The British Are Coming ... to Target: Chicago CityTarget to Include Pret A Manger Fresh-Prepared Foods Shop; Los Angeles, San Francisco and Seattle Likely

News/Analysis/Commentary

Fresh-prepared foods merchandising and retailing continues to get more interesting - and increasingly competitive - in the United States.

Today discount retailing giant Target Corp. announced it has inked a deal with the London, UK-based fresh-prepared foods retailer Pret A Manger to put one of its Pret shops in what will be one of Target's first four smaller-format (60,000-100,000 square-feet,) urban CityTarget stores - the store at the Sullivan Center in Chicago's Loop, which is set to open in July 2012. The Chicago CityTarget store will be about 100,000 square-feet.

Pret A Manger, which means "ready-to-eat" and has free-standing shops in New York City, Washington D.C. and Chicago in the U.S., along with in the UK and Hong Kong, prepares a variety of ready-to-eat  fresh foods daily in-store. Its offerings include sandwiches, salads, soups, sushi, meals, snacks, desserts and more. (See the menu here.)

San Francisco's Metreon Center, shown in the rendering above, is being completely remodeled to house the CityTarget store, which will take up the entire second floor of the center. The store, which will be about 100,000 square-feet, is set to open in mid-2012. The location is an excellent one geographically and demographically for a Pret A Manger shop. [Artist's rendering: Westfield Group.]

The other three CityTarget units, all on the west coast in downtown Los Angeles, San Francisco (in the Metreon Center in the South of Market District) and Seattle, are also set to open next year as well.

As we reported last year, Target also says it plans future CityTarget stores (10 total to start including the four above) in New York City, Boston, Miami, and Baltimore. [See - September 24, 2010: Target to Have 'P-fresh' Fresh Food & Grocery Markets in 850 Stores By 2011 End; First Smaller Urban Store Set For Seattle in 2012.]

All of the CityTarget stores will feature Target's "P-Fresh" food and grocery stores inside, which include an assortment of fresh produce, meats, perishables, frozen foods and packaged groceries.

"We believe Pret A Manger will help us provide guests in downtown Chicago with the exceptional, complete shopping experience they have come to expect from Target," Annette Miller, the retailer's senior vice president-grocery, said in making the announcement today. "Our Chicago CityTarget guests can pop in for a fresh sandwich or salad during their regular visits to our store for groceries or apartment essentials."

Target's announcement today about its partnership with the privately-held British fresh-prepared foods chain, which burger giant McDonald's once owned about a third of, was exclusive to the Chicago CityTarget store.

"We have no other plans in place today for adding Pret A Manger to other CityTarget stores, but we're excited for the potential for that over time," Miller said. "Pret A Manger doesn't have a presence on the West Coast today. That is one reason the partnership is just in the Chicago store."

However, earlier this year a good source told us Pret A Manger is looking to the West Coast, specifically San Francisco, Seattle and Los Angeles, three big cities with strong demographics that fit the retailer well (think demographics similar to those of Starbucks and Whole Foods Market) for its next strategic move.

The UK-based fresh-prepared foods retailer started out in the U.S. in 2000 in New York City, followed by launching in Washington D.C. (in 2009) and most recently (last year) in Chicago. There are currently 250 shops globally. Sales last year were about $530 million, according to Pret A Manager.

Therefore, based on the information we have, we expect to see what will be the store-within-a-store shops - the Pret A Manger in the Sullivan Center-Chicago CityTarget store will be about 2,500 square-feet - in the San Francisco, Los Angeles and Seattle CityTarget stores, if not right away when the units open next year, fairly soon after.

Soups, salads, sandwiches and drinks from Pret A Manger.

In our analysis the move is a smart one for both Target and Pret A Manager. It also could open the door for Target to add the fresh-prepared foods' shops in some of its Target discount stores where it's been adding the "P-Fresh" fresh food and grocery markets in west coast regions and neighborhoods that make sense, such as in parts of the San Francisco Bay Area, Southern California and metro and suburban Seattle, Washington.

Target is also opening a second store in San Francisco next year. That store will not be a CityTarget but instead an about 120,000 square-foot discount store. It will include a "P-Fresh" market inside. The location, in a small shopping center near the private, Jesuit-run University of San Francisco, has good demographics to support a Pret A Manger shop as well. The two stores will be Target's first in San Francisco.

Target has Starbucks units inside many of its stores. So in terms of demographics, one can look at the top-performing in-store Starbucks cafes and begin to get a good idea of which Target discount store locations might do well with Pret A Manger shops inside, should the partnership between the two retailers blossom beyond CityTarget.

Pret A Manger's prepared foods offerings fit well with the profile of the Target shopper, which is majority female, higher income as compared to Walmart shoppers, for example, and more upscale-oriented while still searching for value.

Therefore in our analysis this partnership has the potential to grow significantly. It gives target a high-quality and extensive fresh-prepared foods offering in its stores to go along with its "P-Fresh" markets while giving Pret A Manger a way to expand into new markets without having to acquire its own standalone shops, which can be an expensive proposition in places like San Francisco and Seattle.

This is a development worth watching closely, particularly since Target is adding "P-Fresh" units to hundreds of its about 1,762 U.S. discount stores (located in 49 states) each year.

Already, about half the units have the grocery markets inside. Over the next three years Target says it plans to have the fresh food and grocery offerings in up to 75% of its discount stores.

Having a fresh-prepared foods offering as a companion to "P-Fresh" in many of those stores has the potential to be a powerful one-two punch for Target, along with turning up the heat when it comes to fresh-prepared foods merchandising and retailing in the respective markets where it might add the Pret A Manger shops.

As a result, based on what we've learned from our sources, combined with what we learned earlier this year about Pret A Manger and its expansion desires and future plans, it's our analysis Target and Pret A Manger, although they plan to take the new partnership at a slow but steady pace, are already thinking far beyond the single store in Chicago, starting with the three CityTarget stores opening in Los Angeles, San Francisco and Seattle next year, and if all goes well looking far beyond that.

We could be seeing the makings of a very interesting Anglo-American food retailing partnership featuring London-based Pret A Manger ready-to-eat fresh food shops located inside selected Target stores. The debut will come in July of next year when the first one opens in the new smaller-format urban CityTarget store in Chicago.

Related Stories

January 13, 2011: Today's Target-Zellers Deal and 'The Neighbourhood Market'-'P Fresh' Food & Grocery Markets Connection

December 16, 2010: New Retail Center Would Bring Ralphs Supermarket, Target Store to South Los Angeles' Crenshaw Corridor

November 9, 2010: Bullseye: Target Goes From Zero-to-Eighty-Seven 'P-Fresh' Food Markets in Southern California in Under Two Years

October 11, 2010: Target Hits Once-in-Century Date Bulls Eye: Opens Ten New Stores On Sunday 10-10-2010

September 26, 2010: While Tesco's Fresh & Easy Neighborhood Market Postponed, Target Opened 42 'P-Fresh' Fresh Food and Grocery Markets in Northern California

September 24, 2010: Target to Have 'P-fresh' Fresh Food & Grocery Markets in 850 Stores By 2011 End; First Smaller Urban Store Set For Seattle in 2012

May 11, 2009: Target on Tap to Put Mini-Grocery and Fresh Foods Markets Into 100 Target Discount Stores This Year; Many More Likely to Come in 2010

November 19, 2009: Competitor News: Target Corp. Planning to Dramatically Expand Food and Grocery Offerings in All of its U.S. Target Discount Format Stores

July 9, 2008: Southern California Market Report: Five Supermarkets; A New Fresh & Easy, Wal-Mart and Super Target Will All Compete in Hesperia Food Retailing Rodeo

Today's Target-Zellers Deal and 'The Neighbourhood Market'-'P Fresh' Food & Grocery Markets Connection

Analysis/Commentary

Readers of Fresh & Easy Buzz know we frequently report on, write about, and analyze Minnesota-based retailer Target Corp., particular as it pertains to its fairly new fresh food and grocery initiative, "P-Fresh.

"We're avid and aggressive "Target Watchers."

Our coverage of Minneapolis-based Target includes an ongoing research project in which we've been tracking, identifying, reporting on and writing about the growth of the chain's in-store "P-Fresh" food and grocery markets, which the retailer has been adding to many of its 1,500-plus discount format stores in the U.S., beginning in 2009.

Target Corp. has two retail formats: Its discount stores, which are the majority of its units, and its SuperTarget format stores, which are similar in size to a Walmart supercenter and include a full supermarket inside, like Walmart's supecenter format.

Target, which is the second largest retailer in the U.S. after Walmart Stores, Inc., currently has "P-Fresh" fresh food and grocery markets inside about 350 of its U.S. discount format stores, and plans to add the markets to another 400 units this year. And, as we pointed out here in 2010, California is the leading U.S. state in terms of the number of its discount stores, out of the 350, Target has added the "P-Fresh" units inside of over the last nearly two years. Over 100 of the 350 "P-Fresh" units are in California.

Because we're avid and aggressive "Target Watchers" here at Fresh & Easy Buzz, the retailer's announcement today that it's buying leasehold interests in up to 220 Zellers discount store locations in Canada, for $1.85 billion, didn't come as a surprise to us in the least bit.

