Tesco's Fresh & Easy Neighborhood Market On Track to Close 13 Stores By November 2, 2010

Tesco plans to have the 13 Fresh & Easy Neighborhood Market stores it's slated for closure - six in metro Phoenix, Arizona; six in metro Las Vegas, Nevada; and one in Southern California's Inland Empire region - shuttered and fully-closed by Tuesday, November 2, 2010.

The locations of the 13 closing Fresh & Easy stores are:

Metro Phoenix, Arizona

858 S. Greenfield Road, Gilbert
3232 E. Guadalupe Road, Gilbert
1045 S. Gilbert Road, Mesa
2009 N. Stapley Drive, Mesa
9124 E. Apache Trail, Mesa
5802 W. Olive Ave., Glendale

Las Vegas, Nevada

Desert Inn Road and Pecos Road
Vegas Drive and Jones Boulevard
Lake Mead Boulevard and Hollywood Boulevard
Warm Springs Road and Eastern Avenue
Eastern Avenue and Fremont Street
Las Vegas Boulevard and Lake Mead Boulevard

Southern California

25050 Alessandro Blvd, Moreno Valley (Alessandro Blvd. at Perris Blvd.)

Tesco announced the closing of the 13 stores on October 5, as we reported in this story - October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market.

Fresh & Easy Neighborhood Market by the numbers

Once the 13 stores are closed, Tesco will have 155 of its small-format (10,000-12,000 square-foot) Fresh & Easy fresh food and grocery markets operating in California, Nevada and Arizona, down from the current 168 units.

Below is a breakdown by market region of the 155 stores after the November 2 closures:

Southern California
= 92 units

Central Valley, California/Bakersfield Metro Region
= 7 units

Central Valley, California/Fresno Metro Region
= 7 units

Metro Las Vegas, Nevada
= 21 units

Metro Phoenix, Arizona
=28 units

Total = 155 units

We have a permanent link listing the 13 stores to close at the top of the blog.

Tesco's Fresh & Easy Neighborhood Market is boarding up the 13 stores and will continue to pay the monthly rent on the units unless it can either sub-lease the units, which it has been attempting to do, or work out some sort of reduced rent arrangement with the landlords, which is unlikely.

Tesco has said it could open some or all of the stores at some point in the future. It's called the closures "mothballing," in reference to that possibility.

However, based on our reporting, along with the fact Tesco would like to sub-lease the 13 units, we doubt if once closed any of the 13 stores will fly the Fresh & Easy banner and be reopened anytime in the future.

In terms of subleasing, the metro Phoenix and metro Nevada commercial real estate markets are so flooded with available retail commercial real estate space, particularly vacant buildings, we don't see Tesco having much success with that goal, outside of perhaps being able to sub-lease a handful of the units if it offers extremely appealing monthly rates. The Moreno Valley unit in Southern California could be easier, although the Inland Empire region also has plenty of vacant retail commercial real estate on the market.

Additionally, since Tesco couldn't make a go with the Fresh & Easy stores at the 13 locations, it's doubtful any other small-format grocer, outside of a local independent or two perhaps, or drug store chain (the buildings would be a good size drug stores) will be interested in the locations. Niche specialty type stores would seem to be the best available opportunity, considering the market and the smaller footprints of the store buildings.

Tesco currently isn't plan on opening any additional new Fresh & Easy stores this calendar year. No new units are set to open this month, and none are at present planned for November or December 2010.

The retailer opened nine Fresh & Easy Neighborhood Market stores in September of this year. See the linked stories below for details:

>September 22, 2010: California Dreamin': Fresh & Easy Neighborhood Market, Whole Foods Market Combined Open a Total of Four Stores Today in California

>September 21, 2010: Fresh & Easy Neighborhood Market and Walmart Create A September New Grocery Store Rain Storm in Oceanside, California

>September 15, 2010: Two New Fresh & Easy Neighborhood Market Stores Open in Fresno, California Region Today

>September 8, 2010: Fresh & Easy Neighborhood Market Hits (and Breaks) the 100-Store Mark in California With Today's Openings

>September 7, 2010: 'Big Bang' September: First Four of Nine New Fresh & Easy Neighborhood Market Stores Opening on September 8

>July 14, 2010: Fresh & Easy Neighborhood Market Confirms Our June 25 Report it Will Open Nine New Stores in September 2010

>June 25, 2010: A Four Month Pause: No New Fresh & Easy Neighborhood Market Stores Set to Open Until September 2010

As we previously reported, Tesco's Fresh & Easy currently plans to open 10 new stores in Southern California in early 2011. The current opening time-frame for the stores is January 1, 2011-February 23, 2011.

Additionally, the retailer plans to open its first batch of Fresh & Easy Neighborhood Market stores in Northern California beginning in early 2011, probably starting in February but it could be March depending on a couple of variables. [See - September 22, 2010: Fresh & Easy Neighborhood Market Plans to Open Two Additional Stores in Northern California in Early 2011. Also see the related stories links at the piece.]

Tesco Developing New Urban Department Store-Style Format Stores: Will Sell Groceries and Upscale Non-Foods Side-by-Side

On January 7 we wrote about Tesco's latest new retail food store format development, a small-format, no-frills, discount grocery store for its home market in the United Kingdom (UK). (You can read that piece here.) Tesco is currently developing the price-impact, small-format stores in an old warehouse in Britain owned by the chain's founder

Every the busy format innovator, Tesco also is in development of yet another new format: a multi-level town centre (urban-style) department store that would sell food and groceries, consumer electronics, housewares, clothing, jewelry, toys and other non-foods items. The stores would be two-to-three stories in size, with escalators linking the floors, according to a report by the Financial Times. The original source of the information came from a Tesco report on the new store format which was leaked to and published in the British trade publication Property Week.

Tesco already operates large, full-service mass merchandising or hypermart-type stores. However, that store format is too big for most urban locations. The new Tesco department store-style shops would be about 60,000 square feet. The stores would offer fresh foods and grocery products side-by-side with the assortment of non-foods goods mentioned above.

According to the internal paper on the format, Tesco will target Mark's & Spencer, Debenhams, BHS and a couple others who already operate similar format stores.

Many UK retail industry observers are wondering however if Tesco might be going too far. Between all the Tesco supermarkets, hypermarkets, Tesco Extra and Tesco Express format stores--and now the new no-frills, small-format grocery markets in development, and the new department store-style format--the retailer has been opening over the last five years or so, they say what they call "Tesco fatigue" might be setting in with consumers. These observers site the fact that British supermarket chain Wm Morrison beat Tesco considerably in fourth quarter holiday season sales as an example of that possible "Tesco fatigue" on the part of shoppers.

However, other observers say if Tesco does enter this segment of the retail market they will exert serious competitive pressure on its current players. they especially say Tesco will be a major player on London's High Street, where many of the top department store-style format stores are located, including Marks & Spencer's top-grossing store of that format.

You can read the full Financial Times story here.