Getting Real in the Golden State: First Group of 13 Walmart Neighborhood Market Stores Opening in California This Fall

Walmart Neighborhood Market in California

We first reported in this July 2010 story [July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store] that Walmart Stores, Inc. was looking for locations in California for its Walmart Neighborhood Market supermarkets, which range in size from about 30,000-45,000 square feet.

To date Walmart has operated its mega-supercenters and discount format stores only in California, many of which it's been converting over the last few years to hybrid supercenters offering food and groceries, but not its Neighborhood Market grocery stores.

We followed our July 2010 report and analysis piece up with other stories, like this one in January 2011 about the Bentonville, Arkansas-based global retailer's plans to launch its Walmart Neighborhood Market format in the Golden State. In the January piece and in others, we reported on specific locations in California where Walmart would be opening its Neighborhood Market stores.

It's been a long reportage road from our first reports in 2010 about the mega-retailer's plans to open Walmart Neighborhood Market supermarkets in California to the present.

But it's been a fruitful journey.

Why? Because Walmart Store's, Inc. has now announced - and in our case confirmed because many of the store locations it's announced are those we already reported on - the first Walmart Neighborhood Market locations it plans to open, beginning this fall, in California.

Inside a Walmart Neighborhood Market supermarket. Photo courtesy Walmart Stores, Inc.

Below are the locations of those 13 (Walmart obviously isn't superstitious) supermarkets, along with all the key data grocery industry wonks and consumers alike like to see.

Walmart has other Neighborhood Market locations already booked in California, a couple of which are mentioned in our previous stories. In addition, the retailer is looking for more sites for its Walmart Neighborhood Market supermarkets throughout California.

We will be writing about Walmart's launch of its Walmart Neighborhood Market supermarkets in California from now until the end of the year, including reporting on some of those additional locations.

We'll be using this header: 'Walmart Neighborhood Market in California,' in those stories.

As of today we expect the first Walmart Neighborhood Market stores in California to open in the October-November time period. One of the first, if not the first unit, will be in Lincoln, California near Sacramento, where Tesco's Fresh & Easy Neighborhood Market opened a store in March 2012.

Walmart Stores, Inc. currently has 168 Neighborhood Market stores in the U.S., with plans to double the store- count over the next couple years. As we've said a number of times in Fresh & Easy Buzz, California will play a major role at Walmart in the growing of that store-count. Stay tuned.

[Read our extensive four-plus years of reporting, analysis and commentary about Walmart Stores, Inc., including its Walmart Neighborhood Market and other smaller format grocery stores at the following links: Wal-Mart, Wal-Mart Stores Inc, Walmart, Walmart Stores.]

The Walmart Neighborhood Market supermarket (an urban version) in Chicago's West Loop Neighborhood, which opened earlier this year. The store is about 31,000 square feet. Photo courtesy blog.chicagoarchitecture.info.

Walmart Neighborhood Market in California

Walmart Neighborhood Market - 13 Confirmed California Store Locations

Confirmation sources: Delia Garcia, Walmart West. Steven Ristivo, Walmart Stores, Inc., senior director of community affairs.

SOUTHERN CALIFORNIA

1. City: Los Angeles
County: Los Angeles
Address: Corner Grand Avenue and Ceasar Chavez Avenue. Downtown, on outskirts of Chinatown.
Square-footage: 33K. Ground floor of senior citizens' residential complex.
Current target opening: Early-to-mid-2013. Construction to begin summer 2012

2. City: Huntington Beach
County: Orange
Address: Corner Beach Boulevard and Atlantic Avenue. Former Rite-Aid drug store building
Square-footage: 31K
Current target opening: August 2012

3. City: Rancho Santa Margarita
County: Orange
Address: 30491 Avenida de Las Flores. Avenida de los Flores and Antonio Parkway
Square-footage: 33K
Current target opening: August 2012

4. City: Camarillo
County: Ventura
Address: Camarillo Town Shopping Center. 275 West Ventura Boulevard. Vacant Linens and Things building
Square-footage: 34-36K
Current target opening: Late 2012

5. City: San Diego
County: San Diego
Address: Logan Heights. Imperial Avenue between 21rst and 22nd Streets, near downtown. In historic former Farmers Market building. Neighborhood is underserved by grocery stores offering fresh food and groceries at affordable prices.
Square-footage: 48,800K
Current target opening: Late 2012/Early 2013

NORTHERN CALIFORNIA

San Francisco Bay Area

6. City: Pleasanton/East Bay
County: Alameda
Address: Meadow Plaza shopping center. 3112 Santa Rita Road. Santa Rita Road and Stoneridge Drive
Former Nob Hill Foods' (Raley's owned) supermarket building. Near Safeway Stores, Inc.'s corporate headquarters. Less than a mile from a Safeway store and a Fresh & Easy market.
Square-footage: 31K
Current targeted opening: Late 2012/Early 2013

