Thursday, August 25, 2011

Tesco Opens Long-Awaited Fresh & Easy Neighborhood Market Store in San Francisco's Bayview-Hunters Point Neighborhood

Nearly four years in the making, Tesco opened its Fresh & Easy store (above) in San Francisco's Bayview-Hunters Point neighborhood yesterday. [Photo credit: Fresh & Easy Buzz.] Kevin, a Fresh & Easy Buzz reader who lives in Bayview-Hunters Point, e-mailed us this review (in the quotes below) he posted on the Yelp review site shortly after the store opened yesterday: "It's open. First new grocery store in the Bayview in decades; and it's a grand success. Organic offerings throughout the store - fresh, beautiful stuff. A true full-service grocery store, even offering a full line of wine & spirits. The Bayview in all it's multi-cultural glory is on display here - throngs of happy, smiling people mingling, laughing and honestly joyous about this long-awaited addition to the neighborhood. The staff is helpful and thoughtful - eager to help."

Tesco opened its long-awaited Fresh & Easy Neighborhood Market fresh food and grocery store in the 5800 Third Street condominium development at 3rd Street and Carroll Avenue in San Francisco's Bayview-Hunters Point neighborhood yesterday, completing a nearly four-year process that began when the retailer announced its plans in January 2008 to open a store in the low-income neighborhood underserved by grocery stores that offer a selection of fresh food and groceries at affordable prices.

The opening of the Fresh & Easy store yesterday - Tesco's second unit in San Francisco, 13th store in Northern California, 128th market in California and store number 177 in total - at 3rd Street and Carroll Avenue in San Francisco's Bayview-Hunters Point kicked off at a 10 a.m with presentations by Tim Mason, the CEO of Fresh & Easy Neighborhood Market and deputy CEO of parent company United Kingdom-based Tesco (pictured below), San Francisco Mayor Edwin Lee, David Chiu, president of the San Francisco Board of Supervisors, Malia Cohen, who represents the neighborhood on the board, and Sophia Maxwell, who formerly represented the area on the San Francisco Board of Supervisors and was instrumental in getting the grocer to locate a store in the new 5800 Third Street development, which opened early this year.

Mayor Lee, who is being challenged next year for the city's top elected office by Chiu and numerous others, presented a check for $1,000 to the Bayview-Hunters Point YMCA, which was chosen by the employees of the store to receive the donation Fresh & Easy gives to a local non-profit group each time it opens a new store, while the other San Francisco politicos, Mason and members of his senior executive team encouraged him on.

"I made a commitment to the community to improve Bayview-Hunters Point and make it a place that is safe and healthy for families," Mayor Lee said during his presentation this morning. "This project is a cornerstone in our broader efforts to revitalize the neighborhood by bringing healthy food, vibrant businesses, and new shoppers to Third Street."

Lee is San Francisco's former chief administrator, which is a non-elected position. He was appointed by the San Francisco Board of Supervisors early this year to fill the remaining term of then mayor Gavin Newsom, who was elected California's Lieutenant Governor in November 2010 and took office in January 2011.

It was during Newsom's term as mayor, in 2007, that Tesco agreed to locate a store in the 5800 Third Street development, which at the time was a vacant piece of land and the site of a former Coca-Cola bottling plant.

At the time of his appointment - and up until a few weeks ago - Lee said he would not run for mayor in 2012. However he recently announced he will run for the top office in the city and is being supported by local political heavyweights like Senator Dianne Feinstein and former San Francisco Mayor and California State Assembly Speaker Willie Brown. Both Feinstein, also a former mayor, and Brown are long time residents of and political players in San Francisco.

It was during Brown's two terms as mayor that the city's long-delayed plans to revitalize the low-income Bayview-Hunters Point District began to take shape

As mayor, San Francisco first African American to be elected to the office, Brown pushed through a plan to extend San Francisco's Muni light rail system into the historically majority-African American Bayview-Hunters Point  neighborhood, which previously had been neglected by most elected officials at City Hall, although Brown's close friend, former Mayor George Moscone, who was assassinated in the 1980's along with Supervisor Harvey Milk by another then-Supervisor, Dan White, made some efforts during his tenure to improve the neighborhood. Feinstein, who was President of the Board of Supervisors at the time, replaced Moscone as mayor, then later went on to become one of California's two U.S. Senators.
Above and below: Shoppers browse the aisles yesterday. [Photo credit: Fresh & Easy Buzz.]

