Showing posts with label small-format grocery store revolution in U.S.. Show all posts
Showing posts with label small-format grocery store revolution in U.S.. Show all posts

Thursday, December 4, 2008

Competitor News: Supervalu Inc.'s Small-Format, No Frills, Extreme Value Sav-A-Lot Chain Beefing Up its Executive Ranks as Part of its Growth Program


Supervalu, Inc.'s small-format, no frills Sav-A-Lot grocery chain is beefing-up its senior management team as part of the discount grocer's growth strategy nationally in the U.S.

St. Louis, Missouri-based Sav-A-Lot, which operates nearly 1,200 small-format discount grocery markets in the U.S., has made four new headquarters hires and made a number of internal promotions as a way to grow the business both organically and through new store growth, Fresh & Easy Buzz has learned.

The new hires are:

Bill Gillispie. Gillispie has joined Sav-A-Lot as its new senior vice president of marketing and merchandising. A veteran of the U.S. food and grocery retailing industry, he previously held positions with Scotts Food, Cub Foods, and Jewel Food Stores.

Tom Lenkevich. Lenkevish has been named Sav-A-Lot's senior vice president of operations. He previously held management positions at Meijer, A&P, and Farmer Jack's. He also is a former Sav-A-Lot licensed franchise owner. Supervalu's Sav-A-Lot operates both company owned stores and stores franchised to independent owners.

Andrea Wagner. Wagner, a veteran marketer who previously worked in senior positions for Kroger Co. and H.E.B in Texas, has been named vice president of consumer brand strategy.

Vanessa Foster. Foster is Sav-A-Lot's new director of communications and community relations. She most recently managed community relations and multicultural marketing initiatives for the Cartoon Network children's television network.

The newly promoted-from-within Save-A-Lot executives are John Gerber, named as vice president of distribution; Mike Kemp, the retailer's new vice president of product segments (a new position); and Donna Mickens was named director of organization effectiveness.

Gerber, who's been with Supervalu since 1985, joined Save-A-Lot in 2002, and has held various roles in the company's distribution division.

Kemp joined Save-A-Lot in 2003, and has managed the company's procurement of meat and perishables.

Mickens will oversee executive-level development with a focus on succession planning and identification of key talent within the company.

The major new executive hires and promotions signals what we've been hearing for sometime; that Sav-A-Lot is looking to seriously grow its business both organically and through new store development.

The Supervalu, Inc. subsidiary already is the largest small-format, no-frills, limited assortment discount chain in the U.S. It has about 1,300 stores compared to Aldi USA's nearly 1,000, for example.

Aldi USA is on a major growth spurt however, adding 75-100 new stores a year over the next five years, in addition to moving into brand new markets like it recently did in Florida.

Sav-A-Lot's no-frills, small-format discount stores, which operate on an everyday hard discount model (the retailer calls them "Extreme Value Stores"), and stress the value proposition, but also promote and advertise, have been doing well in the current recessionary economy as shoppers search out the best bargains on food and groceries. In fact, Sav-A-Lot appears to be the bright estspot in Supervalu's multi-format and multi-banner lineup at present.

We've been hearing Sav-A-Lot plans on focusing more on opening new stores west of the Rockies, including in California where it has only a minimal presence with its small-format discount grocery markets. There are Sav-A-Lot stores in 40 states. If so, particularly if it puts a serious focus on Southern California, that wouldn't be great news for Tesco's Fresh & Easy, which is struggling to gain a foothold in Southern California, Nevada and Arizona with its small-format combination discount grocery and fresh foods stores.

If you look at the Sav-A-Lot store location map here for example, you will see very few stores in the Western U.S. Rather, the chain's stores are concentrated in the Midwest, south, Mid-Atlantic and eastern regions of the country.

The Western U.S. presents a huge opportunity for Sav-A-Lot, which as a single banner of Supervalu, Inc. is the fifth-largest grocery chain in the U.S. Supervalu is the second-largest retail grocery company in the U.S., after Kroger CO. (not including mass merchandisers like Wal-Mart and Costco).

'Go west' is something we're told has been mentioned often of late at Sav-A-Lot headquarters in St. Louis, Missouri, which ironically is considered the gateway city to the Western United States.

Sav-A-Lot sees lots of opportunity even in the current down economy, and in many ways because of it, for its extreme value merchandising position and no frills small store format, along with other operational and merchandising reasons.

The Sav-A-Lot stores average 14,000 -to- 18,000 square feet and carry about 1,200 food, grocery and non-foods items, including national brands and their own store brands.

The no frills, limited assortment markets also have "dollar departments" in -store, which essentially are like a small dollar or 99 cent-store-within-a-store.

The chain claims it saves shoppers 40% over the everyday cost of groceries at the average supermarket.

About 75% of the Sav-A-Lot stores currently are operated by licensees, which allows for the chain to have much lower capital expenses than it would if all of the stores were company-owned. Sav-A-Lot corporate handles all of the distribution (is self-distributing), marketing, logistics and related headquarters activities for these licensees, which are many cases are large groups rather single-store-owned independents.

This business model is the one Sav-A-Lot is currently focusing the most on. However it also plans to continue opening new company-owned stores.

It should be interesting to watch Sav-A-Lot's development, especially as it pertains to the Western U.S., now that it has put in place a comprehensive, strong senior management team poised to grow the chain.

Thursday, 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


Wal-Mart Marketside, Arizona - Continuing Coverage & Analysis

As we've been reporting and writing about in Fresh & Easy Buzz, Wal-Mart, Inc. is set to open its first four small-format combination grocery and fresh foods Marketside stores in just two days, on Saturday, August 4, in the Phoenix, Arizona East Valley region cities of Gilbert, Chandler, Mesa and Tempe.

As we've been reporting for months now, Wal-Mart will place a heavy emphasis on convenience, freshness and low price in the Marketside stores.

The Marketside concept and store format is very "food-centric."

For example, the fresh, prepared foods will be made in kitchens located right in the stores. There also will be seating areas in the markets where about 9 -to- 10 customers at a time can eat-in. Take-out is the major focus of the Marketside prepared foods category though.

The prepared foods sold in Tesco's Fresh & Easy stores are made at a central kitchen facility in Southern California, then shipped to the stores in Southern California, Southern Nevada and Arizona.

Fresh produce, meats and deli will be featured in the Marketside stores as well, just as they are in Fresh & Easy markets.

Nearly all of the fresh produce in Fresh & Easy grocery stores are pre-packaged in plastic tubs or plastic bags.

Wal-Mart's Marketside stores will merchandise a mix of bulk and pre-packaged produce, similar to what Safeway Stores, Inc. does in its small-format "the market by Vons" store in Long Beach, California, which is about 15,000 square feet.

On the grocery side, national and regional brand items and some store brands will share space in the Marketside stores with natural, organic and specialty products.

Marketside will have far more skus of nationally and regional branded items than Fresh & Easy stores do however. About 60-65% of the items sold in Fresh & Easy markets are under the fresh & easy store label.

Additionally, since the Marketside stores range from about 4,000 -to- 6,000 square feet (the four Arizona stores are from 15,000 -to- nearly 18,000 square feet respectively, compared to 10,000 -to- about 13,000 square feet for Fresh & Easy stores), Wal-Mart's small-format markets will carry more total skus across all categories than Tesco's Fresh & Easy stores do. Wal-Mart's Amee Chande, vice president of strategy and marketing for Marketside, says the stores carry in the neighborhood of 7,000 -to- 10,00 skus, which is considerably more than Fresh & Easy stores merchandise.


Additionally, as you can see in the Marketside, Arizona interior store photograph directly above, the Marketside stores use more traditional high profile shelving with attractive wood-trimmed end-cap units, again similar to what Safeway is using in its "The Market" format, rather than the utilitarian warehouse-style shelving used by Fresh & Easy and Trader Joe's, for example.

Another difference between the Marketside stores and Tesco's Fresh & Easy is that while both small-format markets sell beers and wine, Marketside also will sell spirits, which could help the store in terms of increasing its average ring or market basket size since spirits generally are higher-ticket items. Fresh & Easy stores don't offer spirits.

Wal-Mart's Chande also confirms the Marketside stores will be full-service-oriented, which we've been saying for sometime in the blog. For example, the markets will offer full-service checkout and bagging at the front-end unlike Fresh & Easy stores which feature customer self- checkout and bagging, although if asked a store clerk will assist shoppers with checkout.

That full-service model obviously also extends to the Marketside prepared foods category since the foods will be prepared by a chef in the in-store kitchen (some items will be prepared ahead and packaged for quick take-out of course) and additionally the stores have the full-service eating area in them.