7. City: San Ramon/East Bay
County: Contra Costa
Address: Country Club Village Shopping Center. 9100 Alcosta Boulevard. Former Ralphs' supermarket and La Asia supermarket building. Closest competitor: Save Mart-owned Lucky supermarket, less than one mile away.
Square-footage: 33-36K
Current target opening: Fall 2012

8. City: Hayward/East Bay
County: Alameda
Address: 2480 Whipple Road. Former Circuit City building
Square-footage: 33-35K
Current target opening: Late 2012/Early 2013

9. City: San Jose
County: Santa Clara
Address: Westgate Mall. 1600 Saratoga Avenue
Square-footage: 38K. Recently closed Safeway store
Current target opening: Fall 2012

Sacramento Region

10. City: Sacramento
County: Sacramento
Address: Taylor Center. 2700 Marconi Avenue. Marconi Avenue and Fulton Avenue. Former Goore's children's store building. Prior to 1999, when Goore's moved in, was a the American Stores' Inc. Lucky supermarket. Goore's closed in fall 2011.
Square-footage: 32-36K*
Current target opening: Late 2012/Early 2013

11. City: Granite Bay (Roseville border)
County: Placer
Address: Sierra Oaks shopping center. Douglas and Sierra College boulevards. Former Grocery Outlet store, plus additional square-footage attached to the building but previously not used by Grocery Outlet.
Square-footage: 43K
Current target opening: Late 2012-to-early-2013

12. City: Lincoln
County: Placer
Address: Highway 65 and Second Street. Former Rainbow Market building
Square-footage: 31-32K
Current target opening: Fall 2012

13. City: Modesto
County: Stanislaus
Address: Coffee and Orangeburg shopping center. Corner Coffee Road and Orangeburg Avenue. Former Dollar Superstore building (26K sq. ft.. Plus, former Leslie Pool Supply building next door (10K sq. ft.)
Square-footage: 36K.
Current target opening: Late 2012-to-early 2013

Walmart Plans to Close Arizona 'marketside by Walmart' Stores, Dump Format By Year-End or Early 2011

The History - and End - of Walmart's 'marketside by Walmart' Format and Stores in Five Acts

Act 1: The beginning

We've been watching, reporting on and analyzing Walmart Stores, Inc.'s 'marketside by Walmart' (originally called just 'marketside') four-store chain of small-format food and grocery stores since before the stores were opened in four cities in Metropolitan Phoenix, Arizona in October 2008, nearly two years ago. [Read a selection of our stories here. Click the 'newer posts' link at the bottom of the linked page for additional stories.]

Act 2: The beginning of the end

On December 21, 2009, we reported in this piece - Wither Walmart's Small-Format 'marketside' Stores and Format? - that Walmart Stores, Inc. had eliminated its Web Site for the four then 'marketside' (now named 'marketside by Walmart') small-format grocery and fresh foods markets and replaced it with a single Web Page introducing the company's new line of 'marketside' store brand food products, which are named after the fresh foods-focused format stores in Arizona.

As you can see in the piece linked above, we further suggested in the story that 'marketside by Walmart's' days were numbered.

Act 3: The curtain is closing

On January 9, we followed up our December 21, 2009 piece with a story titled: Walmart's 'marketside': What's 'In-Store' for 2010? At the end of the piece we offered three predictions about the 'marketside by Walmart' format and stores and its 'Marketside' brand, which Walmart is using on packaged fresh-prepared foods, pre-packaged fresh produce, fresh salsas, packaged breads and baked goods, along with using to brand some of its supercenter deli departments.

Below (in italics) is the prediction we made in the story regarding the 'marketside by Walmart' format and stores. It just happens to be prediction number one:

Walmart will keep the four Arizona 'marketside by Walmart' stores open in 2010. It will do so in part to serve the research and development function we mention above. Walmart won't open any new small-format 'marketside by Walmart' stores in 2010 though, either in Arizona or elsewhere in the U.S.

So far - nine months into 2010 - our prediction is correct. Walmart hasn't opened any additional 'marketside by walmart' stores this year, nor has it closed the four Metro Phoenix, Arizona stores...yet.

Act 4: Enter the replacement format

In early July of this year, we published this story - July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store - in which we not only broke the news Walmart Stores, Inc. is looking for sights in Northern California for the 20,000 or so square-foot 'Neighborhood Market by Walmart' format and grocery store its been experimenting with in Rogers, Arkansas, but also said, based on information we obtained, that Walmart would eventually be closing the four Arizona 'marketside by Walmart' stores, shelving the format, and replacing it (the format not that actual four stores) with a final version of the 'Neighborhood Market by Walmart' prototype store.

