Fresh & Easy Buzz

Sprouts Farmers Market and Sunflower Farmers Market Ink Acquisition-Merger Deal

2012-01-25T16:09:00.000-08:00

The Insider - Heard on the Street

In my November 6, 2011 column - Roll Up Times Two? Sprouts Farmers Market In Talks With Sunflower Farmers Market About Possible Acquisition - I reported that representatives of Arizona-based Sprouts Farmers Market and Colorado-headquartered Sunflower Farmers Market were engaged in negotiations regarding either an outright acquisition of Sunflower by Sprouts' or a merger-type acquisition of Sunflower Farmers Market into Sprouts Farmers Market, with Sprouts' and its majority-owner private equity firm Apollo Global Management absorbing Sunflower into Sprouts' corporate structure and operations, like it did with the Henry's Farmers Market deal last year.

Today I can report that, according to my sources, Sprouts Farmers Market and Sunflower Farmers Market have reached an agreement in principle for such an acquisition-merger, which they currently plan to announce no later than two weeks from today, assuming some additional details and specifics can be worked out between the two farmers market-style grocery chains.

My sources tell me representatives of both grocery chains have signed a memo of understanding or letter of intent to merge the two food retailing companies, with Sprouts Farmers Market in the lead role, and that those additional details and specifics are currently being negotiated on by the two chains.

Neither Sprouts Farmers Market or Sunflower Farmers Market has publicly announced they've been engaged in deal talks, nor have they confirmed or denied my November 2011 report. Additionally, based on my research using the major Internet search engines, no other publications besides Fresh & Easy Buzz have reported on the deal talks to date.

Sprouts Farmers Market currently operates 103 farmers market-style grocery stores in California, Arizona, Colorado and Texas.

The retailer closed three stores - Rollingwood, Sunset Valley and Anderson Lane - in Austin, Texas, in December 2011. The store closings were the result of having too many units too close to each other in Austin, following the Henry's Farmers Market merger last year. Henry's had some Sun Harvest banner stores in Austin which were nearby existing Sprouts locations, resulting in the duplication issue. No other Henry's or Sun Harvest banner stores have been closed to date.

Sunflower Farmers Market operates 35 farmers market-style stores in eight states in the Western U.S. - Colorado (12), Arizona (7), New Mexico (6), Nevada (2), Texas (2), Oklahoma (1), Utah (3) and California (2).

The Sunflower format, as was the Henry's Farmers Market format, is virtually identical to Sprouts Farmers Market's format.

Based on information given Fresh & Easy Buzz by the chain late last year, along with my analysis of added sales from new stores open since then, I estimate that Sprouts Farmers Market currently has annualized sales in the $1.2 billion-to-$1.4 billion range.

Additionally, based on conversations with sources at Sunflower Farmers Market, I estimate the chain's current annual sales to be in the $600 million-to-$700 million range.

Neither grocery chain is publicly-held. Therefore Sprouts and Sunflower don't released annual sales publicly as a matter of record. However, senior executives of both chain's publicly mentioned annual sales numbers in interviews last year. I expect a mention of those metrics to be made again as part of any deal announcement.

Both Sprouts Farmers Market and Sunflower are expanding rapidly, focusing in large part on the same Western U.S. States.

For example, both farmers market-style grocery chains are putting a major new store opening emphasis in Northern California for 2012, where each plans to open numerous new stores this year.

Sprouts and Sunflower both also plan to open new stores (one each respectively) in Phoenix, Arizona this year, along with in Colorado.

Sunflower Farmers Market though, unlike Sprouts, has a wider geographical reach with its growth strategy, currently operating in eight states, compared to Sprouts Farmers Market's presence in four states, which are California, Arizona, Colorado and Texas.

For example, in 2011 Sunflower Farmers Market expanded into Northern California and Oklahoma, where it plans to open at least one new store this year, which will be its second unit in the state.

Sunflower currently has two units in California, in Roseville near Sacramento and in Modesto, which is in the Northern Central Valley. It currently has plans to open four new stores in Northern California this year.

Sunflower Farmers Market has no current plans to open stores in Southern California, which is where Sprouts has the highest number of stores out of its total store base.

Sprouts Farmers market currently plans to open at least three stores in Northern California this year.

A deal with Sunflower Farmers Market (a combined Sprouts Farmers Market and Sunflower) will give Sprouts' an immediate presence in four additional states - Nevada, Utah, New Mexico and Oklahoma. All four of these states fit well geographically with where Sprouts Farmers already is geographically.

Additionally, Sunflower's growth focus in Northern California, which mirrors that of Sprouts Farmers Market - and the fact it has no stores in Southern California (no duplication) - is also synergistic in terms of a combined Sprouts' and Sunflower, as is the fact the two grocery chains operate stores of the same farmers market-style of which are virtually identical to the Henry's Farmers Market chain. Sprouts' has now changed all the Henry's and Sun Harvest stores to the Sprouts Farmers Market banner.

To put is directly, a year ago there were three farmers market-style grocery chains in the U.S. - Henry's, Sprouts and Sunflower - all operating in the same Western U.S. states. Today there are just two - Sprouts (with the combined Henry's) and Sunflower Farmers Market. If all goes according to plan, there soon will be just one such chain, Sprouts Farmers Market (the combined Sprouts, Henry's and Sunflower), otherwise know as the house the Boney family built.

A little over one year ago I broke the news in this January 5, 2011 column - Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards - that Sprouts Farmers Market and the owner of then Irvine, California-based Henry's Farmers Markets were engaged in talks involving an acquisition/merger deal between the two farmers market-style grocery chains.

In a series of follow-up columns - and in various news stories published in January and February 2011 in Fresh & Easy Buzz, we further reported and developed the story, adding new information about the deal talks between private equity firm Apollo Global Management, which owned Henry's through its Southern California-based Smart & Final LLC retail company and is now the majority-owner of Sprouts Farmers Market.

On February 15, 2011 Apollo Global Management announced through Smart & Final that it would merge its Henry's Farmers Market chain with Sprouts, in a deal that would give Apollo majority ownership of Arizona-based Sprouts Farmers Market (the combined Sprouts and Henry's chains), with Henry's being absorbed into Sprouts' existing corporate structure and operations.

On April 15, 21 I reported that the Sprouts-Henry's deal would be final on April 18. [See: Sprouts Farmers Market's Acquisition-Merger of Henry's Farmers Market to Be Final On Monday, April 18.]

On April 18, 2011, Sprouts Farmers Market announced the deal was final in a press release. [See: Sprouts Farmers Market Confirms Our April 14 Scoop: Sprouts' Acquisition-Merger of Henry's Farmers Market Final Today.]

The Devil is always in the details, as I carefully noted at the top of this column. But, according to my sources, where things stand today, what I've called the (farmers market-style food and grocery retailing format) "Roll Up Times Two" (Henry's being the first one) is on the way, unless the Devil messes with those details.

- The Insider

[Readers: Our extensive reporting, analysis and commentary of and on the Henry's Farmers Market-Sprouts Farmers Market deal in 2011, the Sprouts'-Sunflower deal talks, and much more can be found at these links: The Insider, Sprouts Farmers Market, Sprouts-Henry's Deal, Sunflower Farmers Market, Apollo Management, Henry's Farmers Market.]

Vote of Confidence: Warren Buffett Increases Ownership Stake in Tesco to 5.08%

2012-01-19T17:53:00.000-08:00

During an interview on the CNBC business network in November of last year famed investor Warren Buffett was asked if he saw any good long-term opportunities in European equities. His response: "If the price came down on some Tesco, I'd buy some more of that."

Buffett has done just that, following last Thursday's 16% drop in the United Kingdom-based global retailer's stock share price, which was the result of Tesco's issuing of a profit warning due to it poor Christmas season financial results at home in the UK, which accounts for nearly 70% of its annual revenue. [See this story for details - January 11, 2012: Tesco Reports 19.3% Comparable Sales Growth at Fresh & Easy Neighborhood Market For 6 Week Holiday Period.]

On Friday, the following day, Buffett increased his stake in Tesco from 3.21% to 5.08%, at a cost of about £500 million ($774 million), according to a required regulatory filing submitted to government authorities by his Berkshire Hathaway holding company, dated January 13, 2012.

Tesco owns and operates Fresh & Easy Neighborhood Market, which is based in El Segundo, California and has 189 stores stores in California (140 units), Nevada (21 units) and Arizona (28 units).

Tesco is closing 12 Fresh & Easy stores, a story we broke on January 8 (read here) and January 9 (read here). A few hours after we published our January 9 follow-up report, Fresh & Easy Neighborhood Market's corporate spokesperson began calling and e-mailing editors and writers at various publications, ranging from the Financial Times and the Orange County Register to supermarket industry trade publications, announcing the store closings.

Current plans call for Fresh & Easy Neighborhood Market to close the 12 stores by the end of this month to early February 2012.

Buffett's big buy is an important vote of confidence for Tesco following last week's big decline in its value. After all, when it comes to investing, he is regularly referred to as "The Oracle of Omaha."

Buffett, who also owns around $2.5 billion of Walmart Stores, Inc. stock, particularly likes Tesco's growth prospects in Asia, and most particularly the future growth opportunities afforded the global retailer in China, where CEO Philip Clarke is putting a major focus.

Prior to taking over as CEO from Terry Leahy in March 2011, Clarke was in charge of Tesco's Asian and European operations, along with heading up the retailer's corporate information technology efforts.

It is a stretch though to suggest Buffett's increased stake in Tesco is a specific vote of confidence for its money-losing Fresh & Easy chain in the U.S., however, because the legendary investor has as recently as late last year voiced serious concern over the enterprise.

It is fair to say though that Buffett is bullish enough on Tesco as a whole that he would increase his stake in the company by such a significant amount even though he harbors such concerns over the U.S. chain.

The "Sage of the Plains," another nickname for the man from Omaha, is a long-term value investor. So buying when he did, when Tesco was down by such a significant percentage last week, is classic Buffett. In other words, based on his proven research methods and track record, he knows a deal when he sees one. Buffett's seldom wrong.

But Tesco does face some big challenges, both at home an abroad.

It's competitors in the UK are getting much better and bigger, for example. And Tesco's focus on price-focused promotions, such as its recent 'Big Price Drop" promo, which is being called the "Big Price Flop" in the UK, aren't working so far.

Globally Tesco is focused on breaking even with Fresh & Easy by the end of its 2012/13 fiscal year, which ends in February 2013. It's not going to literally break even by then, in our analysis. And even if it does somehow achieve that objective by closing stores and cutting costs it must figure out a strategy to make its Fresh & Easy chain not only less of a financial drain but also a real contributor and asset to group Tesco.

But for now, in terms of Buffett's vote of confidence in Tesco, "Every Little Helps."

Related Stories

June 24, 2010: Warren Buffett Strikes Again: Buys 2 Million More Shares of Tesco Stock For 3.2% Ownership Stake

March 3, 2010: Mr. [Tesco] Three Percent Warren Buffett Still Has That 'Oracle' About Him

March 1, 2010: Warren Buffett, 'The Oracle of Omaha,' Wants you to shop at Tesco...But He Doesn't Mind if You Shop at Walmart

February 28, 2009: Warren Buffett: 'Our Country Has Faced Far Worse Travails': A Paralyzing Fear Has Engulfed the Country. But America's Best Days Lie Ahead.'

See addditional related stories at these links: Berkshire Hathaway, Warren Buffet, Warren Buffett and Tesco.

[Illustration credit: The ink-on-paper illustration of Warren Buffett at the top, titled 'The Oracle of Omaha," is coutesy of artist Andrew Mitchell. You can learn more about his work at his site here.]

Fast-Growing The Fresh Market Chain On Track to Launch in California This Year

2012-01-18T20:37:00.000-08:00

California here they come: The Fresh Market opened the store pictured above, at 421 North State of Franklin Road in Johnson City, Tennessee, on January 4, 2012. Yesterday the grocery chain opened a new store on the east coast, in Scarsdale, New York. Another new Fresh Market store opens next week, on January 25th, in Rockville, Maryland. Many more stores are set to open this year.

On August 3, 2011 we reported [in this story: Fast-Growing Specialty Grocer The Fresh Market Targeting Mid-2012 For First California Store] that North Carolina-based specialty grocery chain The Fresh Market planned to open its first store in California, in the north, in mid 2012.

Since we published our story in August 2011, the fast-growing 112-store grocery chain has been focusing on achieving just that goal. And while it might come a bit later than mid-2012, The Fresh Market plans to open its first one or two stores in Northern California's San Francisco Bay Area and metro-Sacramento region before the year is out, according to our sources.

One of the first Fresh Market stores to open could be in a vacant approximately 25,000 square-foot Borders Books store at Rocky Ridge Drive and Douglas Boulevard in Roseville, near Sacramento, a city that's seen a spate of new grocery store openings over the last couple years, including units opened by other recent entrants to the region, like Sprouts Farmers Market and Sunflower Farmers Market, both of which have additional new stores set to open this year in the Sacramento region and elsewhere in Northern California.

The publicly-held specialty grocery chain, which has been turning in solid comparable-store-sales growth and profits over the last couple years, is also looking for sites in Sacramento and other suburban cities, such as Elk Grove and Folsom, where Tesco's Fresh & Easy plans to open stores in March of this year, along with in other metro Sacramento region cities.

Fresh & Easy Neighborhood Market opened two new stores in Northern California last week, on January 11, giving it 18 units in the northern part of the state. The stores, both in the Bay Area, are in Brentwood (East Bay) and Mountain View, which is in Silicon Valley.

As we reported in our August 3, 2011 story linked at top, The Fresh Market took a pass on a location in Palo Alto last year, which if the deal had gone through would have been its first store in California.

The Fresh Market however still plans to open stores in the San Francisco Bay Area. It particularly has its sites set on Silicon Valley, which includes cities like San Jose, Palo Alto and a number of others.

But the grocer also has plans for other parts of the Bay Area. For example, according to our sources, Fresh Market has taken a look at the now-closed Andronico's supermarkets on University Avenue and Telegraph Avenue in the University city of Berkeley. No deals have been struck between the grocer and the landlords' of either building, however, according to our sources. Other retailers are interested in the buildings as well.

Berkeley, like numerous other cities in the Bay Area, fits Fresh Market's demographics, which are similar to those Whole Foods Market looks for, very well. Those criteria include residents with a high education levels and solid "foodie" IQ's.

In addition to offering national, regional and local product brands in its stores, The Fresh Market has its own private brand items in the basic grocery, specialty and natural-organic categories. One of the private brand lines in the natural-organic category is TFM Live Leaner Cereal, which includes the Honey Almond Flax variety pictured above.

The Fresh Market is also looking to open a distribution facility in Northern California, according to our sources, particularly for distribution of its extensive fresh foods offerings, which include produce, fresh meats, deli and ready-to-eat and ready-to-heat fresh-prepared foods. The grocer likes to source locally and plans to take advantage of the fact that so much fresh produce and other fresh foods are grown and produced in Northern California.

Our sources tell us The Fresh Market - which isn't commenting on its specific plans in California at this point, although we expect an announcement about those plans from the grocery chain soon - wants to have its first couple stores open in Northern California by mid-to-late 2012, to be followed by additional store openings in 2013.

The fast-growing - it opened its newest store yesterday in Scarsdale, New York and one in Johnson City, Tennessee (pictured at top) January 4 - North Carolina-based specialty grocer is a serious player in its current markets, competing strongly against both Trader Joe's and Whole Foods Market, for example, in the fresh and specialty grocery niche.

The Fresh Market now plans to take its brand and style of food retailing (see our August 2011 story for details) to what is arguably the mecca of specialty grocery store competition, Northern California. And, based on what we've learned since August 2011, it plans to do so in a significant way - opening numerous stores in the Golden State over the next few years.

Related Stories

December 5, 2011: Dollar General Jump-Starts California Launch: Taking Over 5 Centro Mart Supermarkets For Early 2012 Openings

November 30, 2011: Fresh & Easy Neighborhood Market, Others Eyeing Closing Andronico's Store on Telegraph Avenue in Berkeley, California

January 8, 2012: Tesco to Close Up to 12 Fresh & Easy Stores

January 9, 2012: Exclusive: Tesco's Fresh & Easy Closing 12 Stores; We Have the Locations

Tesco Reports 19.3% Comparable Sales Growth at Fresh & Easy Neighborhood Market For 6 Week Holiday Period

2012-01-11T23:15:00.000-08:00

Tesco opened three new Fresh & Easy stores today, two 10,000 square-foot standard-version grocery markets in the Northern California cities of Mountain View and Brentwood, and the 3,000 square-foot Fresh & Easy Express unit pictured above, which is in Hermosa Beach, California. [Photo credit: Fresh & Easy Buzz.]

Tesco has (literally) just released (at 7 a.m in the UK) its Christmas and New Years trading statement for the six week period up to January 7, 2012.

In the just-issued statement Tesco reports strong comparable-store-sales (called like-for-like in the UK) of 19.3% for its El Segundo, California-based Fresh & Easy Neighborhood Market chain for the six week holiday period, compared to the same period last year.

Additionally, Tesco says total sales at Fresh & Easy grew by 40.6% (actual rate) for the period, over the previous year.

The 19.3% comparable-store-sales growth number is a strong one for Fresh & Easy.

It's also the most meaningful metric of the two noted above because it measures stores that have been open for at least one year. The total sales number includes new stores that have been opened during the year.

Overall, Tesco, which has operations in 14 countries, reported an increase in group sales in the six weeks to January 7, 2012 of 5.2% including petrol (4.2% at actual exchange rates) and by 4.0% excluding petrol (2.9% at actual exchange rates), compared to the same period last year.

In the United Kingdom, which accounts for nearly 70% of Tesco's annual revenue, the retailer had negative comparable-store-sales of (1.3%) for the seven weeks up to January 7, 2012, including value added tax and excluding fuel sales, compared to the same period last year.

Excluding the value added tax and fuel sales, Tesco's UK stores suffered a a negative (2.3%) like-for-like sales decline.

The negative like-for-like sales for Tesco at home in the UK reflects strong competition from Walmart-owned Asda and Sainsbury's - the number two and three chains in the nation respectively after Tesco, which is number one - as well as from Morrisons and Waitrose, along with pressure being put on it from the deep-discount end by Aldi and Lidl, the German hard discount grocery chains that continue to expand in the UK.

Tesco launched a heavy discount program for the holidays called "The Big Price Drop," which, based on the sales growth numbers for the seven week period, doesn't appear to have been a sales booster for the retailer.

Tesco opened three new Fresh & Easy stores today - two in Northern California, in Mountain View and Brentwood in Northern California's San Francisco Bay Area - and a Fresh & Easy Express unit in the Southern California city of Hermosa Beach.

Tesco now has 187 Fresh & Easy stores in California (138), Arizona (28 units) and Nevada (21 units).

As we were the first publication of any kind to report on Sunday and early Monday, Tesco is closing 12 Fresh & Easy stores. The retailer plans to close the stores by the end of the month.

We will have more to say about Tesco's holiday sales report, particularly as it pertains to its Fresh 7 Easy chain in the U.S., upcoming. But the reporting is literally hot off the online press, so we wanted to give Fresh & Easy Buzz readers the first look.

You can view Tesco just-released holiday sales report here, which includes sales data for its divisions in Asia and Central Europe, along with some additional sales data overall.

Welcome to the (Eclectic) Neighborhood: Second of Seven Fresh & Easy Express Stores Opens Tomorrow in Hermosa Beach, California

2012-01-10T20:35:00.001-08:00

Retail Ethnography - Bright Lights, Eclectic Neighborhood: Welcome to the Neon Fresh & Easy Express

Tesco's Fresh & Easy Neighborhood Market is set to open its second 'Express' format store - 3,000 square-feet of selling space, with an edited and limited assortment of the products it offers in its 10,000 square-foot grocery markets - at Pacific Coast Highway (PCH) and 8th Street in the coastal Southern California city of Hermosa Beach tomorrow morning.

We've been chronicling in words and pictures the creation of the soon-to-open Fresh & Easy Express store in what we've termed the eclectic Hermosa Beach neighborhood since December 13, 2011, when we published this piece - Welcome to the (Eclectic) Neighborhood: Hermosa Beach, California Fresh & Easy Express Set to Open Jan. 11, 2012 - which was the first story in our "Welcome to the (Eclectic) Neighborhood" trilogy.

A week later we updated you on how the Fresh & Easy Express store was 'doing' in the neighborhood, offering Part II of our "Welcome to the (Eclectic) Neighborhood" Hermosa Beach Fresh & Easy Express chronicles in words and pictures in this December 20, 2011 piece: Hermosa Beach, California Fresh & Easy Express Taking Shape For January 11, 2012 Opening.

The Christmas and New Year holidays have now come and gone and the Hermosa Beach Fresh & Easy Express store is set to be welcomed to the neighborhood tomorrow morning at 10 a.m, when the doors to the micro-small-format grocery market are opened.

Tonight a crew of Fresh & Easy employees are in the Fresh & Easy Express store preparing for tomorrow's grand opening.

The new neon sign on the front of the store is burning bright, as are the lights inside the store. The shelves are stocked but getting a touch up and facing, all in preparation for tomorrow's opening.

The Hermosa Beach, California fresh food and grocery market, which we've nicknamed the "Neon Fresh & Easy Express," will be the second 'Express' format store to be opened by the grocer.

The first Fresh & Easy Express market, at La Cienega Boulevard and 18th Street in Los Angeles, opened on November 2, 2011.

Tesco's Fresh & Easy plans to have seven of the small food and grocery markets, all located in Southern California, opened by the end of March 2012.

The next Fresh & Easy Express store set to open is the unit at Victory Boulevard and Buena Vista Street in Burbank, California. The store's opening date is set for one week from tomorrow, Wednesday, January 18. (You can see photographs of the Burbank Fresh & Easy Express store's construction in progress here.)

Tesco is hoping the new, 3,000 square-foot Fresh & Easy Express format stores will play a major role in its efforts to break-even with its Fresh & Easy Neighborhood Market chain in America, which is now four-plus years old and continues to lose a significant amount of money for the United Kingdom-based global retailer, which has operations in 14 countries and is the third-largest food, grocery and general merchandise retailer in the world.

The opening of the 'Express' store in Hermosa Beach tomorrow comes on the heels of an announcement Tesco's Fresh & Easy made late Monday (January 9, 2012) that it's closing 12 underperforming Fresh & Easy grocery markets, a story we broke on Sunday (see here) in Fresh & Easy Buzz, and followed up on Monday (see here), with a second story in which we listed the locations of the 12 stores the grocer is closing, along with reporting on the internal announcement about the store closings made to company employees by Tim Mason, CEO of Fresh & Easy and group deputy CEO of Tesco.

Mason made the announcement via an e-mail to selected employees of Fresh & Easy just a short time before we published our report on Monday. Following the publication of our story on Sunday and our follow up piece early Monday afternoon, in which we reported the stores to be closed, Fresh & Easy Neighborhood Market made the announcement of the store closures, although initial plans called for it to make the Wednesday.

One of the reasons Tesco CEO Philip Clarke and Mason are working hard to get the first seven Fresh & Easy Express stores opened before the end of March is because they hope the 3,000 square-foot grocery markets will perform well, and therefore help provide a key to breaking even financially with Fresh & Easy Neighborhood Market by the end of Tesco's 2012/13 fiscal year, which begins in February of this year and ends in February 2012. This is something Clarke, who took over as CEO of Tesco in March 2011, says will happen.

Tesco will report the results of its 2011/12 fiscal year, which ends in February, in April of this year. Tesco reported a half-fiscal year loss of $112 million for Fresh & Easy earlier this year, on sales of $470 million.

The loss is 23% less than Tesco reported for Fresh & Easy for the same period a year earlier but still remains substantial. As we reported Sunday, the closing of the 12 underperforming Fresh & Easy stores is part of Tesco's strategy to achieve break-even with the chain by the end of the 2012/13 fiscal year.

But tonight, on opening eve, all eyes are on the "Neon Fresh & Easy Express, the soon-to-be-opened store on a busy stretch of the Pacific Coast Highway in the the eclectic neighborhood in Hermosa Beach, California.

And come tomorrow, the new Fresh & Easy Express store with its bright neon sign will join Learned Lumber, Sassy's, The Tendor Box and numerous other retail stores in the eclectic coastal Hermosa Beach, California neighborhood, each one offering what it offers to the eclectic mix of residents who live there.

Welcome to the (eclectic) neighborhood, neon sign and all.

[Related Stories: Read our extensive coverage and analysis of Fresh & Easy Express, including our story that broke the news on the retailer's plans to launch the format, here.]

[Editor's Note: All photographs credit Fresh & Easy Buzz, 01/10/2012.]

Exclusive: Tesco's Fresh & Easy Closing 12 Stores; We Have the Locations

2012-01-09T14:37:00.000-08:00

Breaking Buzz

Yesterday we broke the news that Tesco will close up to 12 of its 184 Fresh & Easy Neighborhood Market grocery stores in California, Nevada and Arizona. [Read the story here - January 8, 2012: Tesco to Close Up to 12 Fresh & Easy Stores.]

Today we can report that Tesco's Fresh & Easy Neighborhood Market plans to close 12 underperforming stores - seven units in California, four grocery markets in metro Phoenix, Arizona and one store in metro Las Vegas, Nevada.

Below are the addresses of the 12 Fresh & Easy stores to be closed:

California

>Fresno: Cedar and Shields
>Bakersfield: H and Planz
>Hemet: Florida and Lyon
>Anaheim: Lincoln and Western
>Baldwin Park: Francisquito and Puente
>Fountain Valley: Harbor and Edinger
>Ontario: Riverside and Archibald

All the stores, except for the Fresno and Bakersfield locations, which are in the Central Valley, are in Southern California

Arizona

>Phoenix: 7th Street and Thunderbird
>Phoenix: 19th Avenue and Glendale
>Phoenix: Camelback Road and 83rd Avenue
>Phoenix: 32nd Street and Greenway

Nevada

>Las Vegas: Ann and Decatur

The store closures were announced to employees of Fresh & Easy Neighborhood Market by CEO Tim Mason today.

