Showing posts with label Northern San Joaquin Valley market. Show all posts
Showing posts with label Northern San Joaquin Valley market. Show all posts

Wednesday, November 3, 2010

Tesco's Fresh & Easy Neighborhood Market Plans New Store in Northern Central Valley, California City of Ceres


Northern California Market Region Special Report

Tesco's Fresh & Easy Neighborhood Market is planning to open an additional store in Northern California's Northern Central/San Joaquin Valley, Fresh & Easy Buzz has learned.

The planned new Fresh & Easy unit will be at 1342 East Hatch Road in Ceres, California, which is a city of 43,000, located next door to Modesto, which has a population of 205,000. Modesto and Ceres are in Stanislaus County.

The store will be Fresh & Easy Neighborhood Market Store Number 1360.

The East Hatch Road future Fresh & Easy market is located near another future Fresh & Easy Neighborhood Market store site, which is at Crows Landing Road near Whitmore Avenue. The location is in Ceres but most local residents consider it as part of South Modesto. The two cities literally border each other in the area. [See - March 31, 2009:Despite Having Postponed its Northern California Launch Indefinitely; Tesco's Fresh & Easy Planning Third Store in Modesto, California.]

The 1342 East Hatch Road future Fresh & Easy store location is located at the entrance to the Ceres Plaza Shopping Center and next to an existing Home Depot big box store. It's off Highway 99, which is the major freeway connecting the Central Valley.

In terms of competing grocers, there's a Raley's supermarket nearby, which is a branch of the Sacramento, California-based 133-store chain. A Kmart discount store, which sells a limited assortment of food and grocery items but not fresh foods like meats and produce, is also nearby.

Walmart is planning to build a new food-grocery-general merchandise supercenter in Ceres, not far from the Crows Landing Road/Whitmore and East Hatch Road future Fresh & Easy store locations.

Tesco's Fresh & Easy Neighborhood Market recently applied to the California Alcohol Beverage Control (ABC) Department for an off sale beer and wine license (license number 472764) for the 1342 East Hatch Road location. The license application is a transfer sale from an existing convenience store retailer, Oakdale Chevron & Mini Mart, 260 North Yosemite Avenue, Oakdale, California, according to the California ABC.

We've also verified the Ceres location through additional sources.

Tesco's Fresh & Easy Neighborhood Market doesn't confirm new store locations until it's ready to make a formal annoouncement.

The new Hatch Road site makes for four potential Fresh & Easy markets thus far that Tesco could open in the Modesto-Ceres area. We say potential because obtaining the sites doesn't mean for sure a store will eventually open at the given location, although one most likely will.

One of those stores, the unit at Oakdale Road and Lancey Drive in Modesto, is part of the first batch of 11 Fresh & easy stores Tesco plans to open in early 2011. [See - September 22, 2010: Fresh & Easy Neighborhood Market Plans to Open Two Additional Stores in Northern California in Early 2011.]

See the three linked stories below for details about the other Modesto and Ceres store locations:

>March 31, 2009:Despite Having Postponed its Northern California Launch Indefinitely; Tesco's Fresh & Easy Planning Third Store in Modesto, California

>May 10, 2008: New Markets: Tesco's Fresh & Easy to Move Into Modesto, California Market; Open its First Store in the City Early Next Year

>November 6, 2008: Upcoming New Markets News: Tesco Will Open A Second Fresh & Easy Store in Modesto, California

Tesco's Fresh & Easy Neighborhood Market continues to look for future store sites in the Northern Central Valley, along with elsewhere in the Northern California region, as it prepares to open its first batch of stores early next year.

For example, so far this year we've reported on the following new Northern California Fresh & Easy store locations the retailer has obtained:

>November 1, 2010: Tesco's Fresh & Easy Neighborhood Market Planning to Build its First Store in Northern California City of Brentwood

>October 26, 2010: Going Semi-Rural: Fresh & Easy Neighborhood Market Buys Property For New Store in Northern California Town of Clear Lake

>September 22, 2010: Tesco's Fresh & Easy Neighborhood Market Planning A New, Third Store in San Jose, California

>August 25, 2010: Going Rural: New Fresh & Easy Neighborhood Market Store Planned for Sutter Creek in Northern California

>May 29, 2010: Going Rural: Fresh & Easy Neighborhood Market to Build First Store in Los Banos, California

In terms of opening new stores, nearly all of Tesco Fresh & Easy Neighborhood Market's focus in the first half 2011 will be on California - south, north and in-between.

We see few if any new Fresh & Easy markets being opened in Metropolitan Las Vegas, Nevada during the first-half of next year, based on the information we currently have.

Additionally, based on current information, look for no more than a couple new Fresh & Easy stores to open in Arizona in the first-half of 2011.

Linkage: 2010 'Northern California Market Region Special Report' series

November 1, 2010: Tesco's Fresh & Easy Neighborhood Market Planning to Build its First Store in Northern California City of Brentwood

October 30, 2010: Raley's Launches New 'Raley's TO GO' Pre-Packaged, Refrigerated Fresh-Prepared Foods Line

October 27, 2010: Save Mart CEO Bob Piccinini Poised to Make it to the 'Bigs' as Member of Golden State Warriors' Ownership Group

September 26, 2010: While Tesco's Fresh & Easy Neighborhood Market Postponed, Target Opened 42 'P-Fresh' Fresh Food and Grocery Markets in Northern California

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

September 22, 2010: Tesco's Fresh & Easy Neighborhood Market Planning A New, Third Store in San Jose, California

September 22, 2010: Fresh & Easy Neighborhood Market Plans to Open Two Additional Stores in Northern California in Early 2011

September 21, 2010: A Look Inside Whole Foods Market's Newest Store, A Mall Location in Santa Rosa, California

September 20, 2010: About Today's Walmart Stores, Inc. Smaller Stores Media Frenzy: We Scooped it On July 6, 2010

September 19, 2010: Whole Foods Market Gives Itself A 30th Birthday Present: 299th Store Opens This Week in Santa Rosa, California

September 18, 2010: Keep On Truckin' - Whole Foods Market Celebrates 30 Years This Weekend

September 14, 2010: Eight Plus One: Napa Unit Added to Eight Fresh & Easy Neighborhood Market Stores Opening in Northern CA in Early 2011

September 5, 2010: BevMo Chain Ends Full Time Employment For Store Workers; They Say No Way and Join With UFCW Union to Demand 'A Better BevMo'

September 3, 2010: How the California Grocers Association and its Members Can Snatch Victory From the Jaws of the Defeat of California's Plastic Bag Ban

August 25, 2010: Going Rural: New Fresh & Easy Neighborhood Market Store Planned for Sutter Creek in Northern California

August 23, 2010: Hybrid 'Good Eats' Market-Cafe From Raley's CEO Michael Teel & Company Opens Today in Sacramento CA

August 22, 2010: The Insider: Challenges & Opportunities: Tesco's Fresh & Easy Neighborhood Market Will Supply its Northern CA Stores From its Riverside County DC in Southern CA

August 21, 2010: April 2010 Prediction Correct: February 2011 Target to Open First Eight Fresh & Easy Neighborhood Market Stores in Northern California

August 19, 2010: Tesco Will Open its First Eight Fresh & Easy Neighborhood Market Stores in Northern California in 'Early 2011.'