Here's what we said (in italics) in the July 6 story:

Walmart Stores, Inc. currently has no plans to open any additional Marketside by Walmart stores - anywhere - including in Northern California. In fact, the retailer still holds leases on two sites in Southern California, one in San Diego and another in nearby Oceanside, but has no plans to open them as Marketside by Walmart stores. Construction at both locations, vacant retail buildings, has never been started, nor are there any plans to do so in the near future.

It's our analysis that Walmart is likely to replace the Marketside by Walmart format with some final version of the 20,000 square-foot Neighborhood Market by Walmart prototype, in terms of not opening any additional Marketside stores, and eventually close the four stores in Arizona, or replace one or more with the 20,000 square-foot prototype. It's important to note that the 20,000 square-foot prototype store in Rogers, Arkansas remains a work in progress in terms of not being cast in stone as the final format product, just like the name Neighborhood Market by Walmart might not end up being what it's called.

Act 5: The End is Near

Walmart's small-format 'marketside by walmart' has gone from withering in December 2008, to beginning to die on the vine in early January 2010, to starting to show signs of rot a little over two months ago, in July 2010, according to our chronology of reporting.

And now, the end is coming very soon for the four 'marketside by walmart' stores and the format.

Based on information we've obtained, Walmart Stores, Inc. plans to announce the closing of the four Metro Phoenix 'marketside by Walmart' stores - which are located in the cities of Gilbert, Chandler, Mesa and Tempe - before the end of December 2010, and no later than in the first quarter of 2011.

Yes, Walmart's small-format, Tesco Fresh & Easy Neighborhood Market-like, fresh food and grocery-focused small-format experiment will soon come to an end.

Currently, based on our information (and as we said in our July 2010 story), the format replacement for 'marketside by walmart' is the 20,000 or so square-foot 'Neighborhood Market by Walmart' prototype store in Rogers, Arkansas. Walmart continues to tweak the format, by the way.

Additionally, Walmart will continue to remodel and build its larger (average 40,000 square-foot) Neighborhood Market supermarkets, a few of which have had name changes to 'Neighborhood Market by Walmart' on a selective basis thus far.

So there you have it. Walmart's four 'marketside by Walmart' stores, which all opened on October 4, 2008, will soon be history, along with the format. The history of Walmart's 'marketside by Walmart' in five acts, as reported on and analyzed by Fresh & Easy Buzz.

But, like the story of the mythical 'Phoenix' (appropriate since the four 'marketside by Walmart' stores happen to be in Metro Phoenix, Arizona) rising out of the ashes, not only has a brand name - 'marketside' - for fresh-prepared foods, pre-packaged produce, fresh salsas, and fresh-baked breads, rolls and a cookie, along with a brand name for store deli/prepared foods departments - been born out of the small-format stores, but so too has a new format - the 20,000 or so square-foot 'Neighborhood Market by Walmart' prototype, which is rising out of what will soon be the ashes of the 'marketside by Walmart' format and stores.

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

Breaking News - Plus Analysis

Walmart Stores, Inc. is currently searching for numerous future store sites in Northern California, with a focus on existing vacant retail buildings, for its 20,000 square-foot Neighborhood Market by Walmart prototype format, which it's been testing in a store in Rogers, Arkansas near corporate headquarters in Bentonville for about a year, Fresh & Easy Buzz has learned.

In addition to its Northern California focus, Walmart is also scouting for sites for the smaller-format stores in northern Nevada, in other selected urban regions in the west, and at urban locations on the east coast and in the Midwest, particularly in Chicago, where it recently announced a major development initiative in partnership with the city and Mayor Richard Daley, in which Walmart will invest tens millions of dollars to develop numerous stores (multiple format, big and small) on Chicago's south and west sides.

The 20,000 square-foot prototype store in Rogers, Arkansas - which is essentially a smaller, hybrid version of Walmart's 40,000 square-foot Neighborhood Market format, mixed with some of the elements of its Marketside by Walmart fresh food and grocery format, four stores of which the retailer's been operating in Metropolitan Phoenix, Arizona since October 2008 - currently goes by the name Neighborhood Market by Walmart, as do at least two converted Neighborhood Market stores (both are 40,000 -to- 45,000 square-feet though); one in Naples, Florida and the other in Plano, Texas. However, according to our sources, Walmart has not yet decided if the 20,000 square-foot prototype will end up being called Neighborhood Market by Walmart, or if it will choose another name for it.

Walmart is searching for an initial 10 locations for the new concept, 20,000 square-foot Neighborhood Market by Walmart prototype format in the Sacramento Metropolitan region, and for about the same number of store sites in the San Francisco Bay Area, according to two Northern California-based commercial real estate sources in a position to know about the search.