Among the features of the in-store kitchen include a wood burning open hearth oven for baking breads, pizzas and related items.

As we've reported, the Marketside store format is divided into sections with names like The Deli, The Bakery, The Garden (fresh produce), The Butcher Shop (meat department) and so on.

Lastly, Chande confirms what we've been reporting since we first wrote about Marketside last year, which is that although the store prices may not be as low overall as at the retailer's Supercenters, the focus is on competitive prices across all categories, including offering 6 -to- 12 basic items like milk, eggs, butter and the like at what Wal-Mart is calling "the lowest" everyday prices.

Below are a few Marketside items and prices Wal-Mart's Amee Chande has released:

Prepared meals and side dishes:

>Family-size chicken tamales over Spanish-style rice, $8
>Family-style penne pasta with sliced grilled chicken breast in creamy alfredo sauce, $8 >Classic-style meat lasagna with ground beef, ricotta, mozzarella and parmesan cheeses, $6 >Garlic mashed red-skin potatoes, $4
>Coconut curry pilaf with mild yellow curry, apricots and almonds, $4.

Ready-to-Eat Sandwiches, burritos and wraps:

>Pepperoni and salami with provolone and balsamic vinaigrette, $4
>Fire-grilled chicken burrito with cilantro rice, black beans, chicken and cheddar cheese, $4

Grocery

>Marketside brand fresh ground Ccffee, $4.98 per pound
>Black Angus choice beef rib-eye boneless steak, $10.98
>Ready-to-steam baby green zucchini, $4.48 (8 oz)
>Mixed fruit bowls, $2.98 (10.5 oz)

Looking at the prices, they aren't "door openers" by any means. The prepared foods item prices are good, especially if they taste as good as the descriptions of them and ingredients in them would suggest.

However, the "grocery items" prices are comparatively on the high end, particularly the $10.98 per pound choice beef rib-eye steak and the $4.48 (8oz) baby green ready-to-steam zucchini. All zucchini is essentially ready-to-steam. You just wash it and steam it.

This week numerous supermarkets throughout the Western U.S. have non-baby zucchini on sale for 99 cents -to- $1.19 per pound. Paying an over $3 premium for baby zucchini seems a bit odd in this current economy, especially considering how well Wal-Mart knows what the market will bear at present.

The sample size of the items and prices is tiny though. Therefore we will wait and see further what the overall pricing scheme is when we are able to survey the Marketside stores.

Meanwhile, as we reported earlier today, Tesco opened two more Fresh & Easy markets in the Phoenix area today, bringing its store count in the region up to 26. The grocery chain has confirmed it plans to open at least 37 Fresh & Easy stores in the Phoenix and Valley regions.

The clock is ticking with only two days until the opening of the first four Marketside food and grocery stores in Gilbert, Chandler, Mesa and Tempe, Arizona -- all of which are only about 1 -to- 2 miles from Fresh & Easy markets in each of those cities, by the way.

It will be interesting to see if Arizona shoppers who are used to Wal-Mart as a "Mega-Mart" retailer decide to spend their money at what now also is a "Small-Mart" retailer.

Perhaps with everything else in life shrinking -- the paycheck, the savings and checking accounts, the size of automobiles -- consumers also will decide its time to "get small" when it comes to grocery shopping. If so, Arizona will be ground-zero for the battle of the "Small-Marts" -- not just between Tesco and Wal-Mart either -- but also Trader Joe's, and perhaps soon Safeway with its first "The Market" format store in the state.

Below are the addresses of the four Marketside stores opening on Saturday, October 4:

>Gilbert: northwest corner of Elliot and Cooper roads
>Chandler: southwest corner of Ray and McQueen roads
>Mesa: northwest corner of Sossaman and Baseline roads
>Tempe: northeast corner of Rural and Elliot roads

Click here for map directions for each store location.

Resources:

Related stories from Fresh & Easy Buzz:

October 2, 2008: Arizona Market Report: Fresh & Easy Opens Two New Stores; Marketside Opens in Three Days; Analysis of One Of the Most Competitive Markets in the U.S.

October 1, 2008: 'The Promotional Pundit:' Fresh & Easy Buzz Analyzes, Offers Suggestions and Grades Tesco Fresh & Easy's Bi-Weekly Advertising Flyer

September 30, 2008: News & Analysis: Tesco Reports Half-Year Financials; Reports Loss For Fresh & Easy USA and Sales Per Square Foot Averages

September 29, 2008: 'Will it Play In Peoria?' Wal-Mart Will Open its Fifth Arizona Marketside Store Later This Year in Peoria, Arizona

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

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 26, 2008: Real Estate Group Selling the Four Wal-Mart Marketside Small-Format Grocery Stores Set to Open on Oct. 4; Plus Data on the Store's Exact Sizes

September 26, 2008: Fresh & Easy Buzz Gets A Peek -- And it Was Only A Peek -- Inside One of the Four New Wal-Mart Marketside Stores Opening in Arizona On October 4

September 26, 2008: News & Analysis: Employees At Two More Fresh & Easy Grocery Stores Could Soon Request UFCW Union Recognition From Tesco's Fresh & Easy

September 24, 2008: Breaking News: Wal-Mart to Open its Four Marketside Food and Grocery Markets in the Phoeniz, AZ Metropolitan Region on October 4

September 23, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

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

September 12, 2008: Thinking Out Loud: We Reply to A Reader's Request About Retail Strategy; Tesco's Fresh & Easy and Wal-Mart's Marketside

September 12, 2008: CEO's Can Say the 'Darndest Things': Wal-Mart CEO Lee Scott Says He Has Faith Tesco Will Succeed With Fresh & Easy; It's A Small-Mart World After All

September 10, 2008: Fresh & Easy Planning to Introduce Over 200 New Store Brand Items By the End of the Year; Prepared Foods, Coffees and Teas, Snacks Among the Selection

September 10, 2008: Financial Times Follows Fresh & Easy Buzz's Lead in Reporting on Wal-Mart's Plans to Open Marketside Stores in Southern California

September 7, 2008: Analysis & Commentary: Should Tesco's Fresh & Easy Put An Asterisk Next to its Motto? Yes; Unless it Corrects Four Operational Omissions

August 27, 2008: Wal-Mart's Four Phoenix Metro Arizona Small-Format 'Marketside' Community Grocery Stores Nearing Completion; Openings Just Weeks Away

August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

August 11, 2008: Arizona Region Market Report: Which Food Retailer Will Seize the Opportunity Offered by the Lack of a Grocery Store in Downtown Tempe, 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

August 9, 2008: Proximity Matters: More On the Upcoming Tesco Fresh & Easy-Wal-Mart Face Off in the Metro Phoenix, Arizona Market

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

August 7, 2008: Pie in the Sky or Pie in the Face to Tesco's Fresh & Easy: Does Wal-Mart, Inc. Plan to Build A $10 Billion A Year 'Small-Mart' Empire?

July 29, 2008: Metro Phoenix Arizona Market Report: Tesco Opens Store Number Twenty in Phoenix Market; We Use That Milestone to Offer A Market Overview and Analysis

July 25, 2008: Metro Phoenix Arizona Market Report: Tesco Opens Store Number Twenty in Phoenix Market; We Use That Milestone to Offer A Market Overview and Analysis

June 26, 2008: Phoenix, Arizona Metro Market Report: More Competition in an Already Hot Market as Pro's Ranch Markets Plans Two New Stores in Phoenix Metro Market

June 24, 2008: Competitor News: Wal Mart Launches New 'Marketside' Website; Announces First Four Stores in Arizona to Open in the Fall Rather Than Summer

June 23, 2008: Competitor News: Wal-Mart's Marketside On A Hiring Tear; Getting Closer to Opening Small-Format Fresh Food & Grocery Stores in the Phoenix, AZ Region

June 20, 2008: Competitor News: Wal-Mart Executive in Charge of Small-Format 'Marketside' Format Development Leaving to Join UK Bicycle Retailer Halfords Group PLC

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

June 8, 2008: Arizona Region Market Report: First Signs of A Weakening Might Be Starting to Show in the 'White-Hot,' 'Super-Competitive' Arizona Market

June 6, 2008: Wal-Mart USA Chief Eduardo Castro-Wright Confirms Fresh & Easy Buzz Reportage on 'Marketside,' Adds Information From the WM Corporate Side

May 18, 2008: Wal-Mart Looking For Sites in California For it's Small-Format 'Marketside' Grocery Stores

February 12, 2008: Wal-Mart's New Logo For It's 'Marketside' Small-Format Grocery Stores Unveiled

January 18, 2008: Wal-Mart and Safeway vs. Fresh & Easy

January 16, 2008: Wal-Mart and Safeway Stores Could 'Box' Tesco in With New Small Format Stores

January 14, 2008: Citigroup Supermarket Industry Analyst Confirms Wal-Mart Small Marts in Arizona

January 14, 2008: Wal-Mart Confirms it Will Test New Small Store Format Later This Year

January 13, 2008: The Battle of the Retail Titans Begins: Wal-Mart to Open Small Format Stores in Arizona

{Photo credit: photo second from the top: Andrea Bloom, Tribune.com.]

