decades.

Canada's Provigo acquired New Deal Markets in the 1990's, shortly after it bought Market Wholesale Grocery Company, which at the time was one of the leading wholesale grocers in Northern California.

New Deal, along with the family-owned Petrini's chain in the San Francisco Bay Area, which Provigo also bought in the 1990's, were at the time Market Wholesale's top two customers, accounting for over half its sales. Provigo's Market Wholesale had "right of first purchase" options with both New Deal Markets and Petrini's, which it exercised when the owners of the chains decided to retire and sell.

Market Wholesale sold and closed what were the 19 Petrini's stores in the Bay Area, after completely changing what was once, under the Petrini's multi-decade ownership, a very successful upscale supermarket chain, with a specialty food and grocery-oriented focus.

In the 1990's, Provigo hired Trader Joe's founder Joe Coulombe, who had by then sold TJ's, to turn the Petrini's stores into a cloned version of the Trader Joe's format, which included cutting all the gondola shelving down to about four-feet high, along with offering a very limited assortment of mostly specialty, natural and organic food and grocery products in the stores.

The format flopped. Provigo then sold off as many of the Petrini's stores as it could, and closed the rest. "Trader Joe's II" was far from a successful second act for Coulombe.

Provigo ended up selling some of the New Deal stores and closed others. It then sold off what it could of the remaining assets.

It also sold the assets of Market Wholesale to United Grocers (UG), a cooperative wholesaler in the Pacific Northwest which at the time had a facility in Medford, Oregon near the border with Northern California. UG later merged with Southern California-based Unified Grocers.

New Deal Markets, Petrini's and Market Wholesale, all once-significant players and names in the grocery business in Northern California, no longer exist.

Interestingly, Tesco's Fresh & Easy stores in California, Nevada and Arizona  look very much like the Petrini's stores did after Joe Coulombe took over and changed the interior design to a bare bones, utilitarian look. The limited assortment product mix and merchandising model and style of the Fresh & Easy Neighborhood Market stores is also very similar to what the Trader Joe's founder did in the 1990's with the once full-service Petrini's supermarkets.

The similarities between Coulombe's 1990's Trader Joe's clone - Petrini's - and Tesco's Fresh & Easy aren't surprising though because Tesco borrow liberally from Trader Joe's physical design and overall format, which was created by Coulombe, for Fresh & Easy Neighborhood Market.

As we've reported since last year, Sunflower Farmers Market has been and is looking for numerous future store locations in Northern California. For example, according to our sources, the grocer is close to closing on a location in San Jose and another in nearby Mountain View. Both cities are in the famed Silicon Valley, in the Bay Area. Were told no deals have been signed yet though.

The grocer is also looking at additional locations throughout Northern California, from the Sacramento region and the Bay Area, to the valley and the coast.

When Sunflower Farmers Market opens the doors of its first farmers market-style food and grocery store in California, at 7 a.m. on May 11 in Roseville, its planning a number of special events to mark the day and kick off its arrival in the Golden State.

Among the grand opening events planned for May 11 include: Free food and drink samples offered at a variety of booths set up by Sunflower's vendors and suppliers; prize drawings and giveaways in the store throughout the day; and scores of grand opening specials. In addition, the first 50 shoppers at the opening will receive Sunflower Farmers Market reusable shopping bags filled with $50 worth of free groceries.

We first reported on Sunflower Farmers market's plans to enter Northern California in September, 2010, in this story: Sunflower Makes Three: Sunflower Farmers Market's First Northern California Store Will Be in Roseville. In December 2010, Sunflower confirmed our September report. [See - December 7, 2010: Sunflower Farmers Market Confirms Our Report It's Headed to Northern California; Roseville Store to Open April 2011.]

Roseville has become a popular location for farmers market-style grocers. Sprouts Farmers Market, which now includes Henry's Farmers Market, having finalized it acquisition-merger of the competing chain on April 18, opened it second store in Northern California earlier this month -- in Roseville.

We broke the news on January 5, 2011 that representatives of Sprouts and Henry's Farmers Market were in talks to potentially do an acquisition-merger deal.

We also reported exclusively, before the two parties announced it, that such a deal would be done, along with reporting again exclusively on April 14 that the acquisition-merger would be final on April 18. On April 18 Sprouts Farmers Market announced just that. [Read our full January-to-April 2011 coverage of the Sprouts-Henry's deal and related issues here.]

In addition to California, Sunflower Farmers Market is entering another new state and market region this year. On April 18 the grocery chain announced it will open its first store in Oklahoma. The store will be at Northwest 63rd Street and North May Avenue in Oklahoma City. The 28,00 square-foot store is will open in September, according to Chris Sherrell, Sunflower's CEO. Sunflower operates stores in next door Texas.

As we've previously reported, Sunflower Farmers Market also has longer-range plans to open stores in Southern California. However, at present the farmers market-style grocery chain is focusing on the northern portion of the Golden State, starting with the Roseville store set to open May 11.

Related Stories

March 24, 2011: Sunflower Farmers Market is Headed to Modesto as Part of Northern California Push

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

September 28, 2010: Grocer-Entrepreneur, Sunflower Farmers Market Founder & CEO Mike Gilliland Honored By Hometown Chamber of Commerce

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

January 10, 2011: Sprouts Farmers Market to Open Second Northern California Store in Roseville No Later Than Mid-April

Wednesday, April 27, 2011

Tesco's Fresh & Easy Neighborhood Market at 175 (Stores): Three New Stores Open in Northern California Today


Fresh & Easy Neighborhood Market opened three stores today in Northern California, giving the small-format fresh food and grocery chain, owned by United Kingdom-based Tesco, a total of 11 units in the region. [See - April 26, 2011: Behind the Buzz: Tesco Opens Three New Fresh & Easy Neighborhood Market Stores in Northern California Tomorrow.]

The three new stores, in Hayward (Mission Boulevard and Rousseau Street), San Jose (Saratoga Avenue and Payne Avenue) and Napa (Imola Avenue and Jefferson Street), are the last batch of the 11 Fresh & Easy markets Tesco-owned El Segundo, California-based Fresh & Easy has to date announced it will open in Northern California in early 2011.

However, as we've reported, Tesco's Fresh & Easy is preparing additional stores for spring-to-summer openings.

On March 15, 2011, we reported here - San Francisco, Antioch and Fairfield Stores Next Up in Northern California For Fresh & Easy Neighborhood Market - that Fresh & Easy Neighborhood Market has four stores next in line for Northern California openings. Two of the stores are in San Francisco - at Third Avenue and Carroll Avenue and 32nd Street and Clement. The other two units are in Antioch and Farfield. (See the story linked above for details.)

As of today, Tesco's Fresh & Easy hasn't announced new store openings for May, including in Northern California.

Based on our reporting, the two San Francisco stores noted above will be the first of the group to open, possibly at the end of May, but more likely in June. (We'll have more on this development in an upcoming story.)

There are now 175 Fresh & Easy stores open and operating in California, Nevada and Arizona.

Below is a breakdown of the 175 units, by market region, as of today.

Fresh & Easy stores, by the numbers:

Southern California/San Diego
= 101 units

Northern California
 = 11 units

Central Valley, California/Bakersfield Metro
= 7 units

Central Valley, California/Fresno Metro
= 7 units

Southern Nevada/Metro Las Vegas
= 21 units

Metro Phoenix, Arizona
= 28 units

Total = 175 stores

Tesco has opened 21 Fresh & Easy grocery markets so far this year - 11 units in Northern California and 10 stores in Southern California.

In a December 30, 2010 piece - Seven Predictions For Tesco's Fresh & Easy Neighborhood Market For 2011 - we said Tesco would open 40-50 Fresh & Easy stores in calendar year 2011.

On April 19, Tesco said it would open 50 Fresh & Easy grocery markets this year, noting it is a few more than it originally planned on opening for 2011. [See - April 19, 201: Tesco's Fresh & Easy Neighborhood Market Posts Biggest One-Year Loss Yet - $307 Million Loss on Sales of $818 Million.]