According to our sources, Walmart is looking for at least three initial locations in Sacramento, with the other seven store sites being in the surrounding suburbs, including in Elk Grove, where Tesco's Fresh & Easy Neighborhood Market has two future store sites - one at Bruceville Road and El Grove Boulevard, and the other at Elk Grove Florin Road and Calvine Road. This mix is subject to adjustment and change.

Interestingly, Southern California-based Smart & Final is planning to open its first Henry's Farmers Market food and grocery store in Elk Grove in late August. [See here.]

Tesco's Fresh & Easy has had 19 publicly confirmed store locations in Northern California's Sacramento/Vacaville Metropolitan region since February 2008. Ten of the store sites are in Sacramento. The other seven are in the suburbs. Two of the stores are in Vacaville, which is about a 30 minute drive from Sacramento, and is located about mid-way between Sacramento and the Bay Area. [See - February 28, 2008: News & Analysis: Tesco's Fresh & Easy Confirms 19 Store Locations for the Sacramento-Vacaville Region in Northern California]

The search for store locations for the 20,000 square-foot prototype format, currently going by the name Neighborhood Market by Walmart, in the San Francisco Bay Area includes a mix of urban and suburban locations, including in the south Bay Area near San Jose, in the East Bay, as well as in San Francisco, and elsewhere in the nine-county region of about 7 million residents.

Tesco's Fresh & Easy has 18 confirmed future store locations in the San Francisco Bay Area. Those store sites were announced in February 2008 as well. Click here to read our most recent - and past - coverage on Fresh & Easy Neighborhood Market's plans in Northern California, including in the nine-county Bay Area.

Walmart is hoping to find some of the Northern California locations this year, and could announce, or at least confirm, its plans for the 20,000 square-foot stores before the year is out.

Fresh & Easy Buzz has visited the 20,000 square-foot new concept Neighborhood Market by Walmart store in Rogers, Arkansas. It differs from the traditional 40,000 square-foot Neighborhood Market format (about 152 existing stores at present) in a number of key ways, although its apparent to us it's where the inspiration and structural basis for the prototype comes from.

First, the 20,000 square-foot prototype store is more compact, but doesn't have a crowded look or feel to it. Second, the store's sight lines (lower but with fairly high-profile gondola shelving in order to hold plenty of SKUs) and overall interior design are an improvement over the traditional Neighborhood Market stores, in our analysis.

Additionally, the department graphics - green in color - in the 20,000 square-foot prototype store are colorful and pop when you set your eyes on them. The theme "Save Money Live Better," is used throughout the store.

The prototype store also features both full-service and self-service checkout lanes.

Lastly, the 20,000 square-foot prototype Neighborhood Market by Walmart store in Rogers, Arkansas has a service seafood counter, a deli/prepared foods department under the "Marketside" brand, am in-store cafe, and features a substantial offering of natural and organic food and non-food products, in addition to conventional national brands, and lots of private label SKUs, across all departments and categories.

We've been reporting and offering analysis for the nearly three-year existence of Fresh & Easy Buzz that in order for Walmart to have a significant presence in the food and grocery retailing space in Northern California it must have a multi-format and multi-square-foot strategy.

The retailer initially began exploring this strategy in late 2007/early 2008, when it located a number of potential sites in Northern California for its small-format (16,000 -to- 20,000 square-foot) Marketside by Walmart fresh food and grocery stores (originally named just Marketside). However, in 2009 Walmart put the opening of any new Marketside stores on hold, and began creating the 20,000 square-foot Neighborhood Market by Walmart prototype, the first and only store of its size currently being the one in Rogers, Arkansas.

There are currently four Marketside by Walmart stores in Metro Phoenix, Arizona. All four stores opened in early October 2008.

Walmart Stores, Inc. currently has no plans to open any additional Marketside by Walmart stores - anywhere - including in Northern California. In fact, the retailer still holds leases on two sites in Southern California, one in San Diego and another in nearby Oceanside, but has no plans to open them as Marketside by Walmart stores. Construction at both locations, vacant retail buildings, has never been started, nor are there any plans to do so in the near future.

It's our analysis that Walmart is likely to replace the Marketside by Walmart format with some final version of the 20,000 square-foot Neighborhood Market by Walmart prototype, in terms of not opening any additional Marketside stores, and eventually close the four stores in Arizona, or replace one or more with the 20,000 square-foot prototype. It's important to note that the 20,000 square-foot prototype store in Rogers, Arkansas remains a work in progress in terms of not being cast in stone as the final format product, just like the name Neighborhood Market by Walmart might not end up being what it's called. [For some background see - December 21, 2009: Wither Walmart's Small-Format 'marketside' Stores and Format? and January 9, 2010: Walmart's 'marketside': What's 'In-Store' for 2010?]