Zellers is a discount/mass-merchant store format that's similar to Target's discount store format.

Target CEO Gregg Steinhafel said in a statement today the retailer plans to open 100 -to- 150 stores across Canada in 2013 and 2014.

It will renovate some of the Zellers locations, at an estimated cost of more than $1 billion, he said. Other Target stores in Canada will be built from-the-ground-up. Target announced its plans to enter Canada last year. [You can read today's announcement from Target Corp. here. Zellers' parent company, Canada's Hudson's Bay Company (HBC), also issued a statement on the deal today here.]

No surprise

Why weren't we surprised by today's announcement? Because Target Corp.'s interest in Zellers, which is owned by Canada's oldest company, Hudson's Bay Company (HBC), isn't a recent phenomenon. Target looked into acquiring the entire Zellers chain, and had talks with HBC's management at least as far back as 2006-2007.

The discussions between the Target Corp. and HBC/Zellers folks obviously didn't result in a deal back then for a number of reasons. One reason being Target Corp. determined at the time that the timing wasn't right for it to either enter Canada or make such a major acquisition. Target announced its plans to enter Canada last year.

However, the relationships formed at that time continued, right up until now. And although no deal was done back then, Target didn't walk away from its research on and investigation in Zellers empty-handed.

Zellers' 'The Neighbourhood Market'

One of the things Target executives found interesting when they toured Zellers stores, was that the general merchandise retailer was testing a concept in a few of its stores called "The Neighbourhood Market," a fresh food and grocery store-within-a-store.

Zellers, which first tested its in-store markets in 2000-2001, currently has "The Neighborhood Market,"which ranges in size from about 5,000 -to- 10,000 square-feet depending on the particular store its in, in 90 of its discount stores, located in a variety of provinces in Canada. [Click here to see the locations of the Zellers stores with "The Neighbourhood Market".]

The Canadian retailer's policy over the last few years has been to add the food and grocery markets inside every new discount store it builds and every existing store it remodels, which is something is started doing in 2002.

Pictured above: A "P-Fresh" in-store food and grocery market, located in a Target discount store in California. Pictured Below: An in-store "The Neighbourhood Market," in a Winnepeg, Canada Zellers' store. Note: Take a look at the near-identical departmental circular ceiling signs, at the top in both photographs. Kissing cousins.
The in-store markets, which are located in the front of the stores, offer a limited assortment of fresh foods - produce, meats, baked goods, dairy/deli, prepared foods - and shelf-stable packaged food and grocery items, just like Target's "P-Fresh" and Tesco's 10,000 square-foot Fresh & Easy Neighborhood Market stores in the U.S., the first of which opened in November 2007. There are currently 156 Fresh & Easy stores in California, Nevada and Arizona. The Tesco Fresh & Easy stores are freestanding units, however, not stores-within-stores, like Target's and Zellers' concepts are.

Zellers had its "The Neighbourhood Market" concept inside a number of its discount stores in Canada well before 2007 (by 2003-2004), however. In fact, word is Tesco did some scouting around in Canada, as well as the research it did in the U.S., prior to creating Fresh & Easy Neighborhood Market.

Fact: Tesco's original name for the chain was "Fresh & Easy Community Markets." But the United Kingdom-based retailer changed "Community" to "Neighborhood" sometime in 2006-2007.

Observation: If you're wondering why Zellers uses the British spelling and French English-usage spelling of "Neighbourhood," rather than using the North American spelling, "Neighborhood," a little research into the origins of Zellers parent company, Hudson's Bay, which is Canada's oldest company and the largest general merchandise retailer in the country, among other things, will make the choice of spelling clear. Also: Although English is the majority language, Canada officially remains a dual (English-French) language nation.

Kissing cousins

Target opened its first "P-Fresh" in-store markets in mid-to-late 2009.

Zellers has been adding its "The Neighbourhood Market'" to its department stores at a fairly rapid pace over the last few years. It has the markets in 90 of its discount stores so far. [Click here to see a list of Zellers stores that include the fresh food and grocery markets.]

Target executives first saw Zellers' food and grocery concept up-close a few years ago. Also keep in mind that Minnesota, where Target Corp. is headquartered, is really close to Canada.

Target created its "P-Fresh" concept and initiative - a fresh food and grocery store-within-a-store inside their Target discount format stores - in late 2008 and launch it in 2009. The "P-Fresh "stores" are much larger than Zellers' in-store markets, nearly three times the size. Both retailer's markets feature the same product categories. Target though offers a much more extensive number of SKUs than does Zellers. But the model is identical.

Additionally, Target's in-store "P-Fresh" signage and related graphics look very close to what Zellers uses - and it was first, remember - with its "The Neighbourhood Market."

Armed now with the information in this story, If you go visit a Target discount store in the U.S. that has a "P-Fresh" inside, then go visit a Zellers store in Canada, with a "The Neighbourhood Market" inside - we bet you'll see the connection - and perhaps even say: "Kissing cousins, they are."

The deal

Target is a better overall retailer, including in the food and grocery segment - although Target has plenty of room to get better at grocery merchandising - than Zellers is.

Target's format and stores are also much better overall.

Zellers has been remodeling some of its discount stores in Canada over the last couple years. But many consumers in the country feel the retailer has become outdated, both in how the stores look and how they are merchandised. And the rapid growth of Walmart-Canada has taken a toll on Zellers, which before Walmart headed north from the U.S. was the first-choice of many Canadian shoppers. In many parts of Canada, Walmart-Canada has made Zellers the second...or even third choice for many Canadian shoppers.

Under the terms of the deal, Target plans to make payments to HBC/Zellers for the leases through 2011. Zellers will sublease the sites from Target and keep running stores under its own banner "for a period of time," Target and HBC/Zellers said in the statements today. A good translation of "for a period of time" is: Once Target takes over all of the Zeller's stores out of the 220 it intends to in the 2013-2014 time period, the Zeller's chain and banner will cease to exist in Canada or anywhere else.

In our analysis the deal is a good one both for Target and for HBC/Zellers. Canadians travel to the U.S. regularly because of the close proximity of the two countries. After all, you can drive from parts of Canada into parts of the U.S. - like Minnesota - faster than you can fly from the west coast to the east coast. Many are very familiar with Target.

And, of course, we aren't suggesting Target wants Zellers for its in-store food and grocery markets. They are merely part of the package. It's a back story - and a connection not mentioned in any of the many stories being published on the deal.

Kissing Cousins united

Lastly, now that you know about the Target-Zellers in-store fresh food and grocery market connection, we're betting you know what we're going to tell you next?

Well... It's simply that Target's "P-Fresh" fresh food and grocery markets are going to be in all or most of those up to 150 stores it plans to open in Canada in 2013-2014, including the Zellers stores it takes over, along with any stores it builds from scratch.

And now you know...'The rest of the Target Corp.-HBC/Zeller's deal story.' Or at least the back story, as it pertains to food and grocery merchandising and retailing.

Sprouts Farmers Market to Open Second Northern California Store in Roseville No Later Than Mid-April

Shoppers packed the Sprouts Farmers Market store, above, in Sunnyvale, California on grand opening day, June 2, 2010. The store is Sprouts' first in Northern California. It's also the grocer's milestone 50th store.

Phoenix, Arizona-based Sprouts Farmers Market, which we've reported (here) is in talks to acquire the Henry's Farmers Market chain from its owners, Apollo Global Management/Smart & Final, plans to open its second store in Northern California no later than mid-April of this year, Fresh & Easy Buzz has learned. The grocer hasn't yet announced the store's opening date.

The store, which we've reported on and written about previously, is in the Stanford Ranch shopping center in Roseville, California, which is in the Sacramento, California metropolitan area.

Sprouts is renovating a vacant building in the center, which previously was home to a Linens N' Things home furnishings soft goods store, for what will be its second farmers market-style format, natural and organic products-focused grocery store in the Northern California region.

Sprouts Farmers Market opened its first store in Northern California, a 30,865 square-foot market at 111 E. El Camino Real in Sunnyvale, on June 2, 2010. Sunnyvale is in the famed Silicon Valley, near San Jose, in the South Bay Area region. [See - June 5, 2010: Sprouts Farmers Market Opens First Northern California Store in Sunnyvale; Strikes Up Partnership With Local Non-Profit Farm

As we've previously reported, Sprouts has a third location, in the East Bay Area city of Dublin, which it also hopes to open in 2011.

The grocery chain is also searching for numerous additional store sites throughout Northern California, putting a focus on the San Francisco Bay Area and the Sacramento metropolitan region.

Timing is key

The timing of the early-to-mid April opening of the Sprouts Farmers Market store in Roseville co-insides with the opening date of Boulder, Colorado-based Sunflower Farmers Market's first Northern California store, which just happens to be in Roseville. The Sunflower Farmers Market stores are very similar in format and customer-positioning (not to mention name) to Sprouts Farmers Market.

The Sunflower Farmers Market store in Roseville is set to open in early 2011, according to CEO Mike Gilliland. [See - December 7, 2010: Sunflower Farmers Market Confirms Our Report It's Headed to Northern California; Roseville Store to Open April 2011 and December 9, 2010: Launching Sunflower Farmers Market Into Northern California is a 'Second Act' of Sorts For Founder-CEO Mike Gilliland.]

