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

Revisting 'marketside by Walmart': Format As We Know it On the Way Out But Some or All Of the Four Stores Could Be Converted

News & Analysis

In this September 9, 2010 piece - Walmart Plans to Close Arizona 'marketside by Walmart' Stores, Dump Format By Year-End or Early 2011 - we reported that Walmart Stores, Inc. will end its small-format 'marketside by Walmart' format and close the four stores in Arizona, either by the end of this year or in early 2011, and discussed and offered analysis on the issue. The stores and format were called 'marketside' until the retailer added "by Walmart' to the name in 2009.

Since we reported and published the piece, we've learned about some additional thinking and discussion at Walmart, involving the four 'marketside by Walmart' stores, which range in size from a little over 15,000 square-feet to about 18,000 square-feet.

Although the 'marketside' fresh food and grocery format as we know it now is going away, Walmart is considering not closing some or all of the four stores, and instead converting them to one or more different formats.

Here's what we know right now:

Even though the 'marketside by Walmart' stores are smaller than Walmart's 20,000 square-foot 'Neighborhood Market by Walmart' prototype store in Rogers, Arkansas [See our July 6, 2010 story - July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store], Walmart Stores' is considering converting some or all four of the 'marketside' stores, which are in Gilbert, Chandler, Mesa and Tempe, Arizona, into a slightly scaled-down version of the 20,000 square-foot 'Neighborhood Market by Walmart' format and store. Based on what we know today, this is the most likely option of the three we're laying out in this piece.

Second, Walmart could replace one or more of the 'marketside by Walmart' units with a smaller version (a true bodega) of its 'Supermercado de Walmart' Latino format stores.

Walmart has a couple of these stores in Metro Phoenix. However, the stores are in renovated Walmart Neighborhood Market stores that, like this one in Phoenix, are 39,000-42,000 square-feet. All four of the 'marketside by Walmart' stores are less than half that size, which is why it would have to be a smaller, hybrid version the the current 'Supermercado de Walmart' units open and operating in Arizona.

Walmart has been working on such a smaller format though. It also operates such stores - in the 15,000 square-foot range, and even smaller - in Mexico. So it wouldn't be a stretch at all. The demographics, however, are only decent for a Hispanic format store in two of the four cities/neighborhoods where the 'marketside' stores are located. Therefore, it would only make sense to convert one, and maybe two, of the 'marketside by Walmart' stores into a Latino consumer-focused store, as described above.

Lastly, Walmart could put a new, "corner grocery store" (our term) type of format it's been working on into one or more of the four 'marketside by Walmart' stores in Arizona. Think of it as an "American" bodega. Walmart first started developing this format, both Latino and non-Latino consumer-focused versions, two years ago. Read our report: 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.

What we know about this format is that it's more focused on basic groceries than Walmart's 'marketside' format is, less upscale and, although it offers some prepared foods, isn't fresh-prepared foods-focused like the 'marketside by Walmart' format is.

We don't know conclusively at this point in time what Walmart is going to do with the four Arizona 'marketside by Walmart' stores. But, based on our most recent information, our analysis is it's likely the retailer will retain at least two, and perhaps all four of the stores, converting the format. A key reason - but far from the only reason - for this is because Walmart Stores, Inc. has long-term leases on the four buildings the stores are housed in.

Further, it's our analysis, based on what we know today, the most-likely format to replace 'marketside' in one or all of the four Arizona 'marketside by Walmart' stores, is a slightly scaled-down, smaller version of the 20,000 square-foot 'Neighborhood Market by Walmart' format.

For example, the 20,000 square-foot prototype store in Rogers, Arkansas includes a pharmacy and fairly good-sized in-store deli. These two departments could be reduced in size, along with shrinking the overall footprint of the 20,000 square-foot store a bit, and then dense up the core of the store, and the format as it is, with just the changes described above, could easily fit in the four 'marketside by Walmart' boxes (the stores.)

Walmart should announce the fate of the format and the four stores at its upcoming analysts meeting in October. We're further reporting the story, and will probably have something additional before then. Stay tuned.

Also, read our December 21, 2009 story: Wither Walmart's Small-Format 'marketside' Stores and Format? And our January 9, 2010 piece - Walmart's 'marketside': What's 'In-Store' for 2010? They offer a good, integrated road map to the present.

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

Fresh & Easy Buzz

July 6, 2010:
Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store [Additional regions and cities mentioned in our piece.]

