Preview: Fresh & Easy Neighborhood Market is Headed to Save Mart Supermarket's Hometown of Modesto

Tesco's Fresh & Easy in Northern California - 2011
News/Analysis

Tesco's Fresh & Easy Neighborhood Market is preparing to open its first store, pictured above and below, in the Northern California city of Modesto on Wednesday, March 23.

The store, one of four units Tesco's Fresh & Easy currently has planned for Modesto and next door Ceres, is in a shopping center at 1717 Oakdale Road (at Lancey Drive) in Modesto, which has a population of about 205,000 residents and is located in the Northern Central Valley. [The photographs were taken by a Fresh & Easy Buzz correspondent on January 30, 2011. The store is completed and ready to open Wednesday.]


[See the following linked stories for details about the four Modesto and Ceres locations Tesco's Fresh & Easy has plans for stores at currently - May 10, 2008: New Markets: Tesco's Fresh & Easy to Move Into Modesto, California Market; Open its First Store in the City Early Next Year; November 6, 2008: Upcoming New Markets News: Tesco Will Open A Second Fresh & Easy Store in Modesto, California; March 31, 2009: Despite Having Postponed its Northern California Launch Indefinitely; Tesco's Fresh & Easy Planning Third Store in Modesto, California; and November 3, 2010: Tesco's Fresh & Easy Neighborhood Market Plans New Store in Northern Central Valley, California City of Ceres.]

Modesto is a little over an hour's drive from the San Francisco Bay Area city of Concord, where Tesco opened a Fresh & Easy store yesterday. [See - March 16, 2011: Fresh & Easy Neighborhood Market Opens Stores in Concord and Vacaville Today; Makes Five Markets in Northern California.]

Fresh & Easy Neighborhood Market acquired the Oakdale Road and Lancey Drive location in 2008, as we reported in this story - November 6, 2008: Upcoming New Markets News: Tesco Will Open A Second Fresh & Easy Store in Modesto, California.

The building was most-recently home to a Save Mart supermarket, which was the anchor retailer in the shopping center. However, the Modesto-based chain, which is the second-largest grocer in Northern California after Safeway Stores, Inc., closed it some years ago after building and opening a bigger and more modern supermarket a little over half-a-mile away at 2601 Oakdale Road (at Floyd).

Save Mart, which operates 241 stores in Northern California, northern Nevada and as far south as Bakersfield in the Central Valley and has about $5 billion in annual sales, is headquartered in Modesto, where it's one of the city's top private sector employers.

Save Mart Supermarkets is privately-held. It's majority-owner is Bob Piccinini and his family. Picinini is a Modesto native and resident. His father Mike and a partner, Nick Tocco, founded the chain in the 1950's, opening the first store in Modesto. In the 1980's, shortly after he became president of Save Mart, Picinini, who is chairman and CEO of the chain, bought out the Tocco family in order to have a controlling interest in Save Mart.

Save Mart had about 40 stores, all in and near Modesto, when Bob Piccinini took over the chain in the 1980's. Today the retailer's 240-plus stores are located throughout Northern California and northern Nevada, and in the Central Valley from Stockton and Modesto south to Bakersfield.

Four years ago Piccinini's Save Mart bought the Albertsons Northern California division from then-owner private equity firm Cerberus. The stores, which are located primarily in the San Francisco Bay Area but also in the Sacramento region and elsewhere in Northern California, were re-branded Lucky about a year later.

The Lucky name has a long history in Northern California, where supermarkets under the banner operated for decades. However, Albertsons Inc., which was acquired by Supervalu, Inc., Cerberus and CVS Pharmacy a number of years ago, acquired American Stores in the 1980's and a few years later changed all of the Lucky banner stores in Northern California to Albertsons. When Save Mart bought the division from Cerberus, rights to the Lucky name and brand were part of the deal. Save Mart decided to change all the Albertsons banner stores back to Lucky, rather than using Save Mart, because research found the Lucky brand still had significant equity among consumers in Northern California.

Save Mart is the dominant grocer in Modesto, both in terms of number of stores and market share. It operates five Save Mart banner supermarkets, a Maxx Value Foods hard-discount format supermarket (on Paradise Road in the western part of the city), which so far the only store in what is a smaller-sized version of its Food Maxx discount warehouse format, and one Food Maxx discount warehouse store in Modesto.

Another privately-held and fairly local (90 minute drive from Modesto) chain, West Sacramento-based Raley's, is Save Mart's leading competitor in Modesto.