As we've reported and offered analysis on frequently in Fresh & Easy Buzz, Walmart has embarked on a strategy to increase its market share, which is minimal, in Northern California in three key ways.

First, it's converting as many of its Division I discount format stores - just as its doing throughout the U.S. - as it can in the region into hybrid supercenters, adding anywhere from 30,000 -to- 56,000 square-feet of additional space to the stores as part of a complete remodeling, and using that added space for fresh foods and groceries.

Additionally, following on the heels of the opening of its first-ever smaller-format, hybrid supercenter in Modesto, California in 2008, which is located in an about 90,000 (less selling space than that though) square-foot building, which formerly held a discount warehouse supermarket and a drug store, Walmart has been and is searching for similar sized - in the 75,000 -to- 1000,000 square-foot range - vacant big box stores in Northern California that it can remodel and turn into edited versions of its Supercenters, like it did with the Modesto store on McHenry Avenue in the city of 205,000, in Stanislaus County [See - May 6, 2010: Going Smaller & Getting 'Hybrid': Walmart's Smaller Supercenter in Vacant Retail Buildings Strategy Began in 2008]

Lastly, Walmart is proposing numerous new supercenters in Northern California, including in the Sacramento region - one is planned for Elk Grove in the southern part of town in fact - the Northern Central Valley (Stockton, Modesto, Merced regions), the Bay Area (in a limited way though because approval is difficult to get) and elsewhere.

The reason Walmart needs a multi-format and multi-square-footage strategy in Northern California is for two primary reasons: (a) obtaining approval for mega-supercenters is extremely difficult in the region (some cities and counties even have ordinances banning the big stores) and (b) the geographical (density) limitations in key cities like San Francisco, Oakland, San Jose, Sacramento and a couple others make locating and 100,000-plus square-foot supercenters (and even 75,000 square-foot units) nearly impossible. Therefore, focusing on a food and grocery- centric format like the 20,000 square-foot (or slightly bigger or smaller) Neighborhood Market by Walmart prototype is key for Walmart to become a grocery retailing player in the Northern California, as well as in numerous other similar places in the U.S., region.

Selected Related Stories from Fresh & Easy Buzz:

April 25, 2008: Going Smaller: Wal-Mart Might have Found A Solution or Two to Much of the Opposition to its Mega-Supercenter Stores in the USA

June 27, 2008: Wal Mart Has Created A New, More Upscale Supercenter Store Design Prototype; Submitting Plans For the Stores Selectively in U.S.

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

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

October 5, 2008: Wal-Mart's Marketside is More Than the Sum of the Parts of its Other Formats; While Time and Consumers Will Judge, We See the Format As A Stategic Fit

October 6, 2008: 'The Promotional Pundit:' How Wal-Mart Can Use its Supercenters to Create Customers For its New Small-Format Marketside Stores in Arizona

November 21, 2008: Breaking News: Wal-Mart Stores, Inc. Names New CEO to Replace Lee Scott; USA Chief Castro-Wright Elevated to Vice Chairman Effective Immediatly

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

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

October 3, 2008: Wal-Mart Opens First Four Small-Format Marketside Fresh Food and Grocery Stores Tomorrow Morning in Gilbert, Chandler, Mesa and Tempe, Arizona

December 21, 2009: Wither Walmart's Small-Format 'marketside' Stores and Format?

May 20, 2010: Welcome to Discountopia USA

Stories thus far in our on-going 2010 Northern California Market Special Report Series:

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

[Readers: Click here and here to read about Fresh & Easy's Buzz's extensive reporting and analysis on Tesco's Fresh & Easy-Northern California, as well as on the Northern California market in general.]

Bloggers-At-Large: Does 'Cool' Matter? A Blogger Compares Tesco and Wal-Mart's 'Neighborhood Market' Offerings

Blogger Rick, who describes himself in his Blog, "The Redeemer Project: My (mis) adventures and (in) coherent ramblings about the Kingdom," as a "Husband, Father, Son, Brother and the Holy Ghost, Amen," offers a post this week in his Blog about Tesco's small-format Fresh & Easy Neighborhood Market combination fresh food and grocery stores and Wal-Mart's Neighborhood Market (standalone) supermarkets.

In terms of the similar names of the two respective food retailing formats and stores offered by Tesco and Wal Mart Stores, Inc., Wal Mart was first with its "Neighborhood Market," having opened its first stores in the format in 1998 By comparison, Tesco opened its first Fresh & Easy Neighborhood Market stores in November, 2007.