April 19 was the first time Tesco or its Fresh & Easy chain mentioned how many stores it would open in 2011. It doesn't usually announce new store opening numbers at all.

Based on the 50 new stores' number, and having opened 21 units so far this year, that means Tesco plans to open an additional 29 Fresh & Easy fresh food and grocery markets this year.

Based on information from our sources, all, or nearly all, of the 29 or so new stores set to be opened in the remainder of 2011 will be in California.

No new Fresh  Easy stores have been opened so far this year in Nevada or Arizona.

No new stores in either region are planned for what's left of April.

Tesco has six less Fresh & Easy stores than it had six months ago in both Southern Nevada and metro Phoenix, Arizona, having closed six stores in each market region in November 2010. [See here for details.]

According to our sources, Fresh & Easy Neighborhood Market isn't planning on opening any new stores in Nevada or Arizona in May, either.

On April 19, Tesco reported a 2010/11 fiscal year loss of $307 million (on revenue of $818 million) for Fresh & Easy Neighborhood Market. It's fiscal year ended February 26, 2011. There were 164 Fresh & Easy stores open at the end of Tesco's fiscal year. Tesco is currently in its 2011/12 fiscal year, which ends February 2012.

On October 5, 2010, when Tesco reported its mid-year financials, the retailer said it planned to have 400 Fresh & Easy stores open and operating by the end of its 2012/13 fiscal year because it needed the sales volume from that number of units open to break-even by February 2013, when that fiscal year ends. [See - October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market.]

But last week, on April 19, Tesco CEO Philip Clarke said the retailer has revised the 400-store number down, saying it plans to break-even with Fresh & Easy Neighborhood Market by February 2013, having 300 stores open and operating, 100 less units than it said would be needed seven months ago.

The downward revision from 400 to 300 stores didn't come as a surprise to us here at Fresh & Easy Buzz, since we said in the October 5, 2010 story linked above, when the 400-store metric was announced, that it was not a realistic number of new Fresh & Easy stores for Tesco to open between then and February 2013. We were correct.

For example, from November 2007 to today, a period of three-and-a-half-years, Tesco has opened 175 Fresh & Easy stores. That would mean it would have had to open 225 stores between now and February 2012, a period of less than two years, in order to hit 400 units. That's opening 40 more stores over a 22 month period than the 175 units it's opened since November 2007 (3.5 years.)

Even hitting 300 stores by February 2013, which means opening 125 new units over the next 22 months, is a pretty tall order, from simply a logistics standpoint, although Fresh & Easy can do it, based on its history.

If it opens the 50 stores this year it will end calendar 2011 with 204 units open, which means it will need to open 94 new stores from January 2012 to February 2013. A tall order - but achievable.

But at what cost in doing so? Tesco already has more Fresh & Easy stores in poor locations than it can afford to have. The 13 stores Tesco closed in November 2010 are a perfect example of this fact.

And, having so many stores out of the current 175 in poor locations is directly related to opening too many stores too rapidly, although that's only one of a handful of major mistakes Fresh  Easy Neighborhood Market has made when it comes to choosing store locations.

For example, the grocer has a number of stores in Arizona, Nevada and Southern California that are completed but have been sitting empty for up to two years. It also has store sites it hasn't even started construction on yet, and not just in Northern California, where it opened its first two stores on March 2. These are store sites primarily in metro Las Vegas, metro Phoenix and the Bakersfield, California region that it's possible Tesco will never even open stores at but is paying for.

This brings up another decision Tesco CEO Clarke will have to make, either at the end of this year or in early 2012. That decision: How many of the current under-performing Fresh & Easy stores should he close? If Tesco used the same performance criteria it used to close the 13 poor-performing stores in November 2010, it could close another 13 units and still have change leftover in terms of additional stores not doing much better than the 13.

Getting to 300 Fresh & Easy stores by February 2013 is achievable for Tesco. But it's far from the most important metric involved in breaking-even its Fresh & Easy Neighborhood Market, which Tesco CEO Philip Clarke says will happen by then, with 300 Fresh & Easy stores open and operating.

Tuesday, April 26, 2011

Behind the Buzz: Tesco Opens Three New Fresh & Easy Neighborhood Market Stores in Northern California Tomorrow


Tesco's Fresh & Easy Neighborhood Market is set to open three new stores in Northern California tomorrow morning.

Once opened tomorrow, the three grocery markets in the San Francisco Bay Area cities of Hayward (Mission Boulevard and Rousseau Street), San Jose (Saratoga Avenue and Payne Avenue) and Napa (Imola Avenue and Jefferson Street), will give Fresh & Easy 11 units in Northern California and 175 stores total in California, Nevada (21 units) and Arizona (28 units.)

The new store at Saratoga Avenue and Payne Avenue is the second unit in San Jose for Fresh & Easy Neighborhood Market. On March 2 the grocery chain opened one of its first two stores in Northern California, in San Jose's Willow Glen neighborhood. [See - March 2, 2011: Fresh & Easy Neighborhood Market Opens First Two Stores in Northern California Today.]

The Hayward store is located in a middle-income neighborhood. The neighborhood doesn't have an abundance of grocery stores and supermarkets, which is something that could benefit Fresh & Easy at the location.

Tesco's Fresh & Easy first announced its plans to open a store at Mission Boulevard and Rousseau Street in Hayward in early 2008, over three year's ago.

Tesco has a second unit in Hayward, at A Street and Hesperian Boulevard, that it's been sitting on since at least January 2008. We expect the grocer to open the store this year or next. But, as of last week, no construction work was taking place at the location.

The neighborhood surrounding the Fresh & Easy store opening tomorrow at Saratoga Avenue and Payne Avenue in San Jose is also comprised primarily of middle-income residents.

We reported in this September 22, 2010 story - Tesco's Fresh & Easy Neighborhood Market Planning A New, Third Store in San Jose, California that Tesco's Fresh & Easy planned to open the store at 1328 Saratoga Avenue (at Payne Avenue). The store wasn't one of the 37 units Fresh & Easy had previously announced it would open in Northern California. [See - November 5, 2010: Fresh & Easy Neighborhood Market Queuing Up Three Additional Stores in Northern California For Early-to-Mid 2011 Openings.]

When Fresh & Easy announced on August 19, 2010 its plans to start opening stores in Northern California in "early 2011," the Saratoga and Payne store in San Jose wasn't on the grocer's initial list of eight stores. [See - August 19, 2010: Tesco Will Open its First Eight Fresh & Easy Neighborhood Market Stores in Northern California in 'Early 2011.']

On November 10, 2010 Fresh & Easy Neighborhood Market announced it planned to open 12, rather than eight, stores in Northern California in "early 2011." The Saratoga and Payne unit was on the list of 12 stores. [See - November 12, 2010: Postponed But Not Abandoned: Fresh & Easy Neighborhood Market Gearing Up For Northern California Launch.]

November 2010 was the first time Tesco's Fresh & Easy publicly said it had a store location at Saratoga and Payne, although we broke the news of its existence in our September 22 story.

Tesco has a third Fresh & Easy store location in San Jose, at Almaden Road and Curtner. As of last week, no construction work was taking place at the vacant building on the site. Tesco has been sitting on (and paying the monthly rent on) the Almaden Road location since at least January 2008.

The store in Napa, at Imola Avenue and Jefferson Street, not only will be Tesco's first Fresh & Easy market in the city. It will also be the first store the grocer has opened in the North Bay Area.

Six of the current eight Fresh & Easy stores in Northern California are in the San Francisco Bay Area.

Four of the stores (Walnut Creek, Concord, Danville and Pleasanton) are in the Easy Bay Area. One store, the unit in San Jose's Willow Glen neighborhood, is in the South Bay Area. The remaining store (of the six) is in Pacifica, which is located on the coastal peninsula near San Francisco.

The remaining two stores are in Vacaville, which is between Sacramento and the Bay Area, and Modesto, which is in the Northern Central Valley.