Monday, 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


Wal-Mart, Inc. CEO Lee Scott mentioned a rather interesting future U.S. small-format food and grocery retailing possibility for the mega-retailer at the 15th annual Goldman Sachs Global Retailing Conference held earlier this month in New York City.

The new Wal-Mart small-format possibility isn't Marketside, the retailer's new small-format combination grocery and fresh foods stores, the first four units of which are set to open this Saturday, October 4 in the Phoenix, Arizona Metropolitan market cities of Gilbert, Mesa, Chandler and Tempe. Rather, it's a new and second possible Wal-Mart small-format grocery store format for the U.S.

During his speaking time at the conference, Lee Scott discussed format development at Wal-Mart, Inc., including the 15,000 -to- 20,000 square foot Marketside stores, as well as offering some of his views on Tesco and its Fresh & Easy Neighborhood Market format, venture and stores, as we wrote about here.

What was the most interesting part of the Wal-Mart CEO's talk though was when he said this:

"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.)

Yes, Wal-Mart, Inc. is investigating creating and opening small-format, bodega-like grocery stores in selected U.S. market regions -- and not just small grocery stores geared only to Hispanic shoppers -- but a modern version of the corner grocery store positioned to mass consumers of all ethnic backgrounds.

This wouldn't be a new development for Wal-Mart, at least when it comes to its Wal-Mart- Mexico division, where the retailer has opened a number of these small-format bodegas or grocery stores as part of its multi-format strategy which has made Wal-Mart the number one food and grocery retailer in Mexico today.

Additionally, Wal-Mart also has been demonstrably improving and growing its Hispanic and Latino food and grocery category expertise across all store categories over the past decade. Its added Hispanic products (and improved the merchandising) in all of its existing format stores, and as we reported here on May 7, 2008 opened its first large-format store (in Garland, Texas) positioned specifically to Hispanic consumers.

But when Lee Scott uses the term "bodega" he isn't saying exclusively that these small-format U.S. grocery stores would be markets geared only to Hispanic or Latino consumers. Instead, the small grocery stores could be in some cases geared to Hispanic shoppers, and in other cases small grocery markets positioned to the public or consumer base at large. They would be more mainstream grocery stores, unlike having the more upscale combination fresh, prepared foods and grocery format of Marketside.

The inspiration for the discussion of these small-format grocery stores comes from how well the retailers bodegas are doing in Mexico, along with its decision to develop the Marketside stores in the U.S., combined with Wal-Mart's observations about what we call the small-format food and grocery store international revolution going on throughout the world.

Wal-Mart also is looking at opening small-format stores via its Asda division in the United Kingdom. Small-format food and grocery retailing is hot in that nation, where Tesco, Sainsbury's, the Co-operative group, Marks & Spencer, Waitrose, Aldi, Lidl and Netto all operate various styles and format types of small-format stores.

Here's what Wal-Mart CEO Lee Scott said earlier this month at the Goldman Sachs retail conference about Wal-Mart's current and future expansion, including small-format stores, in the U.S.:

"We (Wal-Mart) are going to take the opportunities to expand that are presenting themselves now because of the weakened economy. With prices on fuel and food going up, we now are having an increased number of communities contacting us and asking us to build a Wal-Mart store in their town or state and some of those are the very towns or states you would have read about historically that are not enchanted by a beautiful Wal-Mart store."

Scott also commented at the conference that Wal-Mart's smaller Supercenters, which we've reported on and written about, are doing even better than the company had hoped they would:

"It turns out our move to a capital efficiency (opening fewer new stores than originally planned and opening numerous smaller Supercenters) focus this past year was absolutely the right thing to do. What we're seeing worldwide is those stores closest to the customers seem to be doing the best. In the U.S., we're finding our 100,000-square-foot supercenter in the metro areas being very successful and the 175,000-square-foot store, versus the 190,000-square-foot store, is doing very well."

The fact the smaller Supercenters -- something Wal-Mart avoided doing for decades before trying it a couple years ago -- are doing better than the retailer imagined they would also is stoking the optimism at corporate headquarters in Bentonville, Arkansas over smaller-format retailing in general, particularly in the food and grocery categories. This includes lots of optimism about Wal-Mart's existing 40,000 -to- 45,000 Neighborhood Market supermarkets, along with the soon to open Marketside stores. And like hope springing eternal, such hope, reinforced by reality, also can be the springboard for smaller (format) thinking.

As a result, we've learned the small-format "bodega" or more basic grocery store concept is being discussed and studied extensively at Wal-Mart corporate headquarters, which was why Lee Scott mentioned it as a trial balloon of sorts at the Goldman Sachs retail conference earlier this month.

In fact, there's a growing "Small-Mart" brain trust at Wal-Mart that is studying the U.S. mini bodega/modern version corner grocery store concept, along with a number of other small-formats for both the U.S. and elsewhere throughout the world where the retailer has divisions.

Friday, September 19, 2008

Friday Favorites Feature: Small-Format; Prepared Foods Merchandising; Tesco Soup Can Art; Cheap Wine Don't Whine; Petrol Wars and Bye to Biofuels


Fresh & Easy Buzz's Friday Favorites Feature

Top Fav: Small-format food and grocery retailing in America

The food and grocery industry Blog Natural~Specialty Foods Memo is running what it calls a "Small-Format Food Retailing Special Report," in which its writing about various aspects of small-format food and grocery retailing: profiling retailers and discussing issues involving small-format stores.

Below are a few 'Friday Favorites' -- selected stories from the Blog's small-format feature:

Small-Format Food Retailing Memo: This Independent Combines C-Store Convenience With Fresh Foods, Groceries and A Secret Weapon -- Lots of Beer

Small-Format Food Retailing Memo: Not Technically 'Small-Format' But Whole Foods Market, Inc. is Going 'Smaller'

Small-Format Food Retailing Memo: Giant Food Stores To Open its First Small-Format, Hybrid Convenience-Grocery Store: 'Giant To Go'

Small-Format Food Retailing Memo: 'How Sweet it is': New York City's Economy Candy; A Small-Format Urban Store With A Single Focus

Small-Format Food Retailing Memo: First 'Urban Fresh by Jewel' Small-Format Food and Grocery Market Opens Today in Chicago's Lincoln Park Neighborhood

Small-Format Food Retailing Memo: 'USA Today' to Open 'USA Today's' Travel Zone Convenience-Oriented Micro Small-Format Stores in Airports in America

Small-Format Food Retailing Memo: A Professional Chef Turned Grocer Creates A 'Sub-Urban' Small-Format Fresh Foods and Grocery Store in Maryland USA

Small-Format Food Retailing Memo: Savannah, Georgia USA's Parker's Convenience Stores: Taking Hybrid Convenience-Grocery Retailing to Upscale Heights

Small-Format Food Retailing Memo: 'How Sweet it is': New York City's Economy Candy; A Small-Format Urban Store With A Single Focus

Friday Favorites II: Prepared Foods Merchandising

Topic: Fresh, prepared foods merchandising featuring ready-to-eat and ready-to-heat lunch and dinner entrees, side dishes and snacks, is a central merchandising element of Tesco's small-format convenience-oriented Fresh & Easy Neighborhood Market format.

Fresh & Easy stores offer a limited assortment of basic food and grocery items under its own fresh & easy store brand, along with some national brands, and fresh & easy brand fresh, prepared foods. The markets also fresh produce, meats, bakery items, craft beers and wines, and some non-foods items in the stores, which average 10,000 -to- 13,000 square feet.

Fresh, prepared foods merchandising has been around in U.S. food and grocery retailing for a couple decades. However, in the last 10 years or so it's become a fast-growing element of supermarket merchandising, particularly picking up steam in the last 4 -to- 5 years.

The supermarket industry trade publication Progressive Grocer recently held what it called a "Supermarket Fresh Food Roundtable" discussion about the fast-growing form of merchandising in U.S. supermarkets.