In an ironic twist to this name game, Tesco originally planned on calling its Fresh & Easy stores -- it currently has 107 of the stores in Southern California, Metro Las Vegas, Nevada and in the Phoenix Metropolitan region in Arizona -- "Fresh & Easy Community Market." However, after conducting some focus group research Tesco decided to use "Neighborhood Market" rather than "Fresh & Easy Community Market" as the name because it has said the word "Neighborhood" was overwhelming preferred by the focus group participants.

A little more name game irony: Last year Wal-Mart opened a test food store format in Texas designed to cater to Hispanic or Latino consumers. That store, located in a converted Wal-Mart Supercenter, is named Wal-Mart "Hispanic Community" Grocery Store. [We posted about the store's opening in this piece in May, 2008.]

Wal-Mart currently has 145 of its Wal-Mart Neighborhood Market supermarkets open in the U.S. The majority of the stores are located in the southern U.S., but the retailer has them located in many other U.S. regions as well, including operating a number of the supermarkets in the Phoenix, Arizona Metropolitan region and a couple in the Las Vegas, Nevada region, which are two of Tesco Fresh & Easy's three market regions. For Wal-Mart, the "Neighborhood Market" format supermarkets are a small but important part of its overall food and grocery retailing strategy. Fresh & Easy Neighborhood Market is currently the only format Tesco operates in the U.S.

That multi-format strategy is led by Wal-Mart's thousands of mega-Supercenters located throughout the U.S., and with its Sam's Club big box club stores. Wal-Mart also sells a limited assortment of food and grocery items at its discount format stores. And of course it has now created Marketside. As we've previously reported in this September, 2008 piece [Special Report: Wal-Mart, Inc. Studying Second Small-Format Food and Grocery Store Concept; the 'Bodega' or Modern Version of the Corner Grocery Store], Wal-Mart is currently working on the development of two new formats. One is an about 30,000 -to- 35,000 discount food and grocery market geared to Hispanic consumers. The other, in its very early stages, is a smaller version of a Supercenter, sort of a discount store focused mostly on food and groceries.

The Wal-Mart "Hispanic Community" Store in Texas is a large format store at about 160,000 square feet though, and addition to its focus on Hispanic food and grocery items the store also offers a strong selection of non-foods geared towards Latino shoppers, along with lots of "non-Hispanic" basic food, grocery and general merchandise items. Picture it as a Wal-Mart Supercenter with a major emphasis on Latino food, grocery and non-food items but also a strong selection of mainstream products as well.

Wal-Mart's Neighborhood Market supermarkets are a bit over three-times the size of Tesco's Fresh & Easy Neighborhood Market stores. The Wal-Mart Neighborhood Market supermarkets average about 40,000 -to- 45,000 square feet, while Fresh & Easy stores are about 10,000 -to- 13,000 square feet. As a result, the Wal-Mart Neighborhood Market stores carry a much more extensive selection of food, grocery and non-foods items than Tesco's Fresh & Easy markets do. Fresh & Easy Neighborhood Markets offer a limited selection of fresh food and grocery products, both by strategic format design and because of store size limitations.

Wal-Mart created its own small-format combination fresh food and grocery store format, Marketside, which is similar to Tesco's Fresh & Easy. As we've reported on and written about extensively in Fresh & Easy Buzz, the first four Marketside stores opened in the Phoenix, Arizona Metropolitan region in October, 2008. A fifth Marketside store is scheduled to open in the region, in Peoria, Arizona, this year. Five Marketside stores also are scheduled to open in Southern California this year. Two of those Marketside stores -- one in downtown San Diego and the other in nearby Oceanside in San Diego County -- are currently being constructed.

Wal-Mart is the world's largest retailer and the number one seller of food and grocery products at retail in the U.S. Tesco is the number one food and grocery retailer in the United Kingdom. It's the third-largest retailer in the world, after number one U.S.-based Wal-Mart Stores, Inc. and number two Carrefour, which is based in France.

But back to Blogger Rick. Rick, who not too long ago moved from East Texas to the west coast, says one of his goals in starting his The Redeemer Project Blog was is to give friends and family back home "a peek into the really normal parts of my new 'West-Coastish' lifestyle that are sort of cool."

In his post this week he talks about one of those aspects of his new "West Coastish" lifestyle -- grocery shopping.

Rick says in his post he has shopped at both Tesco's Fresh & Easy Neighborhood market and at Wal-Mart's Neighborhood Market.

Want to find out which of the two formats/stores -- Wal-Mart Neighborhood Market or Tesco's Fresh & Easy Neighborhood Market -- Rick thinks is more cool? Does he shop more at the one he thinks is more cool than the other? Or does "coolness" not equal shopping frequency in Rick's world?

Click here to read Rick's post in his "Redeemer Project" Blog in order to find out the answers to those questions -- and more.