The other leading major chain food retailers in Modesto are: Walmart (one supercenter and a discount format store), Safeway, Winco Foods, Trader Joe's, Costco, Grocery Outlet and 99 Cents Only, all with one store each respectively in the city.

Modesto also has numerous multi and single-store independents that operate stores of various different formats, from upscale (O'Brien's Markets; two stores) and mid-range (Sam's Food City), to hard-discount (Cost Less Food Co.; three units).

Additionally, a new independent and locally-owned grocer, Green's Market, which specializes in in-store prepared ready-to-eat and ready-to-heat fresh-prepared foods, opened a small-format store this month in downtown Modesto. The store also offers a selection of fresh produce, perishables and groceries, putting a emphasis on locally-produced, natural/organic and specialty-oriented products.

Raley's, which operates stores under the Raley's (superstores), Bel-Air, Nob Hill (supermarkets) and Food Source (discount warehouse format) banners, has four Raley's superstores in Modesto.

And like Save Mart, one of Raley's four Modesto stores is located about half-a-mile from the soon-to-be-opened Fresh & Easy store at Oakdale Road and Lancey Drive.

The photo above of the inside of the Fresh & Easy store at 1717 Oakdale Road in Modesto, which is set to open March 23, was taken by a Fresh & Easy Buzz correspondent on January 30, 2010, shortly after work began on the store's interior.

The Save Mart supermarket that's a little over half-a-mile from the Fresh & Easy location at 1717 Oakdale Road is about 40,000 square-feet. The nearby Raley's superstore is about 50,000 square-feet. In contrast, the Fresh & Easy market at Oakdale Road and Lancey Drive is, like all of the grocer's fresh food and grocery markets, 10,000-12,000 square-feet.

The Fresh & Easy store opening at 1717 Oakdale Road on Wednesday isn't the first location the grocer acquired in Modesto. Rather, as we were the first publication to report nearly three years ago in this story - May 10, 2008: New Markets: Tesco's Fresh & Easy to Move Into Modesto, California Market; Open its First Store in the City Early Next Year - that honor goes to the Sylvan Square shopping center in Modesto, where Tesco signed a deal to put a Fresh & Easy market in half the building, which is about 30,000 square-feet, that formerly housed independent grocer Michotti's Marketplace, which closed in early 2008.

Fresh & Easy originally planned to make the Sylvan Square center store its first unit in Modesto. However, that was back in the days when Tesco planned to launch into Northern California in early 2009 rather than early 2011. [See - May 10, 2008: New Markets: Tesco's Fresh & Easy to Move Into Modesto, California Market; Open its First Store in the City Early Next Year. Those plans have changed, however. Fresh & Easy decided last year to make the Oakdale and Lancey store its first in the city.

It will be interesting to observe how the two family-owned and locally-based chains, particularly Save Mart, which is Modesto born, bred and based, behave from a competitive standpoint when the Fresh & Easy store at 1717 Oakdale Road, which essentially will be in the middle of the Raley's and Save Mart stores, both being only about half-a-mile away, opens on Wednesday.

Save Mart Supermarket's is known to get very aggressive with new (and existing) competitors coming into its home-base Modesto territory. Among the defensive moves the local chain could make, for example, is to except Fresh & Easy's discount store coupons at its Oakdale Road Save Mart store, like Kroger-owned Fry's is doing in Arizona, as we detailed in this recent story - January 29, 2011: Fry's Food Stores Brings Back 'Competitor Coupon Match' Promotion; Accepting Fresh & Easy Neighborhood Market Coupons in Arizona.

As an example of Save Mart's competitive streak, in December 2010, when it converted a Save Mart store on Paradise Road in west Modesto into its first (and currently only) Maxx Value Foods discount supermarket, the grocer launched a price and promotional war campaign against a nearby store owned by Modesto-based multi-store discount grocer Cost Less Food Co., targeting the Cost Less store on Carpenter Road in Modesto, which is the retailer's closest unit to the Maxx Value store on Paradise Road. Modesto-based Cost Less Food Co. has eight stores. Seven units are in the Central Valley and one store is in Jackson, which is in Amador County in the foothills.

Save Mart's price war campaign started with a full-page advertisement in the local daily newspaper, the Modesto Bee. In the advertisement Save Mart published a price-comparison survery that stated its prices on a chosen market basket of groceries is cheaper than the same one at the Cost Less store, showing receipts for comparable items purchased at both stores in the ad.