In making the announcement Mason said this: " Like any retailer, we are always evaluating our store portfolio and we have decided to temporarily close twelve underperforming stores. At this time, there is simply not enough growth in sales and customers to keep these stores open. Many have been open for several years and are trading in areas where the network of Fresh & Easy stores will be able to absorb most of the existing customer base. We have taken significant steps to minimize the impact these temporary closures will have on you, including making sure we are able to offer all impacted employees a position at another nearby store."

As you can see in the paragraph above, Mason calls the store closures "temporary." He used that word because Fresh & Easy plans to "mothball" the 12 stores like it did with the 13 units it closed in November 2010. All 13 of those stores remain closed and are vacant.

Mason also told employees in today's announcement that although the retailer is closing the 12 stores, Fresh & Easy plans to "open more than two dozen through March, including seven new Fresh & Easy Express stores in Los Angeles and Orange counties and our first five stores in the Sacramento market."

The first batch of those two dozen-plus new stores are set to open on Wednesday.

Neither Tesco or its Fresh & Easy Neighborhood Market chain has publicly announced the closure of the 12 stores listed above.

Tesco has now closed 25 Fresh & Easy stores since it launched its El Segundo, California-based small-format fresh food and grocery chain in November 2007, when the first batch of stores were opened.

Six of the 13 Fresh & Easy stores Tesco closed in November 2010 were in metro Phoenix, Arizona and metro Las Vegas, Nevada respectively. One store was in Southern California.

With the closing of the four Fresh & Easy units in Phoenix, Tesco will have just 24 stores in Arizona, down from a high of 34 units in October 2010, before the six stores were closed in November of that year.

There are currently 135 Fresh 7 Easy stores in California. Closing the seven stores will reduce the grocer's store count in the state to 128 units, but only until Wednesday when Fresh & Easy Neighborhood Market will begin opening the first batch of what will be a couple dozen new stores in California over the next few months. See our exclusive list of those stores here.

The closing of the single store in Las Vegas, at Ann and Decatur, will give Fresh & Easy Neighborhood Market 20 units in Nevada, down from the current 21 stores. The retailer plans to open a couple new stores in the metro Las Vegas region this year, so that store count number will rise once those units open.

Fresh & Easy Neighborhood Market didn't open any new stores in Arizona or Nevada in calendar year 2011, although it has a number of locations in both states it's been sitting on in both states for a considerable amount of time. Instead, all 29 of the new stores it opened in 2011 are in California, which is where all but a handful of the new stores set to be opened in 2012 will be located.

We'll be offering some analysis on the latest round of Fresh & Easy store closings in an upcoming piece. Stay tuned.

Related Stories

January 8, 2012: Tesco to Close Up to 12 Fresh & Easy Stores

December 26, 2011: Solid Performance Gives Tesco 'Fresh & Easy' Wiggle Room - But CEO Clarke Shouldn't Sleep Soundly Every Night

December 8, 2011: Tesco Reports 11.9% Q3 Comp Store Sales Gain for Fresh & Easy ... But On Heavy Discounting

November 10, 2011: Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market

October 10, 2011: Gov. Signs AB 183: End of Self-Service Checkout Only in California For Fresh & Easy Neighborhood Market if Stores to Still Sell Alcohol

November 2, 2010: Closure of 13 Stores Brings Fresh & Easy Neighborhood Market's Store-Count to 155 Units

October 24, 2010: Tesco's Fresh & Easy Neighborhood Market On Track to Close 13 Stores By November 2, 2010

October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market

Tesco to Close Up to 12 Fresh & Easy Stores

2012-01-08T14:31:00.000-08:00

Tesco closed 13 Fresh & Easy Neighborhood Market stores in November 2010, including the unit at 858 South Greenfield Road in Gilbert, Arizona pictured above. The 13 stores remain closed and vacant. Tesco's Fresh & Easy retains the financial responsibility for the store leases. [Photo credit: Fresh & Easy Buzz.]

Breaking Buzz

Tesco plans to close up to 12 underperforming Fresh & Easy stores as part of its strategy to break even financially with its fledgling Southern California-based fresh food and grocery chain by the end of its 2012/13 fiscal year, which begins in late February and runs through February 2013, Fresh & Easy Buzz has learned.

El Segundo, California-based Fresh & Easy Neighborhood Market could announce the latest round of store closures as early as Wednesday, January 11, according to our sources.

The store closure announcement could come as early as Wednesday because Tesco is opening a number of new Fresh & Easy stores, its first for the new year, on January 11. Timing the store closure announcement on the same day a number of new stores are being opened could serve to blunt some of the justifiably negative press that will come from the announcement, according to the thinking of some at Fresh & Easy Neighborhood Market, our sources tell us.

From a public relations perspective such spin could go something like this: 'Yes we are closing some stores but we also opened numerous new stores today,' followed by a comment or two on the continuing poor economy in the places where the stores are being closed, or something similar.

Fresh & Easy Buzz is the first publication to report this development. Neither Tesco or its Fresh & Easy chain have announced any plans to close any stores.

There are currently 184 Fresh & Easy stores in California (135 units), Nevada (21 units) and Arizona (28 units).

Tesco closed 13 Fresh & Easy stores in November 2010 but didn't get around to "mothballing" some of the units until much later. Pictured above is the closed grocery market at 3232 East Guadalupe Road in Gilbert, Arizona. A Fresh & Easy Buzz correspondent took the photograph above on March 23, 2011, which is when the crew took down the signs and "mothballed" the store, which was closed five months earlier. [Photo credit: Fresh & Easy Buzz.]

Tesco closed 13 underperforming Fresh & Easy grocery markets in November 2010 - six units each in Nevada and Arizona and one store in Southern California. Fresh & Easy's CEO, Tim Mason, said at the time the stores would be "mothballed," and possibly re-opened in the future. The grocer still holds the leases on the 13 closed stores. See here and here for details.

Inside a "mothballed Fresh & Easy store: The unit at 858 South Greenfield Road in Gilbert, Arizona, which was closed along with 12 other stores in November 2010. [Photo credit: Fresh & Easy Buzz.]

If Tesco closes all 12 underperforming Fresh & Easy units currently under consideration, which our sources tell us is probable, that will make for 23 Fresh & Easy stores it's closed since launching the Southern California-based chain in November 2007.

Additionally, Tesco has held back from opening numerous Fresh & Easy locations, some of which has been sitting in various states of completion since 2008-2009. These includes store sites in Arizona, Nevada and California.

That Tesco will close more Fresh & Easy stores comes as no surprise to Fresh & Easy Buzz, since we said in the blog in 2011 that it is one of the things the United Kingdom-based retailer will have to do if it hopes to come close to breaking even with Fresh & Easy over the next 14 months.

This year is a crucial one for Tesco with Fresh & Easy because for all practical purposes it has until the end of December to get to break-even with Fresh & Easy Neighborhood Market because the month of January and partial month of February 2013, when the 2012/13 fiscal year ends, is insignificant. If it doesn't happen by Christmas 2012, it isn't going to happen at all because the month of January 2013 and a few weeks in February aren't enough to make a difference, in our analysis.

Because 2012 is a "make or break" year for Tesco with Fresh & Easy, expect to see other significant changes being made, in addition to the latest round of store closures.

On October 5, 2011 Tesco reported a fiscal half-year loss for Fresh & Easy of $112 million on sales of $470 million. The second-half fiscal year began at the end of August 2011 and runs until the end of February 2012. Tesco will report how much it lost on Fresh & Easy for its full fiscal 2011/12 year in April.

The half-year loss amount is 23% less than Tesco lost on Fresh & Easy in the same period the year before. However, there's no guarantee this trend will continue into the second half of the fiscal year.

Tesco plans to open numerous new Fresh & Easy stores this year. Opening new stores requires start up expenses and adds to labor costs. Sales from new stores lag behind paying for those start up and new labor costs, which makes breaking even with Fresh & Easy while opening numerous new stores an even more difficult task for Tesco.

Related Stories

December 26, 2011: Solid Performance Gives Tesco 'Fresh & Easy' Wiggle Room - But CEO Clarke Shouldn't Sleep Soundly Every Night

December 8, 2011: Tesco Reports 11.9% Q3 Comp Store Sales Gain for Fresh & Easy ... But On Heavy Discounting

November 10, 2011: Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market

October 10, 2011: Gov. Signs AB 183: End of Self-Service Checkout Only in California For Fresh & Easy Neighborhood Market if Stores to Still Sell Alcohol

November 2, 2010: Closure of 13 Stores Brings Fresh & Easy Neighborhood Market's Store-Count to 155 Units

October 24, 2010: Tesco's Fresh & Easy Neighborhood Market On Track to Close 13 Stores By November 2, 2010

October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market

Fresh & Easy Neighborhood Market Gets A Reprieve of Sorts On California Self-Service Checkout Booze Ban Law

2012-01-01T15:27:00.000-08:00

California's new law that prohibits shoppers from purchasing alcoholic beverages at self-service checkouts in retail stores went into effect today - but with a twist.

The twist is that at the request of the California Grocers Association (CGA), the California Third District Court of Appeals has halted the enforcement mechanism set forth by the California Alcohol Beverage Control Agency (ABC) in its December 23, 2011 advisory.

As we reported on Thursday, the trade association for food and grocery retailers in California filed a lawsuit before Christmas asking the state appeals court to halt an enforcement mechanism outlined by the California Alcohol Beverage Control Agency (ABC) in its December 23 advisory notice because the trade group says the agency's interpretation of the new law, AB 183, "is inconsistent with the statute, unenforceable, and in violation of the California Administrative Procedure Act (APA)."

Read our December 29, 2011 piece for details: The 'Fresh & Easy' Writ: California Grocers Association Files Lawsuit Over Self-Service Checkout Booze Ban Law.

The court says the halt of the ABC advisory will remain in place until there's a decision on the lawsuit filed by the CGA, which means for now retailers don't have to follow the guidelines set forth by the ABC in its December 23 advisory.

AB 183 however is law as of today, which means it's illegal in California for customers to purchase alcoholic beverages at self checkout registers in stores.

Confused? You should be.

What is unclear however is how the law will be enforced.

For example, Tesco's Fresh & Easy Neighborhood Market has self-service checkouts only in all of stores, including its 135 units in California. There are 184 Fresh & Easy stores. The other units are in Arizona (28 stores) and Nevada (21 stores).

Fresh & Easy calls its self-service system assisted checkout because store employees assist customers with the checkout process if asked.

Additionally, all purchases involving alcoholic beverage sales at the checkouts require assistance from an employee. Whenever a shopper scans an alcoholic beverage item during self-checkout the system locks up, which requires the assistance of a store worker in order for the transaction to be completed. The self-checkout systems at all other retail stores in California work essentially the same way.

As we written previously, based on the language of AB 183 prior to the advisory issued by the ABC last week, it's possible that Fresh & Easy could use its existing self-checkout system as long as any transaction involving alcohol purchases is completely monitored and conducted by a store employee.

The ABC's advisory says this isn't the case however - hence the lawsuit by the CGA.

At present, based on the court's halting of the ABC's enforcement mechanism outlined in the advisory, it appears Tesco's Fresh & Easy will be able to use its existing self-checkout system as long as any customer transaction involving the purchase of alcoholic beverages is monitored 100% by a store employee.

That, however, is our interpretation - and from what our sources tell us is the assumption Fresh & Easy (and the CGA) is operating on today, the first day in which the law takes effect but without the key enforcement mechanism which has been halted by the court pending resolution of the CGA's lawsuit.

Meanwhile, we've checked but there's no word from AB 183's author, San Francisco Assemblywoman Fiona Ma, who a couple weeks ago sent out a press release touting the piece of legislation she wrote, about the controversy surrounding the self-service checkout booze ban law.

Stay tuned. This story is far from over.

The 'Fresh & Easy' Writ: California Grocers Association Files Lawsuit Over Self-Service Checkout Booze Ban Law

2011-12-29T22:21:00.000-08:00

News/Analysis/Commentary

An interesting new twist has developed regarding California's new law to ban sales of alcoholic beverages at self-service checkouts in retail stores, which is set to take effect January 1 2012.

On December 8 we published this piece - Bad Timing With New Law Effective January 1, 2012: Fontana, California Fresh & Easy Store Cited For Allegedly Selling Alcohol to Minors - in which we pointed out among other things that the language of the new law to ban booze sales at self-service checkouts in California set to take effect in four days is somewhat ambiguous regarding how at least one grocery chain, Fresh & Easy Neighborhood Market, should comply with the new law, although the law's intend is clear, which is that alcoholic beverage sales transactions take place at full-service checkouts.

Fresh & Easy is the only grocer in California that has self-service checkout only in its stores, which is why it's a special case.

In apparent agreement with the ambiguity portion of our December 8 story, On December 23 the California Alcoholic Beverage Control Department (ABC) issued an industry advisory notice in which it attempted to clarify how retailers are to comply with the law when it takes effect January 1, 2012.

Here's (in italics below) what the ABC said in its December 23 advisory notice to California retailers:

On January 1, 2012, Section 23394.7 of the Business and Professions Code goes into effect. This new provision was added to the ABC Act by Assembly Bill 183 (Ma) and regulates the sale of alcoholic beverages through the use of "customer-operated" checkouts at off-sale licensed premises. The section reads as follows:

23394.7. No privileges under an off-sale license shall be exercised by the licensee at any customer-operated checkout stand located on the licensee’s physical premises.

The purposes behind this law include preventing minors from purchasing alcoholic beverages, denying obviously-intoxicated patrons from buying alcoholic beverages, and preventing the theft of alcoholic beverages, by ensuring that alcoholic beverages are sold only in circumstances in which substantial interaction between the purchaser and a sales clerk occurs.

It is clear that a "customer-operated checkout stand" means a checkout stand or station that is designated for operation by the customer. Such checkout stands are commonly referred to as "self serve" or "self service" checkout stands. While retailers do monitor these customer-operated checkout stands and provide assistance to the customer as necessary to conclude any given transaction, including the purchase of alcoholic beverages, such monitoring or oversight does not satisfy the language and intent of the statute. Accordingly, no alcoholic beverages may be sold through any checkout stand that is enabled to allow operation by the customer at the time the customer’s check-out transaction commences or at any point during the check-out process.

The Department recognizes that customers do engage in certain aspects of the point-of-sale procedures even at checkout stands fully staffed and operated by store employees, such as swiping credit or debit cards and authorizing payment, or bagging their own groceries. The Department does not believe such involvement by the customer at a fully staffed checkout stand falls within the scope of customer-operated checkout stand.

The key portion in the ABC advisory notice is paragraph four above. Basically what the ABC is saying, and this is most applicable to Fresh & Easy Neighborhood Market due to its all self-service checkout system, is that all customer transactions that involve alcoholic beverage purchases must be conducted from start to finish by a store employee in a face-to-face manner.

Additionally, and most importantly, the advisory says alcohol sales cannot take place at an existing self-service checkout located on the physical premises (store) of a retailer that holds a California alcoholic beverage license.

What this essentially means in English is that any retailer - read Tesco's Fresh & Easy because all other retailers in California have both full and self-service checkouts in their stores - which has self-service checkouts only has to convert at least one of those self-service checkouts into a full-service checkout if it wants to sell alcoholic beverages in its stores effective January 1, 2012, or else it will not be in compliance with the law.

In other words, the ABC Advisory appears to reinforce our original interpretation of AB 183 vis-a-vis Fresh & Easy, which is that the grocer is going to have to convert at least one self-service checkout in all of its stores in California to full-service in order to satisfy the requirements of AB 183.

Interestingly, note how the ABC advisory mentions satisfying both the language and intend of AB 183. The reason this is interesting is because we addressed both the language, which is ambiguous, and the intent, which is what the ABC is backing up in its advisory, in our December 8 piece. Someone at the ABC must be reading Fresh & Easy Buzz.

Fresh & Easy Neighborhood Market has two types of self-service checkout systems in its stores. Read the full explanation and discussion in our December 8 story linked at top. Pictured above is one of the two versions, the longer checkstand system. These self-service checkouts, which have a conveyor belt, are monitored regularly by store employees, as opposed to the shorter checkstands (version two), which are monitored less frequently. It's these checkouts we suggest Fresh & Easy could modify and use as full-service to comply with the new California law. [Photo Credit: Fresh & Easy Buzz, December 2011.]

The ABC's last minute advisory, just 10 days before AB 183 takes effect, isn't the only new twist to the self-service checkout booze ban law.

Yesterday the California Grocers Association (CGA) filed a petition for a writ of mandate with the California Third District Court of Appeal to stay the December 23 California Alcoholic Beverage Control Industry advisory notice which the grocer's association argues in the lawsuit "attempts to provide guidance in complying with a new state law to regulate alcoholic beverage sales at assisted self-checkout terminals."

Notice the use by the CGA of the term "assisted" self-checkout terminals. Remember, Fresh & Easy is the only grocer in California with all self/assisted checkout in its stores.

In its lawsuit, the CGA claims the ABC's advisory notice is inconsistent with the statute, unenforceable, and in violation of the California Administrative Procedure Act (APA).

CGA notes this: "The new law, Business and Professions Code Section 23394.7, takes effect January 1, 2012. The law provides that 'no privileges under an off-sale license shall be exercised by the licensee at any customer-operated checkout stand located on the licensee's physical premises.'"

This is the key provision we detailed above, which essentially means Fresh & Easy will have to convert at least one self-service checkout to full-service to satisfy the new law, based on the ABC's advisory notice, which communicates how it will enforce the new law.

The advisory can be viewed as an enforcement document from the ABC, meaning that if what is stated in it isn't carried out by retailers in following the new law they could be cited.

Explaining why its filed the writ, CGA president Ron Fong says: "The Advisory attempts to provide grocery retailers guidance on how to comply with the new law, by defining one of the law's key provisions. But the definition is vague and the advisory is an illegal underground regulation. The advisory is as unclear as the law itself. To protect our members, CGA was forced to file this writ."

Rather than issue the advisory, Fong says, the ABC should follow standard procedure and promulgate regulations through the California Administrative Procedure Act.

"We strongly disagree with the ABC's attempted interpretation of the new law," Fong says, adding CGA met with ABC officials to discuss the new law. "What was discussed in our meetings was significantly different than the Industry Advisory released last week."

In addition to requesting the advisory be withdrawn, CGA requested the court immediately issue an alternative writ of mandate that stays the effectiveness of the advisory pending a final ruling by the Court.

As of today the appeals court hasn't issued a decision on the grocery association's writ.

In our opinion the advisory issued two days before Christmas by the ABC is clearly meant as an attempt to clarify what as we've said, including most recently in our December 8 story, is ambiguous language in AB 183.

For example, based on our reading of the language of the law, before the ABC issued the advisory, it's our opinion Fresh & Easy might be able do the following and be in compliance with the legal language (but not the intent) of AB 183.

1. Post signs throughout the checkout area in its stores in California directing customers that if purchasing alcoholic beverages they must use one or more specially designated checkouts.

2. Those specially designated checkouts would be one or more of the type we discuss in our December 8, 2011 story here.

3. Store clerks would then conduct the entire transaction with customers at these designated checkouts; start to finish and face-to-face.

We stress this is merely our analysis and opinion. It isn't an attempt to make a legal determination regarding AB 183 in any way, shape or form.

Additionally, we aren't suggesting Tesco's Fresh & Easy Neighborhood Market plans or had planned to use a version of the system we've outlined above.

The December 23 ABC advisory clearly makes our above scenario moot however (if the CGA doesn't prevail), as it essentially says compliance with the law requires any holder of a California alcoholic beverage license to provide at least one self-service checkout in its store or stores in order to comply with the law effected January 1.

The ABC advisory shouldn't have any effect on any other grocer in California besides Fresh & Easy though, since all the state's other chains and independents either offer full-service checkout only, or in stores with self-service, offer both types of checkout.

These retailers and others only need to instruct customers that if they have alcoholic beverages they must use a full-service checkout lane.

As we've reported previously, Tesco's Fresh & Easy would like to keep its current self service/assisted service checkout system, with as little modification as possible, to comply with AB 183.

With just four days until the self-service checkout booze ban law takes effect, it now appears the grocery chain, which has all but 49 of its 184 stores in California, is placing its hopes to be able to do so on the success of the CGA's lawsuit. The other stores are in Nevada (21 units) and Arizona (28 units.)

From where we sit we find the ongoing saga behind AB 183 surrealistic in the extreme for two reasons.

First, as it pertains to AB 183, it basically will do little if anything to curb underage drinking, which is its primary stated intent, in our analysis.

Most teenagers, for example, obtain alcohol by getting an adult to buy it for them, not by purchasing is at self-service checkouts in retail stores. And while they're are cases of minors gaming self-checkout systems, the percentage is small.

Second, based on four years' of extensive research and reporting on Tesco's Fresh & Easy, which has lost nearly $1 billion since the first stores were opened in November 2007, its our analysis the grocer is missing out on a significant amount of business because numerous shoppers, particularly consumers who are in the 50-plus age segment, do not like the all self/assisted checkout system in the stores, as we've previously detailed in the blog.

As many consumers we've interviewed have told us, 'Why should I scan and bag my own groceries at Fresh & Easy when I can get the same items at numerous other stores for the same price or less and get waited on.'

We've also interviewed numerous consumers who've tried Fresh & Easy but specifically haven't gone back because they don't like scanning their own purchases, nor do they like to ask for help from store workers.

Many shoppers like Fresh & Easy's self-serve checkout. But in the competitive grocery retailing business it makes little sense to exclude the many consumers who dislike it, which is why all of Fresh & Easy Neighborhood Market's competitors offer either full-service checkout or a combination of full and self-service checkout.

For example, Walmart Stores' U.S. division, which is the leading retailer of food and groceries in the U.S. by market share, has studied the utility and feasibility of offering self-service checkout exclusively in some stores but has decided against doing so for reasons of shopper choice and common retailer savvy. All its stores with self-service checkout lanes also offer full-service as not only an option but as a majority offering.

There are only four days until AB 183 becomes law on January 1, 2012. Stay tuned here.

[Readers: Click here to view our extensive past coverage, reporting and analysis of California's new law that bans acoholic beverage sales at self-service checkouts in retail stores effective January 1, 2012.]

Solid Performance Gives Tesco 'Fresh & Easy' Wiggle Room - But CEO Clarke Shouldn't Sleep Soundly Every Night

2011-12-26T09:19:00.000-08:00

The Insider - Heard on the Street

United Kingdom-based global retailer Tesco has lost nearly $1 billion since it launched its El Segundo, California-headquartered Fresh & Easy Neighborhood Market grocery chain in November 2007.

That's a whole lot of money to lose on a food retailing venture, even for the world's third-largest retailer. Walmart is the largest by annual revenue. France's Carrefour is number two globally, followed by Tesco.

But despite its big loss with Fresh & Easy from 2008-2011, Tesco has performed superbly over the last four years.

For example, over its fiscal 2008-2011 period Tesco, which holds an about 30% market share in the United Kingdom and has operations in 14 countries, has grown its group revenue by a very healthy 31%.

In contrast, Walmart Stores, Inc. grew its revenue during the same time period by about 11%, which is far from bad for the mega-retailer from Bentonville, Arkansas, considering it has five times' the annual revenue as Tesco does.

Even more impressive, Tesco has grown its profits by 35% over the last four years, despite racking up hundreds of millions of dollars of annual losses from 2008-2011 with Fresh & Easy.

Additionally, despite continuing to have a negative overall profit margin at Fresh & Easy of around -35%, Tesco has averaged a very impressive profit margin of around 4% over the last four years.

That's more than double the profit margin Kroger Co., the leading supermarket chain in the U.S. and the number two retailer of food and groceries in America after Walmart has turned in over the last four years, for example. Kroger's annual revenue, all of which is generated in the U.S., is fairly close to, although less than, Tesco's.

On top of the impressive metrics detailed above, Tesco has averaged a very healthy return on equity of about 15% over the last decade, which has satisfied all but the most aggressive of its major investors.

It's this impressive performance that, in my analysis and opinion, is why Wall Street and The City (the UK's Wall Street) have been so patient with Tesco and its continuing struggles with and substantial financial losses at Fresh & Easy Neighborhood Market.

It's also why these big institutional investors, like Warren Buffett in the U.S. who owns about 4% of Tesco, will make some noise if Tesco doesn't break-even with Fresh & Easy Neighborhood Market by the end of its 2012/13 fiscal year, which begins February 2012 and ends in February 2013, as CEO Philip Clarke has said will happen, but will give the retailer more time to achieve the goal as long as Clarke and company continue to reduce the loss percentage, as was the case in Tesco's 2011/12 fiscal-half year, when it reported a loss of 23% less ($112 million) for Fresh & Easy than it did for the same period the year before.

Tesco reports the financial results for its 2011/12 fiscal year, which ends in February 2012, in April 2012.

If come April 2012 Tesco posts a 2012/13 fiscal-year reduction in losses at Fresh & Easy similar to what it reported in October 2011 for the half-year, it will get near-unanimous praise from the financial community for its efforts, thus giving Clarke plenty of wiggle room over the next year, in my analysis.

Tesco won't break-even with Fresh & Easy by the end of its 2012/2013 fiscal year though, in my analysis and opinion. But I'm not ready to put any specific numbers to my prediction this far out.

By the way, a loss of say $50-$100 million isn't break-even, as it's been publicly defined by CEO Philip Clarke. It's breaking even. Therefore, I do hope the goal posts aren't changed at Tesco, with a spokesperson next year perhaps suggesting something like, "Well, we didn't mean 'literally' breaking even by the end of fiscal 2012/13."