[Fresh & Easy Buzz Editor's Note: Fresh & Easy Buzz occasionally runs posts from other Bloggers as part of our "Bloggers-At-Large" feature, which is designed to publish other voices on the Blog. If you have written a relevant story, or read one you think would fit into our format, feel free to e-mail it to us at freshneasybuzz@yahoo.com. We reserve the right to select the Blog posts we publish, of course, based on our editorial standards and judgement. Additionally, we publish the posts only sporadically, since the majority of our editorial content is original.]

Wal-Mart to Open Two More New 'Neighborhood Market' Stores in the Phoenix Metro Region; Still On-Track to Open New Marketside Stores This Summer

Wal-Mart, Inc., the world's largest corporation and retailer as well as being the number one national grocery sales market share leader in the U.S., plans to open two more of its approximately 45,000 square foot Wal-Mart Neighborhood Market supermarkets in the Phoenix, Arizona Metropolitan region this year and next.

Both of the new Wal-Mart Neighborhood Market supermarkets will be built in the city of Chandler, which is a suburb of Phoenix, and has about 240,000 residents. The Phoenix Metropolitan region of which Chandler is a part, is a contiguous metropolitan area, in which one city essentially runs into the next.

The two new store sights are at the southwestern corner of McQueen and Warner roads and at the northwestern corner of Chandler Blvd. and Cooper Road, according to Delia Garcia, a Wal-Mart spokeswoman. The stores also will be open 24 hours a day.

Tesco has Fresh & Easy Neighborhood Market stores located nearby the two new Wal-Mart Neighborhood Market locations.

The Wal-Mart Neighborhood Market format supermarkets, which are smaller than the average new supermarket being build by most U.S. retail grocery chain's today which average about 55,000 -to- 65,000 square feet, feature a complete range of food, grocery and non-foods' offerings, with a special focus on fresh produce and meats.

The produce, deli and bakery departments (above) inside a Wal-Mart Neighborhood Market supermarket.

Despite being about 10,000 square feet smaller than the average new supermarket being build today across America, Wal-Mart's Neighborhood Markets' still compare with the variety and product range selections these competing supermarkets offer.

The smaller-sized, neighborhood-oriented supermarkets are a part of the giant retailer's multi-format retail strategy, which includes its huge Supercenters, which average about 185,000 square feet and offer a complete selection of food and groceries as well as products in every category imaginable, its Wal-Mart basic discount stores, which on average are about 90,000 -to- 100,000 square feet and sell a limited selection of grocery products and perishable goods but no fresh meats or produce, and its soon to be opened brand new Marketside small-format (about 15,000 -to- 20,000 square feet), convenience-oriented grocery stores.

The first four or five Marketside stores, which Wal-Mart corporately says aren't designed to counter Tesco's small-format 10,000 -to- 13,000 square foot Fresh & Easy Neighborhood market grocery stores, but were indeed developed primarily for that purpose, are still on track to open this summer in the Phoenix Metro area, according to a Wal-Mart executive who asked we not use his name.

Wal-Mart currently operates nine of its 45,000 square foot Neighborhood Market supermarkets in the Phoenix/Easy Valley region. Additionally, three new stores are set to open soon. As a result, with the two new stores set for Chandler, that will bring the total number of Wal-Mart Neighborhood Market format supermarkets in the area to 14.

The Phoenix Metro region was one of the initial test market regions for Wal-Mart's Neighborhood Market smaller-footprint supermarket when the retailer created the format about seven years ago. Arizona also is one of the top three or four-best market regions regarding overall per-capita sales in the U.S. for Wal-Mart.

Tesco currently operates 17 of its average 10,000 -to- 13,000 square foot basic grocery and fresh foods-oriented Fresh & Easy grocery markets in the Phoenix/East Valley region. The retailer plans to open as many as 15 more of the grocery stores in Arizona before the end of this year.

Wal-Mart has been opening numerous new Supercenters and Neighborhood Markets in Arizona for the last couple years because it is one of the retailer's best U.S. market regions, as we mentioned above.

The region also is one of the fastest-growing areas in the USA. There's a demographic population shift in the U.S. from regions like the Eastern USA, to the sunbelt states like Arizona. Additionally, since Arizona shares a border with Mexico, it's growth is further being increased by immigration (documented and undocumented) from nearby Mexico.

Hispanics make up about 34% of Arizona's population, based on the latest data available from the U.S. Census Bureau, and it's the fastest growing ethnic group in the state.

Therefore, these are the primary reasons for Wal-Mart's strong growth and store expansion in the state, and especially in the Pheonix Metropolitan/East Valley region, where most of the state's population is concentrated.

In other words, the focus of Wal-Mart's Arizona expansion has little to do with any cause or effect from Tesco's big push into the state with its Fresh & Easy stores.