Like Sprouts, Sunflower Farmers Market has plans to open numerous stores in Northern California. Also like Sprouts Farmers Market, Sunflower is focusing its search for additional Northern California store locations in the Sacramento metropolitan and San Francisco Bay Area regions.

Henry's makes three - maybe

Smart & Final-owned Henry's Farmers Market, which opened its first store in Northern California at 8211 Laguna Boulevard in Elk Grove near Roseville in August 2010, has also been considering opening a store in Roseville. However, in light of the current negotiations between Sprouts Farmers Market and Henry's owners, private equity firm Apollo Global Management/Smart & Final, we can't report at this time that those plans remain in consideration.

Henry's Farmers Market currently has a proposal for a second Northern California store before the planning commission in Walnut Creek, California, which is in the Easy Bay Area, not far from Dublin, where Sprouts' planned third Northern California store is located. As far as we've been able to learn, those plans are still going forward at Henry's.

The planned Walnut Creek Henry's location would be a perfect fit for Sprouts Farmers Market, should the grocer's talks to acquire Henry's Farmers Market, which continue to go on this week, result in the privately-held, Arizona-based chain's buying Henry's.

New stores 'sprouting' up all over the region

The Sacramento region, including Roseville, is set to see an influx of new food retailing players and grocery stores this year, and into 2012.

In addition to new arrivals Sprouts, Henry's Farmers Market (summer 2010), which could soon be a combined Sprouts-Henry's, and Sunflower Farmers Market (in April), Tesco's Fresh & Easy Neighborhood Market currently has over 20 planned store sites in the Sacramento region (see our list here.) [Also see - November 22, 2010: Tesco's Fresh & Easy Neighborhood Market Plans Five New Stores in Northern California's Sacramento Region.]

Tesco's Fresh & Easy plans to open its first 12 stores in Northern California (none of the 12 are in the Sacramento region though) starting in March-April of this year. (click here for additional details on Fresh & Easy in Northern California.)

However, based on our most recent information, we don't expect the Tesco-owned fresh food and grocery chain to open any of its Sacramento-area stores until, at the earliest, late 2011. And it's possible the first stores in the region won't open until early 2012. [See - December 27, 2010: First Look at the Pacifica, California Fresh & Easy Neighborhood Market Store, One of the First Opening in Northern California in Early 2011 and December 14, 2010: Fresh & Easy Neighborhood Market to Open 5800 Third Street 'Flagship' Store in San Francisco Later in 2011 Than Originally Announced.

Additionally, Whole Foods Market, which has a store in Roseville and one in Sacramento, plans to open its third store in the Sacramento metro region this year, in Folsom.

Whole Foods is also scouting for additional store sites in the Sacramento region as part of a major new store growth initiative for Northern California, which its been undertaking for a few years, and accelerated in 2009-2010. [See - May 9, 2010: A Whopping 15 of Whole Foods Market's 41 New Stores in Development are in California - And Nine of The 15 Are In Northern CA

Further, as we reported earlier today, Walmart is close to acquiring its first smaller-format store location in Northern California, at Highway 65 and Second Street in the city of Lincoln, which is near Sacramento, and has plans to grab additional sites in the Sacramento region for the small-supermarket-style food and grocery stores. [See - January 10, 2011: Walmart 'Gets Real' With Smaller-Format Grocery Store Initiative in California; First Stores On Tap.]

One of the numerous Sacramento-area Fresh & Easy Neighborhood Market store sites is in Lincoln. Additionally, Tesco has two future Fresh & Easy stores planned for Elk Grove, where Henry's Farmers Market opened its Northern California flagship store in August 2010. [See - August 17, 2010: Henry's Farmers Market 'Beats' Fresh & Easy Neighborhood Market to Northern California Despite Multi-Year Head Start; Elk Grove Store Opens Tomorrow.]

Add to the mix popular discount retailer Target Corp., which is focusing aggressively on the Sacramento region with its "P-Fresh" food and grocery store initiative in Northern California. Target currently has "P-Fresh" grocery markets in 12 of its discount format stores in the Sacramento area, including in Elk Grove, Roseville and Lincoln, and has plans to add the markets inside additional general merchandise stores in the region this year. [See our September 26, 2010 story for details on Target's "P-Fresh" in Northern California: While Tesco's Fresh & Easy Neighborhood Market Postponed, Target Opened 42 'P-Fresh' Fresh Food and Grocery Markets in Northern California.]

Locally-based and family-owned supermarket chain Raley's, which has its corporate headquarters in West Sacramento, California, is the market share leader in the Sacramento region, followed by another family-owned chain, Modesto, California-based Save Mart Supermarkets, which operates supermarkets under its Lucky banner and discount warehouse stores under its FoodMaxx banner in the region. Safeway Stores, Inc., which is headquartered in the East Bay Area city of Pleasanton, about 90 minutes from Sacramento, is a close third in market share rankings in the Sacramento metro market, although its number one in all of Northern California.

Raley's, which has 134 stores and about $3.4 billion in annual sales, operates stores under the Raley's (super stores), Bel-Air (supermarkets) and Food Source (discount warehouse stores) in the Sacramento market region.

Sprouts' 'sprouting' new stores

Sprouts Farmers Market, which has 54 stores in Arizona, Colorado, California and Texas, currently has five new stores set to open this year. More new locations are set to be announced later this year.

In addition to the Roseville, California Sprouts market opening in April 2011, the four other announced new stores set to open this year are in Southern California - Westlake Village and Redondo Beach - and Texas - Fort Worth and Carrollton.

The Forth Worth store, which is at 4650 SW Loop 820 in the Overton Park Plaza shopping center, is set to open this month, on Wednesday, January 26.

Of course, if the discussions with Apollo Global Management/Smart & Final over acquiring the 46-store Henry's Farmers Market chain result in a deal for Sprouts Farmers Market, the Arizona-based chain, owned by members of the Boney family, the same family that started the Henry's chain, will nearly double its store count to over 100 units.

The Henry's Farmers Market stores are in California and Texas. The California stores - 36 in Southern California and one unit in Northern California - operate under the Henry's Farmers Market banner. The nine stores in Texas are under the Sun Harvest Farmers Market banner.

Meanwhile, regardless of which direction the deal negotiations end up going - they're looking positive for a deal right now, according to our sources - regarding a possible Henry's Farmers Market acquisition by Sprouts, the Arizona-base chain plans to continue to grow its store-count significantly in Northern and Southern California, along with in Texas (current major focus, along with California), Arizona and Colorado - plus potentially adding a couple new Western U.S. states - over the next few years.

Reader Resource

>Read our 2010 'Northern California Market Region Special Report' series here for a current primer on food and grocery retailing in the region. See the numerous linked stories at the end of the piece at the link.

Veteran Grocer Harley DeLano's 'DeLano IGA Markets' Chain On the Verge of Closure in San Francisco Bay Area

Pictured above is the DeLano's IGA Market store at 207 Flamingo Road in Mill Valley, California. It's one of the eight Cala Foods/Bell Market stores Harley Delano and his son Dennis bought from Kroger Co. in 2006. [Photo Credit: Jay Masunaga.]

Breaking Buzz
Northern California Market Region Special Report

A second multi-store independent grocer in the San Francisco Bay Area, Marin County-based Delano's IGA Markets (Delano Retail Partners LLC), is on the verge of going out of business, Fresh & Easy Buzz has learned.

The DeLano's problems come just a couple months after one of the oldest multi-store independent grocers in the Bay Area, PW Markets which was founded in the 1940's by the late Joey Franco, closed its doors, sighting competitive pressures in a tough economy as the reason for going out of business. PW Markets, which until a few years ago operated 11 stores in the Bay Area, continued to be run by members of the Franco family until calling it quits this summer.

DeLano's IGA Markets, which operates six stores in San Francisco and nearby Marin County, is majority owned by grocery retailing veteran Harley Delano, who was president of Kroger Co.-owned Cala Foods/Bell Markets from 1990 to 1999, and his son Dennis, who's logged three decades in the food and grocery retailing industry.

Harley Delano, the chairman and CEO of DeLano IGA Markets, retired from his position at Cala/Bell in 1999/2000. The senior DeLano, who's in his early 70's, has over a half century of experience as a grocer, most of it in California.

The DeLano's also own and operate a seventh store in Davis, California, near Sacramento. The Davis store, Westlake IGA Market, which is the grocer's newest unit and was opened in September 2009, and a store in the Marin County city of Fairfax, Fairfax IGA, operate under the "Hometown IGA" rather than "DeLano's IGA" banner.

The Davis store is located in the Westlake Plaza shopping center in the western part of the city, which is home to the University of California at Davis. It's a small-format (11,000 square-foot) neighborhood grocery store. A local group called Davis Advocates for Neighborhood Groceries spent at least three years trying to find a grocer to go in the location. Among the retailers that considered putting a store at the site was Tesco's Fresh & Easy Neighborhood Market, which looked closely at the location in 2007 but decided against it.

In 2006 the DeLano's bought eight Cala Foods and Bell Market stores in San Francisco and Marin County from Kroger Co., which formed the basis of the DeLano IGA Markets chain. Having run the chain just a few years earlier before retiring in 2000, DeLano knew the stores well.