Conversely, if Tesco posts a loss of say $10-$15 million for Fresh & Easy at the end of fiscal 2012/2013, I will consider that break-even. Perhaps the holiday season has me in the giving mood?

The upcoming year, 2012, is a crucial one for Tesco with Fresh & Easy.

California (south, central and north), metro Las Vegas, Nevada and metro Phoenix, Arizona, where Tesco's 184 Fresh & Easy grocery markets are located, are among the most competitive food retailing market regions in the U.S. The competition in all three states will only get more intense in 2012.

For example, Walmart plans to open its first Walmart Neighborhood Market stores in California next year.

Mega-dollar store chain Dollar General will open its first Dollar General Market small-format grocery stores in California, starting in the north, in 2012. Dollar General opened five of the grocery markets in metro Las Vegas this year, with more units planned for the region.

The coming year will also find Boise, Idaho-based discount grocer WinCo Foods opening its first one or two stores in metro Phoenix. Fast-growing WinCo, which operates mega-stores averaging about 90,000 square-feet, is a competitive force wherever it goes. Metro Phoenix will be no exception, in my analysis.

Tesco has said it plans to open about 50 new Fresh & Easy stores in 2012. Nearly all of those stores will be in California, according to Fresh & Easy Buzz's research and reporting.

Tesco's ace in the whole in terms of its stellar performance over the last few years is its mega-market share at home in the UK, where it has over 2,700 stores and generates about 70% of its annual revenue.

Tesco controls about 30% of the UK market, which is nearly as much as its two leading competitors - Walmart-owned Asda and Sainsbury's - combined.

Asda has an about 17% share. Sainsbury's is very close behind with about 16.3%. Morrisons, the fourth-largest food and grocery retailer in the UK, has an about 12.4% market share. These "Big Four" chains, as they're called in the UK, account for nearly 75% of all food and grocery sales in the nation, according to the data from market research firm Kantar.

I don't see Tesco losing much market share at home in the UK over the next couple years despite the heavy competition there from Asda, Sainsbury's and Morrisons, along with Waitrose at the more up-market end and the hard discounters Aldi and Lidl on the other end. Tesco is a mid-range food retailer in the UK, as are Asda and Morrisons.

Therefore, I also expect Tesco to perform at or near the same levels it has over the last four years, despite continuing losses at Fresh & Easy in America.

As long as this is the case, Tesco CEO Philip Clarke will continue to get his wiggle room for Fresh & Easy from investors until early 2013, when the retailer reports its fiscal 2012/13 results, which if Clarke is right will include breaking even with what then will be a five-year-old and some change Fresh & Easy Neighborhood Market chain in America.

What I describe though is only the midfield game for Clarke and Tesco when it comes to Fresh & Easy. In other words, getting to break-even by fiscal 012/13 end and doing so without experiencing the wrath of investors is merely job one.

The bigger picture, which is if Fresh & Easy Neighborhood Market is actually a viable food and grocery retailing model and business for Tesco in the U.S., is what Clarke must also be thinking very seriously about. I don't know about him - but it would keep me up at least one night out of each week.

I'm not going to address that mega-question today. But it is a central question I will be addressing in this space throughout 2012.

I will say this today though, although I've seen some considerably promising improvements at Fresh & Easy since Philip Clarke took over as CEO of Tesco in March of this year, the jury is still out on the central question I posed above, which is if Fresh & Easy Neighborhood Market is a viable - defined as something that can make money and be grown beyond its current three state geographical area - business for Tesco in America.

Stay tuned for that discussion in 2012. See you next year.

- The Insider

Related Stories

December 8, 2011: Tesco Reports 11.9% Q3 Comp Store Sales Gain for Fresh & Easy ... But On Heavy Discounting

November 10, 2011: Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market

October 10, 2011: Gov. Signs AB 183: End of Self-Service Checkout Only in California For Fresh & Easy Neighborhood Market if Stores to Still Sell Alcohol

July 1, 2011: Tesco Shareholders Meet: Board Says Yes to Pay Plan, No to Investigation of Fresh & Easy Neighborhood Market; Pig Farmers Say it's Impossible to Bring Home the Bacon

May 11, 2011: CEO Philip Clarke Launches A New 'Vision and Strategy' For Tesco

February 28, 2011: Changing of the Guard: Clarke Takes Over the Reins as Tesco CEO Wednesday

February 23, 2011: 'The Insider' - Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market

January 27, 2011: Incoming Tesco CEO Philip Clarke Names Expanded Corporate Executive Committee

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

October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market

October 4, 2010: Tuesday's Tesco Interim Report Offers A Road Map of Sorts For the Future of Fresh & Easy Neighborhood Market

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

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

June 8, 2010: Tesco CEO Terry Leahy Retiring; Philip Clarke New CEO; Tim Mason Named Deputy CEO But Will Remain Fresh & Easy Neighborhood Market Chief in U.S.

[Readers: Click here to read past columns by 'The Insider.'

Merry Christmas From Fresh & Easy Buzz

2011-12-25T07:47:00.000-08:00

Tesco Celebrates the Holidays With Mince Pie Ice Cream in the UK and Pumpkin Spice at Fresh & Easy in America

2011-12-23T18:25:00.000-08:00

Private Brand Showcase

A slice of pie, often with a scoop or more of ice cream on the side à la Mode style, is a post-Christmas dinner dessert tradition throughout much of the world, particularly in Europe and America.

For example, no proper British family would be caught dead without having a mince pie on the cupboard for dessert on Christmas Day.

By the same token, most American families include pumpkin pie as part of their holiday dessert offerings, often along with apple pie, and in some cases even mince.

As any kitchen anthropologist knows, when it comes to pie à la Mode, there are two types of eaters: the ones who like just a bit of ice cream to go along with a healthy slice of pie; and those ice cream lovers who prefer just a smidgen of pie to go along with their ice cream.

Those in the latter camp can rejoice this holiday season - at least if you live in the United Kingdom, California, Nevada or Arizona.

Why: Because Tesco in the United Kingdom and its sibling in America, Fresh & Easy Neighborhood Market, which has 184 stores in California, Nevada and Arizona, are celebrating the holiday mince and pumpkin pie traditions in each respective country with special seasonal ice cream flavors.

Just in time for Christmas, Tesco has come out with mince pie ice cream under its Tesco Finest premium private brand, which it's offering in most of its 2,700-plus stores in the United Kingdom.

The ice cream is the second seasonal Tesco Finest brand product it's come out with a mince pie theme and taste. The other one is noted and pictured in this December 4, 2011 story: 'Merry Crispmas' ... From Tesco.

The Tesco Finest Mince Pie Ice Cream includes mincemeat made with French brandy and ruby port wine and bits of buttery pastry (the crust). There's also citrus and loads of spices, including cloves and cinnamon.

The limited edition ice cream, which is designed to stand alone rather than merely share a plate with mince pie, although mince pie lovers might find themselves "double-dipping" in a like-for-like à la Mode fashion.

Fresh & Easy, which is owned by Tesco, is offering its own frozen version of pumpkin pie, with its limited edition fresh&easy brand Pumpkin Spice Ice Cream, pictured above.

The ice cream, which retails for $3.99 (1.25 quarts) is spiced with nutmeg, ginger and cloves, similar to how a traditional pumpkin pie is.

Like the Tesco Finest Mince Pie Ice Cream, Fresh & Easy's Pumpkin pie version is also designed to stand alone, although we see numerous à la Mode opportunities. A scoop or two sharing the same plate as a white or vanilla cake might make for a nice taste contrast, for example. Sort of turning the pie (or cake) à la Mode tradition on its head, so to speak.

Mince pie used to be a much more popular Christmas holiday dessert item than it is today in the United States. It remains so for Americans of a certain age but ask most Americans under about age 60 if they would like mince pie for dessert come Sunday and, with some exceptions (British expats for one), the answer will be no thanks.

Pumpkin pie remains a holiday favorite in America though, its popularity usually knowing no age boundaries. For example, here at Fresh & Easy Buzz we know numerous kids as young as 6-years-old and on up who love the spicy custard pies, and not just for the holidays.

But ice cream could be another matter. For example, we've searched pretty comprehensively and haven't found a mince pie ice cream in the United States, perhaps for the reason described above regarding the overall popularity of mince pie in America.

But perhaps those mince pie adverse younger folks might like the pie's flavors offered in ice cream form?

As such, perhaps Fresh & Easy's product developers should consider giving a fresh&easy brand mince pie ice cream a go next holiday season. The recipe is in the family, after all.

And even if younger consumers don't take to it, there's definitely a age 60-plus (which happens to be the fastest growing population cohort in the United States) or so group of people out there in California, Nevada and Arizona that would likely give it a try.

[Photo Credit #1: fresh&easy Pumpkin Spice Ice Cream = Fresh & Easy Buzz.]
[Photo Credit #2: Tesco Finest Mince Pie Ice Cream = @Cinabar, via Twitter.]

Recent Private Brand Showcase Stories

December 5, 2011: The Tesco Christmas Dinner Pizza - A Festive Feast Without the Fork

December 4, 2011: 'Merry Crispmas' ... From Tesco

December 1, 2011: Master Chocolate-Maker Tells the Story Behind Fresh & Easy Neighborhood Market's Holiday Confections

November 14, 2011: Safeway Puts its Brand on Ice in San Francisco For the Holidays

November 13, 2011: Trader Joe's Introduces 'Wasabi Arugula' ... Minus the Wasabi

November 9, 2011: Glatt to Meet You Paisan - Kosher 'Meats' Italian at Mollie Stone's Markets

Readers: Click here to read all past stories in our Private Brand Showcase feature.

Hermosa Beach, California Fresh & Easy Express Taking Shape For January 11, 2012 Opening

2011-12-20T19:15:00.000-08:00

What a difference a week or so makes: New signs on the future Fresh & Easy Express, pictured above. Above photo taken 12/19/11. Photo below from our December 13, 2011 story. Photo credits: Fresh & Easy Buzz.

Retail Ethnography - Welcome to the (Eclectic) Neighborhood

A week ago today we wrote and published this story - December 13, 2011: Welcome to the (Eclectic) Neighborhood: Hermosa Beach, California Fresh & Easy Express Set to Open Jan. 11, 2012 - about the Fresh & Easy Express store Tesco's Fresh & Easy Neighborhood Market is preparing to open in early January 2012.

In the story we reported that El Segundo, California-based Fresh & Easy Neighborhood Market plans to open what is calls internally the "F3 store" on January 11, 2012.

The Fresh & Easy Express stores have about 3,000 square-feet of selling space in what is about 4,000 square-feet of interior space, hence the "F3 store" moniker. The standard stores are called F10's because they have 10,000 square-feet of selling space.

The grocery chain hasn't announced the opening date of the Hermosa Beach Fresh & Easy Express store, or the dates of any other stores it plans to open in January 2012.

Since our story came out last Tuesday, Tesco's Fresh & Easy has made considerable progress on the 'Express' store, which is located on Pacific Coast Highway (PCH) and 8th Street in Hermosa Beach.

For example, as you can see in the photograph at top taken Monday, December 19, the exterior of the building, which previously housed a furniture store called Mortise & Tenon, now sports two new signs - the vertical sign directing shoppers to the store's parking lot on 8th Street and the Fresh & Easy signage on the building's facade.

If you take a look at the second photo at top, which is from our December 13 story, you'll see that the two signs weren't on the future Fresh & Easy Express store.

The vertical Fresh & Easy Express sign (see top photo) directing shoppers to the parking lot on 8th Street replaced the old Mortsie & Tenon furniture store sign (see second photo at top).

The Hermosa Beach unit is one of four Fresh & Easy Express stores the grocer plans so far to open in early 2012, all in Southern California.

The other three units are: Los Angeles (Figueroa Street and Jefferson Boulevard); Burbank (Victory Boulevard and Buena Vista); and Laguna Niguel (Crown Valley Parkway and Golden.)

The first Fresh & Easy Express store opened November 2, 2011 in Los Angeles See the November 1 and 2, 2011 stories linked at the end of this piece for details and photographs.

On November 15, 2011 Fresh & Easy Market announced via a press release that it plans to open 20-plus new stores in early 2012.

The Tesco-owned fresh food and grocery chain didn't and hasn't announce the specific locations of the stores, mentioning just the cities the grocery markets will be located in.

However, through our reporting and research we've identified the addresses of the 20-plus stores, which we published in this story on November 15: Fresh & Easy Neighborhood Market to Open 20-Plus New Stores in Early 2012 - We Have What's Not in the Press Release.

Tesco's Fresh & Easy will close out 2011 with 184 stores in California (135 stores), Arizona (28 units) and Nevada (21 units.)

Of the 135 grocery markets located in California, 105 units are in Southern California. There are 14 stores, seven units each in metro Bakersfield and metro Fresno, in the mid-to-southern Central Valley, and 16 stores in Northern California.

Tesco has opened 29 new Fresh & Easy stores in calendar year 2011. No new store openings are planned the the remainder of the year.

The Hermosa Beach Fresh & Easy Express store is slated to open in three weeks. Stay tuned.

Related Stories

December 13, 2011: Welcome to the (Eclectic) Neighborhood: Hermosa Beach, California Fresh & Easy Express Set to Open Jan. 11, 2012

November 23, 2011: Tesco and its Fresh & Easy Chain Hoping 'Seven' is the Lucky Number For 'Fresh & Easy Express'

November 2, 2011: Open in Los Angeles: A Look at the First 'Fresh & Easy Express' Store

November 1, 2011: Analysis: Tesco Opens First 'Fresh & Easy Express' Store Tomorrow in Los Angeles ... So What ... ?

July 30, 2011: First 4,000 Sq. Ft. Fresh & Easy Neighborhood Market 'Express' Store Set to Open in Los Angeles' San Pedro Community This Year

January 23, 2011: Tesco's Fresh & Easy Neighborhood Market Looking For Locations For New, Smaller-Format 4,000-to-5,000 Square-Foot Stores

Welcome to the (Eclectic) Neighborhood: Hermosa Beach, California Fresh & Easy Express Set to Open Jan. 11, 2012

2011-12-13T23:57:00.000-08:00

Retail Ethnography

Welcome to the neighborhood.

Tesco's Fresh & Easy Neighborhood Market plans to open its micro-small-format (3,000 square-feet) Fresh & Easy Express fresh food and grocery store (pictured at top) at Pacific Coast Highway (PCH) and 8th Street on an eclectic commercial block in Hermosa Beach, California on January 11 2012, according to the banner (below) the grocer recently put on the exterior of the vacant building being renovated to house the store.

And an eclectic block it is - particularly the three retail stores that will be neighbors of the Fresh & Easy Express market when it opens in less than a month.

Sharing the block fronting the PCH and across 8th Street are three stores: Sassy's, The Tender Box and Learned Lumber.

The last business, Learned Lumber, is self-explanatory - it's a lumber yard.

But the other two, Sassy's and The Tender Box, are nearly impossible to discern from just the names of the stores.

Venture a guess what type or format of stores they are, without looking a the photos?, of course

Fortunately you don't have to guess, that's what we're here for - to go out in the field and report, and then inform.

Sassy's (at left, above), which is located next to The Tender Box (at right, above) and is a mere baguette's throw from the future Fresh & Easy Express store, is a adult lingerie and costume shop, featuring everything for a night at home (lingerie), a special night out (adult costumes) or a mix of both in the same evening.

If you're thinking The Tender Box might be, say, a tobacco shop, think again. And when trying to guess, think about its proximity next door to Sassy's.

Give up?

Well, and remember we're merely the messenger, The Tender Box specializes in adult entertainment and toys, and we aren't referring to consumer electronics, although some of the inventory for sale in The Tender Box does require batteries to use.

Unique business names seems to be the norm for the block.

For example, the vacant 4,000 or so square-foot building (pictured below) Fresh & Easy Neighborhood Market is putting the 'Express' market in previously housed a furniture store named Mortise & Tenon. For those not familiar with the term mortise & tenon, it is a type of joint used in wood working, such as in furniture-making. The store will have about 3,000 square-feet of selling space.

All four of the stores - Fresh & Easy Express, the lumber yard, Sassy's and The Tender Box are on the west side of the PCH. Learned Lumber and Fresh & Easy Express are next to one another on 8th Street, while Sassy's and The Tender Box are next to one another across 8th Street.

And yes, no need to ask - Learned Lumber does sell plenty of "hardwood," and the now gone furniture store - which the Fresh & Easy Express is replacing - also offered various items made out of that particular variety of lumber back in its day on the block.

The eclectic nature of the businesses on the block shared with the soon-to-open Fresh & Easy Express store actually are a pretty good depiction of the Hermosa Beach neighborhood itself, which is, well ... eclectic.

The demographic is mostly young. But there are also a number of older, long-term residents in the area, including a few folks who still call themselves hippies.

It's also fairly bohemian or hipster if you're looking for a lifestyle generalization.

There are also numerous singles and young couples in the neighborhood, which is highly dense and filled with apartment complexes and condominiums.

Our four-plus years of research and reporting on Tesco's Fresh & Easy shows younger people, those about 35 and under, as well as singles, tend to be the demographic that thus far has taken to the Fresh & Easy format the most, from a demographic and lifestyle perspective.

Therefore, the demographic and lifestyle composition of the neighborhood could bode well for the Fresh & Easy Express, which is essentially a smaller - about 3,000 square-feet, as compared to 10,000 square-feet - and edited - about 2,500-2,700 SKUs, as compared to about 5,500 SKUs - version of the 10,000 square-foot standard-version Fresh & Easy stores.

The area isn't an inexpensive place to live however.

Housing costs and rents in Hermosa Beach are a bit less than is the case in nearby Manhattan Beach (where Fresh & Easy has a store), for example.

But Hermosa Beach is only affordable from the perspective of what people living in coastal Southern California consider "affordable" to be. As an example, If you're reading this and renting a two bedroom apartment in metro Phoenix, Arizona (or some place similar), multiply what you're paying by a factor of around three.

What the neighborhood doesn't have much of is foot-traffic. Rather, the traffic in and around the block where the future Fresh & Easy Express store will open at Pacific Coast Highway and 8th Street, on January 8, 2012, is mostly automotive.

The 'Express' market will front the PCH, as you can see in the photo above. But there's also an entrance on 8th Street, where there's a small parking lot, pictured below.

There's no on-street parking to speak of either on 8th Street (a few spaces on one side of the street is all) or on the PCH. Therefore, the small parking lot next to the Fresh & Easy Express store on 8th Street is about it on what is a very auto-traffic heavy block.

These same tight space conditions might also make food and grocery deliveries to the 'Express' store a bit of a challenge. The earlier in the morning the better would probably be a good move.

The Hermosa Beach neighborhood isn't a food desert.

There's a Ralphs' Fresh Fare supermarket, for example, along with a big CVS Pharmacy drug store, which has a large selection of groceries, perishables and frozen foods (and liquor, beer and wine) but no fresh foods like meat or produce, and a 7-Eleven convenience store, all a couple to a few minutes drive from the Fresh & Easy Express location at Pacific Coast Highway and 8th Street.

Additionally, there's a Whole Foods Market store about 10 minutes away by car from Pacific Coast Highway and 8th Street, along with a couple other grocery stores a 10-15 minute drive away.

The Hermosa Beach Fresh & Easy Express set to open January 11 is one of four 'Express' format stores Tesco's Fresh & Easy Neighborhood Market plans to open in early 2012, as we reported and detailed in this story on November 15, 2011: Fresh & Easy Neighborhood Market to Open 20-Plus New Stores in Early 2012 - We Have What's Not in the Press Release.

The other three Fresh & Easy Express stores with planned early 2012 openings are in Los Angeles, Burbank and Laguna Niguel. The addresses of those stores are in the story linked above.

Tesco's Fresh & Easy Neighborhood Market opened its first 'Express' store at La Cienega Boulevard and 18th Street in Los Angeles November 2, 2011.It's the only Fresh & Easy Express unit currently open.

In addition to the La Cienega store, we've identified the addresses of six more future Fresh & Easy Express stores - the three noted earlier set for early 2012 openings, plus two more, which we listed in this November 23, 2011 story: Tesco and its Fresh & Easy Chain Hoping 'Seven' is the Lucky Number For 'Fresh & Easy Express.'

There are also photographs of the Burbank Fresh & Easy Express, construction in progress, in the November 23 piece.

Back at Pacific Coast Highway and 8th Street, where the Fresh & Easy Express store will soon open in the former furniture store building, we don't see a whole lot of retail synergy coming to the grocery market from its immediate neighbors - Sassy's, The Tender Box and Learned Lumber - although one can imagine that after spending time shopping in any or all three of the stores one might have worked up a bit of a thirst or hunger.

Conversely, we doubt if the Fresh & Easy Express will bring much new business to Sassy's, The Tendor Box and Learned Lumber, since all three stores tend to be what retail experts call destination stores.

The lumber yard, for example, tends to deal primarily with contractors and local handymen rather than off the street trade, although its probable that after loading a truck with lumbar a contractor might venture over the the Fresh & Easy Express for a bite to eat and a beverage.

And we could be completely wrong about synergies in the case of Sassy's and the Tender Box. Both stores cater to women as well as men, for example - and it is a fact women shop for groceries at a much higher percentage than men do. So perhaps the close proximity of the three stores will lead to a bit of synergy for the two stores plus the Fresh & Easy Express.

But, in a less tongue-in-cheek analysis, based on the demographics of the neighborhood, the potential for the Fresh & Easy Express store doing well in the area is fairly high. For example, the large selection of ready-to-eat and ready-to-heat fresh-prepared foods available in the "Express' format stores should be particularly popular with the young and single residents in the Hermosa Beach neighborhood.

Conversely, the major drawback for the Fresh & Easy Express store at Pacific Coast Highway and 8th Street in Hermosa Beach is the lack of adequate parking. The nearby Ralphs, CVS drug store, 7-Eleven and Whole Foods Market store all have large parking lots, for example. And since the neighborhood is high on auto transit and low on foot-traffic, having adequate parking is a very important variable.

But Fresh & Easy Express is a eclectic little store - its small but stocked with plenty of ready-to-eat and heat foods; has an in-store bakery; offers an assortment of groceries, perishables, frozen foods and non-foods items; sells beer and wine; and serves fresh coffee by the cup - and the commercial strip where it's located on Pacific Coast Highway and 8th Street offers an eclectic mix of retail, to say the least. So perhaps the little grocery store will fit right in, sharing the block with Sassy's, The Tender Box and Learned Lumber, in a Hermosa Beach bohemian kind of way.

[Editor's Note: Photo Credit - Fresh & Easy Buzz. The photographs were taken by a Fresh & Easy Buzz correspondent on 12/07/11. Click on the photos to enlarge.]

Related Stories

November 23, 2011: Tesco and its Fresh & Easy Chain Hoping 'Seven' is the Lucky Number For 'Fresh & Easy Express'

November 2, 2011: Open in Los Angeles: A Look at the First 'Fresh & Easy Express' Store

November 1, 2011: Analysis: Tesco Opens First 'Fresh & Easy Express' Store Tomorrow in Los Angeles ... So What ... ?

July 30, 2011: First 4,000 Sq. Ft. Fresh & Easy Neighborhood Market 'Express' Store Set to Open in Los Angeles' San Pedro Community This Year

January 23, 2011: Tesco's Fresh & Easy Neighborhood Market Looking For Locations For New, Smaller-Format 4,000-to-5,000 Square-Foot Stores

Tesco Reports 11.9% Q3 Comp Store Sales Gain for Fresh & Easy ... But On Heavy Discounting

2011-12-08T16:01:00.000-08:00

News & Analysis

United Kingdom-based Tesco said today comparable-store-sales (called like-for-like in the UK) for its El Segundo, California-based Fresh & Easy Neighborhood Market chain increased by 11.9% for its 2011/12 fiscal year third quarter, which ended November 26, 2011.

The 11.9% comparable-store-sales gain is slightly less than the 12.4% Tesco reported for Fresh & Easy for its fiscal second quarter, which ended August 27.

Comparable or same-store-sales is a key indicator for retailers because the metric only includes stores open a year or more.

In contrast, overall sales growth as a metric includes new stores opened during a given quarter. Tesco reported a 29.2% overall growth rate for the third quarter for Fresh & Easy Neighborhood Market.

When looking at Fresh & Easy Neighborhood Market, comparable store sales are what's key because the numerous new Fresh & Easy stores Tesco opens tends to make the overall sales number meaningless when it comes to gaining any real understanding of the 184-store U.S. grocery chain's sales performance.

The 11.9% comparable sales growth number is a good one for Tesco's Fresh & Easy. It also continues a solid comparable sales growth trend for the grocery chain, which has turned in double-digit comparable sales increases over the last few quarters.

However, a considerable percentage of that double-digit comparable sales growth is due to heavy discounting by the chain during the third quarter, which included distributing numerous 20% off discount store coupons, along with the discounts offered customers with the new Fresh & Easy "Friends" reward card which was launched in early October, in our analysis.

Fresh & Easy's loyalty/rewards card gives customers points for certain purchases which they can redeem for cash discounts. For example, 500 points equals five dollars off any given total purchase. Fresh & Easy gave (and is still offering as an intro) shoppers 500 free points or $5 on their cards just for signing up.

Philip Clarke, Tesco's CEO, said today U.S. like-for-like revenue rose almost 30% in the "week around Thanksgiving," which "demonstrates the business is really gaining traction with customers."

What Clark didn't mention though - and what you aren't likely to read elsewhere because we track such things closely at Fresh & Easy Buzz - is that from November 2 through the week leading up to Thanksgiving, Fresh & Easy Neighborhood Market distributed five of its 20% off - $10 off purchases of $50 or more, 6 off $30, $5 off $25 - store coupons via its "friends of fresh & easy" e-mail-based flyer. The coupons are also easily available online by simply typing "fresh & easy coupons" into Google or one of the other search engines.