Among the participants in the fresh foods discussion included people responsible for fresh foods merchandising at some of the top retail chains in the U.S.

The discussion participants were: Ed Ambrose, director of prepared foods, Supervalu, Inc., Eden Prairie, Minn.; Mike Buck, v.p. of service deli & prepared foods, Supervalu; Nancy Gaddy, v.p. of deli and bakery, Winn-Dixie Stores, Inc., Jacksonville, Fla.; Craig Inabinett, director of deli/bakery operations, Piggly Wiggly Carolina Co., Charleston, S.C.; Mike Merritt, deli merchandiser, Buehler's Fresh Foods, Wooster, Ohio; and Mike Tilden, director of service deli merchandising, Supervalu.

The discussion was moderated by Progressive Grocer's senior editor/fresh food Meg Major. Read her Q&A-style article and coverage of the fresh foods roundtable from the recent issue of Progressive Grocer here.

Topic: Supervalue, Inc., the second-largest U.S.-based supermarket chain, is launching Culinary Circle, a new brand and line of premium quality but "value-priced" prepared foods in the supermarket chains it owns throughout the United States, including the Albertsons chain which has hundreds of stores in Southern California, Arizona and in the Las Vegas, Nevada Metropolitan region where Tesco's Fresh & Easy has its 82 grocery markets.

Nowhere is the supermarket prepared foods sweepstakes heating up more competitively among grocers than in Southern California, where Tesco's Fresh & Easy has over half of its 82 grocery stores. Safeway's Vons, Kroger Co.'s Ralphs, Albertsons (which is owned by Supervalu and is in the process of rolling out the new Culinary Circle brand prepared foods line into all of its stores in the region), Whole Foods Market, Inc., Trader Joe's (which is headquartered in Southern California), Gelsons, Bristol Farms, Sprouts Farmers Market, Henry's Farmers Market, Smart & Final, Costco and others all are becoming major players, along with Fresh & Easy in prepared foods merchandising. That's why we call it a sweepstakes.

Nancy Luna, a business reporter for Southern California's Orange County Register newspaper. who also writes a blog for the paper called the 'Fast food Maven,' has a recent piece about Albertsons' introduction of Supervalu, Inc's new Culinary Circle brand premium quality, value-priced line of fresh, prepared foods into the chain's Southern California stores, amidst the competitive prepared foods retailing sweepstakes we referred to above.

Read the story, "No time to cook? Grocery stores offer more quality to-go foods," here.

More Friday Favorites: Tesco in the United Kingdom

Topic: Britain's famous Graffiti street artist Banksy could do for Tesco store brand canned Tomato Soup what the late American pop artist Andy Warhol did for Campbell's brand canned soups, which was to put them on the pop-art map, in the U.S. when he produced his famous poster featuring a repetition of Campbell's red and white label soup cans. That poster even hung in New York's Metropolitan Museum of Art.

In a style very similar to Warhol's, Banksy has produced the Tesco (store brand) Tomato Soup Cans poster pictured above. Andy Warehol's Campbell Soup Cans poster in pictured below.


We haven't heard if Tesco CEO Sir Terry Leahy likes the poster or not. But if it helps sell as many cans of Tesco Tomato Soup as Andy Warhol's famous Campbell's Tomato Soup poster did, don't be surprised if you see huge displays of Tesco Tomato Soup in all of the retailer's United Kingdom (UK) supermarkets this winter. Click here for more information on Banksy's Tesco Tomato Soup Can poster.

Topic: Tesco is leading a lobbying efforts along with a handful of other UK companies demanding stronger action on climate change by Britain's Parliament. That's a switch in that its usually government that's demanding stronger action on such issues from corporations. Read more about it here: Govt lobbied by green business leaders. And here: Big Business Bosses on Climate Change Action

Topic: Times are tough economically in the UK just as they are in the U.S. Realizing this fact -- and knowing that a little drink of wine can do far more for struggling consumers that a whole lot of whining will do -- Tesco and one of its Chief UK food retailing rivals Sainsbury's are offering "affordable wine" to British shoppers. After all, cutting back is one thing -- but eliminating the fermented juice of the grape completely is unthinkable for many consumers. Read more here: Cutting back: affordable wine. Simple, affordable pleasures can keep one going in bad economic times.

Topic: For those living in the U.S. and fed-up with $4 gallon gasoline, perhaps spending a little time in the UK where gas costs about three times that much per-gallon will make you less angry about the price you're paying at the pump. But don't think for a minute UK consumers aren't equally as angry about the price of petrol across the pond. And that fact isn't lost on the UK's gasoline retailers, which include supermarket chains Tesco, Asda and Morrisons. They've started a gasoline price war of sorts, which has been joined by UK service stations Shell, BP and others. Check it out here: Petrol costs down as price war resumes. And here: Price war brings fuel prices down.

Meanwhile, Tesco is considering eliminating its policy of offering biofuels along with petrol at many of its UK filling stations: Biofuels: Tesco may scrap policy. We wonder though how that fits with the call for the UK government to enact tougher carbon emissions standards?

Thursday, September 11, 2008

'Locali Conscious Convenience:' New Small-Format Hybrid Convenience-Grocery Store Coming to Hollywood, California


A new small-format, hybrid grocery and convenience-oriented store is coming to Hollywood, California. And the company hopes to create a regional chain of the stores throughout Southern California.

Locali Conscious Convenience, which is currently under construction, is set to open its doors this fall. The market, located at 5825 Franklin Avenue in Hollywood, seeks to make healthy eating and eco-friendly household necessities easily accessible to those on the go, says CEO Greg Horos. Roughly translated from Italian, locali means "community" or "where it's happening."

According to CEO Horos, the small-format, environmentally-focused hybrid grocery and convenience market "will be a hip version of the mom and pop corner store. Locali will also be a place for people in the community to connect with each other and their food sources. There will be an emphasis on local and organic food artisans, producers and growers in the inventory line up. However, refined sugar, hydrogenated oils, high fructose corn syrup and genetically modified products will be missing from the shelves," he says.

“I like to describe it as the sustainable version of 7-11," Horos says. "We’ll have healthy and eco-friendly versions of the all the typical things you’d find at a convenience market…with the exception of cigarettes and lotto tickets…No clean versions of those,” he added.

“We’re building (the store) to LEED (strict green building guidelines) standards and working with the city of Los Angeles to make sure we can supersede those standards as much as possible. We have a lot of terrific value adds for the community. I’m most excited that we’re offering exclusively organic and biodynamic wines and beers, too.”

Besides the energy efficient building measures and appliances, Locali Conscious Convenience will also provide for the disposal of compost, in addition to recycling waste. A percentage of their proceeds will benefit a variety of local and international charities geared towards improving overall wellness, according to Melissa Rosen, a company spokesperson. The retail space is being designed by Los Angeles-based MASS Architecture & Design, Ms. Rosen says.

"Locali conveniently connects the community to eco-friendly food, beverage and lifestyle products. By providing easy access to socially and environmentally responsible goods, Locali promotes conscious consumerism and healthy living," Ms. Rosen says.

Locali Conscious Convenience is a unique hybrid concept, combining green retailing with small-format food and grocery retailing, natural and organic niche. However it's not the first or the only retail format of its kind in the U.S.

Tesco's Fresh & Easy Neighborhood Market currently has one store in Hollywood, on Hollywood Blvd. Over half of its 78 stores are located in Southern California, with the remaining stores in the Las Vegas, Nevada and Phoenix, Arizona Metropolitan regions.

In June, 2008, the publication Natural~Specialty Foods Memo wrote and published this piece, "Retail Innovation Memo: The 'Econvenience Store' Will Be the Next New Thing, and is A Convenience Store Industry Green Retailing Trend in the Making," about Green Spot Market & Fuels, a hybrid small-format convenience and grocery store that opened in the Dallas, Texas region earlier this summer.

In the story, Natural~Specialty Foods Memo predicted we would soon begin seeing other, similar format stores opening in the United States, calling the eco-hybrid convenience/grocery store an emerging trend.

Hybrid eco-convenience stores popping up all over

It appears the blog is on to something with that prediction. In addition to Texas' Green Spot and Los Angeles' soon to be Locali Conscious Convenience, Fresh & Easy Buzz has learned a hybrid eco-convenience-grocery store chain named Good to Go ECOnvience Center recently opened its first store in Grand Chute, Wisconsin USA on May 1, 2008.

Good to Go, which like Green Spot and Locali Conscious Convenience also bills itself as "the first eco-convenience store in the U.S.," says it has plans to open 150 of the green convenience-oriented stores in Wisconsin, Iowa and Northern Illinois by the end of 2010, which is a very ambitious store opening program.

