Southern California Market Report: Cathedral City Votes to Approve New Fresh & Easy Market; One Councilman Dissents Citing Low Wages As His Reason

At its meeting last Wednesday night the city council in the Southern California desert region city of Cathedral City unanimously approved an application by Tesco in a 4 -to- 1 vote to locate a new Fresh & Easy Neighborhood Market grocery and fresh foods store on a 1.5 acre site on Date Palm Drive south of 30th Avenue in the city.

The one dissenting councilman, Greg Pettis, voted against approving the Fresh & Easy store for the Date Palm Drive location, sighting as his main reason that the grocery chain pays store-level employees too low of hourly wages relative to its unionized competitors.

Tesco Fresh & Easy Neighborhood Market pays store-level $10 an hour in Southern California ($9 an hour in Nevada and Arizona). Each store is staffed with 10 -to- 25 employees. All store workers are part time except for the store manager. The store team leader (assistant manager) makes a starting hourly wage of $13 an hour. Most team leaders work part-time, although some work full-time.

Part time employees who work 20 or more hours a week receive a health insurance plan which the grocery chain says it pays 75% of, with employees contributing 25%. Fresh & Easy Neighborhood Market says it also offers all store level employees a 401-K plan. However the company does not say how much of an employer match is offers the store employees.

Councilman Pettis said at the Wednesday night meeting: "We all want new business for Cathedral City. But I'm not convinced Fresh & Easy is one of them."

He said Fresh & Easy is a non-union grocery chain and that union chains in the market such as Vons, Safeway, Stater Bros. and others pay considerably higher wages than Tesco Fresh & Easy Neighborhood Market offers its store-level employees.

Pettis also said he voted against the Fresh & Easy because (in his opinion) it doesn't generate any significant sales tax for Cathedral City.

"There's no tax on food," Pettis said at Wednesday night's city council meeting. "Other items, such as paper products or light bulbs are taxed but they account for less than 10 percent of the store's gross sales," he said.

The city council asked city staff to provide an estimate on about how much sales tax revenue the new Fresh & Easy market on Date Palm drive would generate annually for the desert city. Administrative City Services Director Tami Scott estimates the store might bring in about $45,000 -to- $50,000 annually in sales tax revenue.

The other four city council members were in support of the new Fresh & Easy market coming to town however, all voting to approve the grocery chain's permit to locate the store on the 1.5 acre parcel on Date Palm Drive.

City councilman Councilman Chuck Vasquez said he was enthusiastic about the Fresh & Easy store, telling his fellow council members and audience members at the meeting he believes the new store will spur economic development activity in the corridor where the grocery market will be located.

Councilman Pettis, an up-and-comer on the council according to local observers, disagreed. However, his three fellow city lawmakers agreed with councilman Vasquez, resulting in the 4 -to- 1 majority cote in favor of the Fresh & Easy store coming to town at the Date Palm Drive location.

A Fresh & Easy Buzz reader who was at the Wednesday night city council meeting said there wasn't any community objection to the new Fresh & Easy store voiced at the meeting by city residents.

The council didn't hold his lone no vote against him though. They unanimously voted to send Councilman Pettis to be the city council's voting delegate at the annual National League of Cities Annual Business Meeting on Nov. 15 in Orlando, Florida. This is the annual convention for all of America's incorporated cities, where numerous decisions are made regarding political and policy advocacy.

Since the annual convention comes just two weeks after a new U.S. President will have been elected, this year's meeting is considered to be a very important one for municipalities, particularly because of the current economic slump that finds so many U.S. cities unable to balance their budgets, along with many being on the verge of bankruptcy.

Cathedral City is located in the Southern California desert region, near cities such as Indio, Palm Desert and Palm Springs. This part of Southern California is key to Tesco's Fresh & Easy. Not only is its 850,000 square foot distribution center located in the region in Riverside County but its also a market region where the grocery chain already has numerous stores and plans to open many more.