Fresh & Easy distributed the 20% off store coupons online on the following dates leading up to Thanksgiving on November 24: November 2, 9, 16, 18 and 22.

Fresh & Easy Neighborhood Market also distributed the coupons in its weekly advertising circulars, which are direct mailed to consumers homes.

Employees at a number of Fresh & Easy stores we visited in the three weeks before Thanksgiving were also handing out store coupons to shoppers. Additionally, a number of our correspondents reported in the same thing.

Such discounting, which has helped Tesco achieve double-digit same-store sales with Fresh & Easy for a number of quarters now, does little to help the U.S. chain's trading margin, which Tesco must increase significantly if, as CEO Philip Clarke says will happen, it's going to break-even with Fresh & Easy Neighborhood Market by the end of its 2012/13 fiscal year, which ends in February 2013.

As noted earlier, the 11.9% comparable-store-sales metric for Fresh & Easy is a good one.

The big question though is - at what cost (as in margin)?

Tesco doesn't report metrics like margin - or even sales and profit/loss - for Fresh & Easy for its third quarter.

Therefore, we can't know what that cost might be. For example, did Tesco improve its poor trading margin (negative 35% at fiscal half year) with Fresh & Easy during the fiscal third quarter? Conversely, Did the heavy discounting make that poor trading margin even worse? Did it stay the same?

We won't know any meaningful about whether or not the retailer improving its trading margin and is decreasing its loss with Fresh & Easy until Tesco reports its fiscal 2011/12 full year financials in April 2012. The fiscal year is over at the end of February 2012.

On October 5 of this year Tesco reported a fiscal 2011/12 half-year loss of $112 million for Fresh & Easy, on sales of $470 million. The loss is 21-23% (depending on how recorded) lower than the one iy reported for Fresh & Easy for the same period in the previous fiscal year.

Meanwhile, Tesco today reported its fourth-straight quarter of sales declines at home in the UK, which accounts for nearly 70% of the global retailer's revenue. Tesco has operations in 14 countries.

Sales at Tesco's UK stores open at least a year dropped 0.9 percent, excluding fuel and value-added tax, in the fiscal third quarter ended Nov. 26, the retailer reported today.

But despite the decline in sales at home, Tesco reported an overall increase in corporate revenue of 7.2%, including fuel (7.3% at constant exchange rates). and 5.4%, excluding fuel (5.5% at constant exchange rates) for its fiscal third quarter.

[You can view Tesco's fiscal 2011/12 third quarter reporting here.]

The fiscal fourth quarter, which ends in February, is a crucial period for Tesco with its Fresh & Easy chain, which is something we'll be offering analysis on in upcoming stories.

Related Stories

November 27, 2011: More Reshuffling: Number Two Marketing Exec Follows CMO Uwins Out the Door at Tesco's Fresh & Easy Neighborhood Market

November 18, 2011: Fresh & Easy Neighborhood Market Combining Big Seasonal Foods Assortment With Promos and Discounts to Lure Holiday Shoppers

November 10, 2011; Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market

October 10, 2011: Gov. Signs AB 183: End of Self-Service Checkout Only in California For Fresh & Easy Neighborhood Market if Stores to Still Sell Alcohol

Bad Timing With New Law Effective January 1, 2012: Fontana, California Fresh & Easy Store Cited For Allegedly Selling Alcohol to Minors

2011-12-08T15:57:00.000-08:00

News & Analysis

The Fresh & Easy Neighborhood Market store at 16049 Baseline Boulevard in Fontana, California is one of 20 retail stores in Southern California's San Bernardino County that were issued citations by the California Alcohol Beverage Control Board (ABC) this past week for allegedly selling alcoholic beverages to minors.

The citation issued to the Fresh & Easy store in Fontana was the result of a regional sweep conducted by the state's alcoholic beverage sales regulatory agency and the San Bernardino County Probation Department, according to a spokesperson for the ABC.

The 19 other retail stores are in the cities of Ontario, Upland, Redlands, Montclair, San Bernardino and Rancho Cucamonga, according to the ABC and the San Bernardino County authorities.

Self or assisted service checkout at Fresh & Easy.

The citation comes at a particularly bad time for Tesco's Southern California-based Fresh & Easy grocery chain because AB 183, which bans the sale of alcoholic beverages at self-service checkouts in retail stores, goes into effect January 1, 2012.

We nicknamed the self-service checkout booze ban bill the "Tesco Fresh & Easy Law" because Fresh & Easy Neighborhood Market is the only grocery chain in California that offers self-service checkout only in its stores.

All the other chains and independent grocers in the Golden State either offer full-service checkout only or offer a mix of full and self-service.

El Segundo, California-based Fresh & Easy Neighborhood Market has been struggling to figure out a way to comply with the law without having to add some sort of full-service checkout component to what it calls its "assisted checkout" system in its 135 stores in California, according to our sources who are familiar with the discussions.

There are 184 Fresh & Easy stores in the Golden State. The remaining 49 stores are in metropolitan Las Vegas, Nevada (21 units) and metro Phoenix, Arizona (29 units).

Fresh & Easy calls its self-service checkout system "assisted checkout" because if asked, store workers will assist customers with the checkout process. The employees also regularly assist customers when problems occur with the self-checkout process.

Additionally, the self-service checkouts at Fresh & Easy don't allow customers to fully self-scan alcoholic beverage items.

Instead, the product UPC code numbers are programmed into the computer, so when a customer scans an item the system flags it, stopping the self-checkout process. A store worker must then come to the checkout and check the customer's identification card, which the grocer does for those a clerk believes to be 40-years-old or younger. If all is well, the clerk then punches a special code in the register, which then allows the customer to complete his or her self-checkout.

The intent of AB 183 however is that the new law will require a store worker to handle any and all checkout transactions involving alcohol from start to finish, in a face-to-face manner with the customer.

Fresh & Easy has two types or versions of self or assisted service checkout lanes in its stores.

The first type, which has shorter checkstands, isn't monitored regularly by store workers.

The second version though, which features longer checkout stands with conveyor belts, is monitored regularly by one or more store clerks, who linger in the area to assist customers.

It's this second system that Tesco's Fresh & Easy has considered tweaking a bit so that it might meet the requirements of the self-service alcohol beverage self-checkout ban law when it goes into effect less than a month from now, according to our sources.

For example, at the larger conveyor belt-equipped checkouts where store employees are always present and monitor the checkout process, Fresh & Easy could have the employees conduct any and all customer transactions that involve the purchase of alcoholic beverages.

It's possible, although not fully-clear, that if the grocer had a store worker conduct the entire transaction from start to finish, it might meet the legal language of AB 183, although it wouldn't likely meet the intent of the legislation's author, Assemblywomen Fiona Ma (Democrat-San Francisco), and the various supporters of the law.

Her intent behind the legislation, if not spelled out explicitly in the bill's language, is that retail stores would need to offer both full and self-service checkout under the new law.

However, the definition of full-service checkout isn't without some ambiguity in AB 183, based on our close reading of the legislation. Therefore it is possible, in our analysis, that a version of Fresh & Easy's monitored self/assisted checkout could qualify under the law, if not based on the intent of the legislation, perhaps on the actual language of the bill.

The other alternative for Fresh & Easy would be to offer at least one full-service checkout in each of its stores in California, which is something we suggested in early 2008 it do for reasons having nothing to do with any legislation in California, which wasn't yet introduced at the time, designed to ban alcohol sales at self-service checkouts in retail stores.

We stress we're not saying Fresh & Easy Neighborhood Market has decided to go with the option we are reporting on. Rather, based on our reporting, it's one scenario the grocery chain is considering because if possible it wants to retain its self/assisted checkout system, even if doing so requires some modifications, rather than add fell-service checkouts to the California stores, according to our sources.

Meanwhile, although a retailer being issued a citation for allegedly selling alcohol to minors isn't a capital offense, it is a serious one, albeit not completely uncommon.

However, receiving such a citation from authorities coming so close to the self-service checkout alcohol sales ban law going into effect is particularly bad timing for Tesco's Fresh & Easy.

The California ABC is aware the grocer offers self-service checkout only in its stores, and it plans to monitor Fresh & Easy closely once the law goes into effect.

In addition, numerous California law enforcement agencies were supporters of AB 183, and as a result plan to step-up monitoring of the checkouts once the law goes into effect in January 2012.

The law has fines attached to it for retailers that are caught allowing alcoholic beverage sales at self-service checkouts in their stores.

We've talked to staff members of the author and co-authors of AB 183, who all say the intent behind the law is to require face-to-face transactions between customers and store workers whenever alcohol is purchase in a retail store.

With January 1, 2012 coming fast, Tesco's Fresh & Easy will soon need to announce how it's going to comply with the new law.

Waiting until the last minute to do so - and the last minute is pretty much here - is a mistake because if what the grocer does to comply with AB 183 runs counter to the intent of Ma and her supporters, it could become a major public relations disaster for the grocery chain, which is the last thing it needs as it attempts to break-even (Tesco lost $112 million on Fresh & Easy for the first half of its fiscal year ended in August) by the end of 2012.

Related Stories

October 10, 2011: Gov. Signs AB 183: End of Self-Service Checkout Only in California For Fresh & Easy Neighborhood Market if Stores to Still Sell Alcohol

September 9, 2011: 'Son of Tesco Fresh & Easy Law': Self-Service Checkout Booze Ban Bill Passes California State Senate; Headed to Governor's Desk For Action

September 7, 2011: Self-Service Checkout Booze Ban Bill Fails in California Senate First Time Around; 'Missing Seven' Dems Hold Key to Passage By Friday

September 6, 2011: California State Senate Set to Vote on Self-Service Checkout Booze Ban Bill This Week

August 20, 2011: 'Son of Tesco Fresh & Easy Law': Self-Service Checkout Booze Ban Bill AB 183 Passes Out of California Senate Appropriations Committee; Headed For Senate Floor

July 27, 2011: 'Son of Tesco Fresh & Easy Law' Moving Through State Senate: Will California Determine Fresh & Easy Neighborhood Market's Checkout Scheme?

June 4, 2011: 'Son of Tesco Fresh Easy Law': Self-Checkout Booze Ban Bill AB 183 Sails Through California State Assembly; State Senate Next Stop

May 11, 2011: ‘Son of Tesco Fresh & Easy Law' - California Assembly Appropriations Committee Passes Self-Checkout Ban Bill AB 183 By 12-4 Margin

May 6, 2011: 'Son of Tesco Fresh & Easy Law': California State Assembly Appropriations Committee Hearing For AB 183 Cancelled

May 4, 2011: 'Son of Tesco Fresh & Easy Law': Strong Chance California Legislation to Prohibit Alcohol Sales at Self-Service Checkouts Could Pass This Year

September 30, 2010: Fresh & Easy Neighborhood Market Hopes Governor Schwarzenegger Can Find His Veto Pen Before Midnight Tonight

September 28, 2010: Fresh & Easy Neighborhood Market Hoping Governor Schwarzenegger Prefers His Veto Pen When it Comes to AB 1060

September 25, 2010: Future of Fresh & Easy Neighborhood Market's Self-Service-Only Checkout in California Up to Governor Schwarzenegger

August 24, 2010: California State Senate Sends Bill to Governor That Could End Self-Service-Only Checkout at Fresh & Easy Neighborhood Market

August 15, 2010 piece : Bill to Ban Alcoholic Beverage Sales at Self-Service Checkouts Would End 'Self-Service Only' at California Fresh & Easy Neighborhood Market Stores

July 14, 2008: Breaking News & Analysis: CA Assemblyman Introduces 'Tesco Fresh & Easy Law' to Ban Stores With Self-Checkout-Only From Selling Alcoholic Beverages.

Dollar General Jump-Starts California Launch: Taking Over 5 Centro Mart Supermarkets For Early 2012 Openings

2011-12-05T19:12:00.000-08:00

Related Story: February 2, 2011: Centro Mart-Stockton Chairman, Veteran California Grocer Jimmy Lam Has Died.

Tennessee-based dollar-store-dynamo Dollar General plans to hit the ground running hard and fast when it launches both its traditional dollar format stores and its small-box Dollar General Market grocery stores in California next year.

To jump-start its California launch, 38-state, 9,813-store Dollar General has done a deal with Centro Mart, a 65-year-old independent supermarket chain based in Stockton, California, in which Dollar General will take over five of the grocer's seven stores - four in Stockton and one in the San Francisco Bay Area city of Brentwood.

Centro Mart CEO Mel Young says the Stockton-based chain, which until his death earlier in January was run for decades by veteran California grocer Jimmy Lam (see the related story at top), will close the five stores at the end of this month. It will keep two stores, a Centro Mart banner grocery store in the East Bay Area city of Oakley and a supermarket it operates under the Apple Marketplace banner in Lodi, which is near Stockton.

Dollar General will lease the five Centro Mart stores. Its not acquiring Centro Mart.

Dollar General will convert four of the five Centro Mart stores into Dollar General Market grocery stores, which feature fresh foods as well as groceries, and the remaining supermarket will become one of its traditional dollar stores, according to Todd Vascos, Dollar General's executive vice president and chief merchandising officer.

Vascos says Dollar General will begin converting the Centro Mart stores shortly after they are closed, targeting all five for spring 2012, most likely March-April, openings.

Dollar General announced its plans to enter Nevada and California earlier this year. So far the retailer has opened five of its Dollar General Market grocery stores in metro Las Vegas, Nevada.

The retailer currently operates 62 Dollar General Market stores in the U.S.

The Nevada stores are the first Dollar General Market stores the retailer has opened since 2007. Since then it has revamped the format, making numerous changes to the original version.

Centro Mart's Young says Dollar General approached the grocer about acquiring the stores earlier this year.
He says Centro-Mart agreed to the deal in part because of long-time CEO Jimmy Lam's death earlier this year, along with the heavy competitive climate in Northern California, which has made it tough for the independent chain to compete.

Dollar General is also looking for additional locations in Northern California for both its traditional dollar stores and its Dollar General Market.

Our commercial real estate sources, many of whom are regular readers of Fresh & Easy Buzz, tell us the retailer is looking in the San Francisco Bay Area, Sacramento metro region, the Central Valley and farther north for locations, including paying special attention to the numerous vacant big and small-box store buildings currently on the market.

The dollar store retailer's plans also include Southern California, for both its dollar stores and Dollar General Market grocery stores. Like in the north, our commercial real estate sources tell us Dollar General is looking for numerous locations in the region.

Dollar General reported its third quarter financials today.

In a conference call reporting the results, CEO Richard Dreiling didn't address the Centro-Mart deal specifically, but said the retailer plans to open about 40 Dollar General Market grocery stores nationally in 2012. That number includes the five stores in Northern California, plus additional units in "new and existing markets."

Dollar General is entering into a short-term lease for a distribution center near Bakersfield, California which will serve the new stores in California and Nevada, along with existing stores in Arizona, Dreiling said today. The facility will open in the first half of 2012, he said. That timing fits with the April-May planned opening of the five to-be-converted Centro-Mart stores in Northern California.

Dreiling also said today that a major effort with Dollar General Market in its newest two markets, (Nevada and California) as well as nationally, will be to focus on food dessert regions where residents are underserved by grocery stores offering fresh foods and groceries at reasonable prices.

The CEO also said today that Dollar General is expanding its perishables offering in both the grocery markets and in its traditional dollar format stores.

"Fresh and refrigerated foods helped us drive customer traffic and increase basket size by serving a greater share of our customers' needs," Dreiling said. "We will continue to take an aggressive stance towards improving our in stock position. This is a never ending effort which requires focus on store-level perpetual inventory accuracy as well as improved execution across ordering, fulfillment, stocking and delivery."

CEO Dreiling also said today that private brand expansion is a key part of the Dollar General's ongoing strategy, saying the retailer is expanding product sourcing to new categories and importing from new countries. "To further expand our private brands we’ll be adding 150 new SKUs as we move into new categories," he said.

Dollar General reported fiscal 2011 third quarter (13 weeks ended October 28, 2011) net income of $171 million, compared to net income of $128 million in the third quarter (13 weeks) of fiscal 2010.

Excluding expenses in the 2011 third quarter of $0.9 million ($0.7 million, net of income taxes) relating to a secondary offering of the company's common stock by certain selling shareholders and excluding losses in the 2010 third quarter of $8 million ($5 million, net of income taxes) relating to the early repayment of long-term obligations, Dollar General's net income increased 29 percent, according to the retailer.

Consumable product sales continued to increase at a faster pace than non-consumables in Dollar General's third quarter, with the strongest growth across the food and snack categories, according to CEO Drieling. "Salty snacks, carbonated beverages, coffee and milk were the largest contributors," he said today.

The fact consumable sales are outpacing all other categories for Dollar General is in part what's making the retailer high on growing its Dollar General Market grocery store format, including in California, which with nearly 40 million residents has the highest population in the U.S.

Dollar General's entry into California next year adds yet another competitive layer to what already is a highly competitive food and grocery retailing scene, from Southern California and the Central Valley, to Northern California, where the retailer will open its first five grocery stores in the soon to be former Centro-Mart locations in early 2012.

The Tesco Christmas Dinner Pizza - A Festive Feast Without the Fork

2011-12-05T16:21:00.000-08:00

Private Brand Showcase

United Kingdom-based Tesco, which owns 184-store El Segundo, California-based Fresh & Easy Neighborhood Market, is having trolley carts full of fun in Britain this year developing and merchandising limited edition private brand food products for the Christmas holiday season.

For example, yesterday (read here) we wrote about Tesco's limited edition Tesco Finest brand "Crispmas Dinner" collection, a line (range in British industry terminology) of Christmas dinner-inspired crisps (potato chips) in flavors like mince pie and roasted turkey with stuffing, which it's now offering for sale in its stores in the UK, for the Christmas and New Years' the holiday season.

But saying "Merry Crispmas" to shoppers with its "Crispmas Dinner" snack crisp collection is merely the tip of the festive feast-inspired iceberg of creativity coming from Tesco's private brand product developers.

Enter Tesco's first-ever Tesco private brand Christmas dinner pizza (pictured at top and below), which the retailer is introducing in its stores in the UK this week.

The chilled, ready-to-heat pizza, which is a carnivore's delight, features a turkey, sage and onion stuffing, and is piled high with sausage, smoked bacon and mozzarella cheese.

Here's how chilled foods range product developer Louise Sampson, the proud parent of the turkey and pork-packed Christmas dinner pizza, describes the Tesco holiday creation: "We set out to create a pizza for all those people who simply can’t wait until Christmas Day for the festive feast and wanted a sneak taste beforehand. We have created a pizza worthy of the big occasion with a stone-baked thin base which allows the toppings to take centre stage."

The timing of the Christmas dinner pizza could be spot on for Tesco.

Why? Because pizza has recently become the most-popular prepared foods item (chilled and frozen) sold in UK supermarkets.

For example, in 2010 British consumers bought a total of 466 million pizzas from UK stores, as compared to a mere 156 million curries, according to data compiled in August of this year by Kantar Worldwide's UK office.

Tesco has been taking advantage of the booming pizza market in the UK - its corporate spokesperson says over the last 18 months its been overhauling, upgrading and developing new pizza varieties, and now offers 119 different refrigerated and frozen pizza varieties in its stores there.

Tesco is the leading food, grocery and general merchandise retailer in the UK.

It has an about 30% market share, according to research firm Kantar Worldwide, which is nearly as much as the number two and three chains, Walmart-owned ASDA and Sainsbury's, have combined, which is about 36%. Number four supermarket chain Morrisons has about 13% .

Together the four supermarket chains are refereed to in the UK as the "Big Four," largely because together they account for nearly 80% of all the food and groceries sold in the nation.

The Tesco Christmas dinner pizza not only is a creative seasonal item for Tesco, it also allows for plenty of food product fun and buzz creation. We're writing about it after all.

The idea of taking the makings a traditional Christmas dinner and putting it on a pizza might seem odd at first. However, with the exception of the turkey and stuffing, the other items - turkey, ham, bacon, onions and cheese - are pizza-topping mainstays. In the case of turkey, we're surprised it isn't used more often than is it as a pizza-topping, particularly since roasted chicken has become a popular choice for more upscale pizza offerings.

In our analysis and opinion, Tesco's Christmas dinner pizza could serve two classes of consumer, those, like Louse Sampson opined about, who want an early taste of what will be their traditional Christmas dinner to come in a few weeks, and those who, not wanting to go to all the work of shopping for and preparing a traditional Christmas dinner for Christmas Day, instead buy a few Tesco Christmas dinner pizza's along with their favorite beverages and keep it simple, enjoying a festive feast without all the hassle - and without the fork.

Suggestion: Tesco's Fresh & Easy Neighborhood Market chain should jump on the Christmas dinner pizza bandwagon and whip up a limited edition version of its own at its kitchen facility in Riverside County, California.

Why? No U.S. grocery chain offers such an item, for one. But even more so, it would be a fun and attention-getting creation (and in our estimation perhaps even a good seller) - the Fresh & Easy Christmas dinner pizza - for the grocer this Christmas and New Years' holiday season.

The clock is ticking. But there's still time if the Fresh & Easy fresh-prepared foods' product development team obtains the recipe from the mother ship in the UK this week and gets producing, post-haste.

Photo credit: SMS, exclusive to Fresh & Easy Buzz.

Recent Private Brand Showcase stories

December 4, 2011: 'Merry Crispmas' ... From Tesco

December 1, 2011: Master Chocolate-Maker Tells the Story Behind Fresh & Easy Neighborhood Market's Holiday Confections

November 14, 2011: Safeway Puts its Brand on Ice in San Francisco For the Holidays

November 13, 2011: Trader Joe's Introduces 'Wasabi Arugula' ... Minus the Wasabi

November 9, 2011: Glatt to Meet You Paisan - Kosher 'Meats' Italian at Mollie Stone's Markets

October 28, 2011: October 28, 2011: Move Over Chipotle - Fresh & Easy Neighborhood Market Introduces its Own Brand of Burrito Bowls

Readers: Click here to read all past stories in our Private Brand Showcase feature.

'Merry Crispmas' ... From Tesco

2011-12-04T17:17:00.000-08:00

Private Brand Showcase

Tesco is wishing shoppers in the United Kingdom a "Merry Crispmas."

The UK-based global retailer has taken some of the most iconic foods and desserts associated with Christmas dinner - mince pie, turkey, stuffing and cranberries - and used them as the flavor inspirations for its Tesco Finest private brand "Crispmas Dinner" collection, which is a limited edition line (range in British terminology) of sweet and savory crisps (potato chips to uninitiated Americans) that it's introducing in its stores in Britain for Christmas and New Years.

The "Crispmas Dinner" collection includes mince pie flavored crisps, which Tesco is billing as the "first ever" sweet crisp in Britain. The hand-cooked mince pie crisps are seasoned with dried fruit, spices and buttery pastry, according to Chris Gee, the crisps' buyer at Tesco in the UK.

In addition to the mince pie flavored snack chips, the Tesco Finest brand crisps also come in three other varieties: roast turkey with stuffing and onion gravy, spiced gammon, and Wensleydale and cranberry cheese flavor.

Gammon is pork, as in Christmas dinner ham. Specifically, the meat comes from the hind-leg of the pig, which differentiates it from bacon. Wensleydale is an aged cheese produced locally in Wensleydale, North Yorkshire, England.

Tesco Finest is the United Kingdom-based global retailer's premium food brand, which is uses on fresh foods, perishables, frozen foods and grocery products.

Tesco, which owns 184-store Fresh & Easy Neighborhood market in the U.S. (California, Nevada and Arizona), is the UK's leading food and grocery retailer and the third-largest retailer in the world, after number one Walmart Stores, Inc. and Carrefour of France. The UK, where it has 3,000-plus stores, accounts for about 70% of Tesco's overall global sales. It has operations in 14 countries.

The Christmas dinner-inspired crisps also have multiple local angles, in addition to the use of Wensleydale cheese, according to Tesco. For example, the snack chips, which are produced in Devon UK, are all made from Hermes variety potatoes, which are grown in Cornwall and Hamshire in the United Kingdom.

"These limited edition crisps have been launched with the party season in mind – we think people will be able to have a lot of fun with them," says snack buyer Gee. "We’ve worked with top crisp-making experts to make sure they taste as special as you'd expect of the grandest meal of the year.

Flavored (including exotic flavors) potato, vegetable and other types of chips and crisps are currently very popular in the U.S., Europe, Asia, Africa and elsewhere throughout the world.

For example, the Terra Chips brand, which features numerous flavors and varieties of potato and vegetable chips, is extremely popular in the U.S. Some of the more exotic chip flavored we've spotted in stores throughout the world include: shrimp, Marmite, horseradish, pickled onion and many others.

Last year, Tesco's El Segundo, California-based Fresh & Easy Neighborhood Market chain introduced its own semi-exotic crisp variety, Crunchy Plantain Crisps, which we wrote about here - October 16, 2010: Fresh & Easy Neighborhood Market 'Bags' the Humble and Nutritious Plantain For A New Snack Chip Item.

This exotic flavor growth-trend in the snack chip or crisp category, combined with the fact that in the case of mince pie, which we're told is thus far the top-seller in the Tesco Finest limited edition crisps' range, is about as British as mum and, well ... mince pie when it comes to Christmas, leads us to the reasoned conclusion that Tesco has hit a home run with its "Crispmas Dinner" collection.

The holiday season crisps are creative (the concept, flavors and positioning), fun (allow for plenty of word play) and in the best spirit of branding tell a story - that story being the taking of some of the most iconic foods of Christmas and using them as the flavor inspirations for a popular snack item - crisps - giving them a holiday season flavor and marketing spin.

And the tag-line potential isn't bad either - "Merry Crispmas."