The one exception is the new Wal-Mart Marketside small-format grocery store venture. Based on extensive research and good sources, we believe the primary reason for creating the format was to serve as a check on any possible sales effect from the Fresh & Easy stores, which thus far hasn't occurred in the Phoenix Metro market, according to numerous sources, as we reported and laid out here on Wednesday.

We also believe Wal-Mart has increased it time-table for building and opening more of its 45,000 square foot Neighborhood Market stores in the region based on Tesco's entry--and rapid new store building program--into the market with its Fresh & Easy stores.

It's no mere coincidence that a number of these new supermarkets are being located not too far away from a Fresh & Easy grocery store. In addition, the four -to- five new Marketside grocery markets set to open in the region are all close to existing Fresh & Easy stores.

Regardless of the primary reasons for, or Wal-Mart's Phoenix Metro region growth strategy origins and timetables, the effect of the mega-retailer's actions in the market region will end up putting a retail "squeeze" effect on Tesco's Fresh & Easy Neighborhood Market grocery stores.

Here's why: First, Wal-Mart is super-popular in Arizona and especially in the Phoenix Metro/East Valley region. Its the only grocery retailer who is currently challenging local market share leaders Bashas' and Safeway Stores, Inc. for their respective market share dominance. Those two supermarket chains have been in the regions for decades before Wal-mart even entered with its first Supercenter. It's also the only grocery retailing player who has these two chains worried. In other words, the Wal-Mart brand is popular and solid in Arizona.

Second, Wal-Mart has opened a number of its mega Supercenter stores in the region in the last two years. These stores which average about 180,000 square feet and often are as big as 225,000 square feet, devote nearly 100,000 square feet of their space to food and grocery products in many cases. The Supercenter concept has proven to be a popular primary grocery shopping venue in Arizona, with many shoppers leaving their former supermarkets to shop at the stores. The Wal-Mart Supercenters have already started to create a tipping of the retail format shopping balance in the region.

Third, add to the Supercenter factor, the "Wal-Mart Neighborhood Market effect." The reason Wal-Mart is in the process of completing the building of three new Neighborhood Market supermarkets and planning to built two more in the region, is that because unlike is the case in many other parts of the U.S., the stores are doing very well in Arizona, particularily in the Phoenix Metro region. Along with the Wal-Mart Supercenters, they're taking market share away from Bashas' and Safeway.

Lastly, enter the new, small-format Marketside banner grocery stores. Combined with the Supercenters and Neighborhood Market supermarkets, these new 15,000 -to- 20,000 square foot, convenience oriented grocery stores will give Wal-Mart one more strategic bullet in its food and grocery retailing arsenal in the market region.

For example, the Supercenters serve a more regional or larger geographic area strategy. It takes shoppers coming from miles around the mega-stores to make them successful. As a result, there are just so many of the big-box stores Wal-Mart can open in a given market region; and the retailer has been pushing that envelope already in the Phoenix Metro area.

However, the 45,000 square foot Neighborhood Market supermarkets allow Wal-Mart to extend its retail brand--and number of stores--because the population requirements needed to make these stores successful are far-lower than those of a Supercenter. In part that's why they are named Neighborhood Markets. Therefore, Wal-Mart can use these stores as an in-between strategy, adding them in a neighborhood they think will work for this format but not a Supercenter.

Now, along comes Marketside, an even smaller-format grocery store at about 15,000 square feet than the Wal-Mart Neighborhood Market supermarkets are at about 45,000. The stores also will have some added twists, such as lots of fresh, prepared foods. Look for mini health and wellness centers in the stores possibly as well.

The addition of the Marketside format will allow Wal-Mart to fill a third niche as they warrant, which is the ability to pop a "little" Marketside grocery store in neighborhoods the retailer doesn't thing a Wal-Mart Neighborhood Market will do that well in but a Marketside grocery store might. The reasons for this could range from population size to demographics.

This combination of three formats for Wal-Mart in the Phoenix/Easy Valley market region in Arizona has the potential to really put the squeeze on Tesco's Fresh & Easy grocery stores in the market which currently aren't performing very well anyway.

There is a "Wal-Mart Effect" in every region where the giant retailer goes in the U.S. That's one of the reasons so many communities do everything they can to keep the retailer's Supercenters out of their respective towns and neighborhoods. The main opposition argument to the stores is that they hurt local businesses, which includes regional and local chain-owned supermarket stores.

Based on our analysis, the Phoenix Metropolitan/East Valley region is shaping up to be just about the most competitive grocery retailing region in the USA. Since this is Tesco's number-two most important target market for its Fresh & Easy Neighborhood Market grocery stores (Southern California which is nearly as competitive is number one), Tesco will have to sharpen its pencils, make some changes in the Fresh & Easy format, its merchandising, marketing and operations, if the retailer wants to succeed in this highly and increasingly competitive grocery market, in our analysis.