Others

Financial Times
September 19, 2010:
Walmart lines up sites for smaller stores

Wall Street Journal
September 19, 2010:
Wal-Mart Scouting Sites For Smaller US Stores - Report

Associated Press
September 20, 2010:
Wal-Mart to make a big push into urban markets

San Francisco Chronicle
September 21, 2010
Walmart sets sights on San Francisco

Additional Publications - click here

In the coming days, Fresh & Easy Buzz will have more to come about Walmart's smaller-format, smaller-store plans, leading up to the retailer's plans to offer more details in October at its anlaysts' meeting.

Walmart in Fresh & Easy Buzz: Suggested Reading/Linkage:

marketside by Walmart, Wal-Mart, Wal-Mart format innovation, Wal-Mart hybrid supercenters, Wal-Mart Marketside, Wal-Mart Modesto CA, Wal-Mart Supercenter, Wal-Mart's new Supercenter prototype, Walmart, marketside store brand, brand marketside, Walmart Stores Inc. Use the 'Older Posts' 'Newer Posts' links at the bottom of the linked pages for more pages.

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.]

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.]

Wal-Mart In A Latin Beat: New 'Modern Bodega' U.S. Latino Format; New Bodega Stores Set to Open This Year in Mexico to Add Much Spice to Retail Mix

On September 29, 2008 Fresh & Easy Buzz reported on and wrote about in this 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 Stores, Inc.'s latest new retail format development project for the U.S. market, a smaller format (about 20,000 -to- 35,000 square foot) "Modern Bodega" format food and grocery market targeted to U.S. Latino consumers.

Additionally, as we mentioned, Wal-Mart is adding a twist to its Hispanic-focused "Bodega-style" format in development for the U.S. market, which is an attempt to appeal as strongly as possible to younger generations of U.S. Latino consumers who have one foot in their home culture of Mexico, Latin or Central America and the other in U.S. mass culture.

We were one of the first publications to report back in September, 2008 on the new Latino retail format being developed by Wal-Mart's development team.

We can tell you today that the development of the "Modern Bodega" store format continues apace at present at Wal-Mart.

We can also report that among the U.S. target markets being seriously studied by Wal-Mart Stores, Inc. for these new format stores once they come online include Arizona, California and Nevada, the three markets where Tesco operates its current 115 small-format Fresh & Easy Neighborhood Market grocery and fresh foods stores, along with Colorado and New Mexico in the Western U.S.

Additionally, Wal-Mart is studying other markets throughout the U.S. with high percentages of Hispanic consumers for the possible opening of the new Latino-focused format stores as well. Two we are aware of are Texas and Florida. Both states have significant Hispanic-American populations, and just happen to be, along with California and New York, ranked as the top four states in the U.S. in terms of total population.

It shouldn't come as a surprise that Wal-Mart is looking west, since the four Western U.S. states we detailed above have among the highest percentages of Hispanic-American residents in the U.S.

Additionally, each of those four states also have a high percentage of younger (18-45) Latino men and woman, who Wal-Mart also hopes to appeal to with as it plans to incorporate elements into the "modern bodega" format stores it believes will have a special appeal to these younger Hispanic consumers.

Below is what then CEO and now chairman of the Wal-Mart board of directors Lee Scott said about the new "Modern Bodega" retail format development from our piece on September, 29, 2008:

"I think there's lots of opportunity for (new smaller) formats (for Wal-Mart) in the U.S. A store that might remind you of a Bodega store is clearly possible." (A Bodega is a small grocery store typically found in Spanish-speaking neighborhoods.)

Lee Scott stepped down as CEO of Wal-Mart at the end of last month, handing over the CEO title and position to the retail chain's former head of global operations Mike Duke. Duke is as high, and perhaps higher, on the U.S.-version of the "Modern Modega" as former CEO Scott, who remains with the company as board chairman and an advisor.

In fact, our analysis is that Duke is even more keen on the new format development since it takes its inspiration in significant part from what Wal-Mart has been doing in Mexico for many years at its Wal-Mart de Mexico division. As the former head of all of the chain's global operations, Mexico, and the Wal-Mart de Mexico division, was part of Mike Duke's senior executive portfolio.

The other part of the "Modern Bodega" format's inspiration comes from Wal-Mart USA's increasing positioning and emphasis on appealing to Hispanic-American consumers across all of its various retail formats, particularly with its combination food and general merchandise mega-Supercenters.

Since about the mid-1990's, when it first started to seriously focus on Hispanic consumers in the U.S., Wal-Mart has progressively become a solid retailer in the Latino consumer segment in terms of its merchandising and marketing, getting a little bit better each year.