Recent Private Brand Showcase stories

December 1, 2011: Master Chocolate-Maker Tells the Story Behind Fresh & Easy Neighborhood Market's Holiday Confections

November 14, 2011: Safeway Puts its Brand on Ice in San Francisco For the Holidays

November 13, 2011: Trader Joe's Introduces 'Wasabi Arugula' ... Minus the Wasabi

November 9, 2011: Glatt to Meet You Paisan - Kosher 'Meats' Italian at Mollie Stone's Markets

October 28, 2011: Move Over Chipotle - Fresh & Easy Neighborhood Market Introduces its Own Brand of Burrito Bowls

Readers: Click here to read all past stories in our Private Brand Showcase feature.

The 'Earth Fairy' Arrives at Earth Fare to Spread Some Down-to-Earth Holiday Cheer

2011-12-02T21:46:00.000-08:00

Meet the Earth Fairy! (teaser) from Earth Fare on Vimeo.

Turkey and Technology -- Grocers, new technologies and holiday promotions

There's arguably no grocer that's better at using video technology and social media to help tell its story, build its brand and promote its stores than North Carolina-based healthy, natural and organic foods-focused supermarket chain Earth Fare, which has 28 stores in North Carolina (9 units), South Carolina (4), Alabama (4), Tennessee (4), Ohio (4), Georgia (2) and Florida (1).

This week Earth Fare launched a new video to introduce the arrival of the Earth Fairy, who also debuted her own Twitter feed today, @TheEarthFairy, where she plans to bring holiday deals, freebies, tips and more to shoppers via the popular social media site.

The video (posted at top) introducing The Earth Fairy is actually a teaser for her upcoming music video titled: "Did You Get What I Got," which breaks December 12, 2012.

Earth Fare says its Earth Fairy holiday goodies maven will be visiting each of its stores, from Monday, December 5 to December 12, bringing those holiday deals, freebies, tips and cheer to shoppers in-person.

We're wondering if Jack is excited to be sharing the video limelight with the Earth Fairy for the December holiday season. Jack (Murphy) is the CEO of Earth Fare and the star of an ongoing series of videos produced by the grocery chain, like the two spots he was featured in here and here in November for Thanksgiving. In the videos the CEO always goes by just plain old Jack.

Jack's been mum so far. But the Earth Fairy just arrived. Therefore, we suspect he may be weighing in with a new Christmas holiday season video soon, perhaps even mentioning the Earth Fairy and her arrival at the fast-growing, down-to-earth natural and organic foods supermarket chain he runs.

Meanwhile, the Earth Fairy is yet another example of Earth Fare's creative use of inexpensive video technology to create excitement among shoppers, help build its brand and promote its stores, in this case for the December holiday season, along with using social media - allowing the Earth Fairy to create her very own Twitter feed - as part of the marketing process and program.

Related Stories in our Turkey & Technology Series

December 1, 2011: Master Chocolate-Maker Tells the Story Behind Fresh & Easy Neighborhood Market's Holiday Confections

November 29, 2011: Raley's Combining High-Tech and High-Touch Tools to promote its Stores For the Holidays

Master Chocolate-Maker Tells the Story Behind Fresh & Easy Neighborhood Market's Holiday Confections

2011-12-01T21:59:00.000-08:00

Fresno, California-based master chocolate-maker Guy Debbas tells the story behind some of Fresh & Easy's private brand holiday chocolate items in the two-minute video above.

Turkey and Technology -- Grocers, new technologies and holiday promotions

Tesco's Fresh & Easy Neighborhood Market has combined the age-old tradition of storytelling with digital-video technology (YouTube in this case) to offer shoppers a two-minute look behind the company that's crafting some of its fresh&easy private brand holiday confections.

The video features master chocolate-maker Guy Debbas, who owns artisan chocolate-maker Go Pure Foods in Fresno, California, telling his story, and the story behind how he makes a variety of confectionery products for Fresh & Easy.

In the video, Debbas steps away from his chocolate factory in Fresno after offering a quick tour of the facility and takes a trip to one of Fresh & Easy's seven stores in the Fresno area, where he talks to some of the store's customers about the sweet treats he crafts for the 184-store fresh food and grocery chain, along with offering the shoppers a free taste or two on his dime.

Consumers are increasingly interested in where the food they eat comes from, regardless of the product's brand.

Is it locally-grown or produced? Is it imported from another county? If so, where? In the case of chocolates and coffee particularly, is it Fair Trade? Is it Organic? If not, are a lot of pesticides used in its production?

These are just a few of the numerous questions consumers are asking about the food products, including store brands, grocers are offering for sale.

When it comes to a food and grocery retailer's own-brand products, telling shoppers where the products and the ingredients used to make them come from and how they're produced can be even more important and significant since the names of the companies that produce grocers' private label brand products are generally treated as top-secret information, largely for competitive reasons by the retailers.

For example, Do you know the names of the numerous food companies who make your favorite Trader Joe's branded products? How about just the names of the producers of your two favorite TJ's branded items?

What about knowing the name of the company that produces Safeway Store's O' Organics organic olive oil and the scores of other products under the brand? Do you know? You most-probably don't. It's nearly top-secret. It's also not easy to find out from Safeway.

And, do you know the names of the food companies behind the many other fresh&easy private brand food and grocery products, other than those FResh & Easy Neighborhood Market has in the past highlighted in a similar storytelling way for marketing purposes?

Do you care if some are huge global food companies? Would it please you to know that many are entrepreneurial companies, like Fresno-based confection-maker Go Pure Foods?

Questions, questions.

Today consumers are demanding much more transparency from food retailers when it comes to their own brands. And smart retailers are using this to their advantage, telling the stories behind some of their private brand products, like Fresh & Easy Neighborhood Market is doing with its holiday confectionery items.

Storytelling is one of the most powerful marketing tools available to retailers, used well of course.

Video technology like YouTube provides retailers with an inexpensive way to tell those stories and potentially reach a whole lot of customers and potential customers, as the two minute video featuring chocolate-maker Guy Debbas telling the story behind some of Fresh & Easy Neighborhood Market's private brand holiday chocolates demonstrates.

Related Stories

November 29, 2011: Raley's Using High-Tech and High-Touch Tools to promote its Stores For the Holidays

November 18, 2011: Fresh & Easy Neighborhood Market Combining Big Seasonal Foods Assortment With Promos and Discounts to Lure Holiday Shoppers

Fresh & Easy Neighborhood Market, Others Eyeing Closing Andronico's Store on Telegraph Avenue in Berkeley, California

2011-11-30T09:12:00.000-08:00

Cars fill the parking lot of the Androncio's supermarket on Telegraph Avenue in Berkeley. The grocer is liquidating all of the merchandise in the store at deep-discounts prior to closing the store, most likely by the end of the month. Click on the photo above to enlarge it. Note the "store closing" sign on the store. [Photo credit: Fresh & Easy Buzz.]

Northern California Market Region Report
News/Analysis

On November 25, 2011 Renovco Capital, the new owner of Community Markets, announced it will close the store at 2655 Telegraph Avenue in Berkeley, California as part of its strategy to turn the once 14-store food and grocery retailer around, leaving it with just five stores in Northern California's San Francisco Bay Area.

[Read our 'The Insider' columnist's November 26 column: Andronico's to Close Another Store in Berkeley as Part of 'Comeback' Strategy for details. Also see what he wrote about Tesco's Fresh & Easy and Andronico's in this May 30, 2011 column: May 30, 2011: 82-Year-Old Grocer Andronico's Needs A Sugar Daddy of Sorts: 'The Insider' Suggest Tesco and its Fresh & Easy Neighborhood Market Might Fit the Bill.]

The Telegraph Avenue store is the second unit Andronico's has closed in Berkeley in as many months.

It's the third store the grocer has closed since July of this year.

Last month Andronico's closed a store on University Avenue in Berkeley. In July the retailer closed a store in Palo Alto.

Andronico's Community Markets started 2011 of with eight stores, down from a high of 14 units less than a decade ago. It now has five supermarkets - two stores in Berkeley and one unit each in San Francisco, Los Altos (South Bay Area) and San Anselmo (Marin County).

Renovco Capital bought 82-year-old Andronico's out of bankruptcy court of $16 million. (See the stories linked at the end of this piece for details.)

The closing of the Telegraph Avenue Andronico's supermarket, which has been a fixture at the location in Berkeley for many decades, offers a second store site opportunity for Tesco's Fresh & Easy Neighborhood Market in the Easy Bay Area University city (Cal Berkeley), where it's been looking for locations for some time.

In October Andronico's closed a store on University Avenue in Berkeley, and as we reported on October 18, 2011 here - Look for Fresh & Easy Neighborhood Market to Grab Closing University Avenue Andronico's Supermarket in Berkeley CA ... If it Can - Fresh & Easy is interested in the location.

In addition to Fresh & Easy Neighborhood Market, a couple other retailers, including a dollar store chain, are interested in the now vacant University Avenue Andronico's site, according to our sources.

Those same sources told us yesterday that Fresh & Easy's real estate folks have already expressed an interest in the closing Telegraph Avenue Andronico's store.

Additionally, we're told a natural foods chain and CVS Pharmacy, in addition to Tesco's Fresh & Easy, are also interested in the Telegraph Avenue location, which our 'The Insider' columnist reported on November 26 will likely close by the end of the year.

Andronico's is already holding a merchandise liquidation sale at the Telegraph Avenue store, offering products for deep discounts, which is what it did when it closed the University Avenue supermarket. It took the grocer just a couple weeks to liquidate most everything at the University Avenue location.

Our commercial real estate and other sources say one possible scenario involving Tesco's Fresh & Easy and CVS Pharmacy in the Andronico's Telegraph Avenue location would be for the two chains to divide the building in half, putting a Fresh & Easy fresh food and grocery market on one side and a CVS drug store on the other.

Fresh & Easy Neighborhood Market and CVS did just that in a former Albertsons supermarket location at 32nd and Clement Street in San Francisco's Outer Richmond District.

The Fresh & Easy store at 32nd Avenue and Clement Street opened June 22, as we reported that same day in this story: Tesco's Fresh & Easy Neighborhood Market Opens First Store in San Francisco - in Outer Richmond District.

The CVS drug store, which shares the building with the Fresh & Easy grocery market (view the floor plan here) opened about a month later.

The Telegraph Avenue Andronico's store in Berkeley has about 20,000 square-feet of selling space, based on our estimation. That would be enough room to put both a standard version (10,000 square-feet of selling space) Fresh & Easy store and a CVS drug store that's about the same size (or slightly smaller) as the unit at 32nd and Clement in San Francisco.

As an alternative, Tesco could put one of its Fresh & Easy Express stores (3,000 square-feet of selling space inside a 4,000 square-foot exterior) in the Telegraph Avenue Andronico's building, although going with a standard sized Fresh & Easy market makes much better sense, in our analysis.

But it's still early. And we suspect additional food retailers will be interested in the Telegraph location.

No deal has been done between the landlord and any retailer yet, according to our sources.

Of the two locations, the vacant Andronico's on University Avenue and the soon-to-be vacant unit on Telegraph, the Telegraph Avenue location would be the better of the two for Tesco's Fresh & Easy if the grocer were to take just one of the sites, if it can, in our estimation and analysis.

The main reason for this is because a Fresh & Easy (or any other) store at the location would benefit greatly from the heavy pedestrian and auto traffic on Telegraph Avenue.

Additionally, the Telegraph Avenue location is closer to the University of California at Berkeley campus than the University Avenue site is, which is another big plus, because our research and reporting over the last 4-plus years shows that the Fresh & Easy format tends to be most popular among the millennial consumer segment, as well as college and university students.

Both the University and Telegraph Avenue locations offer excellent potential for Tesco's Fresh & Easy however. And commercial real estate buildings that can house grocery stores doesn't open up all that often in Berkeley.

Additionally, the Telegraph Avenue location, to a greater extend, and the vacant Andronico's building on University Avenue to a lessor but significant extent, both also have the potential to be excellent locations for the two farmers market format chains - Sprouts and Sunflower - both of which are putting a major emphasis on opening new stores in Northern California, including in the San Francisco Bay Area.

Berkeley is the ideal demographic for both farmers market style grocery chains, and as noted, grocery store (even smaller format) commercial real estate doesn't become available all that frequently in Berkeley.

Related Stories

November 26, 2011: Andronico's to Close Another Store in Berkeley as Part of 'Comeback' Strategy

October 30, 2011: 'The Insider' Offers Some Advice He Suggests the New Owners of Northern California's Andronico's Markets Should Take Post-Haste

October 18, 2011: May-to-October at 82-Year-Old Andronico's Markets: New Owner, 2 Stores Closed ... Now What?

May 30, 2011: 82-Year-Old Grocer Andronico's Needs A Sugar Daddy of Sorts: 'The Insider' Suggest Tesco and its Fresh & Easy Neighborhood Market Might Fit the Bill

See these links - Fresh and Easy Northern California and Fresh and Easy San Francisco Bay Area - for additional related stories.

Raley's Combining High-Tech and High-Touch Tools to promote its Stores For the Holidays

2011-11-29T19:22:00.000-08:00

Above: Inside the Raley's superstore on Colusa Avenue in Yuba City, California. The 'Raley's Kitchen' in the photo offers in-store, chef-prepared entrees, sides and more, including meats hand-carved to order by the chef. It's part of the extensive deli and fresh-prepared foods offering in the store, which is a category Raley's is noted for. Photo courtesy I-5 design. March 3, 2011.

Turkey & Technology -- Grocers, new technologies and holiday promotions

West Sacramento, California-based Raley's Family of Fine Food Stores is using a combination of high-tech digital and high-touch low-tech tools to create promotions it hopes will drive shoppers into its stores in Northern California and Northern Nevada during the crucial-for-grocers mid-November to December 31 holiday food and grocery sales period.

Text for a discount and chance to win

On November 16 (and running to December 31) Raley's kicked off a promotion in which shoppers are invited to send a text message to the number "678678 Save" in order to receive $10 off any purchase of $100 or more in one of the grocer's Raley's (superstores) Bel Air Markets and Nob Hill Foods (supermarkets). Raley's operates a handful of discount warehouse stores under the Food Source banner. The promotion doesn't apply to the Food Source stores.

After sending the text message, consumers get a confirmation code back, which they give the store clerk at checkout in order to get the $10 discount of their purchase of $100 or more.

Sending the text message also enters shoppers into a contest, which offers the chance to win a free deli party tray.

Raley's is giving away 10 of the deli party trays, which include: two Spinach Dip trays valued at $19.99 each; four deli meat and cheese trays (valued at $29.99); and four Quesadilla Party Trays, which have an estimated value of $44.99, according to the grocery chain.

Participants must be 18-years-old or older in order to enter the text message-based contest.

The drawing for the deli party trays, which is being conducted by the Pocketshop LLC firm for Raley's, takes place December 15. Any remaining prizes will be rewarded on December 31, according to the grocer.

Raley's promoted the send-a-text-for-a-discount promotion and contest on the front page of its November 16-24 weekly advertising circular, which is direct-mailed and inserted in daily newspapers, and distributed to homes throughout Northern California and Northern Nevada.

The grocer also promoted the send-a-text-for-$10-off promo using Twitter's Promoted Tweet program, doing so during the week running up to the Thanksgiving holiday.

Raley's is currently promoting it on its Facebook page, on Twitter and in its stores.

We like the text-for-a-$10-dollar discount for three main reasons.

First, it requires shoppers to do a little work in order to get their $10 discount, unlike merely putting a coupon in the weekly ad circular or posting it online. And since text messaging is so common and popular, it's second nature for consumers to take a few seconds and text for their discount, which helps to ensure a higher participation level (than say sending an e-mail to get the discount) in the promotion and contest because it uses what's become a fast to use and near-ubiquitous digital technology.

Additionally, having shoppers send a text in order to get the $10 off and participate in the contest also has the added marketing benefit of capturing all those phone numbers from which the texts are sent. Such a data base could be used by Raley's in the future, say to send out special text-based promotions our other communications, for example.

Lastly, the text-for-a-deal promotion and contest creates some excitement among shoppers who participate.

It also offers the potential to generate some good word-of-mouth PR for Raley's. For example, it's likely some people sent a text messages to family members and friends telling them about the $10 off deal and the contest, and in turn those folks might have sent text messages to others, sharing the message.

Using social media - Twitter and Facebook - to communicate the promotion also has the potential to create additional virally-spread excitement around it, resulting in even more word-of-mouth buzz for the text message-based promotion.

Retweet to help the hungry

Speaking of social media and creating buzz, on Monday Raley's launched a charitable promotion for its Food For Families program, which donates food and cash to food banks in the communities where it operates its stores.

Using Twitter - both the Promoted Tweets program and its own Raley's feed - along with its Facebook page, the grocer posted this tweet yesterday, November 28: "Giving goes viral! Please RT this message and @raleysstores will donate 25 cents to Food For Families. Visit us here at Facebook."

As the tweet says, for every RT, which stands for retweet and is a way people can share other users' tweets with their followers on Twitter, Raley's is donating 25 cents to its Food For Families program, and thus to the food banks, every time the tweet, and additional ones like it, are retweeted on Twitter.

Like the text message promotion, this donation-backed, cause-related promotion also offers Raley's a solid opportunity to have a considerable amount of buzz created around its brand and stores, along with doing good at the same time. The grocer obviously realizes the potential, as it hopes it's giving offer goes viral.

Raley's also has an additional - and generous - promotion going on for its Food for Families program for the holiday season.

The grocer is offering grocery bags of food for the hungry in its stores for $10 per-bag. Between now and Christmas, for every bag customers buy to donate, Raley's is doubling the offer, donating another $10 bag of groceries to local food banks, for a total of $20.

Shoppers don't even have to visit a Raley's-owned store to donate. They can do so online here, and Raley's will match the donation. The grocer will then donate the groceries directly to the food bank closest to where the person lives.

Free black coffee on Black Friday

On Friday November 25 (Black Friday) Raley's put away the high-tech tools and used old fashion human-power and shoe leather to promote its stores in its hometown Sacramento area, offering a touch of warmth and much-needed caffeine to early-bird holiday shoppers.

We call the approach high-touch, as compared to high-tech.

The privately-held grocer, which has sales of about $3.1 billion annually and is owned by Joyce Raley-Teel (daughter of founder Tom Raley and the company's chairwoman) and headed up by her son, CEO Michael Teel, sent street teams armed with hot cups of Peets Coffee and discount coupons out to numerous jam-packed malls and shopping centers in Sacramento and the nearby cities of Folsom, Roseville and Natomas on Black Friday (and the following Saturday and Sunday).

The Raley's ambassadors armed with free hot coffee and the discount coupons were "warmly" received by the early bird Black Friday shoppers on what was a fairly chilly late night/early morning in the Sacramento region, according to a Fresh & Easy Buzz reader from Sacramento who wrote us and said she was out shopping with her daughters on Black Friday and received a much-appreciated free hot cup of Joe (or in this case Peet) from members of the Raley's street team.

A Christmas tree lighting meets Foursquare

The street team promotion on Black Friday came just two days before what is a big annual event for Raley's and the Sacramento area.

That event, held the night before Thanksgiving on November 23, is the annual Raley's-sponsored Theatre of Lights Christmas Tree lighting in Old Sacramento, which is an historic and popular part of the city that dates back to the California Gold Rush era of the 1800's. [Kati Garner, a writer for the local Sacramento Press blog has a write up and great photographs of the event, which was attended by over 4,000 people, here]

Raley's Stores, which also uses the Foursquare social media site in addition to Facebook and Twitter, offered consumers a $5 digital coupon if they checked in on their smart phones at its Foursquare home while attending the tree lighting event on November 23.

'Tis the season

The less than two month Thanksgiving through New Year's Day holiday selling season offers a huge opportunity for food and grocery retailers in the U.S. The three holidays are numbers one, two and three respectively in terms of the amount of money consumers spend on food, compared to all other holidays, for example.

But this opportunity, like most do, also comes with challenges, the big one for grocers being the fierce competition out there during this time of year. Every grocer knows, after all, what we just told you, which is that the period from mid-November to the end of December is a time when grocery shoppers are spending big. And each grocery chain wants the majority of those holiday food dollars to be spent in its stores, which generally means heavy promoting.

And, usually, to the victor go the spoils.

Beyond the season

Raley's is currently conducting a number of promotions in addition to those we've highlighted. One of the things the Raley's promotions we've discussed in this piece have in common is that each one also offers a secondary marketing/branding element to them for the chain, although we doubt the grocer planned it that way.

For example, the new-school digital and social media promotions help better brand Raley's as a modern and high-tech savvy of grocer, while the old-school street team event is a reminder of the high-touch aspect of the retailer.

And the generous food drive and assistance program to help the hungry, both in its digital and non-digital aspects, continues to brand Raley's as a caring grocer that helps people in the communities where it has its stores.

Raley's has been struggling financially for the last three or so years. Last year Michael Teel returned as CEO of the 75-year-old-plus family-owned grocer founded by his grandfather and owned by his mother, and has since been leading a reorganization strategy.

It's difficult to know how the plan is working because being closely-held Raley's does not release revenue or profit/loss information. Teel previously was CEO of Raley's in the 1980's-90's. He left to persue a variety of other business interests.

On the cost-cutting side of the balance sheet Raley's has so far gotten by fairly lightly, laying off about 300 people at its corporate headquarters and closing a few stores, in addition to most-recently announcing it will no longer pay health benefits for its retired except employees. Store-level workers, which comprise the vast majority of the grocery chain's employees, belong to the UFCW union. Therefore the move doesn't affect those already retired or future retirees.

As part of the restructuring which began last year when Teel took over as CEO, he flattened the organizational structure, eliminating many senior-level people, including in the marketing, buying and merchandising departments at the corporate headquarters in West Sacramento.

The move seems to have worked in our observation and analysis because since then Raley's marketing, merchandising and promotional activity has gotten not only better but more creative, along with becoming much more aggressive, as evidenced in part by the programs featured in this story.

The retailer has also sharpened its everyday pricing profile since early 2010, along with offering improved promotional prices on the items it advertises in its multi-page weekly advertising circular, among having made a number of other changes for the better.

The competition in Northern California, where the majority of the stores are located, is only going to get tougher, beginning next year, so Raley's will need to, among other things, continue sharpening its pricing pencil, along with continuing down the path it been on for a little over a year in developing, launching and implementing creative and effective promotions, both for the holidays and everyday, in order to meet the new challenges and increased competition coming its way.

[Editor's Note: It's a brave new high-tech, digital, social media world out there for food and grocery retailers. And the new tools offer retailers a myriad of new ways to promote their stores for the holidays. Between now and the end of December we'll be running a number of stories focusing on many of these new technologies, using the theme in the sub-head at the top of this story - Turkey & Technology to identify the stories. This piece about Raley's is our first.]

More Reshuffling: Number Two Marketing Exec Follows CMO Uwins Out the Door at Tesco's Fresh & Easy Neighborhood Market

2011-11-27T21:53:00.000-08:00

Tesco's Fresh & Easy celebrated birthday number four November 9.

The top-level management reshuffling and integration of the marketing function into a new combination buying-merchandising-marketing department headed by chief customer officer and former chief commercial (buying and merchandising) officer John Burry continues at Tesco's Fresh & Easy Neighborhood Market.

The latest departure from the Fresh & Easy's El Segundo, California headquarters is marketing operations director Paul Madarieta, who was the number two marketing executive in what was until a couple weeks ago the standalone marketing department.

Madarieta, now gone, reported directly to former chief marketing officer (CMO) Simon Uwins, who as we were the first to report in this story on November 10 left Fresh & Easy and Tesco in a top-level shakeup initiated by Philip Clarke, the CEO of Tesco, and Tesco group deputy CEO/chief marketing officer Tim Mason, who's also the CEO of Fresh & Easy Neighborhood Market.

Madarieta joined Fresh & Easy in late 2007 in a retail operations capacity. His title before moving into marketing was regional director of California stores.

He was later brought into the grocery chain's corporate marketing department by CEO Mason, who, according to our sources, believed his knowledge of retail operations, particularly in California, and high-level of enthusiasm would make him a good addition to the department and to the grocery chain's marketing efforts.

Mason, who since March of this year has been Tesco's chief marketing officer and deputy CEO, in addition to remaining CEO of Fresh & Easy, was the United Kingdom-based global retailer's chief marketing officer before coming to California in 2006 to start up Fresh & as its founding CEO.

Madarieta became Fresh & Easy's marketing operations director in January 2010.

As part of the shake up that resulted in Simon Uwins' leaving Fresh & Easy (see here), Madarieta was offered a lessor position in the new, combined department being headed up by John Burry, which he ultimately declined, instead leaving the 184-store fresh food and grocery chain, according to our sources.

Madarieta's position, like that of his former boss Simon Uwins, has been eliminated by Tesco's Fresh & Easy Neighborhood Market.

Fresh & Easy Neighborhood market recently posted an advertisement for a marketing analyst, a position that pays considerably less a salary than the former marketing operations director position, and a whole lot less than the chief marketing officer position formerly held by Uwins. The marketing analyst will work in the new joint commercial (buying-merchandising)-marketing department being headed up by chief customer officer John Burry.

Prior to joining Tesco's Fresh & Easy, Paul Madarieta spent a number of years working for iconic specialty grocer Trader Joe's, which Fresh & Easy Neighborhood Market has sought to emulate in a number of operational and merchandising ways, ranging from store size and look and its focus on private brands, to putting an emphasis on the wine category, among others.

Madarieta started out as a crew member (store clerk) at Trader Joe's. He later became a store captain (store manager), and from there was promoted to a regional vice president position with the Southern California-based grocery chain.

Fresh & Easy Neighborhood Market has hired a number of former Trader Joe's employees.