The opening of the Fresh & Easy store in Napa should be of particular interest to readers of Fresh & Easy Buzz because of a story we published about the location on September 14, 2010. The story:  Eight Plus One: Napa Unit Added to Eight Fresh & Easy Neighborhood Market Stores Opening in Northern CA in Early 2011.

In the story, in addition to reporting before Tesco's Fresh & Easy announced its plans to do so that the grocery chain would open the Napa store early this year, we offered Tesco a suggestion, based on our knowledge, experience and analysis of the market and the specific Napa location, on how it could create a better opportunity for success with the store.

That suggestion included using a portion of an extra 3,500 square-feet available at the store to put in an in-store cafe, where the grocer could offer coffee and pastries, along with other baked goods, drinks and related items. The cafe would have a bar and some tables as well, so it would serve as a way to draw shoppers into the store as well as to keep them in the store longer, which research and practical experience shows results in the spending of more money per-store-trip.

The Napa store, however, is identical to virtually all the other 171 Fresh & Easy markets. Instead of using all or a portion of the extra 3,500 square-feet for a cafe, the space is currently being offered for lease.

You'll see in our September 14, 2010 story - Eight Plus One: Napa Unit Added to Eight Fresh & Easy Neighborhood Market Stores Opening in Northern CA in Early 2011 -  we presented a conceptual sketch as to how Tesco's Fresh & Easy could use the entire 3,500 square-feet, localizing and customizing the store to the neighborhood and city of Napa. It would have been an interesting and smart thing for Tesco to do as a test, in our analysis.

The idea and concept is all the more interesting because one week ago, on April 19, Tesco CEO Philip Clark, who took over in March, said the company plans to open the Fresh & Easy stores at 7 a.m., an hour earlier than most of the stores now open (a few units open later than 8 a.m.), and to serve coffee and pastries at all the stores in the early morning hours. You know - just like every convenience store, coffee shop/cafe (many featuring drive-through windows), fast food joint (more drive-through options) gas station, supermarket, doughnut shop, bakery and restaurant does in California, Nevada and Arizona.

Selling a cup of coffee and pastry to takeout in the stores isn't going to do much of anything to improve Fresh & Easy's sales, profits or image.

It's fine we suppose. Coffee is available nearly everywhere else, after all. (We forgot to include that's it's also available at most workplaces, in vending machines and in all those food trucks driving around in the early morning, in the list above. Some of us even make coffee at home in the morning.) But as a strategy and merchandising addition to Fresh & Easy Neighborhood Market, it's a near-empty and not very substantial cup of Joe, in our analysis. A shot of decaf, at best.

We aren't taking a cheap shot at Clarke about the plans to start selling coffee and pastries at Fresh & Easy. Instead, we're just looking at it in a serious, analytical way.

After all, he's the new boss at Tesco and had nothing to do with Fresh & Easy in his previous executive positions at the retailer, which were director of Europe and Asia retail operations and chief of information technology.

When Clarke was touring Fresh & Easy stores in February of this year, before he became CEO the first week of March, he was surprised shoppers couldn't grab a cup of coffee in the stores. A few units do offer it, like one he visited in Long Beach, California. [See - February 23, 2011: Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market.]

He asked Fresh & Easy Neighborhood Market CEO Tim Mason (and others at Fresh & Easy), who became Tesco deputy CEO when Clarke became CEO, about the lack of being able to grab a cup of Joe in the stores more than once. And soon, coffee and pastries will be for sale in all the Fresh & Easy stores, as the Tesco CEO announced on April 19.

It's a nice thing, having coffee and pastries available in the morning. But Clarke will have to make some much bigger additions and changes in strategy and practice if he wants to break-even with Fresh & Easy by 2013, as he says will be the case. [See - April 19, 2011: Tesco's Fresh & Easy Neighborhood Market Posts Biggest One-Year Loss Yet - $307 Million Loss on Sales of $818 Million.]

But breaking-even is only job one. As the CEO of Tesco Clarke must ask himself another question at the very same time. That question: Then what? In other words, if Fresh & Easy does come close to or break-even by 2010, what's the strategy - for profitability, growth, ect. - going forward? That strategy needs to be developed now.

What might be helpful, and its something we first suggested over three years ago Tesco try at Fresh & Easy, is to include some small in-store cafes/seating areas in selected stores and see how they perform. Not long after we first offered the suggestion, Fresh & Easy CEO Tim Mason mentioned in an interview with a British newspaper that putting small cafes with sit-down areas in some of the stores was something he was considering doing. It never happened though.

Had Tesco tested the small in-store cafe concept even two years ago, say in about 6-12 Fresh & Easy stores, it would know by now if it was helping and could be using it as a way to help draw customers, keep them in the stores longer, build stronger shopper loyalty, develop a little needed in-store excitement, and create a better sense-of-place in the Fresh & Easy stores, the lack of which is a major reason they don't draw an adequate number of new and repeat primary and secondary shoppers, in our research and analysis.

Monday, April 25, 2011

Talks Between Southern California's 'Big Three' Grocery Chains and UFCW Union Resume Tomorrow

Southern California Market Region:
Labor Negotiations Update

Negotiations between representatives of the seven United Food & Commercial Workers (UFCW) union locals in Southern California and representatives of the region's "big three" grocery chains - Kroger Co.-owned Ralphs, Safeway's Vons, and Albertsons, which is owned by Supervalu, Inc. - are set to resume tomorrow, and run until Thursday, according to Michael Straeter, president of Local 1442.

Following the three days of negotiations this week, plans are for the talks to continue on the same Tuesday- through-Thursday schedule from May 2 -to- 9, Straeter said today.

Kroger Co., Safeway Stores, Inc. and Supervalu, Inc. are the top three supermarket chains (in order of how they're listed) in the U.S., based on annual sales.

Ralphs (number one), Vons and Albertsons are also the top-three food and grocery retailers in Southern California, followed by Stater Bros., which is fourth in market share.

Stater Bros. is normally part of the contract negotiations along with the "big three." However, CEO Jack Brown, who's been a leader in union-grocery labor relations in the Southern California market for decades, this year decided to have Stater Bros. negotiate with the UFCW locals on its own, rather than being a part of the four chain group. The negotiations with Stater Bros. are currently taking place.

The last union contract in Southern California was signed in 2007. That contract expired in March of this year. Since then, the union grocery clerks and the unionized chains in Southern California have been working on a day-to-day basis, under the terms of the old contract.

Last week, UFCW-member grocery clerks in Southern California voted to authorize a strike against the three supermarket chains.

No strike has yet been called.

Both parties have said they want to reach a deal and avoid a strike and walkout by workers. The talks starting tomorrow and continuing until May 9 are designed to achieve that objective.

But when it comes to labor contract negotiations, particularly in challenging times like at present, both God and the Devil are in the details for the negotiating parties.

As such, the Southern California union locals and the three grocery chains are prepared to travel a rough and long road before they get to the end and agree on a contract that can then be voted on (for ratification) by the UFCW-member grocery clerks.

See the two stories at the following links - April 21, 2011: Southern California Grocery Store Workers Vote to Authorize Strike Against 'Big Three' Chains; and Union Grocery Store Workers' Vote Could Authorize Strike Against Southern California's 'Big Three' Grocery Chains - for background information and details on the status of the negotiations.

Saturday, April 23, 2011

'Walmart To Go' - Walmart Stores' Launches Test of Grocery Home Delivery Service Today in San Jose, California

The Insider - Heard on the Street

As the once popular song asked - "Do you know the way to San Jose?"

For mega-retailer Walmart Stores, Inc., which wants to sell more groceries than it's currently doing in the San Francisco/San Jose Bay Area region, and today launched an online-based grocery home delivery service in San Jose, California, the answer is - hopefully.

In my April 7, 2011 column - A Walmart Grocery Home Delivery Service in San Jose, California Wouldn't Likely Be Much to Write Home About - I wrote about Walmart's probable plan to test an online ordering-based fresh food and grocery home delivery service in San Jose, California. The story was first reported by Bloomberg News (here).

