A Pictorial Look Inside Smart & Final's First SmartCo Foods Store in Denver, Colorado

Fresh & Easy Buzz Editor's Note: Yesterday in this story - June 28, 2010: Smart & Final to Open its New Format SmartCo Foods Stores in California and Arizona - we reported that City of Commerce (Southern), California-based Smart & Final plans to bring a version of its new-format SmartCo Foods' food and grocery store to California and Arizona, opening at least one store in each state later this year.

In yesterday's piece we also have a Sidebar-profile of the first SmartCo Foods store, which opened on June 23, at 1442 South Parker Road (at East Florida Avenue) in Denver, Colorado. Four more SmartCo Foods units are set to be opened this year in Metropolitan Denver. Smart & Final says it plans to open 20-25 of its new format stores in the Metro Denver region over the next couple years.

Last week, and again this week, Smart & Final's SmartCo Foods is going all out in promoting its first store in Denver, Colorado. On grand opening day it even told shoppers they could have their cake - and eat it to. Slices of the massive sheet cake above were offered to the first customers in the store on grand opening day, June 23.

New food and grocery retail formats, by existing and new-to-the-market retailers, are a big deal in a big, mature national market like the U.S. - they don't happen all that frequently. And in many ways they're an even bigger deal in the Western U.S., which hasn't seen a new format of note since Tesco's entered California, Nevada and Arizona with its Fresh & Easy Neighborhood Market fresh food and grocery store format and (now 159) stores in November 2007.

Because new formats (and aded competition) matter, and because Fresh & Easy Buzz likes to be a source of "fresh" information for our readers, below is a look in pictures, to go with yesterday's SideBar profile, of the first SmartCo Foods store opened in Denver Colorado last week.

A Pictorial Look at the First SmartCo Foods Store in Denver, Colorado

The produce department in Smart & Final's Denver SmartCo Foods store, opened on June 23, is huge and offers an extensive selection of fresh produce and related items. It borrows the farmers market-style design and bulk produce item merchandising scheme from the company's Henry's Farmer's Market chain (see above) and combines it with supermarket-style upright shelving for packaged fresh produce and related items (see below).

Note the extensive number of packaged fresh produce and related item SKUs (above), in addition to all mounds of bulk produce (top photo).

The SmartCo Foods format, and first store in Denver, includes a large bulk foods department. The department is similar to those of grocers Western U.S. grocery chains WinCo Foods, headquartered in Idaho, and Sacramento, California-based Raley's.

Grand Opening Day (and Beyond) Events-Promotions

Skittles the Clown, a local favorite, keeps the little customers happy at SmartCo Foods' grand opening on June 23.

Top of two photos: customers line up at dawn, waiting for the store's doors to open at 6 a.m on grand opening day, June 23. SmartCo Foods gave the first 300 shoppers free grocery bags. Next: The patient customers head into the store at 6 a.m, when SmartCo Foods opens the doors of its first store in Metropolitan Denver, Colorado.

On grand opening day, June 23, SmartCo Foods donated $10,000 to two Denver-area non-profit groups, The Denver Scholarship Foundation and Denver Kids. Above, Myles Mendoza (right) accepts a $5,000 donation for the Denver Scholarship Foundation.

Glenna Norvelle (above) of Denver Kids, Inc. accepts a $5,000 donation from SmartCo Foods.

The popular Denver Broncos cheerleaders were on hand at the Denver SmartCo Foods store on June 26, signing autographs (above) and posing for photographs (below) for shoppers, along with creating a little heat among customers of all ages, shapes and sizes (above).

Smart & Final to Open its New Format SmartCo Foods Stores in California and Arizona

City of Commerce, (Southern) California-based Smart & Final opened the first of its new format SmartCo Foods food and grocery stores in Denver, Colorado on Wednesday, June 23 -- and on grand opening day of the 57,000-square-foot store, located at 1442 South Parker Road (at East Florida Avenue) in Denver, Smart & Final's president, Dave Hirtz, made additional news, telling members of the press and others that Smart & Final plans to open SmartCo Foods stores in California and Arizona later this year.

Although he wasn't specific, the first Arizona SmartCo Foods unit is set to be in the Phoenix Metropolitan region, according to our information.

The first California store will likely be in Southern California, where Smart & Final is headquartered, although Smart & Final also has plans to open SmartCo Foods stores in Northern California as well.