Good to Go says its stores also are built using LEED green building guidelines. The Good to Go ECOnvenience Center features a green roof with plants and sod that minimize absorption of sunlight that could heat the building and force overuse of its HVAC system; energy savings during the summer cooling season can be as much as 25 percent. The soil also acts like a sponge to absorb rain and reduce storm water runoff by as much as 95 percent after a one-inch downpour.

"When it comes to our customers, we haven't set out to change the direction the wind blows. Rather, we have adjusted our sails," said Angie Nikolas, vice president of neighborhood relations for the retailer. "We're very proud to bring 24-hour convenience that minimizes the impact we make on our environment."

Similar to Green Spot and Locali Conscious Convenience (although each have unique aspects as well), Good to Go's focus is on selling healthier natural and organic food, grocery, beverage, snack and prepared foods items as part of its green theme.

In Portland, Oregon, a company called Full Moon Foodies is working on creating a chain of small-format hybrid convenience-grocery stores with a green and natural products focus.

"I got tired of having to hop into the car to drive to a mega-organic mart, fight for parking and waste time standing in long lines whenever I needed a few items," Ellisa Wee, the retailer's founder says.

According to the company, "the retail concept provides customers with a knowledgeable staff; a modern, upscale store design; multiple community-based urban locations; and extended hours past those of grocery stores."

"We're not trying to re-invent the convenience store or the organic/natural food concept, we're trying to make it more accessible," Wee says.

The Full Moon Foodie's aren't the only retailers looking to penetrate (or perhaps create) the eco-convenience grocery niche however. A company called SeQuential Biofuels, which operates numerous fuel stations throughout Oregon and Western Washington state, has created a natural convenience market, which it is locating on site at its many fueling stations. Those stations offer conventional gasoline, biofuels and other green technologies. Many of the eco-convenience stores are solar powered. The stores also buy used vegetable oil form businesses and consumers and then turn it into biofuel.

The small-format store, called the Natural Market, sells conventional, natural and organic snacks and beverages, along with a limited assortment of grocery items. It features fresh, prepared foods, along with fresh produce. The stores also sell beer and wine, putting a special emphasis on locally-produced brews and wines from the Pacific Northwest region where the stores are located.

All of the coffee cups and straws used for the store's fresh brewed organic coffee are 100% compostable. Additionally, the retailer says it picks each product to sell in the stores "based on where, how, when, and by whom it was made," "Every effort has been made to source local, organic products, a company spokesperson says.

Part of the small-format continuum

We see this emerging small-format eco-convenience hybrid grocery-convenience store retailing trend as a "kissing-cousin" to the small format food and grocery retailing revolution happening in the United States, as well as in Europe and Asia. The eco-convenience stores are a variant of what is a multi-format small-format food and grocery retailing trend if you will.

While there are qualitative differences between Tesco's Fresh & Easy and what these retailers are doing for example--chiefly that Fresh & Easy is putting more of an emphasis on being a primary shopping venue with a low price focus on selling basic groceries and prepared foods--there are numerous similarities as well.

For example, the Tesco Fresh & Easy format puts a major emphasis on healthy and natural foods, preparing its fresh, prepared foods without using artificial ingredients and colorings. Fresh & Easy stores also sell lots of natural and organic grocery products and are positioned as environmentally-friendly markets just like the hybrid eco-convenience stores are, along with offering craft beers and specialty wines like the hybrid eco-convenience-grocery stores are doing.

Therefore, we view this format development as a continuum of sorts, as well a a natural foods variant of the tradition C-store format just as in many ways the natural foods store is a variant of the traditional supermarket.

As part of this format continuum, you have small-format grocers like Trader Joe's with a specialty and natural products focus, and Safeway's "The Market" format which offers basic and specialty groceries in a more upscale environment on one end. In the middle you have Tesco's Fresh & Easy and the soon to open Wal-Mart Marketside, which are hybrid combination basic grocery stores and fresh foods markets. And at the other end you have the small-format, no frills stores like Aldi and SuperValu, Inc.'s Sav-A-Lot, which are deep or hard discount limited assortment grocery stores.

Sitting alongside these various small-formats on this continuum you have the traditional convenience store, the supermarket and the natural foods store. It's like taking a piece from each one; the sums becoming the whole (format).

You can add to this the new hybrid eco-convenience stores, which are combining the traditional C-store format with a mini combination grocery and natural foods store, while still including gasoline fueling stations which offer traditional petroleum-based gas but also are adding cleaner biofuels.

All of the formats are going after two things in the main: the time-pressed shopper who might be tired of shopping at big box stores, along with a share of that shopper's stomach. Each has a similar but different niche. But in one way or the other all are competing against one another for that share of the consumers' stomach, and in many cases her 21rst century "green" conscious as well.

Guest Commentary: No Frills, Small-Format Hard Discounters May Win the Small-Box Sweepstakes


From the Fresh & Easy Buzz Editor's Desk: In our reporting, writing and analysis of small-format food and grocery retailing in the U.S. and globally, Fresh & Easy Buzz has discussed how the fastest-growing and empirically most successful small-format grocery chains in the U.S. to date have generally been what we refer to as the no frills, small-format deep-discounters like Aldi USA and Supervalu, Inc.'s Sav-A-Lot. Even Trader Joe's, a fabulously successful small-format specialty grocer uses many principles of the deep or hard discounters, applying those principles to the specialty and natural foods' categories.

In his editorial commentary in Supermarket News this week, editor-in-chief David Orgel discusses this issue, along with quoting a supermarket industry analyst who says in what we call the small-format food and grocery retailing revolution going on in America it will be the deep or hard discounters, in his analysis, who win not only the battle but also the war, to stretch a metaphor a bit.

Mr. Orgel also addresses the issue of store count growth for both SuperValu, Inc's Sav-A-Lot and Aldi USA, suggesting as the supermarket industry analyst he quotes offers that both these chains might just be growing too slowly.

We essentially agree with this analysis, believing each of these no frills, small-format deep discounters not only has much room to grow in regions where they each have numerous respective stores already, but even more so to grow into regions where they have little or no retail presence currently. This is particularly true for Aldi USA. Although it has about 950 stores in the U.S., not one of its stores are in the Western United States, which is a potentially lucrative market for the hard discounter. The west also is the fastest growing region in America.

Sav-A-Lot, with over 1,200 stores, has more of a national presence in the U.S. than Aldi USA in terms of geography. However, there is much room for Sav-A-Lot to grow its store count considerably. For example, the retailer has only a smattering of stores in California, which is a nation state all by itself with nearly 40 million residents.

Both Aldi USA and Sav-A-Lot have realized they can grow their respective store counts considerably. That's why Aldi USA announced late last year it plans to open 75 -to- 100 new stores a year for the next five years.

SuperValu, Inc.'s Sav-A-Lot isn't growing its store count as fast as Aldi USA is. However, the retailer has increased its new store development program and has told Fresh & Easy Buzz it has plans to increase the number of new stores in the development pipeline even more.

And although 2012 is a ways off, as we reported in this June 12, 2008 piece, "Breaking News and Analysis: German Small-Format Discount Grocery Chain Lidl is 'Coming to America' By 2012 Says Chief Executive Klaus Gehrig," the CEO of Aldi International's chief international small box hard discount competitor, German-based Lidl, says the no frills, deep discounter is planning to start opening stores in the United states in less than four years, and perhaps sooner.

Below is David Orgel's commentary on the small-box sweepstakes from this week's edition of Supermarket News.

Hard Discounters May Win Small-Box Sweepstakes
By DAVID ORGEL
Editor-in-Chief, Supermarket News
September 8, 2008

America has lots of problems, but a lack of stores isn't one of them. No presidential candidates are campaigning on the platform of accelerating the expansion of food retailers. Neither is that a goal for most grocers, which have cut back on new openings in recent years to ease the glut of stores. One exception is the growing interest in small formats from Tesco, Safeway, Wal-Mart and others that threaten to one day flood the market with new square footage in a smaller way.

However, there's actually one segment of retail, indeed of small-store retail, that may not have enough stores. That is the limited-assortment category, also referred to as hard discounting in some circles. This class of retail made a big splash in Europe, but in the U.S. its participants, chiefly Aldi (part of Germany's Aldi Group) and Save-A-Lot (a unit of Supervalu) have rarely commanded the spotlight despite noteworthy successes.

All of that may now be changing, largely because the U.S. economy's nosedive has led many consumers to seek out the lower-priced, private-label-heavy assortments offered in these outlets.