Walmart launched that grocery home delivery service test - which it's named "Walmart To Go" - today in San Jose, beginning with a website section attached to its site, where shoppers in the neighborhoods where the Arkansas-based retailer is conducting what it has announced is a "limited test," can order a selection of fresh food and grocery items and have the products delivered to their homes.

You can view the website,, here. Click here for details on the website about "Walmart To Go."

Walmart is offering a limited assortment of fresh food and grocery items on its grocery home delivery site (which is in beta test mode at present) across the basic grocery store categories, ranging from fresh produce, meat, seafood and other perishables; to packaged food and groceries, health and beauty/body care, pet food and supplies, baby food; and household supplies like paper goods, cleaning products and relate non-foods items.

There's also a section on the site for promotional items (Rollbacks), offered at temporarily reduced prices.

Shoppers can also have their drug prescriptions filled using "Walmart To Go," and have the medications delivered to their homes, along with their groceries.

Walmart is currently charging $5 and up for home delivery. According to the website, the current minimum purchase amount required to get a grocery order delivered is $49.00.

As part of the launch, "Walmart To Go" is offering an E-Voucher that shoppers can use to get their first order delivered free of charge.

In order to find out if "Walmart To Go" delivers to their neighborhood, potential online shoppers in San Jose need to put their zip code into a section on the website. If the service is available in their neighborhood, it will let the user know.

I typed in a few different zip codes for various parts of San Jose. The site indicated "Walmart To Go" delivered to about 40% of the zip codes I  punched in. But I didn't do a random sample. Nor did I try all of the available zip codes for the city.

The prices on the assortment of items currently offered on "Walmart To Go" are about in line with what Walmart charges at its hand full of stores in the San Jose area.

The everyday retail price-points for most items, particularly basics like milk and eggs and popular items like 12-packs of Coke, range from being slightly lower to about the same, and in a few cases I noticed higher, than those everyday prices the two leading supermarket chains in the market region - Safeway Stores, Inc. and Save Mart-owned Lucky Supermarkets - charge for like and similar items in their respective stores.

For example, "Walmart to Go" is selling a dozen of its private brand large-size eggs for $1.68, which is about the same as at the two chains mentioned above do for their best-priced private label versions.

Other grocers and discount format stores in the area sell similar quality eggs for less than $1.68, while other grocers retail the item for more than $1.68.

Eggs, particularly large-size, are also regularly advertised by grocer's in the region, just as is the case in other parts of the country.

As an example, Save Mart has its Sunnyside Farms private brand large eggs on sale this week at its Save Mart and Lucky banner supermarkets at buy-one-get-on-free (BOGO). At that promotional price, the cost per-dozen comes out lower than $1.68. But it is a promotional rather than an everyday price.

Walmart's private label fluid milk is selling for $2.41 on the "Walmart To Go" site. That's considerably lower, for example, than what Safeway is currently retailing its Dairy Glen (the lowest-priced of its private label fluid milk brands) fluid milk for. As of today, Safeway is selling a gallon of the Dairy Glen milk for $2.89, and to get that price shoppers are required to purchase a minimum of two gallons.

Other retailers in the San Jose area sell similar gallons of milk for less than $2.89. However, at $2.41, the "Walmart To Go" price-point is among the lowest I've seen when doing price checks in the area.

Lastly, Coca Cola, in the popular 12-pack cans size (Classic, Diet, ect.), sells for $4.38 on the "Walmart to Go" site. That price is about the same as what the two chains and many other grocery stores in the region offer the popular soft drink variety for on an everyday price basis.

Like eggs, 12-packs of Coke are an item promoted and advertised regularly by grocers and other format retail stores. In fact, it's hard not to find one or more retailers in any given market in the U.S. that aren't advertising 12-packs of Coke at least two, and often three, weeks out of a month, particularly in spring and summer.

For example, Raley's Supermarkets, which operates stores under the Raley's and Nob Hill Foods banners in and around the San Jose region, is currently promoting the Coke SKU in its weekly advertising circular for $2.25, based on a minimum customer purchase of four 12-packs.

Eggs, fluid milk and Coca-Cola are among the ten top-selling products or items in U.S. grocery stores.

Safeway Stores is the market share leader in the San Francisco Bay Area, followed by Save Mart and Raley's.

Safeway Store's operates the only major online ordering-based grocery home delivery service in the San Francisco Bay Area. Safeway's delivery area includes San Jose.

Therefore, at least in the parts of San Jose where Walmart is delivering groceries to residences, Safeway will have a new competitor - "Walmart To Go" - although at present the assortment of products Walmart has available to online shoppers on the website doesn't come close to matching the assortment Safeway offers on But Walmart can add items to its selection easily, which I suspect it will. It's just launched the service as a "limited test," after all.

A few things about "Walmart To Go ... before I go.

First, I like the name. It's short. It's descriptive. And it fits well with Walmart's emerging multi-channel (brick-and-mortar and online), multi- (brick-and-mortar) format food and grocery retailing strategy.

Under the new strategy, there's the supercenters -  the big guys, and the lead horse of the brick-and-mortar store pack.

Next is "Walmart Market", the name Walmart is changing all of its Neighborhood Market supermarkets to, as well as what it will call its new grocery markets in the about 30,000-60,000 square-foot range.

Lastly, there's the smaller guy, "Walmart Express," the name of its new convenience format grocery stores, which will be about 15,000 square-feet.

I think "Walmart To Go," as a name, fits nicely in that mix.

[There's also "Walmart on Campus," the retailer's tiny (about 3,000 square-foot) convenience store on the University of Arkansas campus. But it's really a one-store test for now. So I don't include it yet in the overall multi-channel/multi-format strategy.]

In terms of my lack of enthusiasm for a Walmart home grocery delivery service in San Jose - and it's limited to that region, by the way, as I look at each market region as unique and see some strong potential for such a service by Walmart in other parts of the country - as expressed in my April 7, column, it's still my analysis that from a sales standpoint, at least in the near-to-medium term, a Walmart grocery home delivery service in San Jose, and in most if not all parts of the Bay Area, isn't going to be much to write home about.

However, I like that Walmart is testing it.

And they are testing it in a smart way - just like they did with the "marketside by Walmart" small-format stores in metro Phoenix, Arizona (although I would have tested the stores in the San Francisco Bay Area and in urban parts of Southern California, for example, as I've said before) - which is to start with a very limited test, in this case the city of San Jose, and then see what happens. The investment is low, particularly for Walmart, and as such if the retailer decides not to go forward and expand the service, the loss will be moderate.

I also think in a longer-term sense a grocery home delivery service operated in certain parts of the U.S. could fit well within what is a growing and emerging online business at Walmart Stores.

Walmart's ASDA chain in the United Kingdom has a grocery home delivery service, so the concept isn't completely new to the chain. In fact, Walmart has transferred one or more executives from the UK operation to work on "Walmart To Go." The U.S. and the UK, where online-based grocery home delivery is much more popular, are very different animals though when it comes to the business.

The retailer is planning some interesting new developments online, including experimenting with using social media to help it improve the performance of its online shopping offering in a much more aggressive way than it is currently doing. If things go according to its plans, Walmart Stores will become a much more dominant online retailing force in the U.S. over the next couple years than it is at present.

On April 18, Walmart announced it has signed a definitive agreement to acquire Mountain View, California-based social media company Kosmix, which "has developed a social media technology platform that filters and organizes content in social networks to connect people with real-time information that matters to them," according to its two founders, Venky Harinarayan and Anand Rajaraman.

The two founders, whose first company, Junglee, was acquired by in 1998, have been involved in the social media space for a number of years, focusing on ways to better integrate social media with online shopping.

Harinarayan and Rajaramen, along with members of the team they assembled at Kosmix, are going to work for Walmart and will be part of a newly formed research and development operation the retailer has created in Silicon Valley, called @WalmartLabs.