Smart & Final, which was founded in 1871 as a cash & carry grocer in downtown Los Angeles, operates its 247 non-membership Smart & Final banner and Smart Foodservice cash & carry stores throughout California, as well as in Arizona, Oregon, Washington, Nevada, Idaho and northern Mexico.

The company also owns the Henry's Farmers Market chain, which it acquired from Whole Foods Market, Inc. in 2008. There are currently 35 Henry’s Farmers Market and Sun Harvest Market (in Texas only) banner stores open and operating in Southern California and Texas.

The farmers market-style Henry's and Sun Harvest stores emphasize natural and organic products and fresh produce but also carry some conventional grocery products, as well as having fresh meat, bakery, deli-prepared-foods, bulk foods and non-foods departments.

Smart & Final is opening its first Henry's Farmers Market store in Northern California, in El Grove near Sacramento, in August. The company is growing the Henry's chain rapidly in terms of opening new stores. [June 5, 2010: Henry's Farmers Market Opening its First Northern California Store in August With A Big 'Local' Push]

Additionally, Smart & Final operates 33 small-format grocery stores under the Smart & Final Extra banner in California and northern Nevada. The Extra stores, unlike the Smart & Final non-membership stores which carry mostly club pack size items, offer about 5,000 SKUs of basic-pack food and grocery items, along with an assortment of club pack grocery products. The Extra stores have fresh produce and meat departments, delis, an in-store bakery and a selection of non-foods.

SmartCo Foods makes the fourth distinct format for Smart & Final, and in fact is a hybrid of its non-membership store format, Henry's and Smart & Final Extra. This was evident at the grand opening of the first SmartCo Foods store in Denver on Wednesday.

The 57,000 square-foot Denver, Colorado SmartCo Foods store, which is in a vacant Albertsons supermarket, is one part supermarket, one part warehouse club, and one-part farmer's market (the produce department primarily).

[Read the Sidebar at the end of this story.]

Smart & Final's planned entry into Southern California and Arizona with SmartCo Foods later this year will add yet another layer of competition into two of the most hyper-competitive markets in the U.S. Smart & Final operates its non-membership warehouse stores in Southern California and Arizona, and its Henry's and Smart & Final Extra stores in Southern California, but the new SmartCo Foods format is significant as a new entry in the markets because its hybrid supermarket/warehouse store/farmers market style format, in a good-sized retail box, is the equivalent of being a new retailer, since it doesn't mimic Smart & Final's other formats.

Smart & Final's push into Southern California and Arizona comes only shortly after we reported that Idaho-based WinCo Foods is planning a major push into Arizona, beginning in Metropolitan Phoenix. [See - April 27, 2010: WinCo Foods' Entry Will Put the 'Ultra' in the Already 'Hyper-Competitive' Metro Phoenix, Arizona Market and May 3, 2010: Winco Foods is 'Moving Fast-Forward' With Metro Phoenix, Arizona Market Entry]

WinCo also announced this month that it plans to build a huge 1 million-plus square-foot distribution center in Southern California as part of its major growth plans in the region.

Employee-owned WinCo Foods launched a major Western USA growth strategy in 2008, as we reported on and wrote about here: December 29, 2008: Competor News: Winco Foods to Expand in California and Nevada in 2009; Put Aggressive Focus on Central Valley, Northern California and Northern Nevada. Read more here.]

For Tesco's Fresh & Easy Neighborhood Market, which has the majority of its current 159 stores in Southern California and Metro Phoenix, Arizona, the addition of Smart & Final's new SmartCo Foods stores in the two regions - along with WinCo Foods' entry into Arizona and planned store growth in Southern California - means yet another competitor to deal with as Fresh & Easy works towards stemming its loses, which were $253 million in the fiscal year ended on February 27, 2010. Tesco estimates a similar loss for fiscal year 2010/11, which end in early 2011.

It also means added competition to all of the other grocers - and in the respective markets overall -particularly those in the value-based and discount niches, in Southern California and Arizona, the degree of which will depend on how many SmartCo Foods stores - and how fast it opens them - Smart & Final plans to open in the two regions.

WinCo Foods plans to open numerous new stores in Southern California and Arizona over the next five years.