Which brings up the question of whether there are enough of these stores to satisfy shoppers. In this week's Part Two presentation of SN's Financial Analysts' Roundtable (see Page 22), John Heinbockel, managing director at Goldman Sachs, New York, contends that the demand for hard discounters may actually outpace the supply. Here are excerpts from his comments:

“The most promising small-box concept is an old one but an underdeveloped one in the U.S. — the hard discounter. … When you realize there are more than 15,000 dollar stores in the U.S. and only about 2,200 hard-discount stores targeting the much bigger retail food market, it's very clear there could be 6,000 or 7,000 or 8,000 hard-discount stores in the U.S. ultimately. … Aldi is probably growing too slowly, and so is Save-A-Lot, which may allow a third competitor to come into the market.”

I think Heinbockel is onto something here, although I have a hard time imagining the number of stores at the upper range of his prediction. Both Aldi, at close to 1,000 units, and Save-A-Lot, at about 1,200, are on expansion paths, although not the kind of growth that would add thousands of stores.

These retailers are also trying to enhance customer experiences. Aldi is focusing on improving the look of its stores, better integrating its brands across categories, and selectively expanding SKUs. Save-A-Lot is giving its operators more leeway to practice local marketing and is hoping to expand its base to include younger, urban and ethnic customers. These changes are important because hard discounters will encounter more competition in coming years. How these retailers execute their changes will determine if they solidify a larger base or stumble by testing too many new directions.

I would bet on these players because the stars seem to be aligned. When you look at all the retailers experimenting with a wide range of small formats, it's clear that the most proven of the small boxes — the hard discounter — has the best shot at success.

Thursday, August 7, 2008

Pie in the Sky or Pie in the Face to Tesco's Fresh & Easy: Does Wal-Mart, Inc. Plan to Build A $10 Billion A Year 'Small-Mart' Empire?


Wal-Mart sees Marketside as $10bn chain

From the: Financial Times
By Jonathan Birchall in New York
August 7, 2008

Wal-Mart, the world’s largest retailer, says the new small Marketside grocery stores it is to launch this autumn could expand to a chain of more than 1,000 stores, delivering $10bn-plus in annual sales.

The retailer plans to open 10 of the 15,000 sq ft Marketside stores initially, including four in the Phoenix area, where they will be competing directly with Tesco’s recently launched US Fresh & Easy store concept.

Wal-Mart’s executives have described the Marketside stores as a pilot project, although it is the first new store format to be launched by the company in a decade. But a job advertisement for the retailer indicates the scale of its ambitions for Marketside, saying the format “is expected to start with 10 stores and evolve to between 1,000-1,500 stores with over $10bn annual sales."

At less than a 10th of the size of the average Wal-Mart superstore, Wal-Mart said the new stores would be aimed at “the needs of a time-starved, higher-income consumer that is interested in convenience and premium fresh, natural and organic offerings.”

The approach contrasts with Wal-Mart’s experience with the Wal-Mart Neighborhood Market stores it launched 10 years ago, which are about the size of a traditional US supermarket.

In response to an inquiry from the Financial Times, Wal-Mart stressed the Arizona stores were a pilot project. The retailer subsequently removed from its website the job advert that included the more ambitious targets.

Wal-Mart’s superstores are built around high volume and low cost, and the group has faced challenges in adapting to the supermarket-sized Neighborhood Market stores it launched in 1998, opening more than 140 outlets. The Marketside stores will require a fast turnover of stock, which could be a difficult fit with Wal-Mart’s distribution system.

Tesco has opened more than 60 Fresh & Easy stores in California, Arizona and Nevada since November and plans to have several hundred operating during the next two years.

Wal-Mart, the largest US grocer with more than 20 per cent of the market, is developing the Marketside format as growth slows at its 2,500-plus superstores.

The Marketside format is also expected to spearhead a broader drive by the retailer to improve its overall grocery offering.

Safeway and SuperValu, two of the largest US supermarket chains, are also experimenting with small, local formats.

Fresh & Easy Buzz Editor's Note: Below is a selection of original reporting news stories, features and analysis about Wal-Mart's Marketside format stores from Fresh & Easy Buzz:

August 7, 2008: Food Retailing & Labor Unions: Canada's Supreme Court to Hear Case that Could Change Wal-Mart's, and Others, Non-Union Status in North America

June 24, 2008: Competitor News: Wal Mart Launches New 'Marketside' Website; Announces First Four Stores in Arizona to Open in the Fall Rather Than Summer

June 23, 2008: Competitor News: Wal-Mart's Marketside On A Hiring Tear; Getting Closer to Opening Small-Format Fresh Food & Grocery Stores in the Phoenix, AZ Region

June 20, 2008: Competitor News: Wal-Mart Executive in Charge of Small-Format 'Marketside' Format Development Leaving to Join UK Bicycle Retailer Halfords Group PLC

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

June 9, 2008: Breaking News and Analysis: German Small-Format Discount Grocery Chain Lidl is 'Coming to America' By 2012 Says Chief Executive Klaus Gehrig

June 8, 2008: Arizona Region Market Report: First Signs of A Weakening Might Be Starting to Show in the 'White-Hot,' 'Super-Competitive' Arizona Market

June 6, 2008: Is A Wal-Mart 'Marketside' Small-Format Grocery and Fresh Foods Store Coming to Reno, Nevada?

June 6, 2008: Wal-Mart USA Chief Eduardo Castro-Wright Confirms Fresh & Easy Buzz Reportage on 'Marketside,' Adds Information From the WM Corporate Side

May 18, 2008: Wal-Mart Looking For Sites in California For it's Small-Format 'Marketside' Grocery Stores

April 11, 2008: Wal-Mart to Open Two More New 'Neighborhood Market' Stores in the Phoenix Metro Region; Still On-Track to Open New Marketside Stores This Summer

February 22, 2008: Wal-Mart and Tesco Locked in Heated Cross-Atlantic Competitive Battle in the USA and UK

February 12, 2008: Wal-Mart's New Logo For It's 'Marketside' Small-Format Grocery Stores Unveiled

January 18, 2008: Wal-Mart and Safeway vs. Fresh & Easy

January 16, 2008: Wal-Mart and Safeway Stores Could 'Box' Tesco in With New Small Format Stores

January 14, 2008: Citigroup Supermarket Industry Analyst Confirms Wal-Mart Small Marts in Arizona

January 14, 2008: Wal-Mart Confirms it Will Test New Small Store Format Later This Year

January 13, 2008: The Battle of the Retail Titans Begins: Wal-Mart to Open Small Format Stores in Arizona

Thursday, July 31, 2008

Thursday Fresh (& Easy) Buzz: News and Insight About Tesco's Fresh & Easy Neighborhood Market and Food and Grocery Retailing in the USA


Fresh & Easy Southern California

La Quinta times two: Tesco plans to build its second small-format Fresh & Easy Neighborhood Market grocery store in the Southern California desert city of La Quinta near Palm Springs.

The Fresh & Easy grocery market will be the co-retail anchor, along with a CVS drug store, in a new 10 acre development called Jefferson Square, at Jefferson Street and Fred Waring Drive in North La Quinta, according to J. Scott Fawcett, president of Newport Beach, California-based Marinita Development Co., the project's developer.

Mr. Fawcett says his firm has been working on plans for the center since 2000.

The Jefferson Square center will be 90,000 square feet. In addition to the Tesco Fresh & Easy grocery store and CVS drug store retail anchors, Mr. Fawcett says there will be 10 smaller retail shops which will be leased to a variety of tenants, including a name brand restaurant he says the firm is in negotiations with and therefore can't name at this time.

"We are certain the Fresh & Easy will do very well," Fawcett says. "There are no grocery stores within miles of the residential area (around the center). We're doing this in two phases rather than building everything at once and have them sitting empty."

The first La Quinta Fresh & Easy Neighborhood Market is currently under construction at Calle Tampico and Desert Club drive in the city. It's scheduled to be the first of the two stores in the city to open.

Tesco is putting a major focus on the desert region. It currently has stores open in the nearby cities of Indio, Palm Desert and Cathedral City, with a Fresh & Easy grocery store scheduled to open soon in Palm Springs.

Fresh & Easy Arizona

Four more new Arizona stores set to open: In addition to opening its 20th Arizona Fresh & Easy grocery store yesterday at 7th Avenue and Indian School Road in Phoenix, Tesco has announced an additional four Arizona stores that will be opening soon in the market. Those stores are as follows:

• Dobson and Queen Creek roads in Chandler on Sept. 10.
• Gilbert Road and Southern Avenue in Mesa on Sept. 10.
• Scottsdale Road and Shea Boulevard in Scottsdale on Aug. 27.
• Baseline and Kyrene roads in Tempe on Sept. 10.