A few weeks later Cost Less fired back, running not a one page but instead a double truck ad in the paper, offering a survey with twice the number of items Save Mart used in its market basket sample and showing that its Cost Less store on Carpenter Road is the cheaper of the two stores, based on purchases of like items at both stores.

These types of surveys depend on the items a retailer selects to include in the market basket. And since its a self-selection process it can be easily manipulated. Consumers should beware of such surveys and retailers should be cautious in using them.

In December Save Mart Supermarkets also started running (and continues to do so) a weekly full-page ad for its Paradise Road Maxx Value Foods store in the paper's Wednesday food section, which is something Cost Less has been doing for a number of years. The ad, just like Cost Less Foods' full-page advertisement, features about 10-12 "loss leader" food and grocery items offered at or below cost.

Two other possible defensive moves Save Mart Supermarkets could make vis-a-vis the nearby Fresh & Easy market at 1717 Oakdale Road would be to offer to match or beat all advertised and everyday prices at the Fresh & Easy, which is something Save Mart already does at its Food Maxx discount warehouse stores, where its policy is to meet or beat the prices of all its competitors.

Additionally, since Save Mart is headquartered right in Modesto (about a 10-minute drive from its own and the Fresh & Easy store on Oakdale Road) it can easily offer store-specific deals at the Oakdale Road store only, targeted to Fresh & Easy, like it's doing with the Paradise Road Maxx Value Foods store against Cost Less.

Or...Save Mart could nothing more than it's already doing, which in some ways would be bad news for Fresh & Easy since it would signal that Save Mart doesn't find the new entry owned by the world's third-largest food retailer, Tesco, a serious threat to its store half-a-mile away and its hometown dominance in Modesto.

Save Mart operates supermarkets and Food Maxx units in the Fresno and Bakersfield areas where Fresh & Easy Neighborhood Market has 14 stores, so the chain is familiar with the Fresh & Easy format and operations.

Raley's, in addition to being a superstore operator, is a pioneer and leader in ready-to-eat and ready-to-heat fresh-prepared foods merchandising, a category that comprises a significant portion of Fresh & Easy's offering.

Raley's introduced a new line of pre-packaged refrigerated ready meals and sides in October of last year, which it's added to its already extensive selection of packaged and bulk deli-style merchandised ready-to-eat and ready-to-heat fresh-prepared foods. [See - October 30, 2010: Raley's Launches New 'Raley's TO GO' Pre-Packaged, Refrigerated Fresh-Prepared Foods Line.] The new pre-packaged line was launched in part because of Tesco's moving into Northern California this year.

All of Fresh & Easy's fresh ready meals and sides are pre-packaged. We expect Raley's to defend its prepared foods turf at the nearby store once the Fresh & Easy market at Oakdale and Lancey opens. We also expect Raley's, like Save Mart, to defend its turf across all categories at the Modesto store.

It should be an interesting competitive triangle; the Fresh & Easy market at 1717 Oakdale Road, the Oakdale Road Save Mart store and the nearby Raley's superstore, all located about half-a-mile from each other. And it begins on Wednesday, March 23, when the first Fresh & Easy store in Modesto opens at 1717 Oakdale Road. Stay tuned.

Related Stories

[Readers: Click on the following links - Fresh and Easy Northern California, Tesco's Fresh and Easy in Norcal 2011, Northern CA Launch, Northern California, Northern California Market Region, Fresh and Easy San Francisco Bay Area and Northern California Special Report - for related stories about Tesco's Fresh & Easy Neighborhood Market in Northern California.]

Just Like Mr. Rogers Did, Save Mart Supermarkets' Doesn't Just Talk the Talk, it Walks the Walk in the Neighborhood

Modesto, California-based Save Mart Supermarkets is currently running a television commercial (which you can view in the video above), titled, "People in Your Neighborhood," on broadcast and cable TV stations throughout Northern California and the Central Valley - from Bakersfield in the south, up the Central Valley to Modesto, over to Sacramento, and into the San Francisco Bay Area - where the grocery chain has its 244 stores.

The commercial uses the Sesame Street "People in Your Neighborhood" sound track and in many ways takes its inspiration from Mr. Rogers' neighborhood. But it gets it's philosophical and practical grounding from Save Mart's core values - localism, community and neighborhood - along with the grocer's two mission statement-oriented positioning strategies, which are - Save Mart Supermarkets: "Your Life. Your Town. Your Store." and "Save Mart Supermarkets: The People in your Neighborhood."

Watch the 60-second video at top, then read the profile below.