Based on the fact Smart & Final is opening five SmartCo Foods stores in Metro Denver between this month and December (five month period), and plans to have 20-25 over the next couple years, it's likely the retailer's plans for Southern California and Metro Phoenix are similarly ambitious. It takes numerous stores in a region in order to achieve any efficiencies and critical mass, after all.

Sidebar: A Look at the First SmartCo Foods Store in Denver, Colorado

City of Commerce, (Southern) California-based Smart & Final opened its first new format SmartCo Foods store (pictured above) on June 23, at 1442 South Parker Road (at East Florida Avenue) in Denver, Colorado. The store is the first of five SmartCo Foods stores Smart & Final plans to open this year in Metropolitan Denver. The retailer says it plans to open between 20-25 SmartCo Foods stores in Colorado over the next couple years.

SmartCo Foods is a brand new format for Smart & Final, although more correctly it's a hybrid of the retailers current three formats - its small-format Smart & Final non-membership warehouse stores, it's natual and organic foods-focused Henry's Farmers Market, and its Smart & Final Extra smaller-format supermarkets.

The 57,000 square-foot Denver SmartCo Foods store, which is in a vacant Albertsons supermarket is one part supermarket (Smart & Final Extra), one part warehouse club (Smart & Final club format), and one-part farmer's market (Henry's).

The format and store offers basically everything a regular supermarket does in terms of departments and products, although the SKU count is a bit less (about 30,000 total SKUs) than traditional supermarkets operated by say Safeway Stores or Kroger offer. But in addition to regular pack groceries, SmartCo also features a club-pack department (pictured above), which is nearly as big as the 15,000 -to- 20,000 square-foot flagship Smart & final banner non-membership stores the retailer operates.

Additionally, borrowing from the Henry's Farmers Market format, the produce department in SmartCo Foods is expansive, and is designed to look like a version of a farmers market. The department offers both conventional and organic fresh produce items. Another leaf SmartCo Foods takes from Henry's is that the store features a bulk foods department. SmartCo also offers nearly the complete selection of the retailer's Sun Harvest private natural and organic brand, which includes products across all dry grocery and perishable categories.

The supermarket-side of SmartCo is influenced in part by Smart & Final's Extra format, as well as by the traditional American supermarket fromat in general.

Here's a look at what the store offers in terms of its departments and features:

The produce department - offers a selection of fresh fruits and vegetables, including both conventional and organic items, with a focus on value pricing. In an effort to support local Colorado growers, SmartCo Foods says it's making an effort to carry locally-grown produce, which is something its Henry's Farmers Market chain focuses on.

The meat department - is staffed by trained meat cutters. It features Cattleman’s Finest (a private brand Smart & Final uses) beef products as well as a broad selection of high-quality pork and poultry products, and fresh and frozen seafood. The meat department is self-service style. Most of the fresh meat is packaged in the department.

The in-store deli - offers ready-to-eat prepared sandwiches and other grab-and-go items, a variety of fresh salads, entress and side dishes, along with a large assortment of deli meats and cheeses.The in-store bakery - features a full-selection of breads, muffins, pastries, cakes and cookies baked fresh in-store daily.

Bulk foods - features bulk bins filled with a variety of grains, healthy snacks and other unpackaged items.

Health & Beauty - offers a full selection of conventional health and beauty products as well as Smart & Final's Sun Harvest brand vitamins, supplements and beauty care products made with natural ingredients.

Foodservice & Business - carries a large assortment of practical products, which include: catering supplies, paper and party products, straws, cutlery, portion cups, hot cups, cold cups, clear cups, serving trays, and commercial-strength cleaning supplies. The department is positioned to small business foodservice operators as well as consumers.

Warehouse Savings - features club-pack items offered primarily on an in-and-out basis, value-priced. The products include: paper goods, beverages, packaged foods and groceries and more.

At 57,000 square-feet (the other four stores set to open this year range from about 45,00o to the same size) SmartCo is Smart & Final's largest store format to date. The Smart & Final non-membership stores and range from about 15,000 -to- 20,000 square-feet, the Extra stores aren't much larger, and the Henry's and Sun Harvest stores are in the 20,000 -to- 35,000 square-foot range.