The extension of Muni into Bayview-Hunters Point - there's a major stop right in front of 5800 Third Street where the Fresh & Easy store is located - paved the way for what is becoming a slow but steady revitalization of the neighborhood, which was essentially created during World War two when shipyards were built in the area to build ships for the two-front war effort in Europe and Japan, which created numerous jobs at the time.

Post-World War II  Bayview-Hunters point has seen a steady decline in income and opportunities for its 35,00-40,000 residents. Part-and-parcel of this phenomenon has been a lack of grocery stores in the neighborhood, which is considered a "food desert."

Newsom, who was supported by Brown and replaced him as mayor, continued to put a focus on Bayview-Hunters Point during his nearly two terms in office. That focus included working with former supervisor Maxwell and others to bring the 5800 Third Street development to Bayview-Hunters Point along with the Fresh & Easy store, which Tesco owns rather then leases.

Ironically, when it comes to grocery chains - there is a Foods Co discount warehouse grocery store owned by Kroger Co. located in Bayview-Hunters Point - local chains like Safeway Stores, Inc., which is headquartered just 30 miles from San Francisco in Pleasanton and is the leading food retailer in San Francisco with 14 supermarkets, weren't interested in the neighborhood. Instead, the grocer from across the pond, Tesco, ended up being the first grocery chain to open a new store in Bayview-Hunters Point in two decades. It was about 20-years ago when the Foods Co store was opened in the neighborhood.

About 200 customers, according to our count, attended the grand opening during its opening couple hours, including numerous residents of the 5800 Third Street development who told us they were extremely pleased to finally have the Fresh & Easy store open so they can do their grocery shopping on-site.

Along with the customers, about a dozen protesters attended the store opening, including those representing the United Food & Commercial Workers (UFCW) union (Fresh & Easy is non-union) and a neighborhood group, Clergy & Laity United for Economic Justice, that has asked Tesco's Fresh & Easy to remove alcoholic beverages from the store.

The group is also protesting about the fact that Fresh & Easy Neighborhood Market doesn't except WIC Vouchers in any of its stores besides a single unit in South Los Angeles, which is a story Fresh & Easy Buzz has been in the lead about since early 2008.

Fresh & Easy's CEO Mason however says the grocer has applied to except WIC Vouchers at the store in Bayview-Hunters Point (which is something we first said here in 2008 the grocer should do when it opened the store) and plans to start excepting the vouchers, which provide fresh and healthy foods to mothers for their children, soon.

The Clergy & Laity United for Economic Justice supports AB 183, which as we've reported extensively about would if passed by the California State Senate and signed by Governor Jerry Brown banned the sales of alcoholic beverages at self-service checkout lanes in retail stores in California. Tesco's Fresh & Easy uses an all self-checkout model in its 177 stores in California (128 stores), metropolitan Phoenix, Arizona (28 units) and metro Las Vegas, Nevada (21 stores).

Reverend Carol Been, a senior organizer for the group, says though that the organization is going a step beyond AB 183 and wants Fresh & Easy to stop selling alcoholic beverages entirely in the Bayview-Hunters Point store, siting among other reasons the alcohol-infused violence that broke out during last Saturday's football game at nearby Candlestick Park (about a mile away from the store) between the San Francisco 49ers and the Oakland Raiders.

Numerous stores in the neighborhood sell alcoholic beverages, as does the ball park itself. For example, according to the City of San Francisco's Economic Development Department their are about 90 liquor stores operating at present in Bayview-Hunters Point.

Therefore its unlikely Tesco's Fresh & Easy will remove the adult beverages from its shelves just because it's being singled out by the group for such action. The grocer went through the full process of obtaining an alcoholic beverage license, which was granted to it by the State of California. The City of San Francisco didn't object to the granting of the license either, which municipalities have a right to do in California.

The neighborhood group says its singling out Fresh & Easy to remove alcoholic beverages because of its self-service only checkout policy. However, if AB 183 does become law, it will likely make that a moot point because as the legislation is currently written it would require the grocer to at a minimum have one full-service checkout in each of its California stores because the bill, which we've nicknamed the "Son of Tesco Fresh & Easy Law," requires face-to-face interaction between a store clerk and customer whenever alcohol is purchases.

The group also says Fresh & Easy didn't hire locally for the Bayview-Hunters Point store. However, the grocer actually hired 40 employees for the store, which is almost double the number (20-25) it normally hires to staff one of its small-format grocery markets.