As we often write about, Tesco's strategy with Fresh & Easy is to open a "critical mass" of stores in various market regions in Southern California, Metropolitan Las Vegas, Nevada, and in the Phoenix, Arizona Metro region market.

This strategy calls for having Fresh & Easy markets in nearly every city in these designated market regions (and multiple stores in some cities), locating the stores about 1.5 -to- 2 miles from each others in order to achieve this "critical mass." Think about what Starbucks does with its cafes and Walgreens does with its drug stores in terms of "critical mass" store location strategy, for example.

Southern California Market Report: Will the Inland Empire Region City of Highland Get A Fresh & Easy Market Of its Own?

Southern California's vast two-county -- Riverside and San Bernardino -- Inland Empire region has been one of the fastest-growing areas in California and in the U.S. over the last decade.

From the Fresh & Easy Buzz Editor's Desk: Tesco's Fresh & Easy Neighborhood Market has cancelled very few of its store development plans since it started on its rapid grocery store opening blitz in late October, 2007, which has resulted in the grocer having 96 stores opened thus far in Southern California, Nevada's Las Vegas Metro area and in the Phoenix, Arizona Metropolitan region.

One of the few locations Fresh & Easy did change its plans about was its decision to build a store at Greenspot Road and Boulder Avenue in the Southern California city of Highland, in San Bernardino County.

The Highland Fresh & Easy was to be one of the grocery chain's first stores. But nearly a year ago today, it canceled its plans to open the market at the location in the city in Southern California's Inland Empire region, which is one of Fresh & Easy Neighborhood Market's key market area focuses in Southern California. The retailer's 850,000 square foot distribution center is located in the Inland Empire region in next door Riverside County.

Joe Nelson, a staff writer for the local The Sun newspaper in the Inland Empire, explores whether or not Tesco's Fresh & Easy will eventually open a store in Highland, since the grocery chain has opened stores in numerous neighboring cities all around the town, and plans to open additional stores in those cities.

In fact, he suggests in his report in The Sun Fresh & Easy could be on the verge of dipping its food retailing toe back into Highland, possibly locating a store in a different neighborhood in the Inland Empire region city.

Below is that report from The Sun, which is based in San Bernardino County and serves readers throughout Southern California's Inland Empire region. Note: All of the cities mentioned in the report are in the Inland Empire region.

Highland's hopes for a Fresh & Easy still unanswered
Joe Nelson, Staff Writer
10/18/2008

They've opened or are in the process of opening in Yucaipa, Loma Linda, Fontana and Rialto. But when it comes to Highland, the Fresh and Easy Neighborhood Market has remained elusive for more than a year.

The grocery canceled its decision to build a store at Greenspot Road and Boulder Avenue about a year ago, and things have remained relatively quiet ever since.

There has, however, been a faint hint that the retailer is now considering building a store on Base Line, east of Palm Avenue, next to the new Bakers restaurant and CVS Pharmacy.

"We talked to them informally. They had a preliminary review, but we have not received a formal application," said John Jaquess, Highland's community development director.

Fresh and Easy spokesman Brendan Wonnacott would neither confirm nor deny the company's plans to build in the area the city has destined for a future town center.

"It's still in the early stages," Wonnacott said. "Right now I can confirm we're looking in Highland, and we hope to serve neighborhoods there in the near future."

In the last year, development projects in the area of Base Line, between Palm Avenue and the 210 Freeway, have repeatedly popped up on City Council, Planning Commission and Design Review Board agendas.

On Oct. 7, the Design Review Board approved a site plan for a new Dairy Queen on the southwest corner of Base Line and Bonita Drive. The 2,080-square-foot restaurant will include a drive-through and 10 parking spaces. The existing one across from City Hall will be closed when the new one opens, Jaquess said.