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

July 29, 2010: Tesco's Fresh & Easy Neighborhood Market Putting Together List of Managers Interested in Transferring to Northern California

July 25, 2010: Safeway to Start Construction on New Pleasanton, California Flagship Store Soon; Thanksgiving 2011 Target Opening

July 22, 2010: 'The Insider' - After Four Years in the High Weeds in Northern & Central California, Kroger Co. is Emerging to Grow its Foods Co Chain

July 21, 2010: Vacant Fresh & Easy Neighborhood Market Store in Pacifica, California Has the City's Mayor in a Pickle

July 18, 2010: 'The Insider' - When it Comes to Northern California - its Competitors are Rome Burning and Tesco's Fresh & Easy Neighborhood Market is Nero Playing the Fiddle

July 14, 2010: Tony Bennett Has Nothing on Whole Foods Market When it Comes to Loving San Francisco...That City By the Bay

July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store

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

June 26, 2010: Tesco Planning to Announce in July When First Northern California Fresh & Easy Neighborhood Market Stores to Open

June 14, 2010: Newly-Named Whole Foods Market CO-CEO Walter Robb Comes Full Circle With the Opening of the New Store in Mill Valley CA

June 5, 2010: Sprouts Farmers Market Opens First Northern California Store in Sunnyvale; Strikes Up Partnership With Local Non-Profit Farm

May 29, 2010: Going Rural: Fresh & Easy Neighborhood Market to Build First Store in Los Banos, California

May 28, 2010: First Phase of Fresh & Easy Neighborhood Market-Anchored Condo Development in San Francisco's Bayview Set For Completion in June

April 19, 2010: Tesco Debating Whether to Launch Fresh & Easy Into Northern California This Fiscal Year... or Wait

May 9, 2010: A Whopping 15 of Whole Foods Market's 41 New Stores in Development are in California - And Nine of The 15 Are In Northern CA

May 8, 2010: Sprouts, and Likely Henry's to Beat Fresh & Easy to Northern California Despite it's Big Head Start

May 6, 2010: Going Smaller & Getting 'Hybrid': Walmart's Smaller Supercenter in Vacant Retail Buildings Strategy Began in 2008

April 19, 2010: Tesco Debating Whether to Launch Fresh & Easy Into Northern California This Fiscal Year... or Wait

[Also: click here , here and here for a selection of past stories on Fresh & Easy and Northern Calfornia.]

Saturday, May 16, 2009

Competitor News: Wal-Mart Clears First Major Hurdle For Proposed Mega-Distribution Center in Merced, CA; Chain's Regional Strategy Moving Forward


Regional Market Report: California's Central Valley & Northern California

In this April 18, 2009 story [Competitor News: Wal-Mart Close to Clearing First Major Hurdle For its 1.1 Million Square-Foot Regional Distribution Center in Merced, California] Fresh & Easy Buzz reported that Wal-Mart Stores, Inc. was close to clearing its first major hurdle towards its plans to build a mega-1.1 million square-foot regional distribution center in Merced, California, in the Golden State's Northern Central Valley region.

That initial hurdle has now been cleared by Wal-Mart: On April 27 a 90-day public comment period in which area residents could comment by letter pro or con to the City of Merced Planning Department about the proposed project's potential environmental and other impacts on the community and surrounding region ended.

As of the end of business on April 27 the City of Merced received 301 letters from area businesses, organizations and individuals regarding the planned 1.1 million square-foot Wal-Mart distribution center project, according to the city's planning department.

Next phase for Wal-Mart

The next phase of the now-ended public comment period has started.

That phase requires Wal-Mart's contract planning firm for the project, EDAW, to respond in writing to each of the 301 letters received by the CIty of Merced.

The 301 letters are a mix of comments in favor of and opposed to the proposed 1.1 million square-foot Merced Wal-Mart distribution center, according to the planning department. When we published our earlier story on April 18 there were about 50 letters submitted at that time, with the number of letters in favor of the project far exceeding the quantity of letters in opposition, according to the city's planning department.

Once the EDAW planning firm responds to all of the letters, the City of Merced Planning Commission will hold public hearings on the proposed project.

Those hearings could come soon, or much later, depending on how fast the planning firm responds to the letters, a process Wal-Mart is required to follow by law.

The hearings will include public input, allowing members of the public for and against the huge distribution center project to voice their opinions.

Wal-Mart Stores, Inc. has said it wants to break ground on the 1.1 million square foot distribution facility starting in early 2010.

The project, which Wal-Mart proposed in 2005, is to be built on 230 acres at Childs and Gerard avenues in southeast Merced, according to plans filed with the City of Merced Planning Department.

Wal-Mart Stores, Inc. says it estimates the distribution center will take about 18 months to complete.

If the planned mega-distribution center is ultimately approved by the planning commission, it then goes before the Merced City Council for discussion and debate -- and an eventual vote. In California, planning commissions, which are comprised of members appointed by the city council, only give advisory approval to projects. Elected officials must ultimately approve such projects.

Merced residents and others for and against the distribution center project also get a chance to voice their respective opinions at a public Merced City Council meeting before the elected officials vote on the project's approval or denial, according to the city.

Organized support and opposition groups

As we wrote about in our April 18, 2009 story, there are organized groups in favor of and against the proposed 1.1 million square-foot Wal-Mart distribution center project in Merced.

Leading the opposition to the proposed distribution center is a local organization called "Merced SWAT" (Stop Wal-Mart Action Team). You can read about the group's opposition to the project at its Web site here.

Another local group, the "Merced Alliance for Responsible Growth," also opposses the planned Wal-Mart distribution facility. There's overlap between this group and "Merced SWAT."

Two national anti-Wal-Mart groups have also joined the local organization, "Merced SWAT," in opposition to the proposed Merced Wal-Mart distribution center.

One of the two organizations is the well-know Wal-Mart watchdog group "Wal-Mart Watch." You can read what the group is saying about the proposed project at its Web site here.

The second national anti-Wal-Mart organization allied with the local Merced group is called "WARN" (Wal-Mart Alliance for Reform Now). The group says it's collaborating with "Merced SWAT" to oppose the 1.1 million square foot Wal-Mart distribution center project in Merced. Read what WARN has to say at its Web site here.

The proposed distribution facility project also has strong support in Merced however.

For example, a majority of the City Council has indicated it's in favor of the distribution center, which Wal-Mart says will bring 1,200 full-time jobs to Merced. The retailer says the facility will operate 24 hours a day, seven days a week.

Additionally, most of the city's and Merced County's business leaders are in favor of the project.

And informal polls of residents have shown widespread support for bringing the disctribution center and the estimated 1,200 new jobs to the city.

Lastly, a pro-distribution center organization called the "Merced County Jobs Coalitio"n is heading up support and lobbying efforts among proponents of the proposed 1.1 million square-foot Wal-Mart Merced distribution center.

Tough economic climate, high unemployment

Merced County, of which Merced is the county seat, currently has a whopping 20% unemployment rate, one of he highest in California. By comparison, California's overall joblessness rate is about 11.4%, and the current U.S. unemployment rate is just under 9%.

Additionally, Merced County, which up until about mid-2007 was one of the fastest-growing counties in California, has since early 2008 been one of the top-five counties in the U.S. in terms of having the highest per-capita housing foreclosure rates in the United States month after month. And its often been number one or two during this period, including just last month when it was the leading U.S. county in housing foreclosures, according to a number of firm's that track monthly foreclosures by county.