Modesto, California-based Save Mart Supermarkets, which began with a single store in the Central Valley city of 205,000 residents 58-years ago, is today one of the approximately five-largest privately-owned supermarket chains in America. Only a handful of other U.S. family-owned grocery chains - Meijer Inc., H-E-B and Wegmans, for example - have higher annual sales than Save Mart's about $5 billion in yearly revenue.

Save Mart, which is majority-owned by Chairman and CEO Bob Piccinini, who's father Mike and then partner Nick Tocco opened the first Save Mart store in Modesto on January 17, 1952, today operates 244 stores throughout California's vast Central Valley region, in the San Francisco Bay Area, and in Northern Nevada. The chain's banners are: Save Mart, S-Mart Foods, Lucky (supermarkets), and FoodMaxx (discount warehouse stores) banners.

The primary if not sole reason for the existence of the S-Mart banner, which is only used for the grocer's stores in Stockton, California, is because a local, family-owned multi-store independent in Stockton has operated a handful of stores under the Save Mart name in the city since the days of Bob Piccinini's father, Mike. As a result, the families made an agreement long ago that Modesto-based Save Mart Supermarkets would use the S-Mart name on its stores in Stockton for as long as the local family operates there stores of the same name.

Not long after taking over Save Mart as CEO around three decades ago, Bob Piccinini bought out the interest in the company held by the Tocco family and became the majority-owner of what then was a very successful local grocery chain with about 45 stores.

He's been there ever since - although for a time Piccinini gave up the CEO title and focused on real estate acquisition as chairman. But after a number of years he took the CEO title back. These days though Bob Piccinnini has lots of capable help in the day-to-day running of the chain from president and coo Steve Junqueiro.

Save Mart is a self-distributing grocery chain. In addition to its stores, the food and grocery retailing company owns and operates: Smart Refrigerated Transport (perishables distribution/transportation), Yosemite Wholesale Warehouse in Merced (produce distribution), Vacaville Distribution Center, Roseville Distribution Center (both grocery distribution centers), and is a voting partner in Super Store Industries (SSI). SSI owns and operates a distribution center in Lathrop, California near Modesto, Mid Valley Dairy in Fairfield, California, and the Sunnyside Farms ice cream plant in Turlock, which is also near Modesto.

Save Mart's partner in SSI is its competitor, Sacramento, California-based Raley's. Both grocers pull grocery and perishable product from the facility for their stores, in what is a very unique distribution partnership between two competitors. Like Save Mart, Raley's is a family-owned chain. It has sales of about $3.2 billion annually, making it among the largest privately-owned food retailers in the U.S. as well.

A hallmark of Save Mart's success for 58-years has been its lazer-beam like focus on being a part of the communities and neighborhoods it serves with its stores. It was "local" long before local became a food and grocery retailing trend and buzzword. And for 58-years, the word "neighborhood" has been a major part of the Save Mart Supermarkets' name, not on its store signs or stationary - but in its every practice.

If you ask the leader of any community or non-profit organization in Modesto, California, where the chain is based, to name the two businesses they first go to whenever they need assistance of some sort - donations, sponsorships, ect. - they will tell you this: Save Mart Supermarkets and E.J Gallo Winery, which like Save Mart is a family-owned company that calls Modesto home.

It's the same case in an ever-growing way in the other Northern and Central California communities where Save Mart has its stores, including increasingly in the San Francisco Bay Area, where the family-owned grocery chain has only been doing business for just a little over three years.

In 2007, Save Mart CEO Bob Piccinini made the biggest deal in his long career owning and running the supermarket chain - he acquired the 128-store Albertsons chain in Northern California from Albertsons LLC, which was owned by the Cerebrus private equity firm.

The deal nearly doubled Save Mart's annual revenue, and for the first time in the company's history put the grocer into the highly competitive nine-county San Francisco Bay Area market, which has been comtrolled from a market share standpoint by Safeway Stores, Inc. for...well, forever. Albertsons, now rebranded Lucky by Save Mart - its old name in the Bay Area until Albertsons Inc. changed the banner to Albertsons in the 1980's after buying the old Lucky chain from American Stores, Inc. - is (and was then) the number two market share leader in the nine-county Bay Area, home to about 7 million people.

Here's just a sample of the charities, non-profit groups and community organizations Save Mart supports on a regular basis:

MDA, City of Hope, Children's Hospitals, The Salvation Army, American Cancer Society, the Center for Human Services, March of Dimes, American Heart Association, United Way, local food banks, all public and private schools, health agencies in their market areas, and many more local civic organizations.