When CVS Pharmacy got approval to build on the northwest corner of Base Line and Palm Avenue, demolition of the existing Bakers restaurant, which faced Palm Avenue, was part of the package. The restaurant was rebuilt facing Base Line, east of the new CVS. Both recently opened.

The intersection of Base Line and Palm is one of the busiest in the city, making it a prime spot for new development and a town center. City Hall is on Base Line just west of Palm Avenue, and a new sheriff's station will be built on Base Line further to the west, at the corner of Olive Tree Lane.

When Fresh and Easy finally makes its move in Highland is unknown.

Wonnacott would not say why the company decided not to build on Greenspot Road in an area the city has dubbed the Golden Triangle, which will be a shopping, dining and entertainment hub. A Lowe's, Staples, and Del Taco and Subway restaurants are all set to open soon just east of the 210 Freeway.

Fresh and Easy opened its 96th store Thursday in Las Vegas. Last week, one opened on Base Line and Citrus Avenue in Fontana, Wonnacott said.

A store in Loma Linda is getting ready to open, and one opened in Yucaipa last month. Two stores are planned for Rialto, Wonnacott said.

The company also plans to open stores in Calimesa and Beaumont.

Southern California Market Report: Lou Hirsch On Changing Grocery Shopper Behavior in Southern California's Inland Empire Region

Shopper Laurel Speer pays close attention to values and prices as she shops the meat case at the Henry's Farmers Market store in Temecula, California. [Photo: Frank Bellino/The Press-Enterprise.]

Lou Hirsh, a staff writer for the business section of the Press-Enterprise newspaper, which is based in and covers Riverside and San Bernardino counties in Southern California's Inland Empire region, has a piece in today's edition of the paper about the various ways shoppers are attempting to save money during the current economic downturn, which most economic experts like Stephen Levy of the respected Center for the Continuing Study of the California Economy in Palo Alto say has now likely become a full-blown recession in California.

Among the ways described in the story in which shoppers are trying to save money on food and groceries include:

• Trading-down from national brand to private label products if the prices on the private label items are cheaper
• Trading-down from premium to mid-level food products.
• Buying bulk foods and cooking more at home from scratch rather than eating out or buying prepared foods at the supermarket.
• Using manufacturers' cents-off coupons to save money on their total grocery order purchases.
• Shopping at salvage format grocery stores such as Grocery Outlet, which specialize in selling manufacturers' close-out and overstock items and food and grocery products with minor label mistakes or in slightly blemished condition.

Grocery Outlet and other salvage grocers buy these products in large quantities for a deep discount from manufacturers and in turn sell them in their stores for much cheaper than the same items sell for in most supermarkets.

For example, here's what Eric Lindberg, the co-CEO of the Berkeley, California-based Grocery Outlet chain says in the story about recent business in the stores:

Eric Lindberg, co-CEO of Berkeley-based Grocery Outlet, said his privately held company has seen "double-digit" increases in sales and foot traffic compared with last year at its 135 locations, which include stores in Hemet and Victorville.

Hemet and Victorville are in Southern California's Inland Empire region which includes Riverside and San Bernardino counties. Tesco's Fresh & Easy Neighborhood Market's distribution center is based in Riverside County and the Inland Empire region is one of the retailer's top focuses for its small-format Fresh & Easy grocery stores. In fact the very first Fresh & Easy market opened in late October, 2007 in the city of Hemet. Since then Tesco has opened numerous Fresh & Easy stores in the region.

Another interesting change in shoppers' habits is commented on in the story by Janet Little, who is the the staff nutritionist and spokesperson for the Henry's Farmers Market chain in Southern California.

Janet Little, a nutritionist and spokeswoman for Irvine-based Henry's Farmers Market, which has seven Inland locations, said the chain in the past year has seen lower demand for items like gourmet cheeses and increased purchases of its bulk items, such as sugar, flour and other ingredients that families are purchasing to make full meals at home.

Read Lou Hirsh's story in today's Press Enterprise here. We suggest you read the entire piece. It's a good, quick read.