Local development watchers in Merced have told us in the recent past that they believe the planned Wal-Mart distribution center project will ultimately be approved by the City Council because new jobs are so desperately needed in the city and county.

However, it's important to note that since the April 27 public comment period on the project ended, the opposition groups have been gearing up considerably, including in the case of "Merced SWAT" recently hiring a Sacramento, California-based land-use lawyer to assist it in fighting the project, along with getting more aggressive with its public relations efforts.

Of course such opposition isn't anything new for Wal-Mart, particularly in California where it has had other distribution center proposals, along with numerous proposed mega-Supecenter stores, killed by opposition groups , cities and counties.

As a result, Wal-Mart is working closely with the City of Merced and with its allies in the city regarding its efforts to gain approval for the proposed 1.1 million square-foot facility. Supporters are touting the 1,200 new jobs and Wal-Mart is promising to spend additional monies in the city, buying supplies for the distribution center from local businesses and donating to a wide variety of groups and local organizations, as it does throughout the U.S.

There are three major retail grocery industry distribution facilities in Merced, so the proposed Wal-Mart facility would hardly be one of a kind if built, although it would be much larger than the existing three centers are.

Grocery wholesaler McClane Companies, which is owned by billionare Warren Buffett's Berkshire Hathaway conglomerate, has a large distribution center in Merced from which it distributes grocery products to convenience stores throughout California and other western states.

Pleasanton, California-based Safeway Stores, Inc. operates a private label manufacturing and distribution facility in the city.

And Modesto, California-based Save Mart supermarkets operates a fresh produce distribution center in Merced.

Strategic importance

The proposed 1.1 million square-foot distribution center is crucial to Wal-Mart's strategic plans to grow its store count and market share in Central and Northern California, particular in the food and grocery categories, in which it is only a minor player at present in the regions.

For example, read our story here - February 11, 2009: Tesco's Fresh & Easy Isn't the Only Food & Grocery Retailer With its Eyes on Bakersfield: Wal-Mart's Bakersfield Push and Central Valley, CA Strategy; and our piece here - September 15, 2008: Wal-Mart Expanding its Discount Store-to-Supercenter Conversion Program As Part of its Strategy to Grab Even More Food and Grocery Sales Market Share.

The Merced facility would distribute everything contained in a giant Wal-Mart Supercenter, including perishable and non-perishable food and grocery products.

Right now, the political odds-makers in Merced tell Fresh & Easy Buzz that their money is on the ultimate approval by the Merced City Council of the project in the city of about 80,000 residents. Merced County has a population of about 250,000.

First Lady in Merced today

And today is a big day for Merced.

First Lady Michelle Obama is set to make her first and only university commencement address this afternoon to about 500 graduates of the University of California at Merced, the University of California's newest campus, which opened in the city in 2005. The class graduating today is the first full graduating class since the school was opened four years ago.

Ironically, the graduating class lured the First Lady to speak at today's commencement by launching a student-initiated letter writing and video lobbying campaign directed at Mrs. Obama, which included sending her a special Valentine's Day invitation in February, which was an invitation she apparently couldn't resist.

Perhaps the proponents and opponents of the proposed Merced Wal-Mart distribution center project could learn something from the University of California at Merced class of 2009 when it comes to launching successful letter writing and lobbying campaigns? After all, out of the huge stack of 2009 commencement speech requests she received, the First Lady chose just one, UC Merced, where she will speak this afternoon.

The city and the campus are conducting a two-day weekend festival in conjunction with the First Lady's commencement speech. As many as 15,000 -to- 20,000 people are expected to attend the graduation ceremonies on campus. The four year-old campus currently enrolls about 3,000 students.

Those same Merced political odds-makers tell us that today and tomorrow the proposed Wal-Mart distribution center issue is taking second place as a topic of discussion among residents as the city gears up for and celebrates the First Lady's visit. But come Monday, local residents tell us the proposed distribution facility issue will be back front and center as the main topic of discussion around town and in the city's coffee shops and pubs.

The proposed Merced mega-Wal-Mart regional distribution center is a major topic of discussion among the region's grocers as well, as they know the facility means more Wal-Mart Supercenters and likely other Wal-Mart format food and grocery stores in the region. That's a competitive prospect most grocers aren't looking forward to.

Tesco's Fresh & Easy in the Central Valley

Tesco's Fresh & Easy Neighbohrood Market hopes to have a major impact on food and grocery retailing in California's Central Valley in the not too distant future.

Thus far, Tesco has three of its small-format, convenience-oriented Fresh & Easy combination grocery and fresh foods markets open in Bakersfield, which is in the southern Central Valley. The grocery chain plans to open at least six additional stores (four more in Bakersfield, one in Delano and one in Wasco) in Bakersfield and the surrounding region.

Fresh & Easy Buzz however is aware that at least two of the four additional Bakersfield Fresh & Easy stores have now been completed but are sitting empty and have yet to be opened by the grocery chain. Those two locations are at Brimhall & Jewetta and Hageman & Coffee in Bakersfield. The store in Delano also is completed but has yet to open. [February 11, 2009: Tesco to Open Third Bakersfield, California Fresh & Easy Store On February 25.]

Additionally, Tesco has at least 10 (seven in Fresno and three in nearby Clovis) Fresh & Easy markets slated for the Fresno Metropolitan region in the mid-Central Valley.

Tesco's Fresh & Easy hasn't opened any of the 10 Fresno-area Fresh & Easy stores despite the fact that some of the stores are completed and ready to open.

For example, the downtown Fresno Fresh & Easy market at Tulare and R Street, which we wrote about in this July 23, 2008 piece: [Fresno, California Fresh & Easy Grocery Store to Be First in Chain to Include Local, Community and Neighborhood Design Elements and Features] is completed but not yet opened.

Fresh & Easy has included the 10 Fresno stores as part of its indefinite postponement of its Northern California region launch, even though Fresno isn't technically in Northern California. Rather it's considered Central California. [See - November 12, 2008: Analysis: Hard Times at Fresh & Easy - Northern California Expansion to Be Postponed or Shelved Do to Economy; But its Only a Symptom Not the Cause. May 15, 2008: Fresh But Never Easy: Tesco's Long But Rapid South-North March in the Nation-State of California. May 6, 2009: Tesco Fresh & Easy Northern California Market Region Update ]

And in the Northern Central Valley, Tesco's Fresh & Easy thus far has three sites planned in Modesto, as we've previously reported. [See - March 31, 2009: Despite Having Postponed its Northern California Launch Indefinitely; Tesco's Fresh & Easy Planning Third Store in Modesto, California.]

But despite all these Central Valley sites, many of which contain completed Fresh & Easy markets, the grocer has to date only opened three stores in the vast region, all three in Bakersfield.

Merced is located between Fresno and Modesto. The city is about 45 miles from Fresno (to the south) and about 35 miles from Modesto (to the north).

Of course, it's hard to become a player in a market like the Central Valley if a grocer has stores completed but doesn't open them, as the Bakersfield and Fresno examples above indicate is the case for Tesco's Fresh & Easy.

Not opening a completed grocery store is seldom if ever done by U.S. food retailers. Having numerous empty store buildings that aren't producing sales or cash flow isn't considered to be prudent management in the food and grocery retailing industry, particularly for major chains.

For example, one would be hard-pressed to find a completed Wal-Mart store of any kind that doesn't have a definite opening date planned for it.