This is just the tip of the iceberg, and doesn't do justice to the long list of people, groups and organizations the grocer helps. But we don't have enough space in this piece to list all the entities - large, medium and small - the grocer supports in various ways.

If we had to (and apparently we are going to try) sum up the keys to Save Mart's success in a few words it goes something like this:

>Local. To paraphrase the late, long-serving Democratic Speaker of the U.S. House of Representatives, Thomas P 'Tip' O'Neil, who famously said: "All politics is local;" Save Mart's mantra is: "Grocery retailing is local," regardless of how big you get.

>Community and Neighborhood. Save Mart looks at each of its stores not as an extension of the corporation but rather as independent, neighborhood supermarkets that have the added advantage of being a part of a large chain. In other words, the whole can only exists if the sum of its parts serve each of the neighborhoods and communities in which they sell groceries in. Store Directors operate by a strong set of corporate rules. But they also have much more independent ability than their peers at most grocry chains do.

Save Mart's two mission statement positioning lines are: "Your Life. Your Town. Your Store." and "Save Mart Supermarkets: The People in your Neighborhood." The latter being the focus of its current television commercial, which is posted at the bginning of this profile. The grocery chain does an excellent job of having all it does flow from these to premises. They're mission statments and strategic markers, rather than mere positioning elements.

>Tradition. Customer service still reins supreme. And all of the male store clerks are still required to wear a white shirt and a tie, a tradition Mike Piccininni and Nick Tocco started with that first store in 1952. The same dress code applies at Save Mart's corporate headquarters in Modesto.

>Value. Save Mart isn't the low-price leader with its Save Mart and Lucky banner supermarkets, which comprise the vast majority of its 244 units. (It's FoodMaxx discount warehouse format - 45 stores - does position itself as the low-price leader though, including offering to meet any price offered by its competitors.) However, the grocery chain does a great job in delivering value, which although competitive prices must be part of any value equation, aren't the sole indicator.

>Measured Progress. Save Mart has never been the leading innovator in its markets. However it's always been innovative. The grocer innovates though in what we call a measured way, taking into account its core elements - localism, community, neighborhood, tradition and the offering and sustaining of value to its customers.

Based on its 58 year track record, we think Save Mart gets the Mr. Rogers seal of approval for its focus on "the neighborhood" and its extensive efforts in the communities where it does business, while at the same time being able to make a profit selling food and groceries, along with employing thousands of people, paying them excellent wages and offering them top-flight benefits. In fact, that's sort of what "neighborhood" and "community" should be all about in the neighborhood we call America, isn't it?

Gentlemen ... Start Your Grocery Cart: Save Mart Supermarkets Goes 'Big' With 12-Foot High Motorized Shopping Cart

Touring the track on Sunday at the Toyota/Save Mart 350.

Northern California Market Region

Northern California's two leading supermarket chains - Pleasanton, California-based Safeway Stores, Inc. and Save Mart Supermarkets, which is headquartered in Modesto - have been thinking and doing "big" this month.

But the big thinking and doing has nothing to do about the fact the grocery chains are the number one - Safeway - and number two - Save Mart - market share leaders in Northern California.

Safeway Store's big thinking and doing was on display in San Francisco on Sunday, June 17, when the grocery chain broke the Guinness World's Record for creating the longest picnic table. We wrote about the "big" (or long) event in this June 19 story: Safeway Has A Picnic in San Francisco Featuring the 'World's Longest Picnic Table' to Showcase its 'Open Nature' Natural Foods' Brand


Kyle Bush and the giant Shopping cart in the winner's circle after Sunday's race.


12-foot high 'hot rod' shopping cart

Not to be outdone by its competition when it comes to "big" thinking and doing, earlier this year Modesto-based Save Mart hired a local company, BRE Rods & Classics, located in nearby Salida, California, to create the 12-foot high, "hot rod" shopping cart (pictured at top).

The cart, which some insiders are calling "Piccinini's Pride," in honor of Save Mart majority-owner, chairman, CEO and rabid auto racing fan Bob Piccinini, who commissioned the mean machine, was featured on Sunday at the NASCAR Toyota/Save Mart 350 auto race at Infineon Raceway in Northern California's Sonoma County.

Sunday's race, sponsored annually by Toyota and Save Mart Supermarkets, was won by Kurt Bush, who held off a late-charging Jeff Gordon to claim the first-place honor.

Save Mart's mega-motorized shopping cart, which is powered by a 454 Chevy engine sponsored by Watson Racing, which allows it to hit speeds of up to 100 miles an hour, according to Jim Brown of BRE Rods & Classics, got its inaugural debut in Modesto's annual "Graffiti Fest" parade on Friday evening, June 11. (You can see the Save Mart motorized shopping cart on a test run in the brief video below.)