What Others Are Saying: Press-Enterprise Newspaper Investigates if There's A 'Fresh & Easy Effect' in Southern California's Inland Empire Region

Fresh flowers can be a woman's best friend. A shopper selects a bouquet of fresh flowers at the Fresh & Easy grocery store in Moreno Valley, in Southern California's Inland Empire. (Photo: Kurt Miller. Courtesy: Press-Enterprise.)

The Press-Enterprise newspaper, which serves residents in the Southern California Inland Empire region counties of Riverside and San Bernardino, has a piece written by staff business writer Lou Hirsh about the impact of Tesco's Fresh & Easy Neighborhood Market grocery stores on the area's food and grocery retailing scene.

As Fresh & Easy Buzz readers are aware, we've written frequently about the Inland Empire region's food and grocery retailing market as its one of Tesco's key target markets for its small-format, convenience-oriented Fresh & Easy grocery stores, as well as becoming an increasingly super-competitive market in general.

As we've reported, Tesco says it could open as many as 48 Fresh & Easy combination basic grocery and fresh foods stores in the region by the end of 2009. Tesco currently has eight Fresh & Easy grocery markets open in the area: one each in Hemet (the very first store opened), Indio, Palm Desert, Riverside, Moreno Valley and San Jacinto; and two stores in Upland.

Tesco also has its Fresh & Easy Neighborhood Market corporate headquarters and its 800,000-plus square foot distribution center located in Southern California's Inland Empire region, in Riverside County. By virtue of this fact, its fair to say the Inland Empire region is Fresh & Easy's "home turf."

The Press Enterprise story addresses the question, which we address regularly on Fresh & Easy Buzz as well, if Tesco's Fresh & Easy Neighborhood Market is yet having any impact on the competitive food and grocery retailing scene in the region with its seven stores open and operating in the market thus far.

Numerous investment banking and food retailing analysts offer their analysis of Fresh & Easy in the piece. Additionally, in the piece, the writer quotes opinions of consumers in the region regarding their observations and experiences with the grocery stores.

The upshot to the offerings from the various analysts quoted in the story and the consensus of overall opinions is: It's too early to tell if Tesco's Fresh & Easy is having any impact on the food and grocery retailing scene in the Inland Empire region, which is fair.

Read the Press-Enterprise story here.

Staff writer Hirsh also has a companion piece about how the recessionary economy in the region, along with what we've called the "super-heated" food and grocery retailing scene in Southern California's Inland Empire, is effecting shoppers.

The piece offers a good overview in terms of how consumers in the region are dealing with food inflation and the soaring cost of food, which the U.S. Department of Agriculture reported yesterday is at its highest levels in 18 years.

As part of dealing with the rapidly-rising cost of food and groceries, Inland Empire shoppers are doing what most shoppers throughout the U.S. are currently doing, which is looking for the best bargains they can find in order to feed their families without having to morgage their futures completely.

Read staff writer Lou Hirsh's companion piece, "Inland shoppers bring market changes," here.

A New Fresh & Easy Store Opening About Every Two Days In February

Despite the fact February is the shortest month this year, with only 29 days, Tesco's Fresh & Easy Neighborhood Market is opening a new store about every other day, in a frenetic February, 2008 new-store opening blitz in Southern California, Arizona and Nevada.

In a January 27 post in the Fresh & Easy corporate blog, company marketing chief Simon Uwins said the grocer will open 16 stores in the four weeks from January 28 -to- February 29. That's on average an opening of about one new store every two days, if the retailer is able to get all 16 new grocery markets opened by the end of this month as planned.

Nearly all of these 16 stores are being opened in Southern California, Fresh & Easy's number- one target market region, and Arizona, the grocer's number two region of focus.

Tesco will open store number 50 tomorrow morning at 10:am in the Southern California desert region city of Palm Desert. The store is located at 72885 Hwy. 111. Palm Desert is in Southern California's Inland Empire region, an area where Tesco plans to open as many as 48 stores before the end of this year.