The same would be the case at Kroger, Costco, Safeway and virtually every other chain -- large or small -- we are aware of. It's just not an excepted practice. And most grocers rush to open a completed store rather than allow it to remain empty a day longer than they have to.

Linkage - Additional Related Stories:

>February 11, 2008: Tesco's Fresh & Easy Isn't the Only Food & Grocery Retailer With its Eyes on Bakersfield: Wal-Mart's Bakersfield Push and Central Valley, CA Strategy

>September 15, 2008: Wal-Mart Expanding its Discount Store-to-Supercenter Conversion Program As Part of its Strategy to Grab Even More Food and Grocery Sales Market Share

>December 29, 2008: Competitor News: Winco Foods to Expand in California and Nevada in 2009; Put Aggressive Focus on Central Valley, Northern California and Northern Nevada

>December 3, 2009: Tesco Opens its First Two California Fresh & Easy Stores Outside of Southern California in the Central Valley City of Bakersfield Today.]

>April 13, 2009: Despite Postponing its Northern California Launch Again Earlier This Year Tesco's Fresh & Easy Planning Third San Francisco Store; First Stockton Unit

>March 31, 2009: Despite Having Postponed its Northern California Launch Indefinitely; Tesco's Fresh & Easy Planning Third Store in Modesto, California

>November 12, 2008: Analysis: Hard Times at Fresh & Easy - Northern California Expansion to Be Postponed or Shelved Do to Economy; But its Only a Symptom Not the Cause

>July 23, 2008: Fresno, California Fresh & Easy Grocery Store to Be First in Chain to Include Local, Community and Neighborhood Design Elements and Features

>May 14, 2008: Fresh & Easy Buzz Exclusive: Tesco's Fresh & Easy Neighborhood Market Plans to Open Five Stores In the Fresno, California Metropolitan Region

>May 15, 2008: Fresh But Never Easy: Tesco's Long But Rapid South-North March in the Nation-State of California

>November 20, 2008: Analysis & Commentary: Fresh & Easy Neighborhood Market and Tesco's Lowered Expectations

>September 29, 2008: Special Report: Wal-Mart, Inc. Studying Second Small-Format Food and Grocery Store Concept; the 'Bodega' or Modern Version of the Corner Grocery Store

>August 8, 2008: Analysis & Commentary: Wal-Mart's Marketside As Part Of it's Multi-Format Category-Killer Strategy Spells Trouble For Tesco's Fresh & Easy

[Follow Fresh & Easy Buzz around on Twitter.com at www.twitter.com/freshneasybuzz.]

Saturday, April 18, 2009

Competitor News: Wal-Mart Close to Clearing First Major Hurdle For its 1.1 Million Square-Foot Regional Distribution Center in Merced, California


Upcoming New Markets Special Report: Northern California - Central Valley

Wal-Mart Stores, Inc. is close to clearing its first major hurdle towards gaining approval to break ground on its proposed mega-1.1 million square-foot regional distribution center in Merced, California, which is located in the Northern Central Valley in California.

In late February of this year, Wal-Mart released its Environmental Impact Report (EIR) on the proposed Merced distribution center. The EIR was prepared for Wal-Mart by an outside consulting firm that specializes in land planning and development projects like the facility.

The report is currently in what's called the public comments phase. This is a 60-day period required by law for such projects.

Residents, businesses and organizations have until April 27 to submit letters, pro or con, to the city of Merced planning department regarding the distribution center and its potential environmental and related (traffic, ect.) impacts on the City of Merced, Merced County, and the surrounding region.

Once all the comment letters are in, Wal-Mart's contracted planning firm is then required by law to reply to each letter. That could take a matter of weeks, or months, depending on how many letters are received by the city of Merced by April 27.

The City of Merced's Site Plan Review Committee will be holding a public meeting regarding the proposed Wal-Mart distribution center on Thursday, April 23, 2009 at 1:30 p.m. in the City Council Chambers at the Merced Civic Center at 678 W. 18th St, Merced. The Site Plan Review Committee is a staff committee comprised of the city's director of development services, the chief building official, and the city engineer.

According to the city, The only action being considered by the Site Plan Review Committee on April 23 is whether to refer the Site Plan Review Application to the Merced Planning Commission for a public hearing.

The committee will not be reviewing the Wal-Mart distribution center project itself or the Environmental Impact Report (EIR) at the meeting.

Wal-Mart plans to break ground on its proposed 1.1 million square-foot distribution center, assuming it gains approval by the city of Merced, in early 2010.

Plans call for the Merced distribution center, which is key to Wal-Mart's Northern and Central California growth strategy as we wrote about previously in this February 11, 2009 news and analysis piece [Tesco's Fresh & Easy Isn't the Only Food & Grocery Retailer With its Eyes on Bakersfield: Wal-Mart's Bakersfield Push and Central Valley, CA Strategy], to operate 24-hours a day, seven days a week.

The proposed regional distribution center -- which will distribute everything sold in a Wal-Mart Supercenter, which includes food and groceries (and clothing, electronics, furniture and much more) -- will likely serve all of Northern California, the vast Central Valley, and into Southern California. It also likely will serve Wal-Mart stores in nearby states if needed.

Wal-Mart says the planned 1.1 million square-foot Merced facility will employ about 1,200 full-time workers.

There are organized groups both for and against the proposed Wal-Mart distribution center in Merced.

The pro-Wal-Mart distribution center group is called the Merced County Jobs Coalition. The group against the distribution center calls itself the Stop Wal-Mart Action Team.

Tough economic times in Merced

Merced County, which the city of Merced is the county seat of, along with being its largest city (about 80,000 population), has one of the highest unemployment rates in California.

Figures just released by the government for March show Merced County's jobless rate at a whopping 20.4%. Next door Stanislaus County isn't fairing much better. It's March 2009 unemployment rate was at 17.5%

Just three counties in California had March unemployment rate percentages higher than Merced County did. Those three counties are: Colusa County, north of Sacramento (25.7%); Imperial County, near San Diego in the southern part of the state on the Mexican border (25.1%); and Trinity County (21.9%), in far Northern California.

Considering that at the height of America's Great Depression in the 1930's the national unemployment rate was about 35%, the current unemployment numbers for these four California counties are rather ominous.

California's unemployment rate for March 2009 was 11.2%, making it the fourth-highest jobless rate in the U.S. Only Michigan, Oregon and South Carolina had higer unemployment rates than California for March, according to data released by the U.S. Bureau of Labor Statistics on Friday, April 17.

Merced County also has been one of the top three (and frequently number one) U.S. counties in terms of having the highest rates of housing foreclosures for nearly the last two years, according to data published each month by the real estate industry research firm RealtyTrac.

Despite economy there are numerous positives in Merced

Despite experiencing severe economic problems, there are numerous positive things happening in the city of Merced, which is located about 50 miles from Fresno and about 35 miles from Modesto (Stanislaus County), where as we've previously reported Tesco's Fresh & Easy neighborhood Market has plans thus far to open three of its small-format grocery and fresh foods markets. [Read our most recent story - March 31, 2009: Despite Having Postponed its Northern California Launch Indefinitely; Tesco's Fresh & Easy Planning Third Store in Modesto, California.]

The two counties -- Merced and Stanislaus -- are located right next to each other. Many of the cities in each county share borders with one another. If creating counties was a geographical rather than a political process in the U.S., the two counties would logically be one, from the perspective of geographic proximity. Stanislaus County has a population of about 530,000, making the combined population of the "twin" counties nearly 800,000.