Walmart says "it plans to expand the @WalmartLabs team and expects the new group will create technologies and businesses around social and mobile commerce that will support Walmart’s global multi-channel strategy, which integrates the shopping experience between bricks and mortar stores and e-commerce."

The @WalmartLabs operation is part of the retailer's division, which is based in Brisbane, a small city next door to San Francisco.

Mountain View, where Kosmix was based, is a 30-45 minute drive from Brisbane and less than 10 miles from San Jose. San Jose is under an hour's drive from the offices in Brisbane, depending on traffic conditions, of course.

I included the travelogue paragraph above in order to highlight the geographical - and human resource - synergies behind Walmart's launching the grocery home delivery service in San Jose, acquiring the Mountain View-based social media-based company, and setting up @WalmartLabs in Silicon Valley, which San Jose and Mountain View are part of.

From the human resource and talent angle, The San Jose -to- San Francisco geographical region is home to, among other top-flight social media companies (and start ups), Facebook (Palo Alto) and Twitter (San Francisco). It also has the human resource talent and infrastructure Walmart needs to become a leader in online shopping and in using social media to help it achieve that objective.

Walmart should be given credit for making the synergistic  moves. (I just don't think, in my experience and analysis, "Walmart To Go" will be very popular in San Jose from a sales perspective. But I could be dead wrong)

In addition to creating an e-commerce/social media research and development center, @WalmartLabs, putting the operation in Silicon Valley gives the retailer an added presence, along with having its facility there, in the Bay Area, where it plans to do all it can to become a serious player in food and grocery retailing over the next few years. And testing "Walmart To Go' in nearby San Jose does allow for the operation to be nearby both and the new @WalmartLabs start up.

According to my sources, the retailer is also looking at possibly testing "Walmart To Go" in at least one other part of the country, and perhaps even two regions. But for the immediate-term, my sources tell me, the focus will be on the limited test in San Jose, where Walmart wants to "find a way" to sell more groceries, and hopes one of those ways is through "Walmart To Go."

I will have more to say about "Walmart To Go" in a upcoming column, including hopefully some evaluations by one or two people who've tried the online ordering and home delivery service. Stay tuned.

- The Insider

Read 'The Insider's' past columns here.

Friday, April 22, 2011

A Little About Those 'green things' At Fresh & Easy Neighborhood Market on Earth Day 2011

Private Brand Showcase - Earth Day 2011

Tesco's Fresh & Easy Neighborhood Market publicly introduced its 'fresh&easy green things' brand of "eco-friendly" household cleaning and paper products to the media in a product press release, dated April 21, 2011, which landed in the Fresh & Easy Buzz electronic inbox this morning.

Today is Earth Day, and Fresh & Easy's announcement of its line of "green" household cleaning products and paper goods was timed to coincide with today's celebration of the annual event, which is designed to remind us to conserve the earth we inhabit.

Tesco's Fresh & Easy may have publicly introduced its 'fresh&easy green things' line of household cleaning and paper products in the April 21 press release. But the line isn't brand new - its been on the shelves in the 172-store grocery chain's stores in California, Nevada and Arizona for over two months.

We reported on and wrote about the introduction of the 'fresh&easy green things' line in a story over two months ago, as the products were hitting store shelves. You can read the story here - February 9, 2011: New 'fresh&easy green things Eco-Friendly Household Products' Line Hitting the Shelves at Fresh & Easy Neighborhood Market.

The primary "green" features of the private brand household cleaning products are: they're made from plant-based ingredients; are free from phosphates, dyes and perfumes; are pH neutral; biodegradable; and scented with essential oils rather than chemicals.

The paper products are made from 100% recycled paper and comprised of 80% post-consumer recycled paper or waste. Additionally, no chlorine is used in producing the white paper towels and tissues, according to the product package labels. In addition, the paper products' clear-cello packaging is biodegradable, designed to degrade in 12-18 months.

There are no national standards for "eco-friendly," "environmentally-friendly" or other similar terms used for "green" household consumer products, like there is for organic, which is a term regulated by the U.S. federal government. The government's organic-use regulations also have legal penalties attached, if used improperly by farmers, manufacturers, marketers and retailers. Therefore, buying "eco-friendly" household cleaners and paper goods is mostly a "buyer beware" situation for consumers.

For example, not all brands of "eco-friendly" paper goods are made from 100% recycled paper, like Fresh & Easy's are. Additionally, the percentage of post-consumer recycled paper used in such brands of products can vary considerably. At 80% post-consumer recycled paper, Fresh & Easy's brand is at or near the top percentile, along with a number of others, based on the numerous brands in the category we've examined.

The packaging for both "eco-friendly" lines was designed for Tesco's Fresh & Easy by London-based P&W, which works extensively with El Segundo, California-based Fresh & Easy Neighborhood Neighborhood Market, as well as with its parent company, United Kingdom-based Tesco, on private brand packaging design creation.

Fresh & Easy's 'fresh&easy green things' "eco-friendly" household cleaning products and paper goods lines join similar private brand lines it's competitors, such as Safeway Stores, Inc., Whole Foods Market, Trader Joe's and others, offer in their respective stores.

Both the "eco-friendly" household cleaner and paper goods categories have been expanding significantly over the last few years in the U.S.

For example, among the numerous national brand leaders in the "eco-friendly" household cleaners category are: Seventh Generation - one of the creators and a pioneer company and brand in the category - Clorox, with its "Green Works" brand line of household cleaners; and San Francisco-based Method, which is a fast-growing company and brand in the "eco-friendly" household cleaning products, laundry detergent and related green products' categories.

Seventh Generation is also one of the pioneer's in the "eco-friendly" paper goods category, having introduced its first line of such products around two decades ago. Another popular national brand in the category is the "Green Forest" brand of household paper products, which has significant distribution in grocery stores throughout the U.S.

The "eco-friendly" household cleaning and paper products categories are also being expanded, both in distribution and in sales, by the introduction of private brand lines by retailers like Safeway Stores, Inc., which debuted the first 28 SKUs of its 'Bright Green' brand of household cleaning products, paper goods and related products in 2008.

Safeway has over 1,700 stores in the U.S. and Canada. That extensive store-base allowed Safeway to go from zero distribution of its 'Bright Green' line to having the private brand on the shelves of one thousand-plus stores in a very short period of time. In contrast, it can take non-retailer manufacturers-marketers of similar brands and products years to gain distribution in one thousand-plus stores, although that's changing as the categories grow and mature, and as demand becomes stronger for the "eco-friendly" products.

Tesco's Fresh & Easy currently has 172 stores in California, Nevada and Arizona. It's offering its 'fresh&easy green things' products in all those units. That, albeit on a smaller-scale than what's available to Safeway Stores, is still a significant and rapid expansion of  "eco-friendly" product availability, which adds to the growing distribution and sales in the categories.

And in the case of retailer's and their private brands in these still small but growing "eco-friendly" product categories, there's a benefit to owning the points of distribution - their stores - and the shelf space inside those stores.

Reader Resource

>Read other recent and past stories from our Private Brand Showcase feature at this link - .

>Click on the following links - , , , , , , , , , , ,  - to read a selection of past stories about food and grocery retailing and Earth Day, along with other "green" aspects of food retailing.

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Thursday, April 21, 2011

Southern California Grocery Store Workers Vote to Authorize Strike Against 'Big Three' Chains

Southern California Market Region Report

In this story [April 21, 2011: Union Grocery Store Workers' Vote Could Authorize Strike Against Southern California's 'Big Three' Grocery Chains] published in the very early hours of the morning, we said members of seven UFCW retail grocery union locals in Southern California would vote overwhelmingly in favor of authorizing a strike against the region's "big three" grocery chains - Kroger-owned Ralphs, Safeway's Vons and Albertsons, which is owned by Supervalue, Inc. - when the results of yesterday's vote were made public later today.

The results are in - and as we said would be the case, the UFCW-member grocery clerks voted by an overwhelming majority to authorize the union to call a strike if it feels its negotiations with the three supermarket chains are going nowhere, or if they become seriously bogged down.