Since then Kroger has either closed or sold all of its remaining Cala Foods and Bell Markets stores, which numbered over 20, in the Bay Area, except for a single unit on Hyde Street in San Francisco. That store is slated to close either at the end of this year or sometime in 2011. Cala/Bell was a long time privately-held grocery chain in the Bay Area. Kroger acquired it in the 1980's.

The DeLano's have sold two of the original eight stores aquired from Kroger in 2006.

Here's what we know about DeLano IGA Market's troubles:

>Two stores to close any day now: The DeLano's have told employees at two of the San Francisco stores, 27th Avenue and Geary in the Richmond District and 18th Street in the Castro District, that the stores will be closed soon. An employee at one of the stores, who's a Fresh & Easy Buzz reader, says inventory in the stores is not being replenished and store hours have been reduced. He said the word is the doors will be closed once all of the existing inventory is sold. He said the closures could come as early as next week.

>Sale or Bankruptcy: Sources tell us DeLano IGA Market's problem's goes far beyond the closing of the two San Francisco stores. The sources say the grocer has been dealing with serious financial difficulty since at least mid-2009. DeLano's IGA Markets closed a store in the Marin County city of Tiburon in December of last year, for example. It's second since buying the eight stores from Kroger Co. on 2006.

We're told DeLano's is looking at two options. First, its hoping to sell the chain, or at least a few of the stores, to another grocer. Our sources tell us the DeLano family is in discussions with the owners of multi-store independent grocer Mollie Stone's Markets, which is based in Marin County, about acquiring some of the stores. Mollie Stone's has eight stores.

Based on demographics - Mollie Stone's Markets operates upscale, specialty-oriented grocery stores - in our analysis the grocer would be interested in just a couple to a few of the Bay Area stores, specifically the units in Mill Valley (pictured at top) and in the Castro District (4201 18th Street) in San Francisco, and perhaps the Fairfax unit. The demographics of the Davis store are fairly strong for the Mollie Stone format. But the grocer doesn't operate any stores outside the Bay Area, although that doesn't mean it might not be interested in doing so if the opportunity and deal were right. Davis is about 90 minutes from the grocer's headquarters in Mill Valley.

The second option would be for the DeLano's to file bankruptcy. It's unclear though, according to our sources, if the grocer has the cash on hand, or would have access to enough capital, to file for a Chapter 11 proceeding, which would allow it to reorganize operations and keep some of the stores in operation. The alternative would be a filing in which the grocer closes all the stores and goes out of business, and its assets are liquidated to pay off some or all of its creditors. The latter is the most probable filing, according to our sources.

>More Store Closures: Inventory levels in a number of the other DeLano IGA Markets, besides the two we report are closing, is low as of yesterday. According to our sources, many of the stores have abnormal out-of-stocks, particularly in the fresh and perishable foods categories. This development lends further evidence that the entire chain is in trouble and is headed for closure - or some form of limited acquisition.

>Website Down: The DeLano's IGA Markets website (delanomarkets.com) has been down (as in taken down) since at least yesterday, to our knowledge, and perhaps longer than that. The prolonged duration of having the website down, which has been a reliable one in the past in our experience, taken with the other information we are reporting, suggests something more than the closure of just two stores is going out with the grocer.

Interestingly, the website for the Davis and Fairfax stores, which are under the Hometown IGA rather than DeLano's IGA banner and have a separate online site, remains up. We're told by sources that the DeLano's own the Davis and Fairfax stores under a different corporate structure (not under Delano Retail Partners LLC), which might explain why one website is down and the other remains up. However, we haven't been able to verify that information as of yet.

>Bottom Line: Based on the information we presently have, it looks like DeLano IGA Markets will soon be out of business, or at a minimum shrunk considerably in size. Some of the stores could be bought by Mollie Stone.

The six DeLano's stores in San Francisco and Marin County that fly the IGA banner are smaller-format conventional supermarkets. The markets range in size from slightly under 10,000 square-feet to slighty over 20,000 square-feet.

The six stores are merchandised based to a certain extent on neighborhood demographics. For example, the stores on Mission Street and West Van Ness in San Francisco have expanded offerings of Hispanic foods because of the high percentage of Latino consumers who live in the neighborhoods. In contrast, the store in Marin County's Mill Valley (pictured at top) has expanded selections of organic and specialty foods because the area's high-income and highly educated residents are big consumers of such products. For example, Whole Foods Market has two stores in Mill Valley, which has a population of just 14,000. The stores do draw shoppers from nearby communties though.

As a price-competitive strategy, Delano's IGA Markets has been doing double couponing in the stores, which is something Harley Delano picked up from his years at Ralphs, which used the promotional vehicle for decades in Southern California until ending it some years ago. Under the ongoing promotion, the stores double the face value of each manufacturers' cents-off coupon (a 50 cent coupon gets a $1 discount) submitted by customers at checkout.

Independents under pressure

The closure of PW Markets a couple months ago, along with the current problems facing Delano's IGA, point up the growing competitive food and grocery retailing market in Northern California and the San Francisco Bay Area specifically.

For example, as as we've been reporting on and writing about since April of this year in our 'Northern California Market Region Special Report' series (see the linked stories at the end of this piece), a number of new grocery chains are entering the San Francisco Bay Area.

Privately-held Arizona-based Sprouts Farmers Market opened its first store in the South Bay Area earlier this year, and has many more units planned. Sprouts currently has over 50 stores. It's putting a major 2011-2012 focus on Northern California and the Bay Area, which is home to nearly seven million residents. [See - June 5, 2010: Sprouts Farmers Market Opens First Northern California Store in Sunnyvale; Strikes Up Partnership With Local Non-Profit Farm.]

Additionally, Southern California-based Henry's Farmers Market, which is owned by Smart & Final, opened its first store in Northern California earlier this year. The store is in Elk Grove, near Sacramento. Henry's plans to open its first Bay Area unit in Walnut Creek next year. Like Sprouts, it has additional stores planned for the region. [See - August 17, 2010: Henry's Farmers Market 'Beats' Fresh & Easy Neighborhood Market to Northern California Despite Multi-Year Head Start; Elk Grove Store Opens Tomorrow. Also see links to other stories at the August 17 piece.]

Further, Tesco's Fresh & Easy Neighborhood Market plans to open numerous stores in Northern California beginning early next year. The majority of its first batch of stores in the region will be in the nine-county San Francisco Bay Area. [See - November 5, 2010: Fresh & Easy Neighborhood Market Queuing Up Three Additional Stores in Northern California For Early-to-Mid 2011 Openings.]

Not to be left out, Sunflower Farmers Market, which operates stores similar in format to Sprouts and Henry's, is also entering Northern California. It's first store is set for Roseville, California, which is near Sacramento. Sunflower is also scouting for locations in the San Francico Bay Area. [See - September 22, 2010: Sunflower Makes Three: Sunflower Farmers Market's First Northern California Store Will Be in Roseville.]

And the big guns, Walmart Stores and Target Corp., the two-largest discount retailers in the U.S., are also putting a serious focus on the Bay Area. As we reported in this story - Walmart has plans to open a number of smaller-format food and grocery-focused stores in the San Francisco Bay Area over the next couple years. And Target is making the region a major focus for its store-within-a-store "P-Fresh" fresh food and grocery markets. [See - July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store; and September 26, 2010: While Tesco's Fresh & Easy Neighborhood Market Postponed, Target Opened 42 'P-Fresh' Fresh Food and Grocery Markets in Northern California.]

Also significant, Whole Foods Market and Trader Joe's are also expanding considerably in the Bay Area, opening numerous new stores, with plans to open more units over the next couple years. [See - May 9, 2010: A Whopping 15 of Whole Foods Market's 41 New Stores in Development are in California - And Nine of The 15 Are In Northern CA.]

And not to be left out, Safeway Stores, Inc., which is the clear food and grocery market share leader in the San Francisco Bay Area, followed by Modesto, California-based Save Mart's Lucky chain, is remodeling and expanding the size of many of its existing stores in the region, along with opening new stores, even though it has nearly 200 stores in the nine-county Bay Area. [See - July 25, 2010: Safeway to Start Construction on New Pleasanton, California Flagship Store Soon; Thanksgiving 2011 Target Opening.]

Numerous key multi-store independent grocers, such as Mollie Stone's Markets, Lunardi's, Andronico's, Zanotto's, Draeger's and others continue to survive, although none have been thriving over the last few years, in the San Francisco Bay Area despite the increased chain competition and difficulty gaining access to capital because of the ongoing credit and lending crisis, which has hurt many privately-held independents that previously had ready-access to lines of credit but who have found that access seriously limited since 2008. But the increased chain competition and persisting credit market challenges, along with the fact many more shoppers in the region are today focused on price than was the case only a couple years ago, will make it more difficult for these and other independents - which have in significant measure been the innovators and trend-setters in the San Francisco Bay Area - in the year ahead.