The other four Colorado SmartCo Foods stores soon to open are located at:

>5141 Chambers Road in Denver

>3615 West Bowles Ave. in Littleton

>16746 E. Smoky Hill Road in Centennial

>1750 North Main St. in Longmont

The SmartCo Foods website is here. Check out the opening week ad specials, like whole chickens for 59 cents a pound, $1.49 per-gallon milk , eggs for 79 cents a dozen and more here.

Winco Foods is 'Moving Fast-Forward' With Metro Phoenix, Arizona Market Entry

Metro Phoenix, Arizona Market Report

News & Analysis

In this piece last week on April 27 - WinCo Foods' Entry Will Put the 'Ultra' in the Already 'Hyper-Competitive' Metro Phoenix, Arizona Market - we wrote this (in italics below), about Idaho-Based Winco Foods and the Metro Phoenix, Arizona market:

"We know (although they haven't confirmed it) that WinCo Foods is looking at multiple sites for stores in Metro Phoenix, and may already have decided on at least two additional locations, based on information from our sources. As a result, even if the neighborhood group is successful in getting the project killed when the Glendale City Council votes on it next month, the setback isn't going to stop Winco from entering the Metro Phoenix, Arizona market, with its mega-food and grocery stores."

In the piece we also noted the Arizona Republic newspaper reported that day on one for sure planned WinCo store site in Glendale, Arizona, a Phoenix suburb.

Today, Arizona commercial real estate executive Ed Beeh, the executive vice president of SRS Real Estate Partners in Phoenix, which is representing Winco Foods in the market, went on the record with the Phoenix Business Journal, sharing with the publication a second (in addition to the one reported on by the Arizona Republic, mentioned in our April 27 story) specific proposed Winco store location. [The Phoenix Business Journal story.]

Beeh told the publication WinCo Foods has purchased a former Walmart site near Seventh Avenue and Bell Road in north Phoenix for one of its 90,000 -to- 1000,00 square foot discount mega-supermarkets. He didn't provide any additional information about that location though - or mention any others. (This is one of the two additional but not specifically named locations mentioned in our April 27 post.)

However, Greg Laing, a commercial real estate executive in Metro Phoenix, who's firm Phoenix Commercial Advisors represents the Arizona-based Sprouts Farmers Market grocery chain, told the publication he believes WinCo also has contracts on store sites at the southeast corner of Alma School Road and the San Tan Freeway in Chandler, and at the northwest corner of Pecos Road and the San Tan in Gilbert. Fresh & Easy Buzz knows Laing to be a straight-shooter in Arizona commercial real estate circles. Therefore, we put stock in what he is saying.

Both Chandler and Gilbert are in Metro Phoenix.

Tesco's Fresh & Easy Neighborhood Market has stores in both Chandler and Gilbert , as well as in Phoenix.

All of this information tracks with what we started hearing from sources - and have been reporting, first on our twitter.com feed early this year, and more recently on the blog: That Winco Foods has made a major commitment to the Metropolitan Phoenix, Arizona market, and plans to open multiple stores in the region.

As we've also noted, Winco is looking for numerous store sites in the market region. And by numerous, we mean additional future locations beyond those mentioned thus far. (It takes Winco some time, like it does Walmart, to build one of its mega stores.)

As we said in our April 27 piece, Winco Foods will be a game changer in Metro Phoenix once it has a number of stores up and running, particularly in the discount segment, but also overall in food and grocery retailing.

Winco also poses an interesting competitive challenge in the market to Walmart. In the food and grocery retail categories, the two chains have very similar positioning, merchandising and pricing strategies and policies.

Like Walmart, Winco is an everyday-low-price, rather than a high-low, operator.

In the various Western U.S. markets where Winco and Walmart compete, the Idaho-based, employee-owned chain regularly does market basket price comparisons against its competitors, including Walmart, and then publishes the results, claiming to beat the brawny big box retailer from Bentonville every time.

WinCo Foods, which bills itself as "The Supermarket Low Price Leader," opened three new stores today - two units in the Utah cities of Ogden and Orem, and one in Sumner, Washington.

Walmart is the market share leader in Metro Phoenix and all of Arizona, however. And Winco will have its competitive legs challenged by the mega-chain in the market.