The Tempe store will be the first Fresh & Easy market in that city. The retailer currently has stores in Chandler, Mesa and Scottsdale.

As we reported in this piece yesterday, Tesco hopes to have about 37 of the small-format, convenience-oriented combination grocery and fresh foods Fresh & Easy grocery markets opened in Arizona by the end of this year.

With the opening of the new Phoenix store yesterday, Tesco now has 67 Fresh & Easy Neighborhood market grocery stores open in Southern California, Nevada and Arizona. Plans call for about 30 more new stores to be opened by September, 2008.

The right way, the wrong way and the Tesco way: United Kingdom-based international retailer Tesco PLC, parent company of Fresh & Easy Neighborhood Market USA, is well known in the food and grocery industry globally for its methodological, and some say laborious, technological and quality control procedures regarding the process potential suppliers and vendors have to go through in order to produce a store brand item for the retailer.

It seems Ed Debartolo (he's not the former owner of the San Francisco 49ers football team) learned just how extensive and time consuming that process is when dealing with Tesco, the UK's largest and world's number three retailer.

Mr. Debartolo is the owner of Phoenix, Arizona-based Berto's, a $22 million a year specialty producer of Italian Gelato and Sorbet treats.

Despite the process, it appears the end result was good for both Bertos and Tesco's Fresh & Easy. Read a story about the experience in this July 30 article from the Arizona Republic newspaper, written by staff writer Cathryn Creno.

As the great American (he called himself "The Great One") comedian, and host of the long running television show bearing his name, Jackie Gleason used to say...'How Sweet it is.'

Fresh & Easy Las Vegas, Nevada Metropolitan Region

New stores: Fresh & Easy Buzz has learned the next new Fresh & Easy Neighborhood Market in the Las Vegas, Nevada Metropolitan region will open on Aug. 21. That new store is at Horizon Ridge Parkway and Stephanie Street in Sin City. Tesco plans to open at least 10 new Fresh & Easy grocery markets in the Las Vegas Metro region between now and the end of the year.

Small-Format Food Retailing: The independent segment

In addition to covering, writing about and offering analysis on Tesco and its Fresh & Easy Neighborhood market USA venture and stores, Fresh & Easy Buzz also reports on, writes about and offers an analytical eye on what we call the small-format food and grocery retailing revolution going on in the U.S. and throughout other parts of the world.

Tesco is a leader in this revolution, both in the U.S. with Fresh & Easy but even more so in Europe, with its Tesco Express small-format combination grocery and convenience stores.

We believe a combination of current trends in the U.S., $4 and soon to be $5 a gallon gasoline, a suburban-to-urban migration pattern in many parts of the U.S., and the need to cut overhead by food retailers (meaning perhaps in many cases building smaller stores) because of the combination of soaring energy costs and high food inflation, offers a bright future for small-format (on average 5,000 -to- 25,000 square foot) food and grocery stores in the U.S. particularly.

Researcher, writer and broadcaster James Kunstler, who wrote the popular 1993 book "The Geography of Nowhere" about suburban and urban migration and related issues, believes suburbs are done for in the U.S., which of course if true would mean many people would become urban migrants. Read an interview with Mr. Kunstler here. There's also a link there to his website which contains a podcast from the author about suburban/urban issues.

The suburban-urban discussion is important to food retailing because an even small but significant migration by consumers to cities will mean the need to build smaller-format grocery stores, which as we know is already happening. In fact, most American urban neighborhoods, regardless of economic level, are currently underserved by food and grocery stores, which makes small-format stores a growth sector even without significant suburban to urban migration trends becoming real.

If suburban to urban migration in significant numbers becomes the case, it also means small-format retailers like Fresh & Easy, Aldi, Trader Joe's and the many other newcomers to the format (Wal-Mart, Safeway and the like) will be positioned to kick of a radical revolution in American food and grocery retailing.

Of course, that paradigm could shift as fast as it becomes reality. For example, maybe with a suburban to urban mass migration movement, Internet-based home grocery delivery will finally come into its own in the U.S.? Its all good food for thought; and strategic planning.

The New Corner Grocers

Speaking of small-format food and grocery retailing in the U.S., it's not just the big guys like Tesco, Aldi, Wal-Mart, SuperValu (Sav-A-Lot), Safeway and others who are either in the game or getting into it. The small, independent guy or gal, the entrepreneur and independent grocer, also are opening new small-format grocery stores throughout America.

The independent grocer, the pioneer of small-format food retailing in the U.S., never went away. Not by any means.

There are ten of thousands of successful multi and single store independent food and grocery store operators in America, and thousands more mom & pop shop and mini mart retailers, along with many more operating natural, specialty and gourmet foods stores. Despite the highly competitive supermarket and mass merchandiser chains in the U.S., the independent food and grocery retailing sector is alive and thriving in America.

Much of the new-wave of independent food retailing in the U.S. is in the small-format segment, where entrepreneurs are creating hybrid formats, mixing basic grocery stores with traditional convenience stores, fresh foods, specialty foods and other twists and variations that it takes an innovator (which usually means an independent) to come up with. And, many of these independents are beginning to open stores in urban neighborhoods in cities across America.

The Portland, Oregonian newspaper has a interesting piece in today's edition about two such independents in Portland, Oregon, both who have recently opened new small-format grocery stores and are looking to create their own respective niches in the market. Read the article here.

Downtown Denver, Colorado also is seeing a number of independents open small-format grocery stores in the city's core. These grocers include: Marczyk Fine Foods, Cook's Fresh Market and Tony's Market, which is the latest to locate in downtown Denver with what will be a 15,000 square foot food and grocery store. read more about what's happening in downtown Denver here.

Monday, July 21, 2008

Small-Format Food and Grocery Retailing in the USA and Abroad

Back to the future: Small-format food and grocery stores are "the original" format grocery store, and remain so even today in less-developed country's in the world. Pictured above is a circa early 1920's Loblaw grocery store. Loblaw today is Canada's number one food and grocery chain. Notice the signs on the store front: price, value and service remain just as important today as they did then.

From the Fresh & Easy Buzz Editor's Desk: Small-format food and grocery store retailing is "busting out all over" in the United States and throughout the world.

While there have always been small-format grocers, paticularly independents who invented the format, what makes it a sort of revolution today is that the world's largest chains--Wal-mart (Marketside), Carrefour (Carrefour Express), Tesco (Tesco Express and Fresh & Easy USA), SuperValu, Inc. (Sav-A-Lot), Aldi, Safeway Stores, Inc. ("The Market" format) and many others-- have created and are aggressively growing their small-format chains.

The food and grocery industry blog Natural~Specialty Foods Memo is currently running what it calls a "Small-Format Food Retailing Special Report", featuring a number of stories about small-format food and grocery retailing in the U.S. and globally.

Below are links to the current pieces the blog is running:

Small-Format Food Retailing Special Report: Global Small-Format Food and Grocery Retailing News and Notes

Small-Format Food Retailing Special Report: Waitrose to Create its Second Brand New Small-Format Chain This Year With Convenience-Oriented Format

Small-Format Food Retailing Special Report: No Frills, Small-Format Discount Grocer Aldi USA Preparing For Florida USA Store Launch

Small-Format Food Retailing Special Report: SuperValue's No Frills, Discount Sav-A-Lot Chain Looking For Big Growth in Two Eastern U.S. States

Wolfe's Market; A Case Study On Why Independent Grocers Continue to Survive and Even Thrive in the U.S. Despite Tough Odds

Monday, June 9, 2008

Breaking News and Analysis: German Small-Format Discount Grocery Chain Lidl is 'Coming to America' By 2012 Says Chief Executive Klaus Gehrig


German small-format discount grocery chain Lidl plans on joining its fellow "fighting tiger," price-focused German food retailing cousin Aldi by expanding into the United States, Fresh & Easy Buzz has learned.

In an interview published today in the German newsweekly Focus Magazine ("Trade: Lidl boss Klaus Gehrig will, despite the setbacks by scandals continue to grow--soon in the USA and Switzerland"), Klaus Gehrig, chief executive of Lidl's parent company Schwarz Gruppe, tells the publication: "We are now preparing to enter the U.S. market."

Gehrig tells Focus Magazine Lidl plans to enter the United States food and grocery retailing market by 2012, likely having its first stores in the states before that date.