Some of the positive happenings in Merced, despite the economic problems, include the city being the home of the newest campus of the University of California.

That University of California at Merced campus opened in 2005 and is growing in student numbers, new buildings and facilities development, and programs each year.

There hasn't been a new, planned major research university built in the U.S. other than UC Merced in many years. And until opening UC Merced, the University of California system, the largest state system of its kind in the U. S., hadn't opened a new campus since the 1960's, when it opened the University of California at Santa Cruz, in Santa Cruz, California, on the Northern California coast. Getting such a campus is a big deal for Merced, or for any California city for that matter.

The campus is getting much publicity at present because First Lady Michelle Obama is going to be the commencement speaker for the graduating class of 2009 in May. The city is going all out for the event, holding a huge "Town & Gown" festival in its downtown, along with other related activities in partnership with the University.

Downtown Merced is another overall positive for the city. Compared to the downtown areas of many similar-size and larger cities, Merced's is attractive and functional, despite some retail store and other business closings, resulting in some empty buildings, due to the recession.

But accept for the relative few vacant buildings, when walking around the downtown, which is rather vibrant, it's hard to believe the city has a 20.4% unemployment rate and is sufering from the recession in a major way. Although when talking to residents you can feel it in no time flat. Many people are seriously hurting, as local jobs are extremely scarce.

And of course, depending on which side of the issue you are on, a new 1.1 million square-foot Wal-Mart distribution center, which comes with 1,200 new full-time jobs, could be a very positive upcoming development for Merced, particularly with its current (and growing) 20.4% unemployment rate.

We think the long term prospects for business, including food and grocery retailing, is good in Merced, due largely to the establishment of the University of California campus in the city, which is slated to become a major research as well as teaching campus, just like all of the other UC campuses.

UC campuses historically spin off all sorts of private sector businesses. Berkeley helped create Silicon Valley and the Bay Area's biotech business sector. Davis virtually is the California agricultural and wine industry's in-house research arm. Scores of its graduates have gone on to start their own farms, food companies and wineries. Some of the most promising work in electric car technology also has and is coming out of the Davis campus. There are similar examples from every UC campus.

And already less than four year old UC Merced is conducting major research in alternative energy technology, biomedical research and in other scientific fields. There's a move on to build a medical school on the campus. And plans already are set to open a graduate school of management in the next couple years.

There's not one California city -- Berkeley, Davis, Los Angeles, San Diego, Irvine, Riverside and the others -- where a University of California campus has been put, and allowed to grow over a number of years, that hasn't benefited dramatically from the University's presence.

For example, the city of Berkeley in the San Francisco Bay Area was literally built around the University of California at Berkeley campus, the system's oldest and its flagship campus. Today (and for many years prior) UC Berkeley is one of the top research and teaching institutions in the world, and number one, two or three globally in a number of academic and professional areas.

In Southern California, the hip community of Westwood, full of housing, shops and other commercial activity, was built and became what it is today because of the existence of the UCLA campus in Westwood, which is the centerpiece of the entire community.

And back in Northern California, the city of Davis, California, home to the University of California at Davis, which started out as an agricultural campus but today is one of the top-ranked Multi-University's in the world, has and continues to serve as the hub of what has grown from a sleepy little city of a couple thousand residents -- Davis -- to what is considered one of the most innovative and livable cities in America, with a population of about 70,000. Davis is located 12 miles from Sacramento.

It will take a number of years, but Merced, like all of the other University of California cities, will benefit in enormous ways from being home to the University of California system's newest campus, and the only planned major research University that has been built in the U.S. in a couple decades.

City of Merced: Letters mostly pro-distribution center so far

According to the city of Merced, the letters coming into its planning department so far are currently mostly in favor of the Wal-Mart distribution center. A city spokesperson says the letters are currently running at a ratio of about nine-to-one in favor of approval of the mega-distribution center in the city.

It appears it's all about jobs, which isn't a surprise with a county unemployment rate of 20.4%, which residents in the city and county tell us they expect will continue to climb over the next few months.

Distribution center: Next steps

Once Wal-Mart's consulting firm responds to all of the letters submitted by the April 27 deadline, the city of Merced's Planning Commission will then begin hearings on the distribution center plan.

Once they've completed the hearings, the project then goes to the Merced City Council for a vote of approval or rejection.

it's all about jobs

We're told that a majority of the members of the Merced City Council support the Wal-Mart distribution center being built. According to local sources not one of the members has to date come out publicly against the project.

it's all about jobs.

There are of course other things that could happen between now and the end of the year regarding the project, such as lawsuits being filed by environmental groups, which happens often whenever Wal-Mart proposes to build its mega-Supercenters in parts of the U.S. and particularly in California. But that's changing. Many communities that didn't want a Wal-Mart Supercenter a few years ago are asking the retailer to come to town in this bad economy.

It's all about jobs.

But our sense is, based on talking to local residents in Merced, which we did this week while traveling in the Central Valley, that the vast majority of citizens and elected officials in the city and County want and need new jobs so bad that local supporters will fight any opposition by outside environmental or other groups attempting to block the 1.1 million square-foot Wal-Mart distribution center from being built in Merced. Two years ago, when the city and county were booming, it might have been a very different story. But all that has changed.

It's all about jobs.

Based on its desire to break ground on the distribution center in early 2010, Wal-Mart's objective is to get the facility's plan approved no later than by the end of this summer. A Wal-Mart source told us that based on what it is hearing at present, approval could happen far by then or earlier.

Local officials we talked to in Merced this week expressed similar feelings. We observed numerous people in the city's attractive downtown district wearing pro-Wal-Mart distribution center buttons, for example.

The general buzz we felt in town was in favor of the development. And the general reason for that we felt was that its all about jobs.

[If interested, you can download the complete Wal-Mart-Merced, California regional distribution center Environmental Impact Technical Report -- it's a whopper -- along with related documents and information on the project at the link here.]

Selected Related stories from Fresh & Easy Buzz:

>February 11, 2008: Tesco's Fresh & Easy Isn't the Only Food & Grocery Retailer With its Eyes on Bakersfield: Wal-Mart's Bakersfield Push and Central Valley, CA Strategy

>September 15, 2008: September 15, 2008: Wal-Mart Expanding its Discount Store-to-Supercenter Conversion Program As Part of its Strategy to Grab Even More Food and Grocery Sales Market Share

> December 29, 2008: Competitor News: Winco Foods to Expand in California and Nevada in 2009; Put Aggressive Focus on Central Valley, Northern California and Northern Nevada

>December 3, 2009: December 3, 2008: Tesco Opens its First Two California Fresh & Easy Stores Outside of Southern California in the Central Valley City of Bakersfield Today.]