WinCo Foods also will be challenged by Kroger's Fry's (number two market share in Metro Phoenix) and Safeway (third) particularly, but also the numerous other food and grocery retailers with stores in Metro Phoenix, like Target, Costco, Walmart's Sam's Club, Bashas' and a host of others, including Tesco's Fresh & Easy, which has been putting a focus on price and value since late 2008-early 2009, to the present.

Most of these grocers already compete with WinCo Foods in one of the six western states - Washington, Idaho, California, Nevada, Oregon and Utah - where the supermarket chain has its current 74 stores. So they have a good idea what's coming. And you can bet they're concerned - and worried.

Linkage - Related Posts:

April 27, 2010: WinCo Foods' Entry Will Put the 'Ultra' in the Already 'Hyper-Competitive' Metro Phoenix, Arizona Market

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

WinCo Foods' Entry Will Put the 'Ultra' in the Already 'Hyper-Competitive' Metro Phoenix, Arizona Market

Metropolitan Phoenix, Arizona Market Report: Analysis & Commentary

Early this year we posted a "tweet" on our Twitter.com site, in which we predicted Idaho-based grocery chain WinCo Foods was planning to enter the Arizona market, starting with a few stores - the first opening likely in 2011 - in the Metropolitan Phoenix market region.

Our knowledge came as the result of information we first started receiving from sources in December 2009 that WinCo had set its sights on the hyper-competitive Metro Phoenix market.

Additionally, before posting our tweet, we checked in with a source at WinCo Foods via e-mail. And although the source said they couldn't "confirm" WinCo was "planning" to open one or more stores in the region, they said they could tell us "WinCo is very interested in getting into the Arizona market," which is about as good of a non-confirmation, confirmation as you can get.

Glendale bound

Today, the Arizona Republic offers about as good of a non-WinCo Foods' spokesperson confirmation as a publication can get, in a story by staff writer Rebekah L. Sanders.

In the story, "Plan to put grocer at Glendale farm site irks neighbors," Ms. Sanders reports that a group of neighborhood residents in a semi-rural part of the Phoenix suburb of Glendale, Arizona, are objecting to a developer, and WinCo Foods', plans to locate one of the big (average 90,000 -to- 100,000 square foot) WinCo discount food and grocery stores on a vacant plot of land where the developer is planning a shopping center featuring the supermarket, four medium sized retail buildings, and 13 smaller shops. [Click here to read the Arizona Republic story.]

The project-area near Glendale is set to become a food and grocery retailing hot corner.

For example, Walmart is building a new (40,000 -to- 45,000 square foot) Neighborhood Market supermarket about one mile away.

Additionally, the CVS drug chain is building a new store nearby. CVS sells a fairly healthy selection of packaged food and grocery products, beverages (adult and non-adult) and perishables items in its drug stores. It also devotes about half of its weekly 12-page advertising circular to the promotion of consumables and non-foods packaged goods.

Evaluating the odds

Winco could be in for a fight from the neighborhood group in terms of gaining approval for its first Metro Phoenix store in Glendale, although the two members of the City Council, who's districts border the planned center, support the project, according to the Arizona Republic story. A similar group of neighborhood residents was successful in preventing retailer Target from building a 100,000-plus square foot store in the area a few years ago.

However, this was before Arizona's economy went into free-fall in 2008. With unemployment in the area at about 10%, it's going to be difficult for the City Council to say no to the project, particularly since WinCo employs about 300-400 workers in a single store. Those are 300 badly needed new jobs in the Glendale area. The odds: We put our money on approval by the council, perhaps with some minor changes to the current plan for the center.

What we know

We know (although they haven't confirmed it) that WinCo Foods is looking at multiple sites for stores in Metro Phoenix, and may already have decided on at least two additional locations, based on information from our sources. As a result, even if the neighborhood group is successful in getting the project killed when the Glendale City Council votes on it next month, the setback isn't going to stop Winco from entering the Metro Phoenix, Arizona market, with its mega-food and grocery stores.

WinCo Foods is a majority employee-owned company. In fact, just last week WinCo said it bought out the 10% of the company - the only part of Winco Foods owned by an outside investor - held by Seattle, Washington-based investment firm Endeavour Capital Management. WinCo said its employees now own 87% of the company, through its ESOP (employee stock ownership plan). The remaining 12% is privately-held by WinCo Foods under a different ownership structure.

