Smart & Final's First California SmartCo Foods Store to Be in Southern CA City of Lake Forest

Pictured above is the existing Smart & Final non-membership warehouse store and the vacant Office Depot store building (to the right) next door, in the Twin Peaks Plaza shopping center in Lake Forest, (Southern) California. Smart & Final bought the Office Depot building. It's combining the two spaces into one in a major renovation. The combined space will create an about 41,000 square-foot SmartCo Foods store. [Photo credit: City of Lake Forest, California.]

Southern California Market Region Report

Fresh & Easy Buzz has been following and reporting on the launch by Southern California-based food and grocery retailer Smart & Final of its new-format SmartCo Foods stores in the Metropolitan Denver, Colorado region closely. Smart & Final has opened five SmartCo Foods stores so far in Metro Denver.

For example, read our series of stories linked below:

>Tuesday, August 17, 2010: And Then There Were Five: Smart & Final Completes its Mission of Opening Five SmartCo Foods Stores in Metro Denver Before Summer Ends

>July 14, 2010: Smart & Final Opens Second SmartCo Foods Store Today in Metro Denver, Colorado

>June 28, 2010: Smart & Final to Open its New Format SmartCo Foods Stores in California and Arizona

>June 29, 2010: A Pictorial Look Inside Smart & Final's First SmartCo Foods Store in Denver, Colorado

Smart & Final says it plans to open a total of 20-25 of the 41,000 -to- 60,000 square-foot hybrid supermarket/non-membership warehouse/farmers market-style markets in the Denver region over the next few years.

In the June 28, 2010 story linked above, we reported that Smart & Final plans to open SmartCo Foods stores in California and Arizona this year, as well as in Metro Denver.

The first California SmartCo Foods store will be in the south Orange County city of Lake Forest, in Southern California, in the Twin Peaks Plaza shopping center at 23601-23641 El Toro Road.

The store is going into an existing Smart & Final non-membership club store the retailer is renovating, along with a vacant Office Depot big box building next door, which Smart & Final has acquired. When the renovation is completed, the combined two spaces will create a SmartCo Foods store of about 41,000 square-feet, which is similar in size to the smallest of the five stores currently open in Metro Denver. Those five stores are in former Albertsons supermarket buildings.

Smart & Final plans to open the SmartCo Foods store before the end of this year. However, depending on the pace of the current major renovation, it may not open until early 2011.

Lake Forest has a population of about 74,000. According to the City of Lake Forest the city's demographics break down like this: White 49.28%; Hispanic 22.53%; Asian 11.56%;
Black 1.96%; and Other 14%.

The city has a high median household income of $94,107. The popular and affluent planned communities of Foothill Ranch and Portola Hills are part of the city of Lake Forest.

As we've said in the pieces linked near the top, the addition of the SmartCo format and banner to the Southern California market will add yet another layer of competition to what's an already very competitive region when it comes to food and grocery retailing. Additionally, Orange County, which has been a major focus for Tesco's Fresh & Easy Neighborhood Market in Southern California, is one of the most grocery-stored and competitive sub regions within Southern California.

Smart & Final is currently looking for additional locations for its SmartCo Foods stores in Orange County and elsewhere in Southern California.

Additionally, as we've previously reported, plans are to open SmartCo stores in Metropolitan Phoenix, Arizona, which is one of Fresh & Easy Neighborhood Market's four market regions, with its current 159 stores. The other regions are: Southern California; California's Central Valley; and Metro Las Vegas, Nevada.