>April 13, 2009: Despite Postponing its Northern California Launch Again Earlier This Year Tesco's Fresh & Easy Planning Third San Francisco Store; First Stockton Unit

>March 31, 2009: Despite Having Postponed its Northern California Launch Indefinitely; Tesco's Fresh & Easy Planning Third Store in Modesto, California

>November 12, 2008: Analysis: Hard Times at Fresh & Easy - Northern California Expansion to Be Postponed or Shelved Do to Economy; But its Only a Symptom Not the Cause

>May 14, 2008: Fresh & Easy Buzz Exclusive: Tesco's Fresh & Easy Neighborhood Market Plans to Open Five Stores In the Fresno, California Metropolitan Region

>May 15, 2008: Fresh But Never Easy: Tesco's Long But Rapid South-North March in the Nation-State of California

>November 20, 2008: Analysis & Commentary: Fresh & Easy Neighborhood Market and Tesco's Lowered Expectations

>September 29, 2008: Special Report: Wal-Mart, Inc. Studying Second Small-Format Food and Grocery Store Concept; the 'Bodega' or Modern Version of the Corner Grocery Store

>August 8, 2008: Analysis & Commentary: Wal-Mart's Marketside As Part Of it's Multi-Format Category-Killer Strategy Spells Trouble For Tesco's Fresh & Easy

>April 14, 2008: New Multi-Supercenter and Multi-Format Strategies Are Showing Wal-Mart to Be A More Agile Grocery Retailer in the U.S.

>November 19, 2008: Competitor News: Wal-Mart Lowering Prices on Holiday Items and Staples; New Formats Coming; Online Grocery Sales; Hundreds of New Stores FY 2009-2010

[You can follow Fresh & Easy Buzz around on Twitter.com at www.twitter.com/freshneasybuzz.]

Thursday, November 6, 2008

Upcoming New Markets News: Tesco Will Open A Second Fresh & Easy Store in Modesto, California

Upcoming New Markets News: Central Valley - Modesto, CA

Tesco's Fresh & Easy Neighborhood Market plans to locate and open a second Fresh & Easy grocery and fresh foods store in the Central Valley, California city of Modesto, Fresh & Easy Buzz has learned.

Modesto's second Fresh & Easy market will be located at 1717 Oakdale Road in the city, in a building that formally housed a Save Mart supermarket. Save Mart built a new, larger store nearby some years ago and closed the older, smaller store at the location.

Fresh & Easy will remodel the building, turning it into one of its small-format, combination basic grocery and fresh foods markets.

The shopping center where the new 1717 Oakdale Road Fresh & Easy store will be located includes a Big Lots general merchandise discount store next door, a dry cleaner, pizza parlor, Mexican restaurant, Chinese restaurant, nail salon, Rent-A-Center store, insurance office and a Bank of America, according to a regular Fresh & Easy Buzz reader who lives in Modesto and knows the local food and grocery retailing market better than most industry professionals.

Tesco's Fresh & Easy has applied to the State of California Alcohol and Beverage Control Department for an off-sale beer and wine permit for the store at the 1717 Oakdale Road location. There's also an application sign on the window of the empty building in the shopping center. The application was first made on September 23 of this year.

The 1717 Oakdale Road Fresh & Easy will be the grocery chain's second location in Modesto, a city of about 205,000 located in the Northern San Joaquin Valley, in Stanislaus County.

Stanislaus County has a population of about 500,000. Modesto is the county seat and the largest city in the county. Modesto's motto is: "Water, Wealth, Contentment, Health," as the arch at the top of this story depicts. The arch is located as the gateway to downtown Modesto.

We reported in this May 10, 2008 story, "New Markets: Tesco's Fresh & Easy to Move Into Modesto, California Market; Open its First Store in the City Early Next Year," about Tesco's plans to open its first Fresh & Easy Neighborhood Market store in Modesto. That store will be located in the city's Sylvan Square Shopping Center in a building that previously housed an independent supermarket, Michotti's Marketplace, which closed, sighting competitive pressures in the market.

Crosspoint Realty Co., which is in charge of the Sylvan Square center and building, is dividing the former Michotti's Marketplace supermarket building, which is about 30,000 square feet, roughly in half. The Fresh & Easy store will take up about 13,000 square feet of the building when completed.

Fresh & Easy moves north

Locating a second Fresh & Easy store in Modesto is a part of Tesco's California strategy. The retailer is moving north from its current Southern California store base into the Central Valley, Sacramento region and the San Francisco Bay Area as part of its strategy to be a major statewide food and grocery retailer in the Golden State.

The first two Fresh & Easy markets in the Central Valley will open next month on December 3 in Bakersfield, as we reported in this piece yesterday.

Tesco will open additional Fresh & Easy stores throughout the Central Valley, from Bakersfield and Fresno in the south valley and on north to Stockton, beginning next year, along with beginning to open units in the Sacramento/Vacaville region and San Francisco Bay Area.

The grocery chain also will open its Northern California distribution center next year in Stockton, which is located about 30 miles from Modesto in the Northern San Joaquin Valley, as we reported here on March 8 of this year.

New developments in Modesto market

There have been a number of changes and new developments in the Modesto, California food and grocery retailing market in just the seven months since we reported on the first Fresh & Easy coming to the city in our May 10 story.

The "big" development is that mega-retailer Wal Mart Stores, Inc. will open its first Supercenter in Modesto in about two weeks, on November 14.

The Modesto Supercenter is a first for Wal-Mart nationally in the U.S. in that it is the retailer's first hybrid big box store. Rather than being built from the ground up, the Modesto Supercenter is located in a former warehouse food store building of about 100,000 square feet, which is about 80,000 square feet smaller than the average size of a Wal-Mart Supercenter.

The 100,000 -to- 105,000 Supercenter however will have all of the same departments a typical 180,000 -to- 200,000 square foot unit has. The departments will just be smaller and scaled down to fit the reduced square footage of the store.

Wal-Mart has one of its discount format stores already in Modesto. Those stores though don't sell fresh produce or meats. They also offer only a limited assortment of dry grocery products and a small selection of perishables, primarily basic dairy and deli items.

The mega-retailer is in the process of building a huge Supercenter in nearby Ceres, which shares a southern border with Modesto. Ceres has a population of about 45,000. But the new Supercenter there when open also will draw from residents of Modesto, since the two cities are right next to each other. The Ceres Supercenter, which is a new construction, will be about 200,000 square feet when completed. It is set to open in 2009.

Wal-Mart Stores, Inc. also has a proposal on the table to built a regional distribution center in the city of Merced (Merced County), which is about 30 miles from Modesto. The new distribution center would serve Wal-Mart stores, including Supercenters with food and grocery products, throughout the Central Valley and Northern California.

As a result of building this new distribution center, Wal-Mart will attempt to locate many more Supercenters -- and perhaps some of its other format stores like Sam's Club, Wal-Mart Neighborhood Market supermarkets and it's new small-format Marketside that sell food and grocery products -- in the region in the coming years.

Another significant change in the Modesto market was the recent sale of two supermarkets in the city by local independent grocer Richland Markets to another local, multi-store independent, Cost Less Foods Company, in late August, early September.

Richland Markets was for decades a major food and grocery retailer in Modesto and the surrounding communities, where it operated six full-service supermarkets. Over the last few years Richland Markets has sold off its stores. After selling the two Modesto stores last month, the independent grocer is now left with just one, in Ceres.

Cost Less Foods now operates three stores in Modesto, along with one in next door Oakdale and another in nearby Turlock, which is about 10 miles from Modesto. The retailer also operates a couple more stores outside the Modesto market.

Cost Less is a privately-owned grocery chain. It operates on an everyday low price merchandising philosophy but also features about a dozen "super hot" weekly specials in a weekly full-page advertisement it runs in the food section of the Modesto Bee, the major daily paper in the market.