The Series: Northern California Market Region Special Report

November 22, 2010: Tesco's Fresh & Easy Neighborhood Market Plans Five New Stores in Northern California's Sacramento Region

November 8, 2010 - Fresh & Easy Neighborhood Market's '5800 Third Street' Northern California 'Flagship' Store in San Francisco is Taking Shape

November 5, 2010: Fresh & Easy Neighborhood Market Queuing Up Three Additional Stores in Northern California For Early-to-Mid 2011 Openings

November 3, 2010: Tesco's Fresh & Easy Neighborhood Market Plans New Store in Northern Central Valley, California City of Ceres

November 1, 2010: Tesco's Fresh & Easy Neighborhood Market Planning to Build its First Store in Northern California City of Brentwood

October 30, 2010: Raley's Launches New 'Raley's TO GO' Pre-Packaged, Refrigerated Fresh-Prepared Foods Line

October 27, 2010: Save Mart CEO Bob Piccinini Poised to Make it to the 'Bigs' as Member of Golden State Warriors' Ownership Group

September 26, 2010: While Tesco's Fresh & Easy Neighborhood Market Postponed, Target Opened 42 'P-Fresh' Fresh Food and Grocery Markets in Northern California

September 22, 2010: Sunflower Makes Three: Sunflower Farmers Market's First Northern California Store Will Be in Roseville

September 22, 2010: Tesco's Fresh & Easy Neighborhood Market Planning A New, Third Store in San Jose, California

September 22, 2010: Fresh & Easy Neighborhood Market Plans to Open Two Additional Stores in Northern California in Early 2011

September 21, 2010: A Look Inside Whole Foods Market's Newest Store, A Mall Location in Santa Rosa, California

September 20, 2010: About Today's Walmart Stores, Inc. Smaller Stores Media Frenzy: We Scooped it On July 6, 2010

September 19, 2010: Whole Foods Market Gives Itself A 30th Birthday Present: 299th Store Opens This Week in Santa Rosa, California

September 18, 2010: Keep On Truckin' - Whole Foods Market Celebrates 30 Years This Weekend

September 14, 2010: Eight Plus One: Napa Unit Added to Eight Fresh & Easy Neighborhood Market Stores Opening in Northern CA in Early 2011

September 5, 2010: BevMo Chain Ends Full Time Employment For Store Workers; They Say No Way and Join With UFCW Union to Demand 'A Better BevMo'

September 3, 2010: How the California Grocers Association and its Members Can Snatch Victory From the Jaws of the Defeat of California's Plastic Bag Ban

August 25, 2010: Going Rural: New Fresh & Easy Neighborhood Market Store Planned for Sutter Creek in Northern California

August 23, 2010: Hybrid 'Good Eats' Market-Cafe From Raley's CEO Michael Teel & Company Opens Today in Sacramento CA

August 22, 2010: The Insider: Challenges & Opportunities: Tesco's Fresh & Easy Neighborhood Market Will Supply its Northern CA Stores From its Riverside County DC in Southern CA

August 21, 2010: April 2010 Prediction Correct: February 2011 Target to Open First Eight Fresh & Easy Neighborhood Market Stores in Northern California

August 19, 2010: Tesco Will Open its First Eight Fresh & Easy Neighborhood Market Stores in Northern California in 'Early 2011.'

August 17, 2010: Henry's Farmers Market 'Beats' Fresh & Easy Neighborhood Market to Northern California Despite Multi-Year Head Start; Elk Grove Store Opens Tomorrow

July 29, 2010: Tesco's Fresh & Easy Neighborhood Market Putting Together List of Managers Interested in Transferring to Northern California

July 25, 2010: Safeway to Start Construction on New Pleasanton, California Flagship Store Soon; Thanksgiving 2011 Target Opening

July 22, 2010: 'The Insider' - After Four Years in the High Weeds in Northern & Central California, Kroger Co. is Emerging to Grow its Foods Co Chain

July 21, 2010: Vacant Fresh & Easy Neighborhood Market Store in Pacifica, California Has the City's Mayor in a Pickle

July 18, 2010: 'The Insider' - When it Comes to Northern California - its Competitors are Rome Burning and Tesco's Fresh & Easy Neighborhood Market is Nero Playing the Fiddle

July 14, 2010: Tony Bennett Has Nothing on Whole Foods Market When it Comes to Loving San Francisco...That City By the Bay

July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store

June 28, 2010: Smart & Final to Open its New Format SmartCo Foods Stores in California and Arizona

June 26, 2010: Tesco Planning to Announce in July When First Northern California Fresh & Easy Neighborhood Market Stores to Open

June 14, 2010: Newly-Named Whole Foods Market CO-CEO Walter Robb Comes Full Circle With the Opening of the New Store in Mill Valley CA

June 5, 2010: Sprouts Farmers Market Opens First Northern California Store in Sunnyvale; Strikes Up Partnership With Local Non-Profit Farm

May 29, 2010: Going Rural: Fresh & Easy Neighborhood Market to Build First Store in Los Banos, California

May 28, 2010: First Phase of Fresh & Easy Neighborhood Market-Anchored Condo Development in San Francisco's Bayview Set For Completion in June

May 9, 2010: A Whopping 15 of Whole Foods Market's 41 New Stores in Development are in California - And Nine of The 15 Are In Northern CA

May 8, 2010: Sprouts, and Likely Henry's to Beat Fresh & Easy to Northern California Despite it's Big Head Start

May 6, 2010: Going Smaller & Getting 'Hybrid': Walmart's Smaller Supercenter in Vacant Retail Buildings Strategy Began in 2008

April 19, 2010: Tesco Debating Whether to Launch Fresh & Easy Into Northern California This Fiscal Year... or Wait

[Also: click here , here and here for a selection of past stories on Fresh & Easy and Northern Calfornia.]

Bullseye: Target Goes From Zero-to-Eighty-Seven 'P-Fresh' Food Markets in Southern California in Under Two Years

Southern California Market Region Report

[Editor's Note: Fresh & Easy Buzz published Part 1 of our Target "P-Fresh" research report on September 26, 2010 - While Tesco's Fresh & Easy Neighborhood Market Postponed, Target Opened 42 'P-Fresh' Fresh Food and Grocery Markets in Northern California - focusing on Northern California. Part 2 below focuses on the Southern California region.]

Can you guess the name of the retailer that's opened more new food and grocery "markets" in Southern California over the last 18 months than any of its competitors, and has managed to do so without opening more than a handful of actual new stores?

The answer: Target Corp.

Over the last 18 months, Minneapolis, Minnesota-based discount retailer Target has opened 87 of its 10,000-12,000 square-foot "P-Fresh" store-within-a-store fresh food and grocery markets inside 87 of its discount format stores throughout Southern California.

Target currently has 141 discount format stores in Southern California, which means, if it chooses, the retailer still has 54 existing units available to add additional "P-Fresh" fresh food and grocery markets in.

There are seven SuperTarget combination food-grocery-general merchandise stores in Southern California. The stores are similar to a Walmart supercenter in terms of product selection.

Target operates 246 stores in California and 1,752 stores in the U.S. The majority are discount format units.
Target plans on installing "P-Fresh" markets (pictured above) in a number of those remaining 53 Southern California discount format stores by the end of 2011, along with including the 10,000-12,000 square-foot fresh food and grocery markets in most if not all of the new discount format stores it opens in the region.

For example, on October 10, Target opened 10 new discount stores nationally. Two of the 10 new stores are located in Southern California - in Azuza and Simi Valley. Both include "P-Fresh" markets. [See - October 11, 2010: Target Hits Once-in-Century Date Bulls Eye: Opens Ten New Stores On Sunday 10-10-2010.]

Target is also developing one of its new-prototype, smaller-format stores in the 7+Fig mall in downtown Los Angeles.

The urban Target store, which will be about 90,000- 100,000 square-feet, will have a heavy emphasis on food, groceries and household basics, according to John Griffith, Target's executive vice president of property development. The store will be located in a combined space formerly occupied by Macy's and Bullock's department stores.

Target's discount format stores average about 130,000 square-feet. It's combination food and general merchandise SuperTarget stores are in the 175,000 square-foot range.

The downtown Los Angeles store is the second urban unit announced by Target. The first will be in Seattle, Washington. Both stores are set to open in 2012, according to Griffith.

In late September, 2010, as we reported in this story - September 24, 2010 - Target to Have 'P-fresh' Fresh Food & Grocery Markets in 850 Stores By 2011 End; First Smaller Urban Store Set For Seattle in 2012 Target Corp. said it plans to have "P-Fresh" fresh food and grocery markets in 850, more than half, of its U.S. discount format stores by the end of 2011.

As a point of comparison, Target's 88 "P-Fresh" store-within-a-store units, which it's opened over the last 18 months, gives it nearly the same amount of fresh food and grocery "units" in Southern California as Tesco has with its current 92 stand-alone Fresh & Easy Neighborhood Market stores.

Tesco has opened the 93 Southern California Fresh & Easy units over a three-year period, starting with the first batch of stores it opened in the region in November 2007. There are 92 Fresh & Easy stores in Southern California. A store in Moreno Valley was closed this month. The Fresh & Easy markets average about 10,000 square-feet, very similar in size to Target's "P-Fresh" in-store markets.

Going beyond the comparison between Target and Tesco's Fresh & Easy to the larger Southern California region itself, Target Corp., with its 88 "P-Fresh" in-store markets, and Tesco, with its 92 small-format Fresh & Easy Neighborhood Market stores, have combined added the equivalent of 180 new 10,000 square-foot grocery stores to the region since late 2007. That's a whole lot of new grocery stores over a three year period, even for vast Southern California.