Tesco plans to open its first Fresh & Easy stores in Northern California early next year. [Read - August 21, 2010: April 2010 Prediction Correct: February 2011 Target to Open First Eight Fresh & Easy Neighborhood Market Stores in Northern California and Tesco Will Open its First Eight Fresh & Easy Neighborhood Market Stores in Northern California in 'Early 2011']

Smart & Final is also looking for sites in Northern California for its SmartCo Foods stores. In addition, Smart & Final-owned Henry's Farmers Market opened its first store in Northern California on August 18 in Elk Grove, which is near Sacramento. [See - August 17, 2010: Henry's Farmers Market 'Beats' Fresh & Easy Neighborhood Market to Northern California Despite Multi-Year Head Start; Elk Grove Store Opens Tomorrow

Fresh & Easy's Rocky Start and First 100 Days in Orange County California: The Orange County Register's 'Fast Food Maven' Reports

Southern California's Orange County (know as the O.C. to those with teenagers who fell in love with the TV program of that name, or watch the MTV reality programs set in places like Laguna Beach) has become one of the most competitive grocery retailing markets in the Western United States over the past five or so years.

This coastal region of Southern California, named for the fact it once contained more acres of Orange groves than it did houses or shopping centers, is in many ways a food retailer's dream. The vast majority of Orange County's population is middle -to- upper-middle class, and there is a substantial affluent class as well. There's also a strong demand on the part of many of the region's consumers for high-quality foods--and they aren't afraid to pay extra for them.

In terms of grocery retailing in Orange County, Southern California-region market share leaders Vons (owned by Safeway Stores, Inc.) and Ralphs (owned by Kroger Co.) are the total grocery sales market share leaders in the region. However,the big guys have numerous other grocers which offer upscale stores, extensive specialty, ethnic, natural and organic groceries, as well as extensive offerings of fresh, prepared foods, nipping at their market share.

Among those upscale grocers are Bristol Farms, which is a homegrown gourmet grocery retailer now owned by SuperValu, Inc. Gelson's is another popular upscale grocer with stores in the region. Gelson's offers lots of specialty and gourmet foods in its stores--as does Bristol Farms--in addition to an extensive selection of in-store-prepared foods, and lots of natural and organic products. Gelson's is a publicly-owned grocer (trades under the Arden Group name) but is firmly a locally-based food retailer.

Other serious players in Orange Country include supernatural and lifestyle food retailer Whole Foods Market, Inc. Orange County is a major focus for Whole Foods' and its "new generation" food emporiums averaging 55,000 square feet -to- 70,000-plus square feet. These stores offer such a massive and varied selection of in-store-prepared foods offerings and sit-down restaurants that the Texas-based grocer recently coined the term "groceraunt" to describe these new generation food stores.

Small-format specialty grocer Trader Joe's also is hugely popular in Orange County. There are even TJ's groupies in the region. If these TJ's fans' particular city doesn't happen to have a Trader Joe's, they will drive to the nearest city in Orange County that has one on a regular basis.

Trader Joe's has its U.S. headquarters in Southern California where the specialty chain was founded. However, it's owned owned by Germany's Albrech family, which also owns the Aldi small-format discount supermarket chain. There are almost 900 Aldi stores in the Midwest and Eastern U.S. Aldi has stores throughout Europe and in other countries in the world as well.

Another up-and-comer in Orange County is Sprouts Farmers Market, a small but growing chain of small-format natural foods stores based in Arizona. [Read more about Sprouts here.] Orange County is a key target region for Sprouts, which is owned by the Boney family who founded two small natural foods chains--Boney's Marketplace and Henry's--in Southern California, and operated the chain's for years before selling them to Wild Oats Markets, Inc.

Orange County also is about to get a branch of that famed New York gourmet grocer Dean & Deluca. The gourmet grocer is building what will be its largest specialty foods emporium in Orange County. The store is about 22,000 square feet. Not only will it be filled with the most upscale of upscale fresh foods and groceries, it also will sell an extensive variety of high-end kitchen accessories and equipment.

The store also will include one of the gourmet retailer's famed "Dean & Deluca Cafes," which offers gourmet coffee's, baked goods, white table-cloth restaurant-quality meals and snacks. The Orange County store is scheduled to open in Fall of 2009.