For example, in its advertisement this week, which broke yesterday, the discount grocery chain is offering chicken fryer leg quarters for 49 cents pound, boneless pork chops for $1.28 pound, Roma tomatoes for 58 cents pound, Kraft 32oz Mayonnaise for $2.28 each, and Betty Crocker Hamburger Helper for just 98 cents a box, along with another seven items at similar hot prices.

Generally, Cost Less Foods has the lowest advertised items when its dozen are so weekly promoted items are also ran in competitors weekly advertising circulars, which often is the case.

Another change in the Modesto market was the closure a few months ago of R-N supermarket, one of the city's last remaining larger independent supermarkets. The store's owners said increasing competition and higher rents were the reason they were closing the store.

The R-N supermarket building is currently vacant. It isn't very far from the Sylvan Square Shopping Center site where the first Modesto Fresh & Easy market is going. According to a commercial real estate source in Modesto, there has been talk of Tesco's Fresh & Easy possibly locating what would thus far be its third Modesto store in that now vacant building. However we have found no confirmation of that at present however.

Modesto market share leaders

In terms of market share leaders, Modesto-based regional supermarket chain Save Mart still holds that honor in Modesto and the surrounding market region.

Save Mart, which operates over 200 supermarkets in the Central Valley and Northern California under the Save Mart (in the valley) and Lucky banners (in the San Francisco Bay Area and Sacramento markets), along with a discount warehouse chain called FoodMaxx, has seven stores in Modesto -- five Save Mart supermarkets and one FoodMaxx warehouse unit.

Save Mart also has Save Mart banner supermarkets in the nearby cities of Riverbank, Oakdale, Ceres, Turlock and Patterson, along with one FoodMaxx store in Turlock.

Privately-held Save Mart, which has its corporate headquarters in Modesto, had sales of about $6.5 billion in 2007.

Sacramento-based Raleys, which also is privately-held, is gaining on Save Mart a bit in Modesto.

The 130 store chain, which operates supermarkets under the Raleys, Bel-Air and Nob Hill banners, along with a having it's own discount warehouse store chain called FoodSource, currently has four stores in Modesto, as well as one in Riverbank, Oakdale and Turlock, All of these stores are under the Raley's banner. The chain also has a store under the Nob Hill banner in the Stanislaus County city of Newman, which is about 25 miles from Modesto.Link

Independents and other players

O' Brien's Market, a three store locally-owned independent, is a vibrant force in Modesto as an upscale grocer. The retailer has two stores in Modesto and one in next door Riverbank. In addition to offering a full selection of basic food and grocery products in its supermarkets, O'Brien's puts a focus on selling specialty, natural and premium food and grocery products, and in-store fresh, prepared foods, along with baked goods.

O'Brien's is nearly the last vibrant independent left in the city however. And Modesto was once a thriving independent grocery store market.

Another independent, three-store Sam's Food City, which has been in Modesto and for decades, continues to operate and do well, according to local observers, although primarily as a neighborhood grocer, which there's certainly nothing wrong with. After all, that's Fresh & Easy's niche.

Sam's has one store in Modesto, one in Turlock and one in Livingston, which is about 20 miles from Modesto in neighboring Merced County. The stores niche is primarily lower-end and price and convenience-oriented.

Modesto also has a very popular Costco club store, which according to local observers does a very strong food and grocery business.

Trader Joe's has one store in the city.

The Winco supermarket chain also has a unit in Modesto. Winco stores are big and discount-priced. Winco also has a major regional distribution center located in Modesto. The fast-growing Idaho-based employee-owned chain is expected to build more stores in Modesto and the the surrounding area.

There's also a large Food-4-Less discount warehouse format store in Modesto/Ceres that does a brisk business, according to local market observers.

There are no natural foods chain stores in Modesto. However the city has a couple strong independent natural foods markets that do well, along with a number of smaller health/natural foods stores.

Since there isn't a Whole Foods or similar chain natural foods store in the city, Fresh & Easy could do well in the natural and organic categories since it offers a fairly decent selection of such products at affordable prices that will most likely be considerably cheaper than the existing independents in Modesto currently are selling similar items for.

Fresh & Easy's organic products selection is limited however since the small-format stores only carry about 3,500 total items. Therefore the larger, independent natural foods markets in Modesto should still continue to do well based on the fact they offer a much larger selection of items in a wider variety of product categories than Fresh & Easy can and does.

Tesco's Fresh & Easy Neighborhood Market has yet to publicly confirm the first Modesto Fresh & Easy store in the Sylvan Square center we reported on in March.

Fresh & Easy Buzz is the first publication to report on the second store at the 1717 Oakdale Road location.

Monday, July 7, 2008

Upcoming New Markets Special Report: Raley's Trying Out New, Smaller Footprint Supermarket Format in Central Valley, California City of Oakdale


West Sacramento-based Raley's Family of Fine Stores is trying out a new, smaller-format (about 40,000 -to- 45,000 square feet) supermarket concept under the new "Raley's Fresh Market" banner in the northern San Joaquin Valley city of Oakdale, in Northern California's Stanislaus County, Fresh & Easy Buzz has learned. Previously the supermarket chain has only used the Raley's name on its superstore format stores.

Oakdale, which calls itself the "Cowboy Capital of the the United States" because it holds one of the largest annual rodeos in the U.S., as well as has the most national competitive rodeo champions in the nation, is a small city of about 20,000 residents, located right next door to Modesto, which has a population of about 210,000. Stanislaus County currently has a population of about 500,000. The three-county northern San Joaquin Valley region, comprised of San Joaquin, Stanislaus and Merced counties, has a population of about 1.4 million residents.

As we reported in this piece earlier today, Raley's, which currently operates about 129 supermarkets and warehouse stores under the Raley's, Bel Air Markets, Nob Hill Foods, Food Source and now Raley's Fresh Market banners, is looking for new store sites throughout Northern California and in the Reno/Sparks/Lake Tahoe region in northern Nevada.

The new Raley's-owned store in Oakdale, called Raley's Fresh Market, is at 40,000 -to- 45,000 square feet much smaller than most of the modern day Raley's banner stores, which range from about 55,000 -to- about 75,000 square feet. It's also unique in that the "Fresh Market" banner store is located in a former supermarket building the retailer remodeled for its Oakdale store.

For example, nearly every new Raley's, Bel-Air, Nob Hill Foods and Food Source store the grocery chain has opened in recent years has been a brand new, built from the gound up supermarket, or in the case of Food Source, a discount warehouse format store.

The Oakdale store also is the first time Raley's has used the "Fresh Market" name along with its Raley's name on a supermarket.

The Oakdale store previously housed an independent supermarket named Oak Ridge Fresh Market, which was a spin-off by the owners of the building's previous grocer, Richland Markets, which built the building and operated a Richland Market banner supermarket in it for a number of years.

Richland Markets, a long-time family-owned area multi-store independent, has been selling off most of its seven supermarkets in the cities of Modesto, Turlock, Ceres and Oakdale over the last few years due to family succession and competitive issues, according to a Modesto-area food broker and regular Fresh & Easy buzz reader.

Just recently, Richland Markets agreed to sell two of its remaining three supermarkets to another locally-based multi-store independent, discount grocer Cost Less Foods, leaving Richland left with only its flagship supermarket in Turlock, which is a city of about 75,000, located 10 miles from Modesto, according to the local area food broker.

The decision to locate the store in a vacant supermarket building and to try out the new Raley's Fresh Market banner name was made for a couple of different but related reasons, Fresh & Easy Buzz has learned.