The small-format grocery retailer's strategy is to significantly build-up its European business, including opening numerous new Lidl discount grocery stores in the region, and then move into the U.S. by 2012, Gehrig says in the interview.

Gehrig also says Lidl plans to have a significant grocery retailing presence in Switzerland with its small-format, price-impact grocery stores. He says the retailer is planning to open about 80 small-format Lidl stores in that nation.

In addition to its plans to grow significantly throughout Europe, including in Tesco's home turf of the United Kingdom where Lidl is becoming a major grocery retailing player, CEO Gehrig says Lidl plans to open 1,000 new stores in Germany, which would put it near German rival Aldi's store count of about 4,000 in the homeland.

Aldi and Lidl are strong competitors in Germany and in other parts of the world, like the UK, where both grocery chains have stores in the same markets. Therefore, it doesn't come as a surprise to Fresh & Easy Buzz that Lidl is going after Aldi at home in Germany and in Europe, where Aldi has become a major food and grocery discount retailing force, as is Lidl.

Aldi currently has about 900 of its small-format, limited assortment discount grocery stores in the U.S. and is growing its store count by 75 -to- 100 new stores a year for the next five years, according to an announcement Aldi USA, its American division, made late last year.

Lidl and parent company Schwarz Gruppe has been watching Aldi USA for a long time--Aldi first came to the U.S. in about 1975--as it has been watching Tesco since it opened its first small-format Fresh & Easy Neighborhood Market grocery stores in the Western U.S. beginning in November, 2007.

Schwarz Gruppe believes it does small-format, discount food and grocery retailing better than Aldi (and of course Aldi disagrees) in its Lidl stores, and it appears the grocery chain believes it can do well in the United States--which is a potentially lucrative market for international food retailers--so has decided to cast its lot across the Atlantic beginning shortly before or in 2012 when Gehrig says the German "fighting tiger" small-format, price-focused discount grocer plans to enter the U.S. market with its first stores.

There is no information as of yet regarding which regions of the U.S. Lidl plans to target initially. However, Aldi's current 900 stores are located in the Midwestern, Mid-Atlantic and eastern regions of the country.

Lidl could decide to start in one or all of those regions if it wants to go head to head against rival small-format discounter Aldi. Or it could pursue a Western U.S. strategy (or a combination strategy), taking on for example Tesco, which is focusing its Fresh & Easy small-format combination basic grocery and fresh foods grocery markets in the Western U.S. states of California, Arizona and Nevada at present.

Lidl's stores are different than Tesco's Fresh & Easy in that they put more of an emphasis on selling basic grocery items at discounted prices. Although, the Lidl stores in Germany and elsewhere offer some fresh and specialty foods, it isn't as much of a focus as with the Tesco Fresh & Easy stores. Lidl stores average 10,000 -to- 15,000 square feet.

The small-format Lidl discount grocery stores are best described as no frills, warehouse-style stores in design and merchandising philosophy. In fact, in many ways they are like lots of supermarkets from the 1970's and 1980's in the U.S. These stores used a no frills merchandising style which also included the "stack them high (grocery products) and sell them fast" philosophy, which was to fill the store aisles with lots of cut-case product stacks and sell the goods for cheap. High stacks, cheap prices, fast turnover.

Inside a Lidl small-format, no frills discount grocery store.

Lidl stores also employ what we call the "sell everything but the kitchen sink" in-and-out promotional merchandising strategy just like Aldi does. Lidl and Aldi stores sell everything from television sets, furniture, electronics, clothing, garden supplies and more on an in-and-out promotional basis, advertising the various items in their weekly advertising circulars at hot prices and stacking the goods high and selling them fast in the stores.

Take a look here at Lidl's current advertising newsletter which features bathroom goods like towels, along with Budweiser beer, Pepsi Cola, Ty-phoo brand Tea, Knorr brand sauces, calculators, woman's fashion items and other goods. Like we expect with Aldi, we just know a kitchen sink will show up one day in a Lidl newsletter advertisement.

However, at least half of Fresh & Easy's focus--a focus that's central to the chain's success--is on selling everyday grocery items at discount or affordable prices. Both Lidl, Aldi and Fresh & Easy also focus on store brands over national brands.

Although they are infants in terms of store count in the UK compared to the nation's major food retailing players, both Lidl and Aldi have recently been taking a small amount of market share away from Tesco there, where it's the leading food and grocery retailer with about a 31% share of the market. The two German discount grocery chains also have been taking share away from the UK's number two supermarket chain, Wal-mart-owned Asda, and number three, Sainsbury's.

Schwarz Gruppe, Lidl's parent company, which also owns the Kaufland retail chain based in Germany, is the sixth-largest food and grocery chain in the world, according to the research firm Planet Retail, which annually ranks the top global food and grocery retailing chains by annual sales and other criteria.

Annual sales for Schwarz Gruppe in 2007 was $70 billion dollars (~50 billion Euros), an increase of 5.8% over 2006. Lidl accounts for about $67.869 billion of that total (the rest being Kaufland), according to Planet Retail's latest estimates.

By contrast, Aldi is ranked by Planet Retail as the ninth-largest global retailer, with sales of $57,522 in 2007.

Wal-Mart is the world's largest retailer, followed by France's Carrfour, Tesco, Germany's Metro Group, U.S-based Kroger Co., and then Schwarz Gruppe, parent company of Lidl, at number six.

Schwarz Gruppe currently has its small-format Lidl discount grocery stores, about 8,580 in total to date, in the following nations: Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.

Like Aldi, which essentially operates the same small-format discount grocery store format throughout the world, with some customization depending on the national market, Fresh & Easy Buzz expects Lidl to do the same; to bring its basic Lidl format to the states and only to tweak and customize the merchandising mix based on U.S. consumer tastes and preferences like Aldi USA does.

In contrast, Tesco created what essentially was a special format for the U.S. with its Fresh & Easy grocery stores, in that Fresh & Easy is modeled after Tesco's popular European Tesco Express small-format stores, but parts company with those stores in the areas of design and overall merchandising mix, especially the emphasis on fresh, prepared foods. As such, Fresh & Easy qualifies as being a separate format from Tesco Express in our analysis.

Although 2012 is four years away, Lidl will inject much excitement and competition into what already is a small-format food and grocery retailing revolution happening in the United States.

For example, U.S-based SuperValu, Inc. now operates about 1,600 of its small-format Sav-A-Lot discount grocery stores in the U.S., and Aldi USA, as we mentioned, plans to grow its current 900 store base by up to an additional five hundred stores, for a potential total of 1,400 discount grocery markets, over the next five years.

Tesco hopes to have 150 of its small-format Fresh & Easy Neighborhood Market combination basic grocery and fresh foods stores open in California, Nevada and Arizona by the end of this year, with double that amount opened by the end of 2009, including its entering the new markets of Northern California (Bay Area and Sacramento Metro) and California's Central Valley.

Tesco's long terms plans with Fresh & Easy have included moving into Oregon and Washington State from Northern California and into additional states in the Western USA.

As Fresh & Easy Buzz has reported in the past, Tesco executives also have looked at opening Fresh & Easy stores in the Chicago, Illinois Metropolitan region and in parts of New York and Florida as part of its long term strategy.

Wal-Mart and Safeway stores also are now in the small-format food and grocery retailing business in the U.S. with their "The Market" and "Marketside" 15,000 square foot formats respectively. Safeway opened its first small-format store, "the Market by Vons," in Long Beach, California on May 15, and plans to open more in California and likely elsewhere in the numerous U.S. markets where it does business with its current 1,750 supermarkets.

Wal-Mart's Marketside, which are a combination basic grocery and fresh foods grocery store format similar to Tesco's Fresh & Easy, but with a difference in that the Marketside stores will prepare food right in-store and even have in-store seating for customers to eat-in, will start opening--the first of four initial stores--in the Phoenix, Arizona Metropolitan region this summer, perhaps as soon as July.

Numerous other retailer's are opening small-format grocery stores in the U.S., as we've reported here on Fresh & Easy Buzz.

Lidl is a seasoned, major global player though in small-format discount food and grocery retailing. Therefore, its announcement that it's coming to America is a very big deal, both for small-format grocery retailing (and all format retailers) in the U.S. in general, and for all of the retailers currently participating in the small-format food and grocery retailing arena in the U.S.

Lidl, which is currently embroiled in a bit of a scandal in Germany over using cameras to spy on its employees in locations like employee rest rooms, will need to avoid that behavior in the U.S. however. Such behavior not only is considered taboo in American business but can cause a company hundreds of millions of dollars in legal fees and employee settlements and enough bad press to sink it before it even starts.