WinCo is non-union, and since it's majority employee-owned - and the employee-owners have said no to being unionized more than once - we doubt that status will change in the foreseeable future, if ever, even though the United Food And Commercial Workers union (UFCW) has been trying to organize the owner-employees for many years.

WinCo puts the 'ultra' in 'hyper-competitive'

Metropolitan Phoenix, Arizona is arguably the most competitive food and grocery retailing market in the U.S. In our analysis it's not arguable.

WinCo Foods, which has 71 stores located in six western states - Washington, Idaho, California, Nevada, Oregon and Utah, and has opened about eight new mega-stores in the last 15 months - is one of the most competitive food and grocery retailing chains in the United States, particularly in the price-impact segment.

It's stores, which devote the majority of the 90,000 -to- 100,000 square feet to consumable and non-foods packaged goods - but not electronics, clothing and other general merchandise like Walmart and Target do in their mega-stores - are also destination markets, meaning that on average customers will come from many miles away to shop at them. This is one of the reasons why, with just 71 stores, WinCo has estimated annual sales of $4-$4.5 billion.

Once it gets just a handful of stores opened in Metropolitan Phoenix, we predict WinCo will begin to become a game-changer in the market. It will not only take sales from nearby - and not so nearby - Walmart Supercenters and Neighborhood Market supermarkets, but also from conventional supermarket chains like Kroger's Fry's, Safeway, Albertsons, Bashas', and even Tesco's Fresh & Easy and other grocers in the market.

This isn't to say Arizona and Metro Phoenix - and particularly market share leader Walmart -will be by any means be easy pickings for WinCo Foods.

And in terms of putting market share numbers up on the board, it will take numerous WinCo stores open and operating in the market before that can happen. Rather, in our analysis, WinCo will find, once it opens in the region, that the Metropolitan Phoenix food and grocery retailing market will be the most competitive - actually hyper-competitive - of all the markets it's in to date.

Let the fireworks begin. Stay tuned.

[Related story - December 29, 2008: Competor News: Winco Foods to Expand in California and Nevada in 2009; Put Aggressive Focus on Central Valley, Northern California and Northern Nevada.]

[Competitive related posts here. Past reports & analysis of the hyper-competitive Metro Phoenix, Arizona market here, here and here . Click the "older posts," "new posts" links at the bottom of each page at those above links as well.]

Competor News: Winco Foods to Expand in California and Nevada in 2009; Put Aggressive Focus on Central Valley, Northern California and Northern Nevada

California and Nevada Market Report

Earlier this year, Fresh & Easy Buzz reported that Idaho-based, employee-owned discount supermarket chain Winco Foods had commercial real estate agents who specialize in retail food store locations scouting the Western United States, including in California and Nevada, which are two of the three markets where Tesco has its Fresh & Easy stores (the third is Arizona), for potential locations for the chain to open new stores at.

The Western USA-focused supermarket chain, which bills itself as "the supermarket low price leader," has decided on a few of those locations, which include sites in California and Nevada, and will start building new discount supermarkets at the locations next year, Fresh & Easy Buzz has learned.

Additionally, Winco is currently searching aggressively for potential new store sites in Central (Valley) and Northern California, and Northern Nevada, three regions it plans to make a major push in next year. The retailer, which currently has a handful of stores in the Central Valley and Northern California, is looking for new store sites in the Fresno area, in the Northern San Joaquin Valley (Modesto-Stockton region), in Metro Sacramento, and in the San Francisco Bay Area.

Winco has a huge 700,000 square foot distribution center in Modesto, California, one of three it operates in the west, that serves its California and Nevada stores. The facility has considerable room to support many more new supermarkets. It's other two distribution centers are located in Oregon.

Winco, which currently operates 64 of its mega-discount supermarkets in five western states --Idaho, Washington, Oregon, Nevada and California -- also is looking for new store sites in Southern California and Southern Nevada (where it doesn't have any stores opened to date), although not as aggressively as it is looking in the Central Valley, Northern California and Northern Nevada. Winco currently has 27 of its 64 stores located in California. The rest are split between Idaho, Oregon, Washington and Northern Nevada, where it currently operates just one supermarket in Reno. All of the Winco stores stay open 24 hours a day.

Inside a Winco supermarket above. The design is utilitarian and no frills. The focus on low prices. The supermarkets do have in-store departments like fresh bakery and deli though, as well as other special features, such as huge bulk foods departments.