According to representatives of the seven locals, about 90% of the UFCW members who voted yesterday, voted in favor of authorizing a strike.

There are 62,000 members of the combined seven locals. However, not all 62,000 members voted, and the UFCW officials are thus far keeping the number of members who voted yesterday under their union-label hats.

We also correctly said in our story early this morning that even though a strike would be authorized by the members, the union would not call for an employee strike/walkout of Ralphs, Vons and Albertsons, but instead would use the strike authorization as a bargaining chip in its negotiations with the three chains. Those negotiations are scheduled to resume next week and to continue over the next three -to- four weeks, according to union representatives and the three grocery chains.

No strike/walkout has been called by the UFCW.

The union officials hope the strike authorization provides them with some added leverage in the negotiations with the three supermarket chains, who want to reduce employee health care benefits (and expenses) and gain some other savings, as we laid out in our piece this morning.

The UFCW local officials we talked to today said no strike is planned for the immediate future. They also said the vote authorizing a strike is more than mere rhetoric; that it's a tool they will use if and when they feel it's needed.

In our early morning story we reported the three grocery chains said the union's holding a strike authorization vote was premature, since the old contract expired on March 6, 2011, and negotiations have only been going on in earnest for a few weeks.

Ralphs, Vons and Albertsons reiterated that position today in a joint statement, in which they said the authorization to strike is not only premature but, in their collective opinion, is essentially a diversion.

"Getting sidetracked by these tactics will only delay our ability to reach an agreement on a fair contract for our associates, the three grocery chains said in the joint statement. "The real work toward getting a fair contract will happen at the negotiating table and we hope that's where the union leadership will focus its attention."

As of today, here's where the grocery chains, the UFCW union-member grocery clerks and the union locals stand.

The union locals can now call a strike if they desire at any point in the negotiating process.

However, most members don't want that, as it means losing their regular paychecks from the supermarket chains for however long a strike might last. in 2007, the year the contract that expired on March 6 was ratified, negotiations between the union and the grocers took about seven weeks.

If the union does strike, the chains could fight back by locking out employees, which happened in Southern California in 2003. In a lockout the grocers hire non-union workers in an attempt to keep the stores open and sales flowing. In 2003 the retailers estimated they collectively lost about $1.5 billion because of the strike by UFCW members.

The presidents of the seven UFCW local also say the don't want to call strike, at present.

Ralphs, Vons and Albertsons are less than pleased about the strike authorization. They see it as premature and as a move by the union to play hardball early on in the negotiations.

The union local presidents, on the other hand, say the grocery chains have been stalling negotiations, so they needed to put an authorization to strike in the hip pockets of their negotiation suits.

Negotiations resume next week. Plans call for three -to- four weeks of intense negotiating, according to union officials and representatives of the three grocery chains.

If there there is a strike, the losers will be the grocery chains  - lost sales and other problems - and the UFCW-member grocery store employees - lost wages, chance of losing a job, and more.

The winners: The numerous non-union food and grocery retailers in Southern California, which include the two largest retailers in the U.S. - Walmart and Target - along with Trader Joe's, Whole Foods Market, Sprouts Farmers Market, Tesco's Fresh & Easy Neighborhood Market and a number of others.

The UFCW locals in Southern California would like to unionize all of the chains listed above.

But, ironically, if the locals do call for a strike against Ralphs, Vons and Albertsons, which account for about half of all food and grocery sales in Southern California, they will be handing a nice piece of new business (added sales) to the very same non-union food retailers they would like to unionize, giving grocers like Fresh & Easy Neighborhood Market, which the UFCW is campaigning hard to unionize, a perfect argument as to why it should remain non-union.

That argument: Remaining non-union, among other advantages, allows it (and the others) to benefit from a strike against the 'big three chains, by gaining sales from an action (the strike) taken by the very union that (in Fresh & Easy Neighborhood Market's case specifically and particularly) wants and asks consumers not to shop at its stores because they're non-union.

This "Catch 22" scenario is something both parties - the UFCW union locals and the "big three" union chains - should think seriously about when negotiations resume next week.

We will be covering the negotiations closely. Stay tuned.

Union Grocery Store Workers' Vote Could Authorize Strike Against Southern California's 'Big Three' Grocery Chains

Southern California Market Region Report

Seven Southern California-based UFCW union locals, which represent about 62,000 unionized grocery store workers in a region stretching from coastal and inland Southern California to the Mexican border, and including the southern Central Valley, held a strike authorization vote yesterday, the result of which will be announced by the locals later today.

The vote involves negotiations the union is having with Southern California's "big three" unionized grocery chains -  Kroger-owned Ralphs, Vons, which is owned by Safeway Stores, Inc., and Albertsons, which is owned by Supervalu, Inc.

The three year contract between union grocery store workers and unionized grocers in Southern California expired on March 6. The workers, the UFCW union and the grocers have been working on a day-to-day basis since then.

The three supermarket chains also happen to be the three market share-leading food and grocery retailers in Southern California. Normally Stater Bros., which is the fourth-largest grocer in the region based on market share, would also be a party in the talks. But this time around Stater Bros. decided to negotiate separately with the UFCW because of the struggles it having in the market, as well as because as a locally-based regional chain it says it has unique needs and interests, compared to the three national grocery chains, which is true.

Gelsons, a small Southern California upscale grocery chain, is also negotiating on its own with the union.

In the past, the region's top four chains negotiated together with the UFCW on a new contract. Once an agreement was reached, nearly all of the smaller unionized chains in Southern California, such as Gelsons, would then adopt the contract agreed upon by the big chains and the union.

Most of the smaller chains will likely do the same this year, as only Gelsons (and Stater Bros, which is a medium-size chain with about $3 billion in annual sales), which has under a billion dollars in annual revenue, is negotiating on its own with the union.

In order for yesterday's vote to result in an authorization to strike, a two-thirds majority of the UFCW-member grocery clerks voting have to vote in the affirmative.

However, a two-thirds majority vote in favor of a strike against Ralphs, Vons and Albertsons doesn't mean a strike will happen soon - or ever. Instead, the union and its members can call for a walkout at anytime - and the UFCW officials wield considerable power regarding if a strike against the three chains occurs, and if it does, when it occurs - once the members authorize it.

We will know how they voted later today when the results are posted by the union locals.

Here's our analysis of what the results of the strike authorization vote to be announced later today will be, based on conversations we've had with UFCW members and union officials in Southern California, along with a summary of what we predict will happen based on those results, should we be correct about the outcome of yesterday's vote.

First, based on our reporting, it's our analysis the UFCW members will vote by an at least two-thirds majority, if not slightly higher, to authorize a walkout against Ralphs, Vons and Albertsons.

However, we predict the presidents of the seven Southern California UFCW union locals will not call for an immediate strike against the three chains, despite the member vote to authorize the walkout.

Instead, the UFCW officials negotiating with representatives of Ralphs, Vons and Albertsons will use the threat of a walkout as a negotiating tool with the chains. Leverage.

Additionally, most of the UFCW member grocery clerks we've talked with since last week, when the strike authorization vote was announced, told us they can't afford to live on the small stipend they would receive if they were to go out on strike, particularly in the current poor economy, where everyday basics like the cost of food and gasoline are going up each week.

The UFCW locals are cognizant of this reality. In fact, one Southern California UFCW official told us, based on remaining anonymous, that if yesterday's vote results in the strike authorization, the union will not call for a walkout anytime soon but instead will use the possibility of an employee walkout as part of its negotiating tool box with the representatives of the "big three" grocery chains.

Officials at the seven Southern California-based union locals believe Ralphs, Vons and Safeway are dragging their collective heels in terms of moving the negotiations along.

In turn, all three chains have said in statements last week and this week they believe the union officials have acted prematurely in calling for yesterday's strike vote.

Such are the things labor negotiations are made of.