We've learned Raley's decided to acquire the vacant building this spring--the Oakdale Raley's Fresh Market just opened a few weeks ago--and turn it into a new format using the Raley's Fresh Market name for three primary reasons.

First, the store is located right across the street from a Save Mart supermarket. Savemart, which is headquartered in Modesto and operates supermarkets throughout the Central Valley under the Save Mart banner and warehouse stores under the Save Maxx banner--along with supermarkets in the San Francisco Bay Area under the Lucky banner (it acquired those stores in its 2006 acquisition of Albertson's, Inc.'s Northern California Division)--is the market share leader in the northern San Joaquin Valley.

When Save Mart acquired Albertsons Inc.'s Northern California stores in 2006 (close to 200 supermarkets), for the first time the Modesto-based chain entered Raley's home turf market of Sacramento. Prior to that, Save Mart had never opened a Save Mart banner supermarket in the Sacramento market, even though its only about 65 -to- 70 miles from Modesto. The retailer always had stores as close as 20 miles from Sacramento, so going into Sacramento would not have been unusual.

Additionally, Raley's only operated a handful of stores (literally two or three only) in Save Mart's home market region of Stanislaus, San Joaquin and Merced counties.

Further, Raley's and Save Mart are partners in a grocery distribution warehouse located in the Northern San Joaquin Valley city of Lathrop. The two chains even shared the same private label, Sunny Select, as their respective store brand, until Raley's started converting most of its store brand items to the Raley's label a couple years ago.

Raley's also uses the Nob Hill Foods brand for store brand specialty and premium foods items. Raley's still sells items in certain categories under the Sunny Select brand. Save Mart continues to use it as its primary store brand across all categories.

However, with Save Mart's arrival with multiple supermarkets in the Sacramento regional market following its acquisition of Albertsons Northern California Division, Raley's got its competitive juices flowing and decided to hit Save Mart a bit harder than in the past in its home base. In the last year, Raley's has opened brand new Raley's banner superstores in Modesto and in Riverbank, which is a right next door to both Modesto and Oakdale. Raley's now has three Raley's superstores in Modesto, one in Riverbank and now the Raley's Fresh Market in Oakdale.

The Oakdale location right across the street from the Save Mart supermarket was too good to pass up for Raleys as part of its upping the competitive ante on Save Mart on its home turf.

Second, since the Raley's Fresh Market store building is smaller than a normal Raley's banner superstore (and is more a supermarket), Raley's decided it would have to limit the assortment it normally puts in its Raley's banner stores. Therefore, the retailer wanted to differentiate its name by adding "Fresh Market" to it, among other reasons fro choosing the name.

Additionally, Raley's wanted to go head-to-head with the Save Mart across the street on price and value, which meant offering lower everyday prices than it does in its Raley's superstores, along with deeper store-specific promotions. Therefore, the format tweaks required by the smaller store footprint, along with the name change, are allowing the retailer to focus more on price and price promotions in the Raley's Fresh Market in Oakdale, without creating confusion in terms of its merchandising and pricing in the Raley's superstore format stores.

Lastly, since the store is in a smaller footprint as well as existing building, its overhead and operating costs are much lower for Raley's than is the case with its newer Raley's banner superstores, which at about 55,000 -to- 70,000-plus square feet not only are bigger, which consumes more energy, but also feature lots of refrigerated and frozen cases in them. Therefore, it can offer lower everyday prices and hot promotions, which it is, designed to undercut the Save Mart across the street. In general, Save Mart supermarket prices tend to be a bit lower everyday than Raley's supercenter prices are.

Since the supermarket's previous tenant, the Oak Ridge Fresh Market, used "Fresh Market' in its name, Raley's also decided to use it as part of its new banner (or hybrid Raley's banner perhaps is a better way to phrase it) because the supermarket chain felt it allowed for some consistancy in the tranistion from the previous grocer to Raley's.

The Oakdale Raley's Fresh Market is a conventional supermarket essentially with a few twists. For esxample, it puts a much stronger emphasis on fresh foods--meats, produce, prepared foods--than a traditional 40,000 square foot supermarket does.

Price and heavy promotion also are part of the store's focus. Since opening, the store has been conducting numerous hot, store-specific promotions, which have included heavy couponing, free gasoline cards to customers who spend a certain amount of money per-purchase, deep discounts on fresh foods and groceries, and other heavy price and value-oriented promotional campaigns.

The Oakdale Raley's Fresh Market also is offering customers a $5 back on every $25 spent promotion currently, along with coupons for free items like fresh eggs, meats, produce items and other food and grocery items throughout the store.

Save Mart hasn't stood still though. It recently fired back with a thick coupon book specific to the Oakdale Save Mart location across the street, offering higher coupon values on many of the same items the Raley's Fresh Market offered in its coupon book. Save Mart also last week launched a special promotion in which it gave a gas rebate of $40 in the form of a gas card to the first 500 customers to spend $40 on groceries in the store.

Raley's has now come out with another thick coupon book for the store; which no doubt will be met by another similar one from Save Mart. Oakdale shoppers, and from what we are told those from surrounding towns, are definately benefiting from the competition between the two across the street situated grocers.

A Raley's spokesperson recently told Fresh & Easy Buzz it's possible the grocery chain may open more Raley's Fresh Markets of approximately the same size as the Oakdale store in other cities, in vacant supermarket buildings. However, she said the Oakdale store currently isn't any sort of test for rapidly rolling out a smaller-format, Raley's Fresh Market banner chain of stores anytime soon. However, the retailer isn't ruling out more, similar stores.

As we reported in this May 10 piece, Tesco plans to open its first Fresh & Easy Neighborhood Market grocery store in Modesto next year in a currently vacant building which most recently housed an independent supermarket that went out of business earlier this year.

That building, which is about 30,000 square feet, is set to be split in half by the shopping center's owner, with nearly half of it then remodeled into a Fresh & Easy small-format grocery store. Ironically, that now out of business Modesto independent supermarket, Michotti's Marketplace, bought the store (the business not the building) from Richland Markets, which is the same retailer that built and operated the Oakdale store the new Raley's Fresh Market is now located in.

We also know from our commercial real estate sources that Tesco Fresh & Easy Neighborhood Market is currently searching for additional store sites in Modesto and in the surrounding cities and towns.

Additionally, as we reported here, Tesco plans to locate its Northern California Fresh & Easy distribution center facility in Stockton, which is about 30 miles from Modesto. Stockton and Modesto (as well as Sacramento)--and the other cities mentioned above--are all conveniently connected along California Highway 99.

In terms of Fresh & Easy's entrance into the Modesto-Oakdale area, the Raley's and Save Mart price fight and competitive battle in the small city of Oakdale should give Tesco some idea of how much these two regional supermarket chains want to protect their respective hometown turf--the Sacramento region where Raley's is headquartered and the northern San Joaquin Valley region where Save Mart in headquartered.

Raley's, with about 129 stores, has annual sales of about $3.5 billion, while Save Mart, which has more than double Raley's total store count, had sales of nearly $6.5 billion in its latest fiscal year.

Both chains are far and away the current market share leaders in their respective headquarter regions. Additionally, Save Mart, with its acquisition of Albertsons Northern California divsion, the stores of which it now operates under the Lucky banner, is the number two market share leader in the San Francisco Bay Area, after number one Safeway Stores, Inc.