The 64 Winco stores, which operate on a deep-discount pricing model and are fairly no frills, are extremely high volume units. For example, the chain had annual gross sales of $3.5 billion (with about 56-57 stores) in its last fiscal year. Mike Read, Winco's vice president of legal and public affairs, says the retailer is estimating it will have sales of about $4 billion in its current fiscal year, which ends in March, 2009. That's lots of gross sales for 64 supermarkets, even though they average about 95,000 square feet each in size.

The Winco Foods' stores in Northern California's Central Valley are performing particularly well because of the deep-discount, low price format.

Average incomes are lower in the Central Valley than in the Bay Area and Southern California, for example.

Additionally, the region, from Bakersfield south to Sacramento north, has been among the hardest hit parts of the state by the housing foreclosure crisis and resulting unemployment.

For example, unemployment in the Fresno region is at a bit over 10%; its 13% in nearby Merced County; 12.3% in Stanislaus County, over 11% in San Joaquin County; and about 10% in the Sacramento Metro region, according to the most recent figures released by the California Employment Development Department. By contrast, overall unemployment in California is at 8.4% , the third highest in the nation after number one Michigan (at 13%) and number two Hawaii, as of November, 2008. Notice how Merced and Stanislaus Counties have just as high (Merced) and near as high (Stanislaus) of an unemployment rate as does Michigan, for example, demonstrating the poor economy in the valley.

As a result of the poor economy in the region in general but especially so in this serious economic recession, consumers are flocking to deep discount supermarkets like Winco and Wal-Mart's Supercenters, where they can buy more food and groceries for their dollar. Wal-Mart has few Supercenters in most parts of the Central Valley and Northern California though, something it is working on changing, so Winco is also benefiting from the lack of competition from Wal-Mart in numerous parts of the Central Valley and Northern California where the retailer has few or no stores.

Winco could open as many as five -to- six of its average 95,000 square foot mega-supermarkets in the Central Valley and Northern California (including Northern Nevada) in 2009, Fresh & Easy Buzz has learned. That's a total of about 550,000 new square feet of food and grocery retailing space in the regions. To put that in perspective, Tesco's Fresh & Easy combination grocery and fresh foods markets average about 10,000 -to- 13,000 square feet. It would take about 50 Fresh & Easy stores (using 11,000 square feet as an average store size) to equal that same amount of retail square footage.

Fresh & Easy - Central Valley and Northern California

Although Tesco's Fresh & Easy has postponed opening its stores in Northern California, the grocery chain has nearly 50 of its small-format, convenience-oriented combination grocery and fresh foods everyday low-priced format markets in the pipeline (in various stages of development from near-completed to recently acquired sites) in Northern California.

The grocery chain also recently opened the first two of a thus far planned five Fresh & Easy markets in Bakersfield, in the south Central Valley. It has eight stores planned for the Fresno region thus far, along with two in Modesto -- all valley regions -- as well as 40-plus stores in the Sacramento/Vacaville market region and in the San Francisco Bay Area combined.

One of the many in-store departments in the mega-Winco supermarkets are its 'old-fashion' bulk foods departments. The huge departments feature nearly every kind of basic food ingredient, from flours to oats, along with bulk snacks, dried fruits and many other items. The bargain-priced basic items like flours, cereals and other unpackaged ingredient items are selling well in the current recession as shoppers are looking to save a buck wherever and however they can.

With Winco making its aggressive push in the Central Valley and Northern California, this adds an additional layer of competitive thrust to what is already a very competitive market that Fresh & Easy will be entering, at least we assume with some stores opening in 2009.

Winco comes in among the lowest-priced of all food and grocery retailers in California and the others Western U.S. states where it has its stores. And like Tesco's Fresh & Easy, it is a non-union operation, unlike Safeway, Kroger-owned Ralph's and pretty much all of the other major supermarket chains in California and Nevada are. Wal-Mart, Target and Trader Joe's are non-union as well.

The Idaho-based supermarket chain, which has 12,000 employees who all own shares in the company, could become a major sub-regional force in California and Nevada over the next two or three years as it adds a number of its new mega-discount supermarkets to its store count in the two states. According to its sales and income growth, it's currently doing well in the recession rather than struggling, which is why its planning aggressive new store growth for 2009.