For example, Larry Biggerstaff, Fresh & Easy's current director of grocery buying and merchandising (reporting to John Burry), was the vice president of merchandising at Trader Joe's prior to joining El Segundo, California-based Fresh & Easy Neighborhood Market last year, as we reported in this September 11, 2010 story - Ex-Trader Joe's VP, Winn-Dixie Exec Larry Biggerstaff New Director of Grocery at Tesco's Fresh & Easy Neighborhood Market.

A number of category managers and buyers at Fresh & Easy also have previously worked for Trader Joe's, which is headquartered in the Southern California city of Monrovia.

For example, in the November 10 story about Simon Uwins' departure, we mentioned that three key mid-level headquarters employees had also recently left the grocery chain.

One of the employees who left in the last 60 days is Mei-Lon Jimenez, who until her departure was the category manager for bakery at Fresh & Easy, and prior to joining the grocery chain worked for Trader Joe's.

In her position at Fresh & Easy Neighborhood Market, Jimenez played a significant role in the start up of the new in-store bakery departments the grocer is putting in many of its stores. We broke the news about the bakery development in this May 18, 2011 story. Fresh & Easy started the in-store bakery installations late this summer. It's on the record as saying its goal is to have the bakeries in about 100 of its 184 grocery markets by the end of this year.

The former Fresh & Easy bakery category manager is now working for the Coles supermarket chain in Australia.

We discovered she joined the down-under supermarket chain two weeks ago when Coles' posted her name on a portion of its website, listing her as its new category manager for cheese. A senior executive at the supermarket chain confirmed the posting. She started at the down-under chain last week, according to the source.

Coles' is headed up by former British supermarket executive Ian McLeod. Its senior management team includes numerous veterans of the food and grocery retailing business in the United Kingdom, including Tesco, as we detailed in this December 25, 2009 piece: It's 'British Invasion: The Sequel Down Under' For Former Tesco Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell.

Another related Coles-Tesco Fresh & Easy angle: Charlotte Maxwell, who worked for Tesco for nine years and was the director of grocery buying and merchandising at Fresh & Easy from 2006 until August 22, 2008, joined Coles in April 2009 as its general manager of deli and bakery, which includes cheese. Ironically, she left Coles (about 30 days ago) to pursue other occupational opportunities. (Click here to read about Ms. Maxwell's departure from Tesco's Fresh & Easy and her joining Coles in Australia.)

With the departure of the number one (Simon Uwins) and two (Paul Madarieta) marketing executives at Fresh & Easy Neighborhood Market, chief customer officer John Burry has taken on the dual-responsibility for the corporate commercial (buying and merchandising) and marketing functions at the Tesco-owned chain, as we reported in our November 10 story.

Additionally, as we noted in the story, Tim Lee, who's been Fresh & Easy's director of fresh foods, reporting to Burry, is stepping in as a key player in the grocery chain's marketing efforts. He continues to report to Burry

Lee is being replaced as director of fresh foods by Ian Fletcher, who previously was in charge of Fresh & Easy's kitchen operation. He too reports to John Burry, as does Lee and director of grocery Larry Biggerstaff.

From a balance sheet (cost savings) perspective, Uwins' salary is being absorbed into Burry's, perhaps with a slight bump, while Madarieta's position and salary will essentially be absorbed by Tim Lee. As previously noted, the two marketing positions have been eliminated.

Tesco will report its 2011/12 fiscal year third quarter results on December 8, although it won't likely offer specific sales and loss numbers for Fresh & Easy, as it generally doesn't do so except when reporting half (interim) and full-year results.

On October 5, 2011 Tesco reported a fiscal 2011/12 half-year loss of $112 million for Fresh & Easy, on sales of $470 million. The loss is 21-23% (depending on how recorded) lower than the one reported for Fresh & Easy for the same period in the previous fiscal year.

The United Kingdom-based global retailer's CEO, Philip Clarke, says Tesco will break-even with Fresh & Easy Neighborhood Market by the end of the 2012/13 fiscal year, which is 15 months away. The 2012/13 fiscal year ends February 2013. Tesco reports its sales and profits/loss for the year in April 2013.

Post Script: Take a look at prediction number 7 in this story from last year - December 30, 2010: Seven Predictions For Tesco's Fresh & Easy Neighborhood Market For 2011.

Also see these columns by our 'The Insider' columnist, all published before Philip Clarke became CEO of Tesco in March 2011:

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

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

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

Additional Related Stories

November 17, 2011: 'Meat Guru'-Category Manager Bill Arnold Out at Fresh & Easy Neighborhood Market

November 10, 2011: Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market.

October 27, 2011: Former Meat Buyer Wins $400,000-Plus Legal Judgment From Fresh & Easy Neighborhood Market

February 23, 2011: Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market

February 28, 2011: Changing of the Guard: Clarke Takes Over the Reins as Tesco CEO Wednesday

Click on this link - Fresh and Easy headquarters personel changes - for more related stories.

[Photo credit: Fresh & Easy Neighborhood Market.]

Andronico's to Close Another Store in Berkeley as Part of 'Comeback' Strategy

2011-11-26T21:56:00.000-08:00

The Insider - Heard on the Street

On October 17, 2011 San Francisco Bay area-based Andronico's Community Markets and its new owner, Renovo Capital, said in a press release announcing the closing of its store on University Avenue in Berkeley, California that it didn't plan on closing any of the shrinking grocery chain's remaining three stores in the University city (Cal Berkeley) where it's had a major presence for decades with four supermarkets.

In my column the following day - October 18, 2011: May-to-October at 82-Year-Old Andronico's Markets: New Owner, 2 Stores Closed ... Now What? - I said this (below in italics):

"The new owner (investment firms Renovco Capital and Rosewood Private Investments) said yesterday that it doesn't plan to close any of the remaining three stores in Berkeley. But it wouldn't surprise me in the least bit if the investment firms aren't forced soon to close one of the remaining three Andronico's stores in the city, even though I believe it would like to keep all three for reasons of having a better retailing critical mass in Berkeley.

My predicted candidate for closure in Berkeley, if it comes, is the Telegraph Avenue Andronico's unit, which over the last couple years has lost considerable sales to a nearby Whole Foods Market store and Berkeley Bowl, a very popular and high volume local two-store independent grocer. Both Berkeley Bowl stores are located in the city."

Yesterday, Andronico's said in a prepared statement that it will close the Telegraph Avenue store in Berkeley.

Adam Alberti, who's acting as a spokesperson for the grocer and its new owner, said yesterday that the specific date the store will be closed has yet to be determined. I'm told by my sources though that Andronico's will most likely close the Telegraph Avenue store by the end of the year.

The closing of the Berkeley supermarket leaves Andronico's with just five stores - two units in Berkeley (East Bay area) and one store each in San Francisco, Los Altos (South Bay Area) and San Anselmo (Marin County) - down from a high of 14 units less than a decade ago.

Prior to July 2011 there were eight Andronico's grocery stores in the San Francisco Bay Area.

So far this year Andronico's has closed three supermarkets - a unit in Palo Alto in July, the store on University Avenue in Berkeley last month, and now the Telegraph Avenue-Berkeley store, which of the three was the largest unit in terms of square-footage.

In a follow-up column on October 30 - 'The Insider' Offers Some Advice He Suggests the New Owners of Northern California's Andronico's Markets Should Take Post-Haste - I offered Renovco Capital and Bill Andronico (who remains president of the grocery chain his family owned for 82-years until last month) a five-step playbook of suggested actions to take immediately regarding the turning around of Andronico's.

One of those action steps including the closing of an additional store, as you can read in the October 30 column linked above.

I also suggested Andronico's senior management team do a complete review of the chain's operations, marketing, merchandising and promotional functions. The closing of the Telegraph Avenue store is part of that evaluation process, which began around the first week of November.

If you bake it will they come? A selection of cakes on display in the bakery at an Andronico's store this month.

Additionally, I had a chance to visit two of the Andronico's Community Markets stores last week - the unit in San Francisco's Inner Sunset District and the store on Shattuck Avenue in Berkeley.

Both stores were fully-stocked and ready for the Thanksgiving holiday. The fresh foods departments - produce, meat, bakery and deli-prepared foods - all looked good, as did the numerous displays throughout the store.

Andronico's is using the signs above to communicate to shoppers it's stocking the stores and back in business.

When I last visited the two stores in late summer, they were looking a bit rugged, although not nearly as bad as the University Avenue store in Berkeley closed last month and the Telegraph Avenue store set to close did at the time.

But last week the two stores I visited - and I have a history of knowing what the two units look like at their best - were attractive and well-merchandised.

In my first column about Andronico's financial struggles, on May 30, 2011 here - 82-Year-Old Grocer Andronico's Needs A Sugar Daddy of Sorts: 'The Insider' Suggest Tesco and its Fresh & Easy Neighborhood Market Might Fit the Bill - I suggested one of the first things the grocer should do was to establish a social media presence, particularly on Facebook and Twitter, which is something it wasn't doing at the time.

As I noted in my October 30 column, three weeks later, on June 20, Andronico's Community Markets became active with a Facebook page, and on July 29 launched a feed on Twitter (@andronicos1).

In that same October 30 column (as one of the five action steps I suggested the grocer take immediately), I suggested Andronico's "Hold a 'Thanksgiving' community celebration at each store, thanking shoppers for sticking with Andronico's through tough times - and letting them know better days are coming soon," along with promoting the events on its Facebook page and Twitter feed.

Andronico's did just that in mid-November. For example, take a look (here) at the Thanksgiving-themed customer appreciation days the grocer has been hosting at its stores this month and promoting on its Facebook page. The grocer also used its Twitter feed to promote the "Thanksgiving" customer thank you events.

Andronico's also took advantage today of the nationwide small business Saturday event that's being promoted as the shop locally/small business version of Black Friday.

The grocer created the attractive poster pictured at top to promote the event, touting its stores as the place to shop locally for food and groceries today.

Andronico's Community Markets has also been conducting a variety of special promotions in its stores over the last few weeks, including a fall food festival at its Shattuck Avenue store in Berkeley that featured food samplings from the store's fresh foods departments and tastings conducted by numerous specialty foods vendors, like Dulce Chutney, pictured above.

The event also featured local guitarist Lucas Gonze (below) performing in the wine and spirits department at the Shattuck Avenue-Berkeley Andronico's store.

It's been about a month since Renovco Capital officially took over ownership of Andronico's, although its been providing financing for the small chain since around August-September of this year.

The senior management team and store employees have hit the ground running in the last 4-6 weeks, getting the remaining stores back in shape and promoting the "Comeback."

There's much more to do - and I will elaborate on my playbook for Andronico's, which I began in my May 30 column, continued on October 15 and October 30, and recapped here today, in the near future.

The future looks much better for Andronico's Community Markets (I still think the new owner should drop the community markets from the name and return back to the original Andronico's Markets) than it did just a couple months ago. But, as noted - there's still a long way to go in what is a very competitive market region.

Related Stories

October 30, 2011: 'The Insider' Offers Some Advice He Suggests the New Owners of Northern California's Andronico's Markets Should Take Post-Haste

October 18, 2011: Look for Fresh & Easy Neighborhood Market to Grab Closing University Avenue Andronico's Supermarket in Berkeley CA ... If it Can

October 18, 2011: May-to-October at 82-Year-Old Andronico's Markets: New Owner, 2 Stores Closed ... Now What?

May 30, 2011: 82-Year-Old Grocer Andronico's Needs A Sugar Daddy of Sorts: 'The Insider' Suggest Tesco and its Fresh & Easy Neighborhood Market Might Fit the Bill

>You can read all of our 'The Insider' columns at this link - The Insider - along with all past coverage about Andronico's here.

Happy Thanksgiving ... From Fresh & Easy Buzz

2011-11-24T12:11:00.000-08:00

Tesco and its Fresh & Easy Chain Hoping 'Seven' is the Lucky Number For 'Fresh & Easy Express'

2011-11-23T18:45:00.000-08:00

Construction on the Fresh & Easy Express store at Victory Boulevard and Buena Vista Street in Burbank, California, pictured above and below, is in full swing. The store is set for an early 2012 opening. The photos were taken by a Fresh & Easy Buzz correspondent on November 18, 2011. Note the "now hiring" banner in the photo below. [Photo credit: Fresh & Easy Buzz.]

Tesco's Fresh & Easy Neighborhood Market opened its first 3,000 square-foot (of selling space within a 4,000 square-foot interior space) Fresh & Easy Express format store at La Cienega Boulevard and 18th Street (1788 S. La Cienega Blvd.) in Los Angeles, California on November 2.

[See - November 1, 2011: Analysis: Tesco Opens First 'Fresh & Easy Express' Store Tomorrow in Los Angeles ... So What ... ? and November 2, 2011: Open in Los Angeles: A Look at the First 'Fresh & Easy Express' Store for details.]

Over the last week or so we've received e-mails from numerous Fresh & Easy Buzz readers, asking how many additional 'Express' stores Tesco's Fresh & Easy Neighborhood Market currently plans to open.

As we've previously reported, including most recently in our November 1, 2011 piece linked above, we've discovered an additional six Fresh & Easy Express stores Tesco and its Fresh & Easy chain plan to open next year, for a total of seven units thus far. All seven stores are in Southern California.

As a service to our readers, we've identified the specific locations of the additional six Fresh & Easy Express stores Tesco's Fresh & Easy currently plans to open.

Listed below are the addresses of all seven 'Express' units - the store opened November 2 and the six additional units planned thus far.

Tesco's Fresh & Easy has not publicly announced the specific locations of the six of the additional 'Express' stores to date. Therefore, we believe you're seeing all six locations for the first time here.

1. Los Angeles
La Cienega Boulevard and 18th Street
Los Angeles County
(Opened November 2, 2011)

2. Los Angeles
Figuera Street and Jeffferson Boulevard (near USC campus)
Los Angeles County

3. Los Angeles/San Pedro
Sixth and Gaffey Streets
Los Angeles County

4. Burbank
Victory Boulevard and Buena Vista Street
Los Angeles County

5. Hermosa Beach
Pacific Coast Highway and 8th Street
Los Angeles County.

6. Laguna Niguel
Crown Valley Parkway and Golden Street
Orange County.

7. Seal Beach
800 Pacific Coast Highway and Main Street
Orange County

The Burbank Fresh & Easy Express unit, pictured above and at top, is in a strip mall. It will be the only grocery market in the small strip center. There's a Kroger-owned Ralphs supermarket across the street. Ralphs' is the leading grocery chain in Southern California. [Photo credit: Fresh & Easy Buzz 11/18/11.]

Fresh & Easy Neighborhood Market is currently preparing three of the six yet-to-be-opened 'Express' format stores listed above - the Figuera Street and Jeffferson Boulevard store in Los Angeles; the Pacific Coast Highway and 8th Street unit in Hermosa Beach; and the Victory Boulevard and Buena Vista Street location in Burbank - for early 2012 openings, as we noted in this story on November 15.

Fresh & Easy has also started hiring employees for the three 'Express' stores.

In addition to the seven Fresh & Easy Express locations, the 184-store fresh food and grocery chain continues to look for additional sites in California where it might locate the micro-small-format stores, which are a scaled-down version of the 10,000 square-foot standard Fresh & Easy markets.

The Fresh & Easy Express stores offer all the product categories - dry grocery, perishables, produce, meat, beer and wine, fresh-prepared foods - that the standard version Fresh & Easy stores do, but in an edited version.

For example, the 10,000 square-foot markets stock about 5,500 SKUs. In contrast, the Fresh & Easy Express format features about 2,500-2700 SKUs in the 3,000 square-feet of selling space.

The 'Express' store opened on November 2 in Los Angeles also has an in-store bakery and self-service coffee bar, which are features Tesco's Fresh & Easy is adding to about 100 of its stores. According to our sources, plans are for all of the Fresh & Easy Express stores to include the bakeries and coffee bars.

Tesco and its Fresh & Easy chain have said the Fresh & Easy Express format is a test.

However, Tim Mason, the CEO of Fresh & Easy Neighborhood Market and Tesco's group deputy CEO-chief marketing officer, said last year and again this year (see here and here) that Fresh & Easy could open as many as 70 new stores in the Los Angeles area over the next couple years.

Fresh & Easy has opened a handful of new stores in Los Angeles this year, with some planned there for next year. Many of the 70 potential units Mason is referring to would be Fresh & Easy Express stores, according to the information we have.

But for now its a total of seven Fresh & Easy Express stores that Tesco's Fresh & Easy plans to have open and operating in 2012.

And ... Tesco and its Fresh & Easy Neighborhood Market chain are hoping it's the 'Lucky Number Seven' when it comes to its Fresh & Easy Express format.

'Friends' Card Problems Make it Even More Difficult to Earn A Little 'Loyalty' at Fresh & Easy Neighborhood Market

2011-11-22T18:47:00.000-08:00

Analysis & Commentary

On June 30 of this year we broke the news in this story [Tesco's Fresh & Easy Neighborhood Market Developing Loyalty Card Program it's Planning to Launch This Year] that Tesco's Fresh & Easy Neighborhood Market would be launching a customer loyalty-rewards program and card this year.

On July 18, 2011, the grocery chain confirmed our report in a press release, announcing its plans to test such a card in its seven stores in the Bakersfield, California region in October, with a chainwide roll out to follow before the end of the year.

Fresh & Easy "tested" its "Friends" loyalty-rewards card very briefly in the Bakersfield-area stores in early October, deciding to launch the card, which offers customers points they can then redeem for cash discounts in the stores, shortly thereafter, saying the brief test went so well they decided to take the card chainwide earlier than originally planned.

As part of our detailed June 30, 2011 story, we noted the comments below, which came from a source in a good position to speak about the loyalty/rewards program's development at Tesco's Fresh & Easy:

"In fact, one of our sources who's familiar with Fresh & Easy's loyalty program tells us, from the source's perspective, the program lacks expertise from a marketing, information technology and software delivery standpoint. And when it comes to loyalty programs, IT, software performance and marketing are about all that matters. Therefore, in the source's view, Fresh & Easy's loyalty program is far from ready for prime time." (Read the entire story for the full context of the paragraph above.)

Our source was, as they like to say across the pond ... "spot on."

Fresh & Easy Neighborhood Market's launching of the card has been plagued by problems, some of which we've tweeted about periodically on our Twitter feed since the October launch.

Since the launch last month, we've heard from numerous readers who've experienced various problems signing up for the card online, along with, in the case of those who didn't give up on the online sign-up process completely, having problems loading the digital points on the card, and for those who achieved that, then redeeming the cash reward points in-store.

We've also observed the problems first-hand in various Fresh & Easy stores we've visited, where we've talked to both customers and employees about the card's introduction and problems.

We also conducted an online sign-up process in-house here at Fresh & Easy Buzz to test it. The result: Numerous problems, most of which are described in this piece.

Fresh & Easy customers who've signed-up for the card in-store have reported a less painful process than those attempting to do so online, based on our reporting.

We haven't written about the problems with Fresh & Easy's loyalty card - the first heads up which was given in our June 30 story - in the blog until now for two reasons - (1) we haven't had a chance to yet (it's been a busy month), and (2) we wanted to give the grocer a decent period of time to fix the problems, which are at their most basic and most immediate technological, but also are systemic with the loyalty card scheme itself, in our analysis.

That systemic aspect has at its heart two things: The rewards points are just too low from a relative perspective, and the entire card scheme is way to complicated. Both can be fixed - and should be soon.

Nancy Luna, a writer-blogger for the Orange County Register newspaper in Southern California has been hearing similar complaints from her readers, along with experiencing the technological and related problems with the "Friends" card directly.

She wrote about her own experiences with the card today (see here). In her piece Luna also offers a number of comments from readers about their experiences signing up for and using the "Friends" card.

For her story, Fresh & Easy Neighborhood Market's corporate spokesman tells the writer that the main problem with the loyalty card has been a faulty magnetic strip on the back of the physical card, which he says the grocer is fixing with the next batch of plastic cards it orders.

But the problems we've identified since the October launch go far beyond just the magnetic strip on the plastic card.

Those problems include: difficulty with the online sign-up (Fresh & Easy's twitter feed has been filled with customer requests for assistance with this process since the card was launched in October, for example), not getting proper discounts in-store and a number of others, many of which are the same complaints voiced by Ms. Luna's readers in her piece today and communicated to use by readers of Fresh & Easy Buzz and others.

Tip: One reader told us he's solved the magnetic-strip problem by using the scanner-price gun at the checkout stand to read his "Friends" card because the card reader won't read it when it's swiped.

Fresh & Easy's loyalty-rewards card was developed in-house and by its Dunnhumby firm in the United Kingdom, which it now owns 100% of. Dunnhumby has an office in the U.S., in Ohio, but could not develop the card for Fresh & Easy because the U.S. branch has an exclusive loyalty card program deal with Kroger Co., as we noted in our June 30 story.

It's clear our source was correct in June when he said the technology behind Fresh & Easy's loyalty card was not ready for prime time, evidenced by the numerous problems consumers are having signing up for it and using it in the stores.

We should say the rank-and-file employees at Tesco's Fresh & Easy - from the people answering the many complaints and questions on Twitter to the workers in the stores - have been working hard and doing their best to fix the problems and make the card work for customers.

But we should also say: They shouldn't have to be using their time to do so. Senior management and CEO Tim Mason should have made sure the card, the technology behind it, and the launch was "ready for prime time."

Why then did CEO Tim Mason decide to launch the "Friends" card chainwide in October?

He was made aware of the potential technological problems, our sources say, including the one who gave the heads up in June. And, of course, the caution was right there in our June 30 story, for all to see. The blog does get a number of daily hits from the El Segundo, California USA zip code.

We can't answer that question fully, although a prime motivator behind the card is the hope among senior management that it will allow Fresh & Easy to stop issuing its deep-discount store coupons on a chronic basis.

That hasn't been the case so far this month however. The grocer has issued online coupons good for $10-off purchases of $50 or more coupons via its "Friends" e-mail program four times this month. The first one coming out November 2, followed by another voucher on November 9, a $10-off-$50 coupon on November 16, and another of the same value today. Fresh & Easy has also distributed the coupons in its paper-version advertising circulars this month.

But specific motivations aside, this isn't the first time Fresh & Easy has launched a program it wasn't ready to handle, although this is the first major instance of doing so in a big way in the Philip Clarke era.

Clarke replaced Terry Leahy as CEO of United Kingdom-based Tesco in March of this year. Fresh & Easy Neighborhood Market was Leahy's baby, and was launched in the U.S. in 2006, the first stores opening in November 2007. There are currently 184 Fresh & Easy markets in California (135 stores), Nevada (21 units) and Arizona (28 stores).

Since becoming CEO of parent company Tesco, Clarke has taken a very hands-on approach with Fresh & Easy, which in his previous positions as head of corporate IT and chief of European and Asian retail operations at the United Kingdom-based retailer he had virtually no involvement with from 2006-2010.

For example, Clarke visits Fresh & Easy's corporate headquarters in El Segundo, California and the distribution campus in Riverside County near-monthly, along with visiting stores regularly when he's in Southern California. Three of his regular stops, for example, are the Fresh & Easy markets in Manhattan Beach, Burbank and Whittier, where he talks with employees regularly.

Clarke has also initiated numerous changes at Fresh & Easy, the in-store bakeries and coffee bars being installed in about 100 of the 184 stores being two of the most significant, since becoming CEO of Tesco in March.

The loyalty card is also something he promoted, as it takes as its inspiration Tesco's ClubCard, which has proven to be very successful for the retailer in the UK. Leahy, Clarke and Mason are all big fans of the Tesco card.

But the Fresh & Easy "Friends" card is a card of a different matter - it's a different type of loyalty card (100% rewards) for a different type of grocery chain (small-format only; Tesco operates multiple formats in the UK) that's located in another country (the U.S. and not the UK.)

The "Friends" card program problems we describe and those described in the Orange County Register story have existed since the first day of the chainwide launch in October. Whatever test there was in Bakersfield obviously didn't serve any real purpose. Tests are supposed to spot such technological problems, after all.

We've talked to a number customers who like the card despite the problems - although most tell us they feel it's too complicated a scheme, and that the points aren't high enough relative to purchase amounts to make the savings significant.

For example, it takes 500 points to equal a $5 discount.

We don't think this is a particularly insignificant discount, based on our experience in the industry. However, Fresh & Easy shoppers are used to getting coupons from the grocer for $5 off purchases of $20 or more, so their frame of reference regarding it taking 500 points, which requires a shopper to spend $100 to obtain, is based on the coupon value they've been getting regularly for years in the "friends of Fresh&easy" e-mail-based program, which the loyalty card is now the central aspect of. From that perspective, we understand why many customers feel requiring 500 points to get a $5 cash discount is too low in terms of the spend-to-points ratio.

Fresh & Easy has heard this complaint from customers because it's now offering two-times the regular point value on the card between now and the end of the holidays. However, come January 1 the grocery chain is going to have to figure out what to do about the point value, because it is something many shoppers are not happy with.

Additionally, the more points Fresh & Easy offers on the card, the more discounts it gives out. Those discounts to customers don't come out of thin air or from the Tesco Santa Claus. Instead, the discounts come out of Fresh & Easy's gross margins.

For example, Fresh & Easy is offering Jenni-O frozen turkeys for 39-cents pound, which is already at or below the grocer's cost. Last week they gave 500 bonus points to "Friends" card holders who bought one of the birds, which is a $5 cash discount that can be redeemed in-store.

But Fresh & Easy also issued a $10-off $50 store coupon the same week, which can be used to turn a $50 purchase, which might include a frozen Jennie-O turkey or two, into a $40 purchase.

The point: All these discounts come out of margin, which at Fresh & Easy must be raised demonstrably from its current negative 30%-plus level (trading margin) in order for Tesco to meet its objective of breaking even with the chain by February 2013, the goal CEO Clarke has set. Heavy discounting like that described above makes achieving that extremely difficult.

These technological problems with the "Friends" card can be fixed, although its late November and they haven't all been fixed yet. But damage has already been done.