Last year the retailer opened its first U.S. Supercenter focused primarily on Hispanic consumers. That store, in Garland, Texas, is called Wal-Mart's "Hispanic Community" store.

The store is actually located in the very first Supercenter opened by Wal-Mart in 1987 (Wal-Mart didn't even use the name Supercenter then. Rather is called the stores, including the store in Garland, Texas converted to the Hispanic store, Hypermarts. The name was eventually changed to Supercenter on all the former Hypermarts.

Wal-Mart gutted and converted that old Supercenter into the Hispanic-focused store, which sells not only food and groceries targeted to the Latino demographic but also general merchandise. The store is serving as a learning laboratory, along with other Wal-Mart stores, for the team designing the new "modern-style" Bodega format.[You can read more about Wal-Mart's first and currently only "Hispanic Community" store here.]

There are many synergies between what Wal-Mart is doing in Mexico, where it today is that country's number one retailer through its Wal-Mart de Mexico division, and what it can do in the U.S. in terms of Latino-focused merchandising and marketing, both at its existing format stores and in new formats like the Garland, Texas "Hispanic Community" mega-store and the "modern bodega" Hispanic format store in development.

After all, in the case of California, Arizona and Texas, for example, the states have a closer geographical proximity to Mexico than they do most other parts (states) of the U.S. And the Latino cultural influence in such states, and throughout the Western U.S., is huge. Least we not forget, most of the Western U.S. was once Mexico.

Additionally, the smaller-format size (20,000 -to- 35,000 square-feet in its current stage of development) of the "modern Bodega" store in development offers a in-fill strategy for Wal-Mart. In practice this means the retailer can pop the stores into market regions with the appropriate demographics in between the locations of its mega-Supercenters and big box Sam's Club membership warehouse stores.

Further, because of the smaller footprint of the stores Wal-Mart can use then in market regions, think highly dense urban areas, for example where there are strong Latino consumer demographics but not enough physical space (real estate) available to build larger stores. This is the stand-alone rather than in-fill aspect or positive utility of such a format.

Last week Wal-Mart de Mexico, Wal-Mart Stores, Inc.'s Mexico division, announced that two-thirds of all its new store openings this year will consist of a relatively new small-format, Bodega-style store that will help them in-fill markets in key regions across Mexico.

Since Wal-Mart already is the largest retailer in Mexico and operates numerous mega-stores in the country, this in-fill strategy makes good sense to us in terms of the current stage of Wal- Mart de Mexico's development in the nation. Frankly, the strategy also is a way for the retailer to defend its dominance in the country.

It's no mere coincidence that Wal-Mart USA is working on its own version of a U.S. "modern bodega" format store at the same time Wal Mart de Mexico is announcing that all bu a fourth of its new stores in Mexico will be of a new "Bodega-style" format store, which likely will be a variation of the various Bodega formats is already operates in the country.

It's also not a mere coincidence that new Wal-Mart CEO Mike Duke is high on the U.S. "modern bodega" format since he was the commander-in-chief of Wal-Mart's global operations that approved the new Bodega-style" stores set to start opening in Mexico soon.

Add this all together, and its our analysis that Wal-Mart's introduction, which will likely come this year, of its first U.S. "modern bodega" Latino format store is going to be the new retail format news of the year. Stay tuned.

Suggested Reading

Aaron Chio is a senior analyst at the Retail Net Group consulting firm. His focus at the firm is on the development of new research, insights and growth strategies in Latin America. He's also a regular reader of Fresh & Easy Buzz.

Aaron Chio has just written and published a strategy report on Wal-Mart de Mexico and its recently announced plans to make the new Bodega format stores its major new store opening strategy in Mexico for 2009.

In the paper he also discusses the same theme we mention, which are the wider implications beyond Mexico, including in the U.S., for the Bodega concept and format, which we most often refer to as small-format food and grocery retailing. There are some qualitative differences between the two terms -- but also numerous similarities.

The paper, which Retail Net Group senior analyst Aaron Chio shares with Fresh & Easy Buzz offers some excellent insights about not only what Wal-Mart de Mexico is doing with the Bodega format, but also what others are doing with the concept, along with that wider market implications for variants of the format, which we mentioned above.

You can read the paper, Retail Net Group Strategy Alert No. 24: Format Innovation: Bodega Stores. by clicking here. It's Fresh & Easy Buzz suggested reading for our readers.

Suggested Reading II: From Fresh & Easy Buzz

>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

>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

>September 15, 2008: Wal-Mart's Chief Merchandising Officer Reiterates CEO's Words that it's 'Keeping Tabs' On Tesco's Fresh & Easy Today at Bank of America Conference

>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.