In addition, Mason said yesterday - and he told the same thing to Mayor Edwin Lee - that 52% of the 40 store employees are from the Bayview-Hunters Point Neighborhood. Additionally, earlier this year Fresh & Easy held a job fair at the neighborhood YMCA, which it donated $1,000 to yesterday, which is where many of those employees were hired from.
Above: The bakery department in the Bayview-Hunters Point store, which includes an oven where fresh breads and pastries are baked in-store. Fresh & Easy started adding the in-store bakeries to its existing 176 stores in July. All new stores will include the departments. We broke the news about the in-store bakeries in this May 18, 2011 piece. Below: Frozen foods in the 3rd Street and Carroll Fresh & Easy store are displayed in upright cases with glass doors. This is another change for the grocer, which is replacing the reach-in frozen food cases in its stores with the more modern units, which is also news we broke in the May 18 piece.

From a business perspective the hiring of 40 employees instead of the 20-25 Fresh & Easy normally hires per-store is difficult to understand. We've predicted the Bayview-Hunters Point store will be one of the grocers top stores in terms of average weekly sales. However, it doesn't need 40 employees to staff it in our analysis. All of Fresh & Easy's store workers are part-timers, working 20-35 hours week, accept for the store managers, assistant managers and team leaders, although in some cases they too work part time.

The grocer way be creating a potentially damaging situation for itself in hiring so many workers for the store in that (1) it could likely result in the workers getting fewer hours - they get health benefits if they work 20 hours or more a week - and even more serious could be that (2) Fresh & Easy will find itself to high of a labor expense number at the store down the road a bit and have to layoff some of the 40 employees, which will likely lead to damaging its reputation in the neighborhood.

Mason also made a little news at the opening, saying the grocer plans to open its third store in San Francisco - the unit at Silver Avenue & Goettingen in the Portola District which like the Bayview-Hunters Point store it acquired  in late 2007 and announced in January 2008 - in early 2012, confirming our previous reports that it would be the next Fresh & Easy store to open in the city.

As we've previously reported, Fresh & Easy also has a fourth store in the works in San Francisco. That unit will be in the former Delano's IGA Market store at 1245 South Van Ness Avenue in the city's Mission District. Based on our current information we expect that store to open in early-to-mid 2012. (See here for details.)

Tesco is also looking for additional locations in San Francisco for both its 10,000 square-foot Fresh & Easy stores as well as for its smaller footprint (3,000-4,000 square-foot) new "Fresh & Easy Express" format, as we've previously reported.

We've been reporting on and writing about Tesco's plans to open a Fresh & Easy market at the Bayview-Hunters Point location since the grocer first announced its intention to do so in January 2008. We said then and still suggest it will be one of the top performing Fresh & Easy stores in the chain.

In our analysis it should be among the top 10%-15 in average weekly sales among the current 177 stores in operation in California, Nevada and Arizona. Additionally, excepting WIC Vouchers at the store will in our analysis provide at least 5%-10% more sales than if the grocer doesn't except the vouchers, which is currently the case at the store, as it is with all but one of the Fresh & Easy markets, the unit in South Los Angeles.

If we're right, and we believe we are, that's good news for Tesco. But the United Kingdom-based global retailer will need much more than a good location in Bayview-Hunters Point in order to achieve its goal of breaking-even with Fresh & Easy Neighborhood Market, which it lost about $300 million on in its latest fiscal year ended in February 2011, by the end of its 2012/13 fiscal year, which is just 18 months away.

That's something we will continue to explore in Fresh & Easy Buzz in the coming months. Stay tuned.

Related Stories

>We've reported on and written extensively about the Fresh & Easy store at 5800 Third Street in San Francisco's Bayview-Hunters Point Neighborhood. Click on these link - , ,  - to read those stories and analysis.

>We were the first publication to point out that Tesco's Fresh & Easy doesn't except WIC Vouchers in its stores. Following our extensive reporting and analysis, which included a focus on the store in South Los Angeles, the grocery chain began excepting the vouchers in that store. We also first said in a couple stories in 2008 (and since then) that Fresh & Easy would be making a mistake and missing an opportunity if it didn't except the vouchers in the Bayview-Hunters Point store when it opens. You can read those stories at these links - , , , , , .

>AB 183 is the latest of three legislative bills in California that beginning in 2008 have been designed to ban the sale of alcoholic beverages at self-service checkouts in grocery and other retail stores in the GOlden State. We've reported on and written extensively about the legislation, including a recent piece last week. See those stories at this link - .

[Editor's Note: Photo of Tim Mason courtesy Fresh & Easy Neighborhood Market.]

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