Further, the additional food and grocery retailing space added by Target and Tesco's Fresh & Easy is in addition to all of the new stores opened by the region's other food retailers - Kroger, Safeway, Walmart, Costco, Trader Joe's, Stater Bros., Albertsons, Whole Foods Market, Sprouts Farmers Market and numerous others - over the last three years.

To put it mildly, growing and intense hyper-competition is on the food and grocery retailing menu in Southern California. And Target Corp., which less than two years ago had only a scant few stores selling fresh food and groceries in the region, is on its way to becoming a player in Southern California.

Related Stories

October 11, 2010: Target Hits Once-in-Century Date Bulls Eye: Opens Ten New Stores On Sunday 10-10-2010

September 26, 2010: While Tesco's Fresh & Easy Neighborhood Market Postponed, Target Opened 42 'P-Fresh' Fresh Food and Grocery Markets in Northern California

September 24, 2010: Target to Have 'P-fresh' Fresh Food & Grocery Markets in 850 Stores By 2011 End; First Smaller Urban Store Set For Seattle in 2012

May 11, 2009: Target on Tap to Put Mini-Grocery and Fresh Foods Markets Into 100 Target Discount Stores This Year; Many More Likely to Come in 2010

November 19, 2008: Competitor News: Target Corp. Planning to Dramatically Expand Food and Grocery Offerings in All of its U.S. Target Discount Format Stores

Below are the 87 Southern California Target discount stores with "P-Fresh" fresh food and grocery markets inside:

Anaheim
101 S Euclid St
Anaheim, CA 92802

Anaheim Hills
8148 E Santa Ana Canyon Rd
Anaheim, CA 92808

Azusa
809 N Azusa Ave
Azusa, CA 91702

Baldwin Park
3100 Baldwin Park Blvd
Baldwin Park, CA 91706

Brea
855 E Birch St
Brea, CA 92821

Buena Park
7530 Orangethorpe Ave
Buena Park, CA 90621

Burbank
1800 W Empire Ave
Burbank, CA 91504

Los Angeles Topanga
6700 Topanga Canyon Blvd
Canoga Park, CA 91303

Carson
651 W Sepulveda Blvd
Carson, CA 90745

Carson North
20700 S Avalon Blvd Ste 750
Carson, CA 90746

Cerritos
20200 Bloomfield Ave
Cerritos, CA 90703

Cerritos West
11525 South St
Cerritos, CA 90703

Chula Vista Broadway
1240 Broadway
Chula Vista, CA 91911

Chula Vista East
910 Eastlake Pkwy
Chula Vista, CA 91914

Compton-Rancho Dom
1621 S Alameda St
Compton, CA 90220

Costa Mesa
3030 Harbor Blvd Ste A
Costa Mesa, CA 92626

Culver City
10820 Jefferson Blvd
Culver City, CA 90230

Culver City South
6000 Sepulveda Blvd
Culver City, CA 90230

Cypress
6835 Katella Ave
Cypress, CA 90630

Diamond Bar
747 Grand Ave
Diamond Bar, CA 91765

Duarte
1050 Huntington Dr
Duarte, CA 91010

El Cajon
250 Broadway
El Cajon, CA 92021

Rancho San Diego
2911 Jamacha Rd
El Cajon, CA 92019

Escondido
1280 Auto Park Way
Escondido, CA 92029

Fullerton South
200 W Orangethorpe Ave
Fullerton, CA 92832

West Fullerton
1893 W Malvern Ave
Fullerton, CA 92833

Gardena
2169 W Redondo Beach Blvd
Gardena, CA 90247

Glendale
2195 Glendale Galleria
Glendale, CA 91210

Granada Hills
11133 Balboa Blvd
Granada Hills, CA 91344

Hawthorne
2700 W 120th St
Hawthorne, CA 90250

Huntington Beach East
9882 Adams Ave
Huntington Beach, CA 92646

Inglewood
3471 W Century Blvd
Inglewood, CA 90303

Irvine
3750 Barranca Pkwy
Irvine, CA 92606

Irvine North
13200 Jamboree Rd
Irvine, CA 92602

Irvine Spectrum
115 Fortune Dr
Irvine, CA 92618

La Habra
1000 W Imperial Hwy
La Habra, CA 90631

Grossmont
5500 Grossmont Ctr Dr
La Mesa, CA 91942

Laverne
2462 Foothill Blvd
La Verne, CA 91750

Lake Elsinore
18287 Collier Ave
Lake Elsinore, CA 92530

Lakewood Center Mall
141 Lakewood Center Mall
Lakewood, CA 90712

Long Beach Bellflower
2270 N Bellflower Blvd
Long Beach, CA 90815

Long Beach NW
6750 Cherry Ave
Long Beach, CA 90805

Los Angeles
3535 S La Cienega Blvd
Los Angeles, CA 90016

Los Angeles Eagle Rock
2626 Colorado Blvd
Los Angeles, CA 90041

Los Angeles Eagle Rock
2626 Colorado Blvd
Los Angeles, CA 90041

Mission Viejo
24500 Alicia Pkwy
Mission Viejo, CA 92691

Mission Viejo N
25601 Jeronimo Rd
Mission Viejo, CA 92691

Natl Cty Pl Bonita
3060 Plaza Bonita Rd
National City, CA 91950

Northridge
8840 Corbin Ave
Northridge, CA 91324

Northridge
8999 Balboa Blvd
Northridge, CA 91325

Norwalk
10600 Firestone Blvd
Norwalk, CA 90650

Norwalk East
12051 Imperial Hwy
Norwalk, CA 90650

Oceanside
2255 S El Camino Real
Oceanside, CA 92054

Orange
2191 N Tustin St
Orange, CA 92865

Pasadena
777 E Colorado Blvd
Pasadena, CA 91101

Pasadena East
3121 E Colorado Blvd
Pasadena, CA 91107

Pico Rivera
8800 Whittier Blvd
Pico Rivera, CA 90660

Rancho Santa Margarita
30602 Santa Margarita Pkwy
Rancho Santa Margarita, CA 92688

Redondo Beach
1601 Kingsdale Ave
Redondo Beach, CA 90278

Rosemead
3600 Rosemead Blvd
Rosemead, CA 91770

Puente Hills
17751 Colima Rd
Rowland Heights, CA 91748

Balboa
5680 Balboa Ave
San Diego, CA 92111

Lemon Grove
3424 College Ave
San Diego, CA 92115

San Diego Mission Valley
1288 Camino Del Rio N
San Diego, CA 92108

San Dimas
888 W Arrow Hwy
San Dimas, CA 91773

San Pedro
1701 N Gaffey St
San Pedro, CA 90731

Santa Ana
1330 E 17th St
Santa Ana, CA 92705

Santa Fe Springs
10621 Carmenita Rd
Santa Fe Springs, CA 90670

Santee
9846 Mission Gorge Rd
Santee, CA 92071

Seal Beach
12300 Seal Beach Blvd
Seal Beach, CA 90740

Signal Hill
950 E 33rd St
Signal Hill, CA 90755

Simi Valley West
51 Tierra Rejada Rd
Simi Valley, CA 93065

South Gate
5700 Firestone Blvd
South Gate, CA 90280

Torrance
3433 Sepulveda Blvd
Torrance, CA 90505

Tustin
2300 Park Ave
Tustin, CA 9278

Van Nuys
5711 Sepulveda Blvd
Van Nuys, CA 91411

Van Nuys North
14920 Raymer St
Van Nuys, CA 91405

Vista
1751 University Dr
Vista, CA 92083

Vista South
3150 Business Park Dr
Vista, CA 92081

West Covina
2831 E Eastland Ctr Dr
West Covina, CA 91791

West Covina South
2370 S Azusa Ave
West Covina, CA 91792

West Hills
6635 Fallbrook Ave
West Hills, CA 91307

West Hollywood
7100 Santa Monica Blvd Ste 201
West Hollywood, CA 90046

Westminster
16400 Beach Blvd
Westminster, CA 92683

Westminster NW
200 Westminster Mall
Westminster, CA 92683

Whittier
15614 Whittwood Ln
Whittier, CA 90603

Woodland Hills
20801 Ventura Blvd
Woodland Hills, CA 91364

Total = 87 units

Target Hits Once-in-Century Date Bulls Eye: Opens Ten New Stores On Sunday 10-10-2010

Target Corp. took advantage of a once-in-a-century opportunity yesterday, 10-10-2010, to officially open a whopping 10 new U.S. discount format stores. Yesterday's date combination only comes around once every 100-years.

All of the new Target units had limited soft openings beginning a few days earlier. However, yesterday was grand opening day at the 10 stores, which range in size from about 138,000 -to- 150,000 square-feet, and span the country, stretching from California and Utah in the west, to Arkansas and the east coast. Target says the opening of the 10 stores created about 2,400 new jobs.

The 10 stores feature Target's 'P-Fresh' fresh food and grocery sections inside. Additionally, because they are new stores, some of the 'P-Fresh' sections are bigger than the normal 10,000-12,000 square-foot size. The new units opened yesterday also include in-store Starbucks coffee bars, prepared food and beverage-focused Target Café's, and in-store pharmacies.