Safeway's Vons' also has branches of its own upscale specialty supermarket format called Pavillions in Orange County. Von's created the upscale retailing format in the 1980's, when the chain was still a locally-based retailer under private ownership. After Safeway acquired Von's, they continued to expand the Pavillions' stores throughout Southern California. In fact, with its Lifestyle format development, Safeway is even making the Pavillions' stores more upscale and specialty-oriented, while still offering full-selections of basic grocery items in the stores.

Kroger-owned Ralph's also is entering the upscale, specialty grocery retailing niche in Southern California--and in Orange County. The retailer created its own upscale format called Ralph's Fresh Fair. The stores are big--50,000 square feet -to- 70,000 square feet--and like the name implies offer extensive selections of fresh foods (including prepared) along with lots of specialty and organic items, as well as a full selection of everyday grocery items.

Tesco's Fresh & Easy in Orange County

It's amidst this competitive grocery retailing backdrop that Tesco's Fresh & Easy Neighborhood Market entered the Orange County market in late 2007. The grocer currently has six of its small-format, convenience-oriented grocery markets in the county. Additionally, three more of the 10,000 square foot -to- 13,000 square foot grocery stores--which feature a selection of basic grocery products with an "everyday low price" emphasis, combined with offerings of fresh, prepared foods, specialty and organic items, fresh, packaged produce and meats, wines and craft beers--will open soon. Additional Fresh & Easy stores are planned for Orange County as well.

Unlike Whole Foods, Bristol Farms, Dean & Deluca, Sprouts Farmers Market and Gelson's however, Tesco's Fresh & Easy doesn't make its prepared foods in-store. Rather, the grocer makes and packages the prepared foods items at a central kitchen at its Riverside County distribution center in Southern California, and then delivers the items, along with other fresh foods, daily to its stores using a direct-store-delivery (DSD) system.

Nancy Luna, a business reporter who covers retail food stores and restaurants for the Orange County Register newspaper, has been following Tesco's Fresh & Easy grocery store developments and openings in the county since the first stores opened late last year.

Ms. Luna has a piece in February 28th edition of the Register in which she writes about Tesco's Fresh & Easy and its "rocky start." You can read her piece from the paper's business section here.

The reporter also writes a blog for the paper called the "Fast Food Maven." She named her blog that because as a working mother she says she likes to find high-quality, quick meals for her family. Luna has a piece in her blog called "Fresh & Easy: The first 100 days." It's a companion piece to the business section story, but allows her to expand on the business section story blogger style. Read her piece here.

As you can see by our overview, grocery retailing--just like surfing or parasailing at Laguna beach--isn't for the timid in the O.C.

Orange County's 'Fast Food Maven' Takes a Poll on Fresh & Easy in Southern California

Nancy Luna, who is a staff food writer as well as the 'Fast Food Maven' blogger for the Orange County Register newspaper in Orange County, California, reported in a February 4, 2008 blog piece that a new Fresh & Easy store will open on February 13 in the Orange County, Southern California city of La Habra.

As of today, there are 40 Fresh & Easy Neighborhood market stores open and operating in Southern California, Arizona and Nevada.

Luna, who regularly shops at her local Fresh & Easy grocery market in the city of Orange, also reported in the piece that one of the reasons she likes shopping regularly in the store is because every time she's there she is nearly alone, and gets in and gets out fast. Good news for her in terms of service, bad news for Fresh & Easy in terms of sales.

This regular experience led Luna to run a survey/poll in her 'Fast Food Maven' blog piece asking her readers for their opinion on whether or not Fresh & Easy has lived up to its "hype" to date.

Poll question: Has Fresh & Easy lived up to all the hype?

Poll responses: (323 votes to date):

>Yes, I love it = 138

>No, I'm disappointed = 59

>It's just ok = 109

>I don't food shop = 17

There also are 30 written comments, ranging from multi-paragraphs to a few sentences, from poll-takers and readers regarding their opinions of Fresh & Easy stores. The responses offer a nice cross-section of consumer opinion on the stores. Read Luna's piece and the comments to her poll question here.