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

>June 16, 2008: Wal-Mart and Tesco: The Cross-Atlantic Competition Continues to Heat Up; Almost Hot Enough to Make Uber-Cool British Secret Agent James Bond Flinch

>December 1, 2008: Competitor News: Where is 'Wal-Mart America?' A Demographic Look and Analysis

>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

>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 2, 2008: Wal-Mart Marketside Countdown: Two Days to Go Until the Mega-Retailer's First Four 'Small-Marts' Open in the Phoenix, Arizona Region

>September 29, 2008: Wal-Mart Offers its Own 'Peek' Inside it's Small-Format Marketside As Part of A One-Week Countdown to the Stores' Oct. 4 Openings in Arizona

>August 11, 2008: Wal-Mart's Small-Format Marketside Strategy is Currently Neither A 1,500 Store, $10 Billion A Year Mega Plan, Nor A Mere Four Store Test

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.]

A Retailer's Christmas Story: Giant Wal-Mart Pulls Trademark Application for 'Marketside' Name in Canada After Owen Sound, Canada Independent Objects

Who says global mega-retailer Wal-Mart Stores, Inc. doesn't look out for the little guy?

Certainly not Paul Thomas and Karin van der Heyden Thomas, who operate a food and grocery store and catering operation called "Marketside Food Shop and Cafe" in Owen Sound, Canada, and have been doing so for 20 years.

The independent food store owners heard last January (2007) that Wal-Mart had submitted a trademark application in Canada under the name Marketside, its new small-format combination fresh food and grocery markets, the first four of which opened in October of this year in the Phoenix, Arizona Metropolitan region in the U.S.

Like Wal-Mart's Marketside stores, the Canadian couple's "Marketside Food Shop and Cafe" offers in-store prepared foods, including hearth-baked bread, and other fresh food and grocery items.

The two Marketside's -- the independent Owen Sound, Canada store, and Wal-Mart's Marketside division -- even have similar Web site URL's. This is the Canadian independent Marketside's Web site URL: http://www.marketside.ca.the/ Wal-Mart Stores, Inc.'s Marketside site is nearly identical and is at the URL here: http://www.marketside.com/.

Of course the similarities between the two stop about there -- from there it's all basically David vs. Goliath.

But there was no battle.

Earlier this year the Owen Sound independent food retailers contacted Toronto-based intellectual property lawyer Megan Langley Grainger after they heard about Wal-Mart's registering the Marketside trademark for Canada. The lawyer warned the couple that it could be costly to fight Wal-Mart, particularly if doing so meant going into litigation. However she offered to draft an initial letter about the issue to Wal-Mart's corporate counsel for a reasonable legal fee and then go from there.

In just a month's worth of letter exchanges between lawyer Megan Langley Grainger and Wal-Mart corporate attorneys, the issue was settled -- Wal-Mart withdrew its trademark application in Canada for the Marketside name and wished the owners of the Owen Sound "Marketside Food Shop and Cafe" well in their continued, and for now exclusive, use of the Marketside name.

Thomas and van der Heyden Thomas just received copies of a Dec. 5, 2008 letter from Wal-Mart lawyer Gervas W. Wall to Canadian trademark officials withdrawing the company's Marketside application.

There will be no Wal-Mart-owned and operated "Marketside" banner stores in Canada -- at least under that name. It doesn't mean Wal-Mart isn't still looking into opening some of its small-format, combination fresh food and grocery stores in Canada. It just would do so minus using the Marketside name.

The independent food retailing couple says they were prepared to consider a financial settlement that would have allowed Wal-Mart to take over the name because they didn't have the resources to fight a long court battle if it came to that. But it didn't.

In addition to operated the food store and catering business, the couple produces and markets a line of flat bread products and spreads under the Marketside brand. The products are sold in their store and marketed to other Canadian retailers. Perhaps they should pitch Wal-Mart to sell the branded goods in its four Marketside stores (and soon to be fifth) in Arizona.

Meanwhile, a Wal-Mart Stores, Inc. source tells Fresh & Easy Buzz that the retailer has no near-term plans to open a different named version of its Marketside stores in Canada, where Wal-Mart is becoming a major player in food and grocery retailing with its numerous Supercenters. The source also said doing so hasn't been ruled out either.