Five of the 10 new stores are in California - two units in Southern California, two in Northern California, and one in Bakersfield in the Central Valley. The locations of 10 new stores are:

>Sacramento East: 6507 4th Ave., Sacramento, Calif.
>Simi Valley West: 51 Tierra Rejada Rd., Simi Valley, Calif.
>Bakersfield Central: 2901 Ming Ave., Bakersfield, Calif.
>San Jose North: 95 Holger Way, San Jose, Calif.
>Azusa: 809 Azusa Ave., Azusa, Calif.
>Salt Lake City: 1110 S. 300 West, Salt Lake City, Utah
>Little Rock University: 420 S. University Ave., Little Rock, Ark.
>Christiana: 800 Christiana Mall, Christiana, Del.
>Flushing: 4024 College Point Blvd., Flushing, N.Y.
>Braintree: 250 Granite St., Braintree, Mass.

The fact five of the ten new Target stores opened on 10-10-2010 are in California is far from a coincidence. Rather, it reflects the significant strategic commitment the retailer has to the state and its various regions.

There are now 249 Target discount format stores in California - 175 in Southern and Central California and 74 in Northern California.

A little over half of the California stores currently have 'P-Fresh" (pictured above) fresh food and grocery markets inside. However, Target is adding them to a significant percentage of the remaining stores rapidly, as part of its program to have the markets in 850 of its now 1,600 U.S. discount format stores by the end of 2011. [Read our September 24, 2010 piece: September 24, 2010: Target to Have 'P-fresh' Fresh Food & Grocery Markets in 850 Stores By 2011 End; First Smaller Urban Store Set For Seattle in 2012.]


For example, the new Simi Valley, California store is the first Target discount store in Ventura County to have a 'P-Fresh' which offers fresh produce, meats, perishable and frozen foods, pre-packaged baked goods, and packaged food/grocery items. There's an existing Target in Simi Valley, opened in 1986, but it doesn't include the in-store grocery market.

In Utah, the new Target discount store in Salt Lake City is the first unit of its kind in the state to feature a 'P-Fresh' market. However, Target has over a dozen of its Super Target combination supermarket/general merchandise stores in Utah, so the state's shoppers are very familiar with the retailer's approach to selling fresh food and groceries.

At the other end of the spectrum in Northern California, the new Target discount store in Sacramento makes 13 for the retailer in the metro region. And all 13 of the stores have 'P-Fresh' markets inside, as we detailed here: While Tesco's Fresh & Easy Neighborhood Market Postponed, Target Opened 42 'P-Fresh' Fresh Food and Grocery Markets in Northern California.

The situation is similar in San Jose. Target now has 'P-Fresh' fresh food and grocery markets in eight discount stores in San Jose. See the story linked above. Also see - September 22, 2010: Tesco's Fresh & Easy Neighborhood Market Planning A New, Third Store in San Jose, California

In terms of 'P-Fresh' size, the new Target in Braintree, Massachusetts opened on Sunday has one of the larger fresh food and grocery store-within-a-store sections to date. The Braintree 'P-fresh' has 20 aisles of groceries, including four aisles devoted to fresh produce, meat and dairy-deli items. The store is 150,000 square-feet.

Target now has 'P-Fresh' fresh food and grocery markets in 472 of its U.S. discount stores. The retailer plans on adding the markets to 378 additional stores over the next 15 months, giving it a total of 850 units with 'P-Fresh' in-store by the end of next year.

As we've been saying in Fresh & Easy Buzz for some time, Target is on its way to becoming a major player in U.S. food and grocery retailing, largely due to its rapid addition and expansion of the 'P-Fresh' markets inside its existing discount format stores.

The 850 Target discount units set to have 'P-Fresh' by the end of 2011 are only half of the retailer's current total discount store-count. We expect to see the retailer add 'P-Fresh' to additional discount stores in 2012. We will have more on that in a future story.

Target also is headed north. The retailer confirms rumors that it plans to open stores in Canada. It isn't offering a specific date for the opening of the first store. But Target Corp representatives were at a retail industry convention in Toronto last week, shopping for locations. A Target spokesperson says the retailer could ultimately open up to 200 stores in Canada over the next few years.

Related Stories:

September 26, 2010: While Tesco's Fresh & Easy Neighborhood Market Postponed, Target Opened 42 'P-Fresh' Fresh Food and Grocery Markets in Northern California

September 24, 2010: Target to Have 'P-fresh' Fresh Food & Grocery Markets in 850 Stores By 2011 End; First Smaller Urban Store Set For Seattle in 2012

September 22, 2010: Fresh & Easy Neighborhood Market Plans to Open Two Additional Stores in Northern California in Early 2011

September 20, 2010: About Today's Walmart Stores, Inc. Smaller Stores Media Frenzy: We Scooped it On July 6, 2010

May 11, 2009: Target on Tap to Put Mini-Grocery and Fresh Foods Markets Into 100 Target Discount Stores This Year; Many More Likely to Come in 2010

November 19, 2009: Competitor News: Target Corp. Planning to Dramatically Expand Food and Grocery Offerings in All of its U.S. Target Discount Format Stores

July 9, 2008: Southern California Market Report: Five Supermarkets; A New Fresh & Easy, Wal-Mart and Super Target Will All Compete in Hesperia Food Retailing Rodeo

July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store

September 23, 2010: Revisting 'marketside by Walmart': Format As We Know it On the Way Out But Some or All Of the Four Stores Could Be Converted

While Tesco's Fresh & Easy Neighborhood Market Postponed, Target Opened 42 'P-Fresh' Fresh Food and Grocery Markets in Northern California

Target plans to have 'P-fresh' fresh food and grocery markets in 850 of its about 1,500 U.S. discount stores by the end of next year. The 'P-fresh' in-store markets offer fresh produce, meats, deli/prepared foods, perishables, frozen foods and packaged food/grocery items in a 10,000-12,000 square-foot store-within-a-store space. Target has 1,752 Target discount format and SuperTarget stores in the U.S.

Northern California Market Special Report
Breaking Buzz

Over the last 15-18 months, Minneapolis, Minnesota-based discount retailer Target Corp. has opened 42 small-format fresh food and grocery stores in Northern California - at locations ranging from Tracy in the Northern Central Valley and the Sacramento Metropolitan region, to throughout the San Francisco Bay Area - without building one new store. There are currently 72 Target discount stores in Northern California, which is defined as everything north to the Oregon border, and to Merced County in the Northern Central Valley.

Those grocery stores, which offer fresh produce, meats, prepared foods, perishables, frozen foods and packaged groceries, are Target's 10,000-12,000 square-foot 'P-fresh' store-within-a-store markets, which the retailer has so far installed in over half of its 72 Northern California discount format stores, allowing it to create about 450,000 square-feet of brand new food and grocery retailing square-footage in Northern California in a little over one-year's time without building a single new store.

[Related Stories - September 24, 2010: Target to Have 'P-fresh' Fresh Food & Grocery Markets in 850 Stores By 2011 End; First Smaller Urban Store Set For Seattle in 2012; and May 11, 2009: Target on Tap to Put Mini-Grocery and Fresh Foods Markets Into 100 Target Discount Stores This Year; Many More Likely to Come in 2010]

[Fresh & Easy Buzz has just completed a research project in which we've identified all of the Target discount stores in California, Nevada and Arizona, the three states where United Kingdom-based Tesco has its 168 Fresh & Easy Neighborhood Market small-format (about 10,000 square-feet) fresh food and grocery stores. [See this recent story for a breakdown of the 168 Fresh & Easy stores by region - September 21, 2010:Fresh & Easy Neighborhood Market and Walmart Create A September New Grocery Store Rain Storm in Oceanside, California]

In our project, we first identified the total number of Target discount format stores in each region where Tesco has its Fresh & Easy markets - Southern California, Bakersfield Metro, Fresno Metro (California's Central Valley), southern Nevada and Metropolitan Phoeniz, Arizona. Then identified and verified which ones have 'P-fresh' grocery sections inside, as of today.

Additionally, because Tesco plans to open its first batch of stores in Northern California in early 2011, and has future store sites in northern Nevada, we included those two market regions in our research. Today's story on Northern California is the first of what will be similar reports on Target's 'P-fresh' stores in each of the regions detailed above.]
Target now has 'P-fresh' in-store fresh food and grocery markets (pictured above) in 42 of its 72 discount stores in Northern California, with more on the way.

Below are the 42 Target discount stores with 'P-fresh' fresh food and grocery sections as of today. We list the stores by region, city, and number of stores in the listed city:

Region: Northern Central/San Joaquin Valley

City/#Stores

Tracy = 1 (unit)

(Total in region = 1)

Region: Sacramento Metropolitan/North

City/#Stores

Sacramento = 3
West Sacramento = 1
Davis = 1
Woodland = 1
Elk Grove = 1
Folsom = 1
Rancho Cordova = 1
Roseville = 1
El Dorado Hills = 1
Lincoln = 1

(Total in region = 12)

Region: Nine-County San Francisco Bay Area

City/#Stores

Albany = 1
Antioch = 1
Cupertino = 1
Dublin = 1
Daly City = 1
Fairfield = 1
Fremont = 1
Livermore = 1
Napa = 2
Novato = 1
Richmond = 1
San Bruno = 1
San Mateo = 1
San Ramon = 1
Sunnyvale = 1
Redwood City = 1
Rohnert Park = 1
San Leandro = 1
San Jose = 7
Walnut Creek = 1
Santa Rosa = 1
Vallejo = 1

(Total in region = 29)

Target plans to add the 'P-fresh' fresh food and grocery sections to a number of the remaining 30 Northern California discount stores, which range in size from about 110,000-180,000 square-feet, a company source recently told Fresh & Easy Buzz.