The three day "Graffiti Fest" event, which is sponsored by the Modesto Kiwanis Club each year, pays homage to the movie "American Graffiti," which was made by Modesto native George Lucas of Star Wars fame, and chronicles the born-and-raised in Modesto movie producer-director's childhood, growing up in what the locals like to call the "Cruising Capital of the World."

Or at least Modesto was America's cruising capital. However, a number of years ago the Modesto City Council outlawed cruising on McHenry Avenue and J Street, the main drag where most of the action took place in Lucas' era (late 1950's-to-early 1960's) and in his movie, which is set in the early 1960's. As the famous line in American Graffiti says: "Where were you in '62?

Local boosters created the annual "Graffiti Fest" event, along with a series of other events throughout the summer, called "Graffiti Summer," as a way to celebrate the tradition, along with using it as a vehicle to increase tourism and encourage people to spent money with local businesses during the summer months.

Save Mart's big, hot rod shopping cart got a bit over-heated during its trial run in the June 11 "Graffiti Fest" parade, according to a longtime Modesto-area food broker and Fresh & Easy Buzz reader who was there, and had to be sidelined. A Save Mart executive confirmed that observation for us recently.

However, the crew at BRE Rods and Classics fixed the problem and "Piccinini's Pride" was in top shape at Sunday's Toyota/Save Mart 350 race in Sonoma County.

Sunday's big race isn't the last stop for the shopping cart. Save Mart's pit crew is taking the racing engine-powered vehicle to the California State Fair in Sacramento next.

After that the cart, which also made an appearance at one of Save Mart's Lucky banner supermarkets in Napa, California on June 23, will be featured at the annual "Hot August Nights" event in Reno, Nevada. Save Mart, like Safeway Stores, Inc., operates supermarkets in northern Nevada, as well as in Northern California.

The Save Mart "hot rod" shopping cart at the Crystal Springs Gold Course in Burlingame, California. The club's pro says course rules prohibit the shopping cart's use as a golf cart, even though it can hold a whole lot of golf bags. But he did let a photographer use the fairway to take a few "shots."

An American tradition

Creating "out-sized" things and events - giant displays in-store, parade floats, and even record-holding tables and giant shopping carts - is part of a long and historic tradition of thinking and doing "big" by U.S. grocers, as a way to not only promote their stores, but also to have plain fun.

It's good to see that Save Mart and Safeway Stores' are keeping that tradition alive - and are doing so in a "big" way.

Potential Guiness World Record?

Modesto, California-based Save Mart Supermarkets, which was founded over five decads ago by Bob Piccinini's father Mike and partner Nick Tocco, operates 240 stores in Northern and Central California and Northern Nevada under the Save Mart, S-Mart Foods, Lucky, Maxx Value (supermarkets) and FoodMaxx (discount warehouse format) banners, should contact the Guinness World Record people post-haste because a Guiness World Record might just be looking the grocer right in its eyes, so to speak.

Save Mart can't get the record for biggest/largest/tallest shopping cart. That record is already held - and at 34.4 feet high, from ground to handle, the world record-holding cart, which was made by the Al Safeer Group and Century Shopping Mall, and sponsored by Dubai UAE Duty Free, won the honors in February 2004 at the Dubai UAE Shopping Festival

But ... the record-holding shopping cart from Dubai has no motor.

Enter Save Mart's 12-foot high "muscle car-style" shopping cart, powered by the 454 Chevy engine.

Based on our research on the Guinness website, we think there just might be an opportunity for Save Mart to claim the title and honor of having the world's biggest, largest or highest (or all three) motorized shopping cart.

It's certainly worth checking out. After all, does Save Mart Supermarkets' (and its chief Bob Piccinini) really want to let Safeway Stores' have all the glory with its World's Longest Picnic Table, when it comes to Northern California-based grocery chains setting world records?

The grocery business is all about competition, right? So ... Bring it on.

Related Stories

June 19, 2011: Safeway Has A Picnic in San Francisco Featuring the 'World's Longest Picnic Table' to Showcase its 'Open Nature' Natural Foods' Brand

March 23, 2011: Tesco Opens First Fresh & Easy Neighborhood Market Store in California's Northern Central Valley Today - in Modesto

March 19, 2011: Preview: Fresh & Easy Neighborhood Market is Headed to Save Mart Supermarket's Hometown of Modesto

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

July 15, 2010: Just Like Mr. Rogers Did, Save Mart Supermarkets' Doesn't Just Talk the Talk, it Walks the Walk in the Neighborhood

Tesco Opens First Fresh & Easy Neighborhood Market Store in California's Northern Central Valley Today - in Modesto

A long line of shoppers waited this morning for the opening of the Fresh & Easy store in Modesto, California, as you can see in the photograph above, and in the next two photos below.