As we've reported, Wal-Mart plans to open 10 Marketside stores, five in Arizona and five more, we think four (we've already reported on two going in the San Diego region) in Southern California and one in Reno, Nevada,

We know Wal-Mart has watched the development of Canada's Sobeys chain with its small-format "Urban Fresh" markets, which are similar to the Marketside format. Actually, since Sobeys' "Urban Fresh" existed long before Wal-Mart Marketside, it's more fair to say the Marketside stores are similar to Sobeys' "Urban Fresh."

Sobey's uses its small-format "Urban Fresh" as part of its multi-format and multi-banner food and grocery retailing strategy in Canada, unlike what Tesco is doing in the U.S. by using small-format Fresh & Easy as a single-play/single-format strategy. Sobeys operates 1,300 stores of varied formats and sizes in Canada under numerous different banners.

As we've written about previously, that's Wal-Mart's strategy with Marketside -- it is just one part of a multi-format food and grocery retailing strategy that includes Supercenters, Wal-Mart Neighborhood Market supermarkets, Sam's Club and now Marketside. Wal-Mart also is working on at least two new food retailing formats, as we've reported previously -- one is a medium-sized (about 25,000 -to- 30,000 square foot) Hispanic 2.0 format (a hybrid Hispanic and Anglo market) and the other is a scaled down version of a Supercenter, sort of a discount store with a food and grocery focus.

Wal-Mart's agreeing so readily to pulling its trademark application for Marketside could be taken in a number of ways. For example, (1) it doesn't want to get the negative publicity that would surround a court battle with an independent food store operator? (2) Marketside isn't that big a brand name to the retailer. Therefore no "big deal" in dropping the trademark application. (3) Its got an even hotter name for its Canadian version of Marketside in the works?

Our answer: it's a bit of all of the above. Most significant though is Wal-Mart did not want a legal fight (and all the bad publicity that would come from it) over the Marketside name in Canada, where it is a major player with its Supercenters and is building and applying for permits to build even more of the mega-stores. After all, the retailer doesn't even know if it will build any small-format Marketside-like stores in Canada. Therefore it essentially decided the cost of trying to push the trademark through was far greater than the benefit.

And, if Wal-Mart's Marketside ends up being a big hit in the U.S., and the retailer wants to start opening stores under the same banner in Canada, it can always approach the owners of the Owen Sound "Marketside Food Store and Cafe" with a nice, healthy financial offer to by the rights to the name from them -- and perhaps even toss in a global distribution deal for the couples Marketside brand flatbreads and spreads.

Wal-Mart's acting like the "Gentle Goliath" to the Canadian couple's determined but reasonable David almost qualifies as a Christmas story these two days before the traditional religious holiday, which has morphed in modern times into a retail holiday as well, and probably even more so.

This decision, along with the settling of the 63 class action lawsuits we reported on earlier today, and the recent donations of millions of dollars in cash and hundreds of thousands of pounds of food to groups feeding the hungry, makes us wonder if CEO Lee Scott and company at Wal-Mart headquarters in Bentonville, Arkansas, aren't celebrating a more charitable, traditional Christmas this year -- a year in which retail sales are among the worse in recent history -- but also a year in which Wal-Mart is doing better than any other retailer in the U.S. is dping during this deep economic recession.

In the spirit of the behaviors and return to tradition, we end with the words (and music) to what is widely considered to be the most traditional and popular Christmas carol -- Silent Night!:

Silent Night!

The origin of the Christmas carol we know as Silent Night was a poem that was written in 1816 by an Austrian priest named Joseph Mohr. On Christmas Eve in 1818 in the small alpine village called Oberndorf it is reputed that the organ at St. Nicholas Church had broken. Joseph Mohr gave the poem of Silent Night (Stille Nacht) to his friend Franz Xavier Gruber and the melody for Silent Night was composed with this in mind. The music to Silent Night was therefore intended for a guitar and the simple score was finished in time for Midnight Mass. Silent Night is the most famous Christmas carol of all time. It's also considered the most traditional of Christmas Carols, and is even enjoyed among non-Christians.

Silent night, holy night
All is calm, all is bright
Round yon Virgin Mother and Child
Holy Infant so tender and mild
Sleep in heavenly peace
Sleep in heavenly peace

Silent night, holy night!
Shepherds quake at the sight
Glories stream from heaven afar
Heavenly hosts sing Alleluia!
Christ, the Saviour is born
Christ, the Saviour is born

Silent night, holy night
Son of God, love's pure light
Radiant beams from Thy holy face
With the dawn of redeeming grace
Jesus, Lord, at Thy birth
Jesus, Lord, at Thy birth "

Click here to listen to Silent Night!