The last contract negotiations (for the contract agreement that expired March 6) took about seven months before an agreement was reached by the union and the chains. That contract was ratified in a vote by the UFCW local members in 2007. The contracts run for three years.

At the end of March, about three weeks after the expiration of the contract, the three chains sent a list of their key negotiating items, including desired take-backs, to the UFCW locals. Therefore, the negotiations have only been going on in a real sense for a little over two weeks.

The negotiations currently center on employee health benefits and pension issues. For example, the chains want employees to contribute more money out-of-pocket for their health benefit plans. The union objects to the proposed increase, saying many part-time employees already can't afford the contribution amounts and therefore are not participating in the employer-union health plan.

The three chains also want some reductions in the various types and amounts of hourly premium pay paid to the workers.

For example, union store clerks get extra hourly pay when they work on Sundays, after certain hours in the evening and on certain holidays. The chains say they need to get the premium pay rates better under control because the added labor costs are, among other things, making them less competitive against the growing number of major non-union grocers in Southern California, who don't generally offer premium pay.

Among these non-union chains are: Walmart, Target, Trader Joe's, Whole Foods Market, Sprouts Farmers Market and Tesco's Fresh & Easy Neighborhood Market. Each of these grocers has and are opening numerous new stores in Southern California, and in the process they've collectively been taking sales and market share away from the big three unionized supermarket chains, along with Stater Bros. and some of the smaller unionized chains.

We will report on the results of the strike authorization vote later today, along with offering some analysis about what the results could mean for Ralphs, Vons and Albertsons - and for the non-union grocers mentioned above.

Wednesday, April 20, 2011

Raley's Supermarkets Introducing New 'Raley's Tonight' Fresh Heat-and-Eat Gourmet Entrees

Private Brand Showcase: Fresh-Prepared Foods' Category

West Sacramento, California-based  Supermarkets is introducing a new brand - "Raley's Tonight" - and new line of ready-to-heat, packaged, fresh-prepared gourmet meal entrees in its Raley's, Nob Hill and Bel-Air banner food and grocery markets in Northern California and northern Nevada this week.

The "Raley's Tonight" ready-to-heat gourmet entrees, which Raley's is merchandising in its refrigerated meat departments rather than in its service delis, were most of the grocery chain's prepared foods items are sold, come in nine varieties: Beef Florentine Flank Steak; Chicken Cordon Bleu; Asparagus Cheddar Stuffed Chicken Breast; Stuffed Boneless Pork Chop; Sausage Stuffed Mushrooms; Beef Fajitas; Chicken Fajitas; Beef Kabobs; and Chicken Kabobs.

The fresh, refrigerated packaged entrees, which are designed as a dinner for two people, sell for about $10 each, and take about 35 minutes to prepare in the oven.

Raley's already offers numerous refrigerated ready-to-heat entrees and side dishes, pre-packaged and in bulk, that take only a few minutes (quick meals) to prepare using  microwave oven, including its "Raley's TO GO" brand, which the grocer introduced last fall, and which we reported on in this story - October 30, 2010: Raley's Launches New 'Raley's TO GO' Pre-Packaged, Refrigerated Fresh-Prepared Foods Line.

However, the new "Raley's Tonight" heat-and-eat entrees are designed to take a longer (the 30-35 minutes) to prepare because of the premium quality, along with the fact the retailer is attempting with the new brand and line to tap into a growing trend among many consumers, who want pre-made meals that require some simple effort on their part, such as popping the entree in the oven and waiting for the timer to go off 30 minutes later, along with preparing something simple to have with the main course.

To this end, is offering consumers "complete dinner suggestions" for each of the entrees. The suggestions, which shoppers can follow, preparing the side-dishes while waiting for the "Raley's Tonight" entree of their choice to heat in the oven, are available in the stores, on the shopping list section of Raley's website, and on the product packages.

For example, Raley's suggests preparing and serving steamed vegetables and a white and wild rice blend to go with the Beef Florentine Flank Steak; steamed vegetables and au gratin potatoes to complement the Chicken Cordon Blue entree; and rice pilaf or risotto and a green salad with the "Raley's Tonight" Stuffed Pork Chop.

Raley's has been pioneer in the ready-to-eat and ready-to-heat fresh-prepared foods category since the late 1980's. Most recently the privately-held supermarket chain has been focusing on creating new brands and lines of ready-to-heat and ready-to-eat fresh, refrigerated foods under its Raley's and Nob Hill Trading Company private brands.

As an example, the grocer recently introduced a line of ready-to-eat gourmet panini sandwiches under its Nob Hill Trading Company brand, and a line of breakfast meal bowls under the Raley's brand.

The supermarket chain is also offering two ready-to-heat complete gourmet meals (designed to feed 8-10 people) for Easter -  Easter Lobster Ravioli Dinner and Eastern Bourbon Maple Glazed Ham Dinner - along with its Nob Hill Trading Company brand ready-to-heat premium Fire-Glazed Spiral Cut Ham, which is locally produced for Raley's by artisan meat guru Bill Andreetta, at his Sunnyvalley Smoked Meats in Manteca, California. Manteca is in the Northern Central Valley near Modesto, located about 80 miles from the grocer's corporate headquarters in West Sacramento.

Raley's operates 133 stores in Northern California and northern Nevada - 85 Raley's banner superstores (located throughout Northern California and northern Nevada), 22 Nob Hill Foods supermarkets (in the San Francisco Bay Area, the central coast and the northern Central Valley); 21 Bel Air Market supermarkets (in the Sacramento region); and five Food Source discount warehouse stores, in the Sacramento area and in the Bay Area city of Hayward.

According to company spokeswoman Ashley Zepernick, Raley's, which was founded in 1935 by Tom Raley, who died in 1991, and is owned by his daughter, Joyce Raley-Teel, currently has annual sales of $3.1 billion -  and about 13,400 employees.

Joyce Raley-Teel and her husband, James Teel, are co-chairs of Raley's board. Both are former Raley's senior-level executives, who retired from their respective day-to-day positions few years ago

Ms. Raley-Teel's son, Michael Teel, is the CEO of the family-owned grocery chain. Teel, who was the CEO of Raley's from 1996 -to- 2002  but left in 2002 to pursue entrepreneurial interests, returned last year as head of the chain to, in his words, "right the family ship."

Raley's has been struggling financially since 2009, and continues to struggle, although it's made some significant progress in the last year by cutting labor costs (layoffs at its corporate headquarters primarily) and streamlining its corporate structure; creating better operational efficiencies; improving its pricing profile and kicking-up its merchandising, marketing and promotional efforts.

"The growth of its private brand fresh-prepared foods program - including the introduction late last year of its  "Raley's TO GO" private brand entrees and side-dishes and the launching of the "Raley's Tonight" brand entrees this week - is one of the added merchandising efforts the 76-year old privately-held grocery chain has embarked on since Michael Teel returned as CEO in 2010.

In the spirit of our 'Private Brand Showcase,' we offer this marketing and merchandising tag line to Raley's, at no charge. The tag line: "Don't Cook Tonight. Try ... 'Raley's Tonight.'

Reader Resource

You can read the full-selection of stories in our 'Private Brand Showcase' feature by clicking on the link here: . Use the older posts/newer posts link at the bottom of the linked page for more page and stories.

Pro-Union Workers' Group and UFCW Union Speak Out On Fresh & Easy Neighborhood Market's $300 Million-Plus Loss

The billboard above, at the 405-Freeway (southbound near Century Boulevard) in Southern California, is part of the UFCW's campaign to unionize Fresh & Easy.

A group of store-level workers who've banned together to organize fellow employees and unionize Fresh & Easy Neighborhood Market reacted this morning to Tesco's report yesterday that the United Kingdom-based retailer lost a whopping $307 million at its El Segundo, California-based fresh food and grocery chain in its 2010/11 fiscal year, whch ended February 26, 2011.