[Related Story: March 19, 2011: Preview: Fresh & Easy Neighborhood Market is Headed to Save Mart Supermarket's Hometown of Modesto]

A big crowd of shoppers braved the wind and rain this morning to attend the grand opening of Tesco's first small-format Fresh & Easy Neighborhood Market store in Modesto, California.

The store's not only Tesco's first Fresh & Easy market in Modesto (population 205,000), it's also the retailer's first store in the Northern Central Valley, which runs from San Joaquin County to Merced County, and is home to about 1.3 million people. (We'll explain why it's significant for Fresh & Easy to be opening its first store in the Northern Central Valley in an upcoming piece.)

The Modesto Fresh & Easy store, which opened this morning at 10 a.m. and is the first of four units Tesco thus far has planned in Modesto and nearby Ceres, is located in a shopping center at 1717 Oakdale Road (at Lancey Drive). The store is about a half mile from a Save Mart supermarket and an equal distance from a Raley's Superstore.

Prior to Tesco's Fresh & Easy acquiring the location in 2008 [See - November 6, 2008: Upcoming New Markets News: Tesco Will Open A Second Fresh & Easy Store in Modesto, California], the store was previously a supermarket operated by Modesto-based Save Mart Supermarkets. Save Mart closed the store a few years ago when it built and opened a larger and more modern supermarket half-a-mile away. Fresh & Easy renovated the building into the about 12,000 square-foot market it opened to a solid crown of shoppers this morning.

The opening of the Fresh & Easy store at Oakdale Road and Lancey Drive in Modesto was kicked off shortly before 10 a.m, when Modesto Mayor Jim Ridenour and the store's manager (both pictured here) cut the ceremonial ribbon, which was good news to the crowd waiting outside in the wet weather because they were allowed to enter the store shortly thereafter.

The store had a steady stream of shoppers following the 10 a.m opening. A Fresh & Easy Buzz correspondent who attended the opening said a second wave of shoppers showed up between 10:30 a.m. and 11 a,m., keeping the store's aisles fairly packed until noon, when a fresh batch of shoppers, many who work at the nearby businesses, showed up to take a look at Modesto's newest grocery store.

United Kingdom-based Tesco, which is the third largest retailer in the world, is the second major global chain to open a grocery store, Fresh & Easy, in Modesto in the last couple years.

In 2008 Walmart Stores, Inc., the world's largest retailer, opened its first Supercenter in Modesto. That supercenter, which has about 80,000-90,000 square-feet of selling space, also happens to be Walmart's first - and to date only we're aware of - hybrid supercenter located in what was an existing vacant big box building.

The supercenter, which is located on McHenry Drive in Modesto, previously contained a warehouse format supermarket and a drug store. Walmart converted the building into a "hybrid supercenter" in an existing building, something the Bentonville, Arkansas-based global-retailer is now doing elsewhere in California and in other regions in the U.S. The average new construction supercenter is about 170,000 square-feet, although Walmart is currently building some as small as 125,000-145,000 square-feet.

Walmart also has a discount format store in Modesto. The store isn't currently on Walmart's list of those in California it plans to expand and add food and grocery sections to, however.

Despite Walmart's opening of the hybrid supercenter in 2008 and now Tesco's entry into Modesto with its first Fresh & Easy store, the city's dominant food and grocery retailers remain locally-based.

The top grocer in the city of 205,000 is Modesto-based Save Mart Supermarkets, which has seven stores in Modesto - five Save Mart banner supermarkets, one Food Maxx discount warehouse store and a Maxx Value Foods discount supermarket.

Maxx Value Foods, a take off on its bigger cousin Food Maxx, is Save Mart's newest format. The Modesto headquartered grocery chain, which has 241 stores throughout Northern California, northern Nevada and as far south in the Central Valley as Bakersfield and about $5 billion in annual sales, converted a former Save Mart supermarket on Paradise Road in west Modesto into the Maxx Value Foods discount supermarket, which currently is the only one in operation. The format is a test for Save Mart and if it succeeds the retailer could convert some of its older, existing Save Mart stores located in lower income neighborhoods, which Paradise Road in Modesto is, into Maxx Value stores.