In terms of the overall loyalty/rewards card scheme, simple and significant are two key variables for any successful program. Therefore, Fresh & Easy must make its program more simple overall and make the points system more significant to shoppers, if it wants the card to do what it hopes it will do. And it needs to do that soon.

Meanwhile, as we were the first to report in this story on November 10 [Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market], Simon Uwins, who was Fresh & Easy's cheif marketing officer and had ultimate responsibility for the launch of the loyalty card program, has left the grocery chain.

Responsibility for the loyalty scheme now falls to John Burry, who has taken on the marketing responsibility at Fresh & Easy, along with keeping his previous responsibility as the grocer's chief commercial officer (head of buying and merchandising). His new title is chief customer officer.

Burry, who had a very full plate already - the center of which features a heaping serving of gross margin improvement as job one - must now make room on that plate for fixing the loyalty card program, which was Uwins' ultimate responsibility before he left two weeks ago.

We will offer some detailed analysis on the loyalty card program at Fresh & Easy in an upcoming story.

But for now the difficulties couldn't come at a worse time for the chain. The October-December holiday sales period is a key selling season for all grocery chains, and particularly for Fresh & Easy because it needs to hit sales goals that have been set relatively high for the period.

Fresh & Easy's employees need to be focused 100% on merchandising and in-store customer service for the Thanksgiving and Christmas period, which are the top two sales holidays in the grocery business in the U.S., rather than having to spend valuable time dealing with technological problems related to what was too early of a chainwide roll-out of its loyalty card, which is something the source in our June, 2011 story made clear for all to read - offering it as an intentional heads up.

Related Stories

November 18, 2011: Fresh & Easy Neighborhood Market Combining Big Seasonal Foods Assortment With Promos and Discounts to Lure Holiday Shoppers

July 17, 2011: Send in the Clowns: Did You Hear the One About Fresh & Easy Neighborhood Market Launching A Customer Loyalty Program?

June 30, 2011: Tesco's Fresh & Easy Neighborhood Market Developing Loyalty Card Program it's Planning to Launch This Year

February 2, 2010: Dunnhumby; Trial Balloons By Media; and Fresh & Easy's Loyalty Card Marketing Trap

December 8, 2009: Analysis: Why A Loyalty Club Card Program Makes Zero-Sense For Tesco's Fresh & Easy USA.

One-Year On: Bristol Farms Adds 4,500 New Natural, Organic, Local and Gluten-Free Items to its Stores

2011-11-21T14:54:00.000-08:00

Click on the letter above from CEO Kevin Davis to enlarge it.

Southern California Market Region

It's been about one year since Bristol Farms' senior management team and the private equity firm Endeavour Capital acquired the Southern California-based specialty grocery chain from Supervalu, Inc., which obtained the trend-setting upscale chain some years' earlier as part of its buyout, in partnership with the Cerberus private equity firm, CVS Pharmacy and a couple other players, of Boise, Idaho-based Albertson's Inc.

As we wrote about in detail in this story last year - October 29, 2010: CEO Kevin Davis, Execs and Investment Firm Buy Upscale Southern California Bristol Farms Chain From Supervalu, Inc. - the deal to buy Bristol Farms from parent Supervalu was quarter-backed by CEO and President Kevin Davis, who spent many years at the specialty grocery chain while it went through numerous ownership changes.

Davis has an extensive background in the food-grocery retailing business in Southern California, including working as a store manager, district manager, corporate vice president of sales/advertising and senior vice president of marketing at Ralphs, which is the largest grocery chain in the region.

Kevin Davis joined Bristol Farms after leaving Ralphs, which he first joined in 1974 as a retail grocery clerk. Kroger Co. bought the Ralphs and the Food 4 Less chains in Southern California from billionaire supermarket industry investment guru Ron Burkle in the 1980's.

This month, a year after he, his management team and the investment firm took over ownership of Bristol Farms, Davis is announcing what he says is the launching of the specialty grocery chain's "most important change to our merchandising plan in our 28 year history."

That change, Davis says in a letter to customers and potential customers featured at the top of this week's Bristol Farms' advertising circular (see at top), is the "adding of over 4,500 new organic, natural, local and gluten-free products, combined with more specials and more everyday values on key brands throughout the store."

"We’ve added more shelves, more items, more variety, and more value to the extraordinary products and unique Bristol style customer service our shoppers expect and deserve," Davis writes in the letter addressed to shoppers included in this week's (November 16-29) advertising circular, and posted at the top of this story.

The addition of the 4,500 new organic, natural, local and gluten-free SKUs into the 13 Bristol Farms stores (12 in Southern California and one in San Francisco) looks to be completed, based on visits we've made to three stores over the last couple weeks, and conversations with workers in those stores. Bristol Farms also operates a natural foods store in Santa Barbara under the Lazy Acres name.

Davis also wrote a brief post on the Bristol Farms company blog on November 8 announcing the merchandising initiative. The content of the advertising message to customers in this week's ad circular is taken from that post.

Bristol Farms has also unveiled the special logo - "Great Taste Just Got Better: More Organics, More Natural, More Local and More Value! - (pictured at top) as a way to tout and promote the addition of the 4,500 new SKUs in the respective product categories noted above.

The logo is being used throughout the grocer's stores, as well as on its website and in printed media materials.

The addition of the 4,500 new natural, organic, locally-produced and gluten-free products is a natural for Bristol Farms because the small chain's focus since the first store was opened in 1982 in Rolling Hills, California, has been on the specialty-natural-organic-fresh foods niches.

In its early days Bristol Farms became best-known for the numerous specialty and gourmet groceries it stocked in the stores, along with its extensive and high-quality fresh-prepared foods offering. Scouting and introducing unique specialty and gourmet food products remains something Bristol farms prides itself on doing.

The grocer built on this positioning and added more and more natural and organic products into the 1990's.

The 1990's, however, brought major new store growth to Southern California from natural-organic grocery chains like Whole Foods Market, Wild Oats Markets (now part of Whole Foods) and its Henry's Farmers Market chain (now part of Sprouts Farmers Market), along with others, therefore making Bristol Farms' specialty grocer niche one that's today occupied by a lot of competitors, including Whole Foods, Trader Joe's, Gelsons, Sprouts and others, such as Tesco's Fresh & Easy, which has opened 105 stores in Southern California since November 2007, and is increasingly being positioned by Tesco as a specialty grocery chain.

A focus on "local" in general, not just offering locally-produced products, has also been a hallmark of Bristol Farms popularity in Southern California.

For example, in 2000 when Bristol Farms' acquired the old Chasen's restaurant building in Beverly Hills/West Los Angeles, which was known as the gathering place for Hollywood's biggest stars, it incorporated many of the famed eating and watering hole's existing design elements into the store it constructed , and that still stands at the location, including keeping the high-backed leather booths Chasen's was famous for, and re-using them in the store's restaurant-dining area. About a half-century ago then actor and future President Ronald Reagan proposed to his second wife, actress Nancy Davis (no relation to Kevin we're told), who became First Lady, while sitting in one of those booths during dinner at Chasen's.

A year earlier, in 1999 Bristol Farms acquired another landmark business, this one in Hollywood. The grocer retained many local elements of that landmark business, the former Chalet Gourmet, in the design of its grocery store at the location in Hollywood.

Earlier this year Kevin Davis said, in relation to the acquisition of Bristol Farms from Supervalu

He also said at the time the now "locally-owned" grocer was interested in opening additional locations in Northern California, where there's just one store in San Francisco, if the right location were to come along.

Our 'The Insider' columnist offered one suggestion for Bristol Farms' in Northern California in his May 30, 2011 column here. Andronico's new owners, Renovco Capital, which finalized its acquisition of the grocer at the end of October and is working fast and hard to turn the six-store San Francico Bay Area operation around, might be interested in talking turkey down the road.

The San Francisco Bristol Farms store is inside the big, vertical San Francisco Centre shopping mall on Market Street downtown. The store's focus in more on ready-to-eat and ready-to-heat fresh-prepared foods than it is on groceries, although it includes a small assortment of groceries, fresh foods and perishables. There's also seating inside the store, where breakfast, lunch and dinner is offered to eating-in as well as for take-out.

Since the October 2010 buyout, Bristol Farms has also been improving and beefing-up its in-store deli/fresh-prepared foods offering, which was already extensive. For example, the grocer recently introduced a new line of high protein and fiber-packed ready-to-eat "energy salads," featuring varieties like Italian Salad with Middle Eastern Couscous, Wheatberry Salad, Quinoa Salad and Edamame Tofu Salad.

Fresh bakery is another department where Bristol Farms has over the decades created a signature image. It was one of the first grocers in Southern California, for example, to introduce a full line of in-store baked fresh artisan breads, doing so in the 1980's.

Another in-store bakery feature Bristol Farms started many years ago - and it should use it more aggressively in its current marketing and merchandising efforts, in our analysis - is its "One of A Kind" baked goods program, in which it creates and offers a unique item that's generally not available at any of its competitors. A few of its "One of A Kind' baked goods items have included: Texas Chocolate Cake, Carrot and Pumpkin Cake, Bristol Farms' Gourmet Brownies and various unique varieties of fresh-baked scones.

Bristol Farms is also expanding its private brand program, developing and introducing more products under its "Bristol Farms" brand, such as a line of cookies it debuted this summer, which feature conventional varieties like chocolate chip, ginger, snickerdoodle and iced oatmeal, along with two certified organic vanilla and lemon wafers.

The specialty grocery chain also recently introduced a new line or organic fruit preserves under its "Bristol Farms" brand, and has expanded its own-brand line of organic herbs and spices as well.

The grocer is also branding many fresh meat, pork and poultry items under the "Bristol's Own" private brand, which is a new and more aggressive branding effort than its made with the categories in the past.

Bristol Farms finds itself independent and in a very competitive niche in Southern California.

Not only are there numerous grocers like Whole Foods, Trader Joe's, Tesco's Fresh & Easy, Gelsons and Sprouts focusing today on the specialty, natural, organic, fresh food and gluten-free categories - and have their own brands of products in the respective categories along with selling manufacturers' brands - the once very niche categories have become much more mainstream, which is why Safeway Stores, Inc., for example, features an extensive selection of specialty, natural and organic foods in its Lifestyle format Vons stores and more-upscale Vons Pavilions markets in Southern California, as does Kroger-owned Ralphs in its same-banner stores, as well as in its more-upscale Ralphs Fresh Fare units.

Both the Safeway and Kroger-owned chains (Vons and Ralphs, which are the top two grocers in the region) feature their own brands of organic, natural and premium food and grocery products as well. Supervalu-owned Albertsons, the third-largest grocery chain in Southern California by market share, also offers its own brand, Wild Harvest, of natural and organic food and grocery products.

Bristol Farms, now celebrating its first year of independence from Supervalu, Inc., has to carve out its own niche in competitive Southern California, having on one side the giants - Safeway (Vons), Kroger (Ralphs), Supervalu (Albertsons) - each offering a strong assortment of private-brand and manufacturer-branded specialty and organic foods in each of their respective chains - while the numerous specialty grocers in the market region - Whole Foods, Sprouts, Trader Joe's, Gelsons, Fresh & Easy and others - push at it with similar positioning and product offerings from the other end.

As a result, it's worth watching what Bristol Farms' management team, 17 members of which are now owners as well as employees, does in the coming year or two to attempt to differentiate the grocer from the specialty format-focused competitors noted above and others, while at the same time offering consumers a reason to shop at its stores, even though increasingly many of the same products it offers are available at the thousands of mainstream supermarkets and other format food and grocery stores in the region.

Fresh & Easy Neighborhood Market Combining Big Seasonal Foods Assortment With Promos and Discounts to Lure Holiday Shoppers

2011-11-18T15:38:00.000-08:00

Holiday 2011 Merchandising & Promotion

Tesco's Fresh & Easy Neighborhood Market is out with an online (and print version) holiday food and drink guide that's packed full of seasonal fresh-prepared entrees, side-dishes, appetizers, ready-to-eat desserts, fresh meats, gourmet groceries, wines and more.

The Thanksgiving and Christmas season food and drink items featured in the holiday guide are set to be available beginning tomorrow, according to Fresh & Easy Neighborhood Market.

Fresh-prepared foods in abundance

Among the many product offerings in Fresh & Easy's 12-page online holiday food and drink guide, which you can view here, include an impressive assortment of its own-brand seasonal ready-to-eat and ready-to-heat refrigerated, fresh-prepared foods, made at its kitchen facility in Riverside County, California.

A small sampling of those offerings include: Roasted Butternut and Beet Salad ($6.99); Apple-Cranberry Stuffing ($6.99/26oz); Butternut Squash Risotto ($7.99/46oz); and Pumpkin Bisque ($3.69/22oz), along with numerous other Thanksgiving and Christmas dinner-themed fresh- prepared food items.

Baked goods, desserts and more

The 184-store El Segundo, California-based fresh food and grocery chain is also offering numerous ready-to-eat holiday-themed desserts in its holiday food guide. For example, there's Pumpkin Cheesecake ($6.99/40oz); Traditional Italian Panettone Bread ($5.99/24oz); Pumpkin-Pecan Coffee Cake ($3.99/16oz); Eggnog Gelato ($2.99 pint); and much more.

There's also some very decadent gourmet desserts that can do double-duty as gifts, as well as for enjoying at home. For example, there's a Cranberry & Almond Carmel Apple, at $9.99 each - yes, that's each - and the Espresso Truffle Trio ($5.99/3oz).

The guide also features numerous holiday-oriented wines and other drinks, along with specialty seasonal coffees like Organic Ginger Bread Ground Coffee ($6.88/12oz).

Holiday meals - online ordering option

Fresh & Easy is also offering three fully-prepared holiday meals: A turkey dinner for eight, for $50; a ham dinner for eight ($45); and a beef rib roast dinner for eight ($65).

The turkey and beef roast dinners come with three side-dishes and gravy. The ham version comes with four sides and a honey-brown sugar glaze. There are 11 side-dishes shoppers can choose from.

The pre-cooked, ready-to-heat dinners can be ordered by shoppers online, as well as in the stores. The deadline for Thanksgiving is today, for pick up at the designated store from November 21-24.

Fresh & Easy hungry for holiday dollars

Tesco's Fresh & Easy Neighborhood Market is aggressively going after shoppers for the Thanksgiving holiday.

For example, it's offering Jennie-O brand frozen turkeys for 39-cents a pound, which (see out twitter feed) is the best price we've found so far in Northern California, and the second-best promotional offering we've found in Southern California, after the Superior Grocer's chain, which is offering branded whole frozen turkeys for 37-cents pound in its 30-plus supermarkets in the region.

Fresh & Easy is offering Jennie-O fresh turkeys for $1.19 pound. That price is at the low-end - but not the lowest promotional price - in California, Nevada and Arizona.

For example, Safeway stores (Safeway and Vons banners) in offering its Safeway Select brand fresh birds at 99-cents pound in all three states. Safeway has around 600 stores in California, Nevada and Arizona.

A couple other grocery chains in California, such as 133-store West Sacramento-based Raley's in the north, also have fresh birds (Raley's brand) on sale for 99-cents pound.

Fresh & Easy's $1.19 pound price is a good one though, as a number of other grocery chains in California, Nevada and Arizona are offering comparable brand fresh turkeys for $1.29-$1.49 pound.

Deep discounts: coupons, bonus points

Fresh & Easy, which has 135 of its 184 stores in California - there are 28 units in metro Phoenix, Arizona and 21 stores in metro Las Vegas, Nevada - is also doing heavy deep-discounting this month, distributing its 20%-off store coupons weekly online and in its paper-version weekly ad flyers.

So far this month Fresh & Easy has distributed three $10-off (purchases of $50 or more) online discount store coupons via its friends of fresh & easy e-mail program - the first on November 2, another coupon on November 9, and a third $10-off/$50 or more voucher on Wednesday. Today Fresh & Easy sent out another new "friends" e-mailer and included the Wednesday coupon in it.

The store coupons are also being distributed in Fresh & Easy's direct-mail flyers, and in some cases in full-page newspaper advertisements the grocer has run this week in selected markets. We've also seen store workers handing out the coupons to customers in some of the Fresh & Easy grocery markets we've visited this week.

The friends of fresh & easy program is now part of the grocery chain's loyalty card program of the same name. However, customers need not have a loyalty card to use the store coupons.

In fact, the online coupons are available all over the web because various coupon and mom bloggers post them on their sites.

Do an Internet search for "Fresh & Easy coupons" or a similar version, for example, and you'll see what we mean.

Fresh & Easy Neighborhood Market launched the loyalty card in October. The card gives customers bonus points which they can convert to discounts on their grocery purchases.

For example, shoppers who sign up this month get not only the 250 points that are an incentive for joining, but also an additional 250 bonus points that Fresh & Easy is adding as a bonus. The 500 points are good for $5 off any purchase over that amount.

Additionally, Fresh & Easy is giving members of its "Friends" loyalty card two-times the bonus points this month on numerous items they purchase. For example, last week, when the grocer was offering the frozen Jennie-O brand turkeys for 59-cents a pound (it slashed the price on the birds by 20-cents pound on Wednesday), it gave card-holders 500 bonus-points, which is the equivalent of a $5 coupon.

Holiday sales period key

The Thanksgiving holiday period is a crucial one for Tesco and its Fresh & Easy chain, which is in-part why the heavy discounting is taking place. Not only is Thanksgiving the number one holiday for consumers food and grocery spending - and the most competitive among grocers - in the U.S. (Christmas is second), Tesco's fiscal-year 2011/12 third quarter is over at the end of this month. The quarter began August 28.

The six months from August 28, 2011 to the end of February 2012, when its 2011/12 fiscal-year ends, is an important period for United Kingdom-based Tesco because in March 2012 the one-year clock starts - to 2012/13 fiscal-year-end (February 2013) - which is when CEO Philip Clarke says the global retailer will break-even with Fresh & Easy Neighborhood Market.

Tesco recently reported a fiscal 2011/12 half-year loss for Fresh & Easy Neighborhood Market of $112 million, on sales of $470 million. The loss an about 21% improvement over the loss of the previous fiscal half-year period.

Fresh & Easy needs to continue the trend in order to have a chance of achieving the goal set by Tesco's CEO. Tesco will report the fiscal 2012/13 results in April 2013.

Meanwhile, Fresh & Easy Neighborhood Market has put together a comprehensive, interesting and solid holiday season promotional guide, particularly when it comes to the numerous own-brand fresh-prepared foods and baked goods/desserts offered.

Right now its all about selling.

But the break-even deadline, which is less than 16 months away, is also very much top-of-mind at Tesco's global headquarters in the United Kingdom and at Fresh & Easy's headquarters office in El Segundo, California - and in the Fresh & Easy stores, with its employees.

To see all of the food and beverage items featured in Fresh & Easy's Holiday Guide, click here. A zip code is required to view the guide. If you don't live where there's a Fresh & Easy store, just type in the following zip code: 90266.

'Meat Guru'-Category Manager Bill Arnold Out at Fresh & Easy Neighborhood Market

2011-11-17T00:25:00.000-08:00

Bill Arnold, Fresh & Easy's "Meat Guru" is out.

Arnold, who Tesco's Fresh & Easy Neighborhood Market made the face of its in-store fresh meat offering in a marketing and public relations campaign over the last couple years, was, in addition to its meat category face and spokesman, the 184-store grocery chain's meat and seafood category manager, who was responsible on a day-to-day basis for procurement and merchandising.

Arnold left El Segundo, California-based Fresh & Easy last week to pursue another job opportunity in the food and grocery industry.

He joined Fresh & Easy Neighborhood Market before the first stores were opened in November 2007.

Fresh & Easy has not publicly announced Arnold's departure, nor has it been reported in the grocery industry trade press or elsewhere, based on an extensive online search we did prior to publishing this story.

Arnold's leaving Tesco's Fresh & Easy Neighborhood Market wasn't directly related to the series of events that led to chief marketing officer Simon Uwings' departure last week, the news of which we broke on Thursday, November 10, in this story: Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market.

In the days following our detailed November 10 story, numerous mainstream business and grocery industry trade publications have published stories based on the information we first reported in Fresh & Easy Buzz, seeking and obtaining confirmation of our report from Fresh & Easy's corporate spokesperson.

Arnold's decision to resign his position however was influenced by and related to the changes happening at Tesco's Fresh & Easy Neighborhood Market, which are detailed in our November 10 story, according to our sources. (We learned of and verified Arnold's departure last week. It was on Wednesday, November 9 that Fresh & Easy's CEO, Tim Mason, announced Uwins' departure during the grocery chain's weekly Town Hall meeting at the El Segundo office.)

Chief among those changes is the reality that since buying-out former in-house meat purveyor 2 Sisters Food Group last year (see our story here), and terminating its business relationship with seafood supplier Pacific Pride Seafood Inc. in June of this year, which we reported exclusively here, Fresh & Easy has shifted most of its meat and fish/seafood buying to its facility at the Riverside County, California campus/distribution center. That operation was formerly 2 Sisters Food Group and is now owned and operated by the grocery chain.

It's not clear at present if Fresh & Easy will replace Arnold and keep the meat and seafood category position, according to our sources, particularly because much of the procurement is now handled by the meat facility at the Riverside campus.

One option that's being consider, according to our sources, is to hire a buyer-merchandiser who would focus primarily on fish and seafood, which is a category Fresh & Easy wants to improve considerably and do more sales volume in.

Bill Arnold was a bit more than a category manager at Tesco's Fresh & Easy, however, at least in the eyes of its marketing department.

The grocer's marketing department, with CEO Tim Mason's blessing, made the meat man the face of the category to consumers in a series of marketing-oriented press releases, videos, posts in the corporate marketing blog and other venues.

For example, a July 1, 2010 post in Fresh & Easy's "talking fresh" blog touts Arnold as "Fresh & Easy's Meat Guru." The post, authored by the meat man, talks about grilling meats, and is a promotional piece designed to stimulate sales of the grocers grill pack items for the July 4th holiday. [See the post: Thursday, July 1, 2010 GUEST BLOG: Fresh & Easy’s Meat Guru Bill Arnold.]

Fresh & Easy Neighborhood Market also produced the three minute video (at the top of this story) of "Meat Guru" Bill Arnold that's included in the July 1 blog post and was posted on its YouTube channel, which features the meat man in front of the meat case in a Fresh & Easy store, where he's touting the grocers own-brand meat and poultry grill packs for theJuly 4th holiday and summer grilling season.

Other marketing programs featuring the now departed Bill Arnold as "Fresh & Easy's "Meat Guru" included a public relations and event-oriented program just this summer as a way to encourage shoppers to buy the grocer's existing and new varieties of meat and poultry grill packs.

For example, as part of that campaign, this May 12, 2011 press release featured Arnold as "Fresh & Easy's Meat Expert."

In the release, which was distributed to media outlets in California, Nevada and Arizona and posted on the web, Arnold offers this advice in a quote: "As we move into summer, more people are coming together for barbecues, graduations, and picnics and everyone wants to find great deals on quality meats and veggies they can easily throw on the grill. We're expanding our grilling range to offer our customers even more choice meat options marinated with new and unique flavors, along with some great vegetarian options and sides."

Arnold, who's now gone, was also featured in a number of other promotions as "Fresh & Easy's "Meat Expert" or "Meat Guru."

In September of this year Fresh & Easy Neighborhood Market paid a former meat category buyer named Kyle Weathersby $489,747,73 in a legal judgement, which was the result of a wrongful termination-employment discrimination lawsuit he filed and won against the grocery chain after being fired in 2008, as we reported here - October 27, 2011: Former Meat Buyer Wins $400,000-Plus Legal Judgment From Fresh & Easy Neighborhood Market.

Prior to his dismissal from Tesco's Fresh & Easy, Weathersby reported to Bill Arnold, who as the meat and seafood category manager was responsible for the day-to-day procurement and merchandising of the products that comprise the respective product categories.

Fresh & Easy Neighborhood Market to Open 20-Plus New Stores in Early 2012 - We Have What's Not in the Press Release

2011-11-15T23:24:00.000-08:00

Tesco's Fresh & Easy Neighborhood Market sent out a press release today in which it announced it's hiring for more than 600 jobs for over 20 new stores it plans to open from January-March 2012. You can view the release .

In the press release, which you can view here, Fresh & Easy Neighborhood Market listed 22 cities - 21 in California and Las Vegas, Nevada - where the 20-plus new stores will be located. But the Tesco-owned grocery chain didn't list the addresses of those 20-plus stores in the 22 cities.

But never fear, earlier this month we published a list (at the top-left of the blog) of 26 stores in California that Fresh & Easy Neighborhood Market is currently preparing for early 2012 openings, and has started hiring employees for.

In addition, we included six locations in Las Vegas that Fresh & Easy has been planning to open for a number of years but hasn't, instead closing six stores there a year ago this month. (See the store closing list at the top of the blog for the locations.)

As we note in the list, we don't suspect Fresh & Easy to open more than a handful of the six units in Las Vegas in the January-March 2012 time period. But, as the grocer noted in the press release today, it does plan to open one or more new store in Las Vegas in early 2012.

Below are the specific locations of the 26 stores Fresh & Easy currently plans to open in early 2012. There could be others coming up, and a couple might not make the cut by the end of March for currently unforeseen reasons. But we've identified the units using a variety of sources in our reporting, along with using various research tools.

To see the Las Vegas addresses, go here: Planned F&E Openings Jan-March 2012.

You'll see numerous publications write about Fresh & Easy's plans, announced today in its press release, but this is the only place you are going to obtain the specific locations - at least for a little while.

You can click here for Fresh & Easy's press release so that you can match up the cities listed in it with the addresses and cities listed below.