The initiative is part of the discount retailer's plans to have the in-store fresh food and grocery markets in 850 of its U.S. discount stores by the end of 2011, as we reported here on Friday.

Target Corp. has only one of its big, combo food/grocery/general merchandise Super Target stores in Northern California. That store, which is just a couple years old, is in the Merced County city of Atwater, in the Northern Central Valley.

Target and Tesco's Fresh & Easy

In January 2008, Tesco announced it had acquired 37 locations in Northern California - in the San Francisco Bay Area and Sacramento Metro region - for its small-format Fresh & Easy Neighborhood Market fresh food and grocery stores. Since then the retailer has added numerous locations, which we've reported on. See our Northern California Fresh & Easy Store List for details.

Tesco originally planned to launch into Northern California in late 2008/early 2009. However it postponed that launch, and as we recently reported and Tesco's Fresh & Easy later confirmed and announced in a press release on August 19, the grocer now plans to open its first batch of Northern California stores in early 2011. [See - June 26, 2010: Tesco Planning to Announce in July When First Northern California Fresh & Easy Neighborhood Market Stores to Open, August 21, 2010: April 2010 Prediction Correct: February 2011 Target to Open First Eight Fresh & Easy Neighborhood Market Stores in Northern California and August 19, 2010: Tesco Will Open its First Eight Fresh & Easy Neighborhood Market Stores in Northern California in 'Early 2011' Also: September 22, 2010: Tesco's Fresh & Easy Neighborhood Market Planning A New, Third Store in San Jose, California.]

Target announced it's plans to add the 'P-fresh' fresh food and grocery markets inside its discount stores in spring 2009. In contrast to Tesco's Fresh & Easy, it started work right away. Beginning in about May 2009 it began adding the units to discount stores throughout the U.S., including what now are 42 in Northern California. And by the end of next year, Target will have the "P-fresh" markets in many more of its current 72 discount stores in the region.

Tesco's Fresh & Easy would have to open all 37 of its confirmed Northern California locations, along with at least five of the unconfirmed stores, in 2011 just to be even with what Target has achieved as of today.

Interestingly, if you look at our list above of the 42 Northern California discount stores Target currently has its 'P-fresh' grocery sections in, and compare it to our list here of Fresh & Easy Neighborhood Market locations planned to date in the region, you'll see Target already has 'P-fresh' markets in many of the Northern California cities where Tesco plans Fresh & Easy stores.

Additionally, Target has discount stores in most of the Northern California cities where Fresh & Easy stores are planned to date, which it can and likely in many cases will, add the 'P-fresh' fresh food and grocery markets in. Target also is planning two stores in San Francisco, both of which it plans to have 'P-Fresh' markets in. The two stores, one a regular-sized discount format store and the second unit a 60,000-1000,000 square-foot store, will be the first stores for Target in San Francisco.

Further, Target is far from finished building new discount stores in Northern California. And with its new smaller, urban store prototype, it will be able to go into regions and cities like San Francisco, Oakland, San Jose, Sacramento, Marin County and others where it's not often possible to build a 120,000-180,000 square-foot traditional discount store. Most of targets new standard discount format and new urban format stores are set to include "P-fresh' fresh food and grocery markets inside.

Lastly, Target still has 30 of its current 72 discount stores in Northern California without 'P-fresh' markets. Based on information we have, at least half of those 30 stores should have the 10,000-12,000 sqaure-foot store-within-a-store fresh food and grocery markets inside by the end of 2010

Zero-to-42 with minimal investment

Seldom if ever can a retailer go from zero-to-42 fresh food and grocery stores in a little over a year's time without having to acquire a single new parcel of land or one vacant building to put a store in, or spending huge sums of money on for construction and related costs, as Target has been able to do in Northern California.

For Target, project 'P-fresh' is an extremely cost-effective way to get into food and grocery retailing in a significant way in Northern California and throughout the U.S., which it's doing by planning to have the fresh food and grocery markets in 850 of its about 1,500 discount stores in the U.S. by the end of next year. It's also a good way to lure new shoppers into the stores, who then are likely to buy some of the tens of thousands of other items - ranging from household goods, clothes and furniture, to electronics and much more - the retailer offers in its big, discount format stores.

Stories So Far: 2010 'Northern California Market Special Report' Series

September 22, 2010: Tesco's Fresh & Easy Neighborhood Market Planning A New, Third Store in San Jose, California

September 22, 2010: Fresh & Easy Neighborhood Market Plans to Open Two Additional Stores in Northern California in Early 2011

September 21, 2010: A Look Inside Whole Foods Market's Newest Store, A Mall Location in Santa Rosa, California

September 20, 2010: About Today's Walmart Stores, Inc. Smaller Stores Media Frenzy: We Scooped it On July 6, 2010

September 19, 2010: Whole Foods Market Gives Itself A 30th Birthday Present: 299th Store Opens This Week in Santa Rosa, California

September 14, 2010: Eight Plus One: Napa Unit Added to Eight Fresh & Easy Neighborhood Market Stores Opening in Northern CA in Early 2011

September 5, 2010: BevMo Chain Ends Full Time Employment For Store Workers; They Say No Way and Join With UFCW Union to Demand 'A Better BevMo'

September 3, 2010: How the California Grocers Association and its Members Can Snatch Victory From the Jaws of the Defeat of California's Plastic Bag Ban

August 25, 2010: Going Rural: New Fresh & Easy Neighborhood Market Store Planned for Sutter Creek in Northern California

August 23, 2010: Hybrid 'Good Eats' Market-Cafe From Raley's CEO Michael Teel & Company Opens Today in Sacramento CA

August 22, 2010: The Insider: Challenges & Opportunities: Tesco's Fresh & Easy Neighborhood Market Will Supply its Northern CA Stores From its Riverside County DC in Southern CA

August 21, 2010: April 2010 Prediction Correct: February 2011 Target to Open First Eight Fresh & Easy Neighborhood Market Stores in Northern California

August 19, 2010: Tesco Will Open its First Eight Fresh & Easy Neighborhood Market Stores in Northern California in 'Early 2011.'

August 17, 2010: Henry's Farmers Market 'Beats' Fresh & Easy Neighborhood Market to Northern California Despite Multi-Year Head Start; Elk Grove Store Opens Tomorrow

July 29, 2010: Tesco's Fresh & Easy Neighborhood Market Putting Together List of Managers Interested in Transferring to Northern California

July 25, 2010: Safeway to Start Construction on New Pleasanton, California Flagship Store Soon; Thanksgiving 2011 Target Opening

July 22, 2010: 'The Insider' - After Four Years in the High Weeds in Northern & Central California, Kroger Co. is Emerging to Grow its Foods Co Chain

July 21, 2010: Vacant Fresh & Easy Neighborhood Market Store in Pacifica, California Has the City's Mayor in a Pickle

July 18, 2010: 'The Insider' - When it Comes to Northern California - its Competitors are Rome Burning and Tesco's Fresh & Easy Neighborhood Market is Nero Playing the Fiddle

July 14, 2010: Tony Bennett Has Nothing on Whole Foods Market When it Comes to Loving San Francisco...That City By the Bay

July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store

June 28, 2010: Smart & Final to Open its New Format SmartCo Foods Stores in California and Arizona

June 26, 2010: Tesco Planning to Announce in July When First Northern California Fresh & Easy Neighborhood Market Stores to Open

June 14, 2010: Newly-Named Whole Foods Market CO-CEO Walter Robb Comes Full Circle With the Opening of the New Store in Mill Valley CA

June 5, 2010: Sprouts Farmers Market Opens First Northern California Store in Sunnyvale; Strikes Up Partnership With Local Non-Profit Farm

May 29, 2010: Going Rural: Fresh & Easy Neighborhood Market to Build First Store in Los Banos, California

May 28, 2010: First Phase of Fresh & Easy Neighborhood Market-Anchored Condo Development in San Francisco's Bayview Set For Completion in June

April 19, 2010: Tesco Debating Whether to Launch Fresh & Easy Into Northern California This Fiscal Year... or Wait

May 9, 2010: A Whopping 15 of Whole Foods Market's 41 New Stores in Development are in California - And Nine of The 15 Are In Northern CA

May 8, 2010: Sprouts, and Likely Henry's to Beat Fresh & Easy to Northern California Despite it's Big Head Start

May 6, 2010: Going Smaller & Getting 'Hybrid': Walmart's Smaller Supercenter in Vacant Retail Buildings Strategy Began in 2008

April 19, 2010: Tesco Debating Whether to Launch Fresh & Easy Into Northern California This Fiscal Year... or Wait

[Also: click here , here and here for a selection of past stories on Fresh & Easy and Northern Calfornia.]