The Fresh & Easy Neighborhood Market employee group, led primarily by workers at the Tesco-owned chain's store on Eagle Rock Boulevard in Los Angeles' Glassell Park neighborhood, said this morning in a statement released by the United Food & Commercial Workers (UFCW) union that, as employees, they're "very concerned" over the $300 million-plus in losses Fresh & Easy sustained in Tesco's 2010/11 fiscal year,

As we reported yesterday, Tesco's Fresh & Easy lost about $307 million, on sales of about $818 million, in its 2010/11 fiscal year, which ended on February 26, 2011. (Note: You will see slightly different loss numbers reported in the millions, depending on the publication doing so. That's because Tesco reports its financial numbers in British pounds. Therefore, the numbers can vary slightly depending on conversion rate use and timing.)

The employee group also takes Fresh & Easy's continued poor performance directly to the corner office in El Segundo, saying: "Tesco Director and Fresh & Easy Neighborhood Market Chief Executive Officer Tim Mason has refused to work with union and community groups to improve Fresh & Easy stores and make them more successful in their communities. Tesco's Fresh & Easy stores have suffered losses every year since the U.S. grocery chain was launched in 2007, and have never posted a profit in the U.S."

"Even after four years of losses for Fresh & Easy stores, Tesco paid Tim Mason around $7 million last year," said worker Lisa Austin. “We’re struggling to survive and make our stores a success on minimal wages and unaffordable health care, but he’s making millions while Fresh & Easy fails. It doesn’t make any sense." [Click here to read a series of stories about Mason's compensation. At the linked page you can click on the older posts/newer posts links at the bottom for additional stories on the subject.]

Austin, who's one of the leaders of the store-level employee group working with the UFCW to organize Fresh & Easy's workers, recently spoke at an April 5, 2011 rally to unionize Fresh & Easy, which we reported on in detail here: UFCW Union, Activists and Employees Hold Pro-Union Rallies at 25 Fresh & Easy Neighborhood Market Stores in California.

In the joint Fresh & Easy worker-UFCW statement this morning, the union's spokesman, Evan Yates, had strong words for Tesco and its 172-store Fresh & Easy Neighborhood Market chain, saying "the United Food and Commercial Workers International Union (UFCW), community groups, politicians and Fresh & Easy workers have tried to work with Tesco to make Fresh & Easy a success since the company announced its entry into the U.S. grocery market. To date, Tesco has maintained its anti-union, anti-worker and anti-community stance and launched its chain of Fresh & Easy markets in 2007 as non-union stores."

Tesco's position, which it's held since the UFCW first began organizing Fresh & Easy employees in 2007, is that if enough store-level workers want to unionize, they need to hold an election supervised by the National Labor Relations board (NLRB), per current U.S. labor law.

Tesco's Fresh & Easy has said if such an election were called. it would follow the law in carrying out its part of the process.

However, leaders of the employee pro-unionization group who work at the Glassell park neighborhood Fresh & Easy market in Los Angeles said on April 5 they haven't held an election at the store because they're concerned Tesco and Fresh & Easy might not play fair. However, a leader of the group also said on April 5 that they aren't sure if they currently have a majority of votes to go union at the Los Angeles store.

Members of the employee group are working with the UFCW on its "Fix Fresh & Easy" campaign, which is designed to put pressure on Fresh & Easy Neighborhood Market's CEO, Tim Mason, who's also Tesco's deputy CEO, and Tesco CEO Philip Clarke, in hope they'll have company representatives sit down with the employees and union representatives to discuss unionizing Fresh & Easy.

The UFCW has been trying  to arrange a formal sit-down with Tesco executives and CEO Tim Mason regarding Fresh & Easy for over three years. Such a meeting hasn't yet happened - and Tesco has made it fairly clear such a meeting won't be coming anytime soon.

Tesco's stores in the United Kingdom, where it's the leading food and grocery retailer, are unionized, as are many of its other divisions in Europe and Asia.

Another Fresh & Easy store worker, Shannon Harding, who works at the Spring Valley store in San Diego, summed up in the statement issued this morning what the workers group says it essentially wants: "Nobody expects to get rich working at a grocery store." But we still deserve decent pay, decent benefits and a real voice in turning this company around. Without those things, Fresh & Easy will never be a success."

Tesco's Fresh & Easy pays store- level workers a starting wage of $10 hour. Other store-level employees, called team leaders (there are generally two-to-four such employees per-store) receive a starting wage of $13 an hour. Assistant managers (one per-store; and not at all stores), which in addition to team leaders are management assistants employed at some of the Fresh & Easy stores, make $15 hour.

There are 20-25 workers per Fresh & Easy store. All of the employees work part-time (20 -to- about 32 hours week), except for the team leaders (some are part-time though), assistant managers and store managers, who are paid a salary.

Unlike unionized grocery store workers at chains like Safeway Stores, Kroger, Albertsons and others, who's pay raise schedule is determined by a multi-year contract agreement between the grocers, the UFCW union and its member-grocery clerks, hourly pay increases, and the amounts of any such increases, for store-level workers at Fresh & Easy Neighborhood Market are up to the company, as is the case at all non-union food and grocery retailers, like Walmart, Target, Whole Foods Market, Trader Joe's and others.

Fresh & Easy Neighborhood Market offers all store-level employees a medical insurance plan in which its pays 70% -to- 80% of the premium cost. The chain also offers workers a 401k plan with an employer contribution.

Union grocery chain workers in California make different hourly wages depending on their job descriptions in the stores. However, on average, a journey-level (about one year's full time experience) union chain grocery clerk - checks groceries, stock shelves, ect. - makes about $19 hour, and has a very strong employer-union health plan, which includes medical, dental and vision coverage. The workers contribute a portion of the monthly premium costs for the health plan.

Union grocery clerks also get a defined benefit pension depending on years of service, such as 10, 20, 30 years. The unionized chains contribute a significant portion of workers' pension money as part of the employee-retailer union contract agreement, along with a number of other types of benefits. They also pay monthly union dues to the UFCW.

Shannon Harding and the UFCW filed a case against Fresh & Easy with the NLRB in 2010. In June 2010 Administrative Law Judge William Kocol ruled in favor of Harding and the union and against Tesco's Fresh & Easy Neighborhood Market on the majority of complaints brought in the case. [See - June 20, 2010: NLRB Judge Rules Against Fresh & Easy Neighborhood Market in Spring Valley CA Store Labor Law Violation Case.

On January 31, 2011, members of the NLRB's board voted to uphold the judge's decision in favor of Harding and the UFCW on the key complaints in the case. (See here.) According to the NLRB the case remains open, meaning a full and final decision is pending.

The Fresh & Easy employee group and the UFCW union have been ratcheting-up their efforts to organize store-level workers at the grocery chain, along with attempting to put greater pressure on Tesco and Fresh & Easy via the "Fix Fresh & Easy" public relations and advertising campaign.

So far the increased organizing, which also now includes efforts by UFCW locals in Northern California where Tesco has thus far opened eight Fresh & Easy markets and is set to open three new stores on April 27, hasn't produced the desired meeting - and based on our information is unlikely to do so anytime in the near future.

However, in light of yesterday's $300 million loss on about $818 million in annual sales - a loss that's about 40% of Fresh & Easy's annual revenues - this increased pressure, particularly from employees of the grocery chain, with the support of the union, comes at a bad time for Tesco CEO Philip Clarke, who inherited Fresh & Easy Neighborhood Market's problems when he took over as CEO from Terry Leahy, who's brainchild Fresh & Easy is.

Clarke is on the record as saying Tesco will break-even with its U.S. small-format, convenience-oriented Fresh & Easy chain by the end of its 2012/13 fiscal year, which is just 22 months from now, which as we said in this story - April 19, 2011: Tesco's Fresh & Easy Neighborhood Market Posts Biggest One-Year Loss Yet - $307 Million Loss on Sales of $818 Million (and have been saying for some time) - is a tall order.

Reader Resource

Readers: See our extensive three plus-year coverage and analysis of the union issue at Tesco's Fresh & Easy Neighborhood Market at (click on) the following links: , , , , , , .]