Southern California

1. Laguna Niguel - Crown Valley Parkway and Golden
2. Hermosa Beach - Pacific Coast Highway And 8th Street
3. Chula Vista - 3rd Avenue and J Street
4. Burbank - Victory Boulevard and Buena Vista
5. Santee - Mission Gorge and Cuyamaca
6. Torrance - Hathorn Boulevard and Carson Street
7. Costa Mesa - Harbor Boulevard and Gisler Avenue
8. Los Angeles - Figueroa Street and Jefferson Boulevard
9. Los Angeles - Canyon Avenue and Sherman
10. Los Alimitos - Valley View Street and Lampson Avenue
11. Moorpark - Los Angeles and Moorpark
12. Granada Hills - Balboa Boulevard and Millwood
13. Santa Barbara - Downtown: 336 North Milpas Street

Central California Coast

14. San Luis Obispo - South Street and Broad Street

Northern California

South Coast

15. Monterey - 2020 Del Monte Avenue

San Francisco Bay Area

16. Brentwood - Balfour Road and Fairview Avenue
17. San Francisco - Silver and Goettinggen
18. Mountain View - North Rengstorft and Middlefield Road
19. Antioch - Lone Tree Way and Gold Course Drive
20. San Jose - Holger and First Street (Downtown San Jose near Safeway's 'The Market' store)

Sacramento Region

21. Sacramento - 34th Street and Broadway
22. Sacramento - Watt Avenue & El Camino Avenue
23. Sacramento - Mack Road and Franklin Boulevard
24. Lincoln - Lincoln and Sterling Road
25. Elk Grove - Elk Grove Florin Road and Calvine Road
26. Folsom - East Natoma Street and Blue Ravine Road

We will be reporting on and writing about Fresh & Easy Neighborhood Market's early 2012 new store plans extensively in the coming days, weeks and months. But there are a few takeaways we want to leave you with from our specific location list above and Fresh & Easy's announcement today.

First, the four Southern California stores in italics in our list above - Laguna Niguel, Hermosa Beach, Burbank and Los Angeles - are Fresh & Easy Express units.

The first 'Express' store, at La Cienega Boulevard and 18th Street in Los Angeles, opened November 2. [See - November 2, 2011: Open in Los Angeles: A Look at the First 'Fresh & Easy Express' Store; and November 1, 2011: Analysis: Tesco Opens First 'Fresh & Easy Express' Store Tomorrow in Los Angeles ... So What ... ?

Also key is the fact that Fresh & Easy will be intering three new market regions when it opens the stores in San Luis Obispo (Central Coast), Monterey (Northern California's South Coast) and Sacramento. We will be writing more about this development in an upcoming story.

Lastly, there are currently 184 Fresh & Easy markets. Tesco CEO Philip Clarke has said the United Kingdom-based retailer needs 300 Fresh & Easy units open and operating by February 2013 in order to fit with his strategy of breaking even with Fresh & Easy by the end of the 2012/13 fiscal year, which is over in February 2013, 16 months from now.

If Fresh & Easy opens 30 new stores (we will error on the high side to be more than fair) by the end of March 2012 - for a total at that time of 214 units - it will need to open 86 stores from April 2012- February 2013, an 11 month period, in order to get to Clarke's magic 300 units, give or take a handful of course.

It's an achievable task - but neither easy nor in many cases advisable. Tesco has opened under 50 new stores so far in 2011, for example.

The 600-plus new jobs Fresh & Easy says its hiring for, all but a handful in California, is good news for the Golden State, which still has the second-highest jobless (over 12%) rate in the U.S. The highest: Ironically ... it's Nevada, at 14%-plus.

Safeway Puts its Brand on Ice in San Francisco For the Holidays

2011-11-14T16:38:00.001-08:00

Branding on ice: The Safeway logo covers the middle of the ice rink above.

Private Brand Showcase

Pleasanton, California-based Safeway Stores, Inc. is extending its brand to an outdoor venue that defines fun, excitement and entertainment during the November -to- January holiday season.

That outdoor venue is the Safeway Holiday Ice Rink in San Francisco's Union Square.

The popular ice rink in Union Square, a shopping area in the heart of the city that's packed with huge department stores like Macy's, Neiman Marcus, Bloomingdale's and Saks Fifth Avenue, along with scores of other retail shops, boutiques, restaurants and cafes, opened November 9, and runs until January 16, 2001.

Safeway, which has a long history of business - it has 14 supermarkets in the city of nearly 900,000 which is located about 30 miles from the Pleasanton corporate headquarters - civic and public involvement in San Francisco, has sponsored the Union Square Ice Rink since 2007.

In addition to the supermarket chain's lead and named sponsorship, a number of other businesses, such as department store retailer Macy's and Ghirardelli Chocolate Company, which was founded in the city-by-the-bay, along with a number of radio and television stations, have signed on as co-sponsors of the Safeway Ice Rink in Union Square.

As part of its sponsorship, Safeway Stores, Inc. is helping to keep the cost of using the ice rink low - tickets cost just $10 for adults and $6 for kids eight years-old or younger. Ice skate and hockey skate rentals, for those who don't have their own, which is probably a fairly high number of people in San Francisco where it's know to get chilly - but not that chilly - are $5 pair

There are also specialty group rates, starting for parties of 15 or more persons.

A portion of ticket proceeds are being donated to the Boys and Girls Clubs of San Francisco and the San Francisco Recreation and Parks Department.

And to make the day or night on the ice last a bit longer, there's even a photo booth at the union square ice rink, which is open from 10 a.m-11:30 p.m daily, where skaters can have their photographs taken for $2 a pop. The photos are printed out on the spot. The photo machine will also send a digital version to your e-mail address.

The logo above is used in various places around the ice rink to reinforce the Safeway brand and the grocer's sponsorship.

The Safeway sponsored and branded Union Square Ice Rink is also holding a number of special events for the public this month and in December.

The first event was the opening of the ice rink last week. The opening ceremonies, which were held from 9 a.m-10 .a.m on November 9, was hosted by "The Ghost of Christmas Past," a member of the cast of San Francisco's internationally renown American Conservatory Theater's annual A Christmas Carol production.

Among other opening morning festivities on the ice was a performance by the popular Irish tenor Michael Londra, who is currently staring in Celtic Yuletide at the Marines’ Memorial Theatre in the city. Londra performed his hit song "Beyond A Star."

Skaters enjoy the Safeway Holiday Ice Rink over the weekend.

On November 25 the Safeway Ice Rink will be a part of San Francisco's annual Christmas Tree Lighting ceremony at Union Square, which is held each year the day after Thanksgiving.

But in typical San Francisco style - and flair - the two other events planned for the Safeway Ice Rink are a bit less traditional.

On December 1, the rink is hosting Speed Dating Skating, which is an on-the-ice version of speed dating. The singles, which there are many of in San Francisco, are being invited to wear their most unusual holiday-inspired sweater as a way to "break the ice" and get conversations started, which in-turn might lead to a future date - or even one later that night.

There's also an interesting freebie included as part of the event: The first 100 singles to arrive get a mistletoe headband, which should spark a little more than just conversation while on the ice.

The "singles night" event happens to share a "branding" angle with one of Safeway's stores in San Francisco - although we're not sure the ice rink's producers were aware of it or had it top-of-mind when planning the event.

Safeway's store in the city's Marina District - where former chairman and CEO Peter McGowan, who also led the ownership group that kept the San Francisco Giants from moving out of the city over a decade ago, has lived for many years - is known as the "Singles Safeway" because of the number of single people who first met in the aisles of the supermarket. Many of those meetings led to a first date - and often two, three or more and, in some cases, even marriage.

In June Safeway Stores, Inc. held this event - Safeway Has A Picnic in San Francisco Featuring the 'World's Longest Picnic Table' to Showcase its 'Open Nature' Natural Foods' Brand - on the Marina Green, which is across the street from the Marina Safeway store in San Francisco.

But the city's unique style and flair really comes out in full bloom on 8 (8-9:30 p.m) when the ice rinks promoter is presenting Drag Queens on Ice.

Willy Bietak Productions, the producer for the Safeway Ice Rink in Union Square, tells us it's giving Santa a break for the night and instead it's invited a number of the San Francisco Bay Area's most colorful professional drag performers to skate and perform at the rink.

The promoter says its also inviting the public to don their own wigs and outfits and skate alongside the Drag Queens during the evening.

Prediction: Not only will it be a colorful evening but you can also bet the photo booth at the ice rink will be getting a lot of use and bringing in plenty of cash during the event.

Sponsoring the holiday ice rink is smart marketing and provides a major branding-plus for Safeway Stores in the San Francisco Bay Area and corporately, in our analysis.

Why? It's the holidays, a time of joy and family, it's an ice rink in San Francisco, a once-a year-event (although this year the city has two such outdoor rinks for the holidays) and its fun.

Therefore as the sponsor of the ice rink in Union Square, Safeway gets its eponymous brand, which it also uses in various versions as a product brand - Safeway, Safeway Select, Safeway Kitchens, Safeway Farms - on food, grocery and general merchandise products in its stores, associated with holiday joy, individual and family fun, a unique, once-a-year experience, and fun and happiness.

All the characteristics noted above pretty much sum up a marketer's dream list when it comes to branding.

Many Bay Area television and radio stations are co-sponsors of the Safeway Holiday Ice Rink in Union Square. Each year since 2007 these and other local broadcast and print media outlets provide millions of dollars worth (if it were paid advertising) of free publicity for the event - and thus to Safeway Stores' as the sponsor.

It's all third-party endorsement publicity as well - television coverage of the skaters and special events at the rink, radio stations producing and airing live remotes from the venue, photographs and stories in the local papers -which is much more powerful from a marketing perspective than paid advertising is.

Putting its Safeway brand on ice in San Francisco, which is the "go to" city for residents of Northern California, where Safeway is the market share leader with about 250 supermarkets (the second highest U.S. division in gross sales after Vons' in Southern California), is not only a "cool" thing for Safeway Stores, Inc., to do, it's also good business - and smart branding.

Related Stories

October 26, 2011: Farms ... at Safeway? Grocer Launches its Newest Private Brand ... 'Safeway Farms'

June 19, 2011: Safeway Has A Picnic in San Francisco Featuring the 'World's Longest Picnic Table' to Showcase its 'Open Nature' Natural Foods' Brand

May 28, 2011: At The 'Brand Factory': Safeway Stores' Launches Newest Private Brand - 'Safeway Kitchens'

February 7, 2011: Getting There First...Plus, Are Tesco's Fresh & Easy and Safeway Traveling Down A Similar Private Brand Aisle?

January 5, 2011: Safeway Adds 'Open Nature' to its Natural-Organic-Healthy Foods' Private Brand Portfolio

April 8, 2011: The Branded 'Signature Cafe' in Safeway Stores' Soon to Open 'Social Safeway' in Washington D.C. Should Turn A Few Heads

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

Click on this link - Safeway Stores Inc. - to read additional stories about Safeway.

Click on this link - private brand showcase - to read past stories in our 'Private Brand Showcase' feature.

Trader Joe's Introduces 'Wasabi Arugula' ... Minus the Wasabi

2011-11-13T16:57:00.000-08:00

Private Brand Showcase

Trader Joe's, which we often refer to as an iconic grocer because of its rabid fan base and creative private brand development and merchandising, has introduced an interesting new addition to its eponymous store brand fresh, packaged produce line - Trader Joe's Wasabi Arugula.

What makes the new Wasabi Arugula item interesting isn't so much what's in the bag though. Instead, it's what's not inside that grabbed our attention.

Trader Joe's Wasabi Arugula doesn't include actual wasabi. Instead, what's inside the bags is a spicier version of the common arugula, also called rocket lettuce, that's sold in many U.S. supermarkets and grocery stores.

The grocer, which has about 360 stores in the U.S., already offers basic arugula or rocket lettuce under its Trader Joe's brand, packaged in cello bags similar to the new "Wasabi Arugula". Therefore, when its private brand development team and the marketers at the corporate offices in Southern California decided to introduce the spicier arugula variety under the same brand, they needed a catchy name. TJ's specializes in catchy names for its various private brand products, after all.

Enter wasabi, that extremely popular - except among the faint of palate - Japanese condiment (it's Japanese horseradish to be specific) - that's not only the staple at every sushi bar in the world but also provides a special kick when paired with many types of foods (and with other condiments like mayonnaise). it's also a catchy and fun word to say. If you don't believe us, say Wasabi fast three times straight right now.

The result: Trader Joe's Wasabi Arugula. And below the product name on the package a tag line says: "Arugula with a little extra punch."

The Wasabi Arugula packaging isn't deceptive. It makes no claim of containing actual wasabi - although including a packet of wasabi salad dressing would make some lovers of the Asian condiment do back flips of joy.

But when spotting the package of Trader Joe's Wasabi Arugula in the produce case from a slight distance away in the grocery aisle (point-of-purchase), the first thing that does come to mind is: "Interesting, arugula with wasabi." That is, until you pick the package up and look at it closely. In other words, the name (the hook) works to draw shoppers' attention to the product. That's good brand marketing.

The 7oz bags of Trader Joe's Wasabi Arugula sell for about $2.39-$2.59, depending on where the particular TJ's grocery market is located in the U.S.

We didn't see any cross-merchandising of chopsticks near where the Trader Joe's Wasabi Arugula was displayed in the refrigerated produce case. Doing so might be a cute idea though, in keeping with Trader Joe's whimsical merchandising philosophy.

Related Stories

November 9, 2011: Glatt to Meet You Paisan - Kosher 'Meats' Italian at Mollie Stone's Markets

October 28, 2011: Move Over Chipotle - Fresh & Easy Neighborhood Market Introduces its Own Brand of Burrito Bowls

October 26, 2011: Farms ... at Safeway? Grocer Launches its Newest Private Brand ... 'Safeway Farms'

>View all the past stories in our Private Brand Showcase feature at these links - private brand showcase, private brands showcase.

Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market

2011-11-10T18:44:00.000-08:00

Simon Uwins, chief marketing officer for Tesco's Fresh & Easy Neighborhood Market since early 2006 when the United Kingdom-based global retailer set up shop in El Segundo, California, is out as part of a top-level management reshuffling by Tesco's CEO, Philip Clarke, and Tim Mason, CEO of Fresh & Easy and Tesco group deputy CEO/chief marketing officer.

In addition to his position as chief marketing officer, Uwins was one of Fresh & Easy Neighborhood Market's senior corporate officers. He reported directly to CEO Mason.

Mason announced Uwins' departure from Fresh & Easy and parent company Tesco Wednesday at the grocery chain's Town Hall meeting.

The Town Hall meetings, which include the full office staff and are broadcast to employees at the Riverside distribution campus, are held weekly at 1 p.m at Fresh & Easy's corporate office in El Segundo, California

Neither United Kingdom-based Tesco or Fresh & Easy Neighborhood Market has publicly announced Uwins' departure. As a matter of policy, Fresh & Easy doesn't announce when senior executives or employees at any level leave the company. Additionally, Fresh & Easy doesn't as a practice announce new hires at any level.

Simon Uwins, 52, was part of the original team of senior executives who came with Mason to set up and launch Fresh & Easy Neighborhood Market in 2006. Prior to that he worked at Tesco's global headquarters in Cheshunt, United Kingdom, where he was a marketing executive.

As part of Uwins' departure as chief marketing officer at Fresh & Easy, Clarke and Mason have reshuffled the organization chart, making a number of changes.

John Burry, Fresh & Easy's chief commercial officer (head of buying and merchandising), is assuming overall responsibility for both the commercial and marketing functions at the Tesco-owned fresh food and grocery chain.

Like Uwins, Burry is one of the original members of Fresh & Easy's senior management team. He is also a senior corporate officer of Fresh & Easy Neighborhood Market.

The commercial department has two directors - grocery and fresh foods - who report directly to Burry. Below them are category managers, who are direct-reports to the directors. The category managers have buyers and assistant buyers directly reporting to them.

One of the two directors (the other is Larry Biggerstaff), Tim Lee, the trading director for fresh foods (produce, meat, deli/fresh-prepared foods) is vacating that position and will be working with John Burry to transition the marketing function at Fresh & Easy into the commercial department, according to our sources.

Lee won't be replacing Uwins as chief marketing officer but rather assuming many of his day-to-day marketing management duties. He will continue to report to Burry.

Tim Lee came to Fresh & Easy from Tesco in the UK in early-2010, replacing Jim Jensen, who left to take a position heading up drug chain Walgreens' new at the time fresh foods program. Lee's focus at Tesco in the UK was as a produce category manager and director.

According to our sources, Lee has 9-10 months left on his original assignment contract at Fresh & Easy. He will be using that time in the new position, which straddles commercial and marketing, our sources tell us.

Ian Fletcher, who runs Fresh & Easy's fresh-prepared foods kitchen operation, is replacing Lee as director of fresh foods, according to our sources.

Fletcher, who originally worked in the UK, has been with Fresh & Easy for a number of years. His wife, Karen Fletcher, was the beer, wine and spirits category manager at Fresh & Easy Neighborhood Market from 2007 until this summer, when she resigned. She too previously worked for Tesco in the UK. The Fletcher's were married not long after coming to Fresh & Easy at the start up stage. John Burry was the best man at the their wedding in Hawaii.

Rounding out the reshuffling, Mark Lodge will take over management of Fresh & Easy's corporate kitchen operation when Ian Fletcher moves into the director of fresh foods position, replacing Tim Lee, according to our sources.

Lodge is currently an employee of the kitchen operation, which is Fresh & Easy's central commissary at the Riverside County, California campus facility, where the ready-to-eat and ready-to-eat fresh-prepared foods sold in its 184 stores in California, Nevada and Arizona are prepared and packaged.

From a balance sheet perspective, the reshuffling will save Fresh & Easy one senior-level executive salary and benefits package, which is that of the departed Simon Uwins. Some of that savings will be taken up by probable pay raises going to Ian Fletcher and Mark Lodge in their respective new positions. Tim Lee is likely a wash, and it's unlikely Burry will be getting a raise as part of assuming the overall responsibility for marketing, in addition to keeping his commercial department duties.

Tesco's Fresh & Easy has lost a number of key middle management-level employees at its El Segundo, California headquarters over the last 60 days, according to our sources.

The employees include: a key director/manager in the grocery chain's logistics and supply chain department; a category manager/buyer who was playing a major role in heading up Fresh & Easy's new in-store bakery program, which is still in its infant stages; and a veteran-senior level member of its information technology (IT) department.

All three of these employees left to take new jobs in the food and grocery industry, according to our sources.

Simon Uwins currently plans to remain in the U.S. rather than returning to the UK, according to our sources.

Tesco currently has no immediate plans to name a new chief marketing officer for Fresh & Easy either, our sources tell us, instead combining the marketing function and department with commercial under the direction of John Burry, as reported and detailed above.

Additionally, since Fresh & Easy's CEO, Tim Mason, is also Tesco's chief marketing officer and is based at the grocery chain's headquarters in Southern California, he will likely play a strong hand in the U.S. operation's marketing, since in the position, which he was named to in March of this year when Clarke became CEO of Tesco, he has the ultimate responsibility for all of Tesco's corporate marketing.

Therefore the new structure - no chief marketing officer at Fresh & Easy - has, at least theoretically, the effect of flattening the organizational chart at the senior level when it comes to the marketing function at Fresh & Easy Neighborhood Market and the headquarters office in El Segundo, California, where Mason is based.

Glatt to Meet You Paisan - Kosher 'Meats' Italian at Mollie Stone's Markets

2011-11-09T18:31:00.001-08:00

Although the item won't be introduced until early next year, Mollie Stone's is giving Fresh & Easy Buzz and our readers the first look at the label for its Nonna Luisa brand organic tomatoes, above.

Private Brand Showcase

Central to the 26-year run of success for privately-owned Mollie Stone's Markets, which operates nine supermarkets in the San Francisco Bay Area, is its format, which combines a strong selection of everyday food, grocery and general merchandise essentials - what it calls neccessity shopping - with a healthy assortment of specialty, gourmet, ethnic, natural, organic and fresh-prepared foods, which it calls passion shopping.

In many ways the format is the brand for Mollie Stone's.

And speaking of branding, a growing and evolving aspect of the grocer's neccessity and passion shopping approach and format - the stores are neither basic supermarkets or specialty markets - is its focus on private brand development, merchandising and promotion.

For example, although Mollie Stone's has only nine-stores, the grocer, which is majority-owned by partners Mike Stone and Dave Bennett, has three private product brands of its own - Mollie Stone's, which it uses on assorted dry grocery items, fresh meats, produce and baked goods; Mollie O Organic (for organic products); and Nonna Luisa, which is the retailer's Italian foods' brand.

Earlier this year Stone and Bennett also introduced the first item in what we call their "personal brand." That brand is Mike & Dave's, taken from the partners' first names. The first product is Mike & Dave's Wing Sauce.

Mike & Dave's is technically a fourth private brand for Mollie Stone's. But we call it a "personal brand" because not only is it named after the two partners who serve as each others wingmen, but they're also marketing the brand to other retailers via wholesalers and distributors, in addition to selling it in the nine Mollie Stone's stores. Therefore it's a venture product brand for the partners in addition to one sold in their stores.

There will be additional items under the Mike & Dave's brand, according to Dave Bennett, who is the retail operations, marketing and buying/merchandising-focused half of the ownership team. Stone focuses on the overall running of the chain from a headquarters perspective, along with finance, administration, new store development and other related tasks.

Mollie Stone's, which has its headquarters office near the bay in the Marin County town of Mill Valley - its stores are in San Francisco (three units) and (one each in) Sausalito, Greenbrae, (Marin County), Burlingame, San Bruno, San Mateo (San Francisco Peninsula) and Palo Alto (Silicon Valley) - is currently beefing-up its private brand offerings as part of that neccessity shopping/passion shopping overall brand its been developing since Stone and Bennett founded the small but high-volume chain in 1985.

For example, this week the grocer is introducing a line of fresh-cut Glatt Kosher meats under its Mollie Stone's private brand in a number of its San Francisco Bay Area stores, including the three small in size but high in sales volume markets it operates in San Francisco.

The Mollie Stone's brand Glatt Kosher meat line features a selection of in-store cut, prepared and packaged cuts of beef roasts and steaks, ground meats and other varieties, as you can see in the photos above and below.

Kosher foods are a specialty of Mollie Stone's - and a passion of co-owner Bennett, who is one of the leading kosher category mavens in the food and grocery business.

For example, earlier in Mollie Stone's history, Bennett managed the Palo Alto store in addition to being involved in running the other stores the partners' operated at the time.

Over the years Bennett and his team at the Palo Alto supermarket created one of the most extensive kosher category product assortments of any chain or store in the Bay Area.

They also focused on enhancing the kosher offering for the key Jewish holidays, which has resulted in the Palo Alto location becoming a shopping venue for many Jewish consumers from throughout the nine-county Bay Area, particularly during the key Jewish holidays like Passover. There are nearly 7 million residents in the region, many of whom are observant Jews.

But Bennett isn't a kosher-centric kind of grocer when it comes to private brands or products of any kind, nor is Mollie Stone's a on-trick food retailer when it comes to ethnic and specialty foods and its own brands.

For example, Bennett tells us Mollie Stone's is in the process of growing its Nonna Luisa Italian foods private brand, which is named after the most important member of any Italian household, not to mention the entire culture. That person, of course, is Nonna (grandmother).

The grocer, according to Bennett, is in the process of adding two new items to its small but growing Nonna Luisa private brand line, both imported from Italy - shelf-stable Gnocchi and Organic San Marzano tomatoes. The label for the tomatoes is pictured at the top of this story.

Bennett tells Fresh & Easy Buzz the new items are will be introduced in the nine Mollie Stone's stores between January-March of next year. There are currently pasta, oils and vinegars under the Nona Luisa brand.

We aren't surprised Mollie Stone's has decided to grow its Nonna Luisa Italian foods' brand because, just as Bennett is the in-house kosher foods maven, the grocer also has its own in-house Italian foods maven, who's also a mensch, and has been with Stone and Bennett since nearly the beginning in 1985, when Mollie Stone's Markets' was founded.

That maven, mensch and Italophile, all rolled up into one, is Angelo Demante, who's managed the Sausalito Mollie Stone's grocery market since it opened in 1988.

Demante, who's worked in the food and grocery retailing business for over a half century, not only is and speaks Italian, he knows the Italian foods' category inside-out, and regularly creates in the Sausalito store some of the best-looking Italian food product displays we've seen, particularly during holidays such as Columbus Day, Easter and Christmas, when many Italian specialty foods are popular and in demand.

In fact, we're told by a source we're only identifying as Deep Clerk that Demante, who may be the oldest-in-age but youngest-in-spirit - particularly when it comes to the Italian foods category - supermarket store manager in America, may already have an end-cap picked out in the Sausalito store for the new Nonna Luisa brand Gnocchi and canned tomatoes set to be introduced early next year.

If Mollie Stone's can make the launch happen in January, the timing could be perfect: Angelo Demante, the grocer's Italian foods' maven and mensch, can simply replace boss and kosher category maven Dave Bennett's current holiday kosher foods end-cap with his own, featuring the two new Nonna Luisa items imported from Italy, which would be another great way for kosher to meet Italian at Mollie Stone's Markets'.

Related Stories

May 16, 2011: 'Wing Man-to-Wing Man' - Mollie Stone's Markets' 'Mike & Dave' Create, Set to Launch 'Personal Brand' Wing Sauce

June 23, 2011: Mollie Stone's Markets' Owners' Eponymous Mike & Dave's Wing Sauce Grows Display Wings

July 14, 2011: Mollie Stone's Markets' Takes Next Step in its Social Media Journey By Hiring First In-House Manager

August 4, 2011: Mollie Stone's Markets' Year of Passionate Improvement Continues With Launch of New Website Tomorrow; But There's Also More In-Store

Read additional stories about Mollie Stone's Market here.

You can view all the stories in our Private Brand Showcase feature, including our most recent about Safeway Store's new private brand and Fresh & Easy's new burrito bowls, here.