The British grocer will open two more of its 10,000 -to- 13,000 square foot grocery stores in the nearby city's of Riverside and Upland one week from tomorrow, on February 27. The Riverside store will be the first Fresh & Easy grocery market in that city. The Upland store will be the grocer's second in that community. The Riverside store is at 8765 Trautwein Road. The new Upland grocery market is at 829 West Foothill Blvd.

The Riverside location is an interesting--and will be a competitive--one. SuperValu, Inc.-owned Albertsons is opening a remodeled supermarket tomorrow right across the street from where the Riverside Fresh & Easy, opening next week, is located.

The Albertsons' store has been remodeled under SuperValu's "Premium Fresh & Healthy Format." That format is an upscale one, featuring lots of fresh, prepared foods, expanded fresh produce departments which feature lots of organic produce, large combined self-service and old fashion butcher- block type meat departments, as well as more natural, organic and fresh foods offerings across all departments.

Riverside, and the Inland Empire region also is home to Stater Bros. markets, a local supermarket chain which is the market share leader in the region. Stater Bros. is an Inland Empire institution. In addition to being the region's number one grocery retailer, it's also the area's number one corporate citizen, giving millions of dollars a year in donations to local educational institutions, community groups, charities and other not for profit organizations.

Stater Bros. has fought-off any and all attempts by other supermarket chains to challenge its market share dominance in its home region. Tesco's Fresh & Easy can expect the supermarket chain to do everything in its power to make sure it doesn't lose any significant grocery dollar share to the British-based retailer.

New Fresh & Easy Store Opened Today in the Southern California Inland Empire Region City of Moreno Valley

Tesco's Fresh & Easy Neighborhood Market opened its 44th small-format grocery store today in Southern California's Inland Empire desert region, a key market for the grocer. The approximately 13,000 square foot grocery and fresh foods market opened this morning in the city of Moreno Valley, at 2505 Alessandro Blvd @ Parris Blvd.

The huge desert Inland Empire region is a key market in Fresh & Easy's Southern California strategy. The retailer has said it plans to open about 48 stores in the region. It's first Fresh & Easy store opened in the area city of Hemet in late October, 2007. The grocer currently has stores in the Inland Empire cities of Upland, Indio and San Jacinto, in addition to Hemet and Moreno Valley.

Tesco will open the next new Fresh & Easy grocery store in the Inland Empire region on February 20, in Palm Desert, at 72885 Hwy. 111. Palm Desert is an upscale residentail community. It's also a major tourist area, with many people from California having second homes in the city and surrounding area. Its been growing rapidly as well, with many new jobs being created in the gaming and tourism industries. Most forms of gambling are legal in the region because California state law allows Indian Tribes--which are numerous in the area--to own and operate Las Vegas-style casino's, which many tribes do.

Following the opening of the Palm Desert store next week, the retailer will open another new Inland Empire region store on February 27 at 8765 Trautwein Road @ Buren Avenue in Riverside, and a store at 829 W. Foothill Blvd. in Upland on the same day.

Tesco says it plans to have the 48 stores in the two-county (Riverside and San Bernardino counties) region open and operating before the end of 2009. The retailer is shooting for having as many as 300 stores open and operating in California, Arizona and Nevada by the end of next year.

Tesco's Fresh & Easy Neighborhood Market grocery stores average about 10,000 -to- 13,000 square feet. The markets' feature a combination of Fresh & Easy brand private label and nationally-branded basic, everyday grocery items at resonable prices, fresh meats and fresh produce, specialty and organic groceries, and an extensive selection of fresh, prepared foods, ranging from basic items like meatloaf and macaroni & cheese, to upscale items like Thai food entrees, Sirloin Steak Tips in Burgundy Wine Sauce, and indulgent ready-to-eat upscale desert items, for example.