West Sacramento-based Raley's is Save Mart's leading competitor in Modesto. It has four stores, all under the Raley's banner. [ See - March 19, 2011: Preview: Fresh & Easy Neighborhood Market is Headed to Save Mart Supermarket's Hometown of Modesto.]

The big turnout at this morning's Fresh & Easy store opening was likely due to a number of factors, including the fact the grocer mailed its weekly ad flyer, which included a coupon good for $10-off purchases of $20 or more and another offering a free reusable canvas shopping bag for purchases of $10 or more, to homes throughout the immediate area, along with to those located in neighborhoods at least as far as two and a half-to three miles from the 1717 Oakdale Road store.

Additionally, Modesto has a very high unemployment rate. the city and Stanislaus County, which it's the county seat of, currently suffers from a joblessness rate of nearly 19%, compared to California's overall 12.4 unemployment rate.

The city and county also have among the highest housing foreclosure rates in the country. Stanislaus County has rated among the top five U.S. counties for residential foreclosures since 2008. The median value of a home in Modesto has dropped by about 40% since 2005.

As a result of these continuing economic struggles, a grocery store grand opening is the perfect venue for the unemployed - a decent outing without a ticket price - and for those looking for a good deal on groceries. A number of shoppers told our correspondent just that this morning.

Lastly, over the last few years grocery store openings have simply become rather popular outings, particularly for the people who live in the neighborhoods where the new stores open. After all, from sociological and anthropological perspectives, grocery stores are far more than merely places to buy food. Their "third places" in which much of the needs of societies and neighborhoods, along with individuals, are met.

Before and after: Pictured above is the inside of the Fresh & Easy store at 1717 Oakdale Road in Modesto on January 31, 2001. Below is the store this morning at the grand opening.

Walnut Creek

In addition to opening the store in Modesto today, Tesco also opened a Fresh & Easy market in Walnut Creek, which is in the eastern part of the San Francico Bay Area. Walnut Creek is next door to Concord, where the grocer opened a store last Wednesday. Walnut Creek is about 65 miles from Modesto.

There are now seven Fresh & Easy markets in Northern California, all opened between March 2 of this year and today. Four additional stores are scheduled to open in Northern California in April.

With the opening of its two newest stores in Modesto and Walnut Creek today, Tesco's Fresh & Easy now operates 171 stores in California, Nevada and Arizona. The majority of the stores, 122 units, are in California. Of the 122 California Fresh 7 Easy stores, 108 units are located in Southern California. In addition to the seven stores in Northern California, there are seven Fresh & Easy markets in the Bakersfield metropolitan region and seven units in the Fresno area.

[Photo credit: Fresh & Easy Buzz, March 23, 2011.]

Related Stories

Readers: See (click on) the following links - Fresh and Easy Modesto CA, Fresh and Easy Northern California, Modesto California market, Northern California Market Region, Raleys, Save Mart, Tesco's Fresh and Easy in Norcal 2011 - for related stories in Fresh & Easy Buzz.

Save Mart Supermarkets Signs On For Five More Years' of NASCAR Sponsorship

Sunday's Toyota/Save Mart 350 at Infineon Raceway.

Northern California Market Region

Modesto, California-based Save Mart Supermarkets has signed a multi-year agreement to continue as co-title sponsor of the annual NASCAR Sprint Cup Series event at Infineon Raceway in Northern California's Sonoma Valley.

The announcement was made Sunday (June 26) by Save Mart majority-owner, chairman and CEO Bob Piccinini and Steve Page, president and general manager of Infineon Raceway, during the Toyota/Save Mart 350 NASCAR race, which was won by

The 240-store supermarket chain, which is number two in market share in Northern California after number one Safeway Stores, In., and Infineon Raceway have a long partnership together: Save Mart has been either title sponsor or co-title sponsor of the NASCAR Sprint Cup event at Infineon Raceway since 1992.

Additionally, Save Mart has been either the title or co-title partner of the NASCAR annual Cup event - this year's Toyota/Save Mart 350 held Sunday -  in Sonoma for two decades, celebrating its 20th anniversary as a sponsor of NASCAR in Sonoma this year.

According to Save Mart CEO Bob Piccinini, Save Mart was the title sponsor of the NASCAR Cup event from 1992-1997. It has combined with partners as co-title sponsor of the event since 1998. The last five years, the event has been known as the Toyota/Save Mart 350.

Piccinini says the new agreement with the Sonoma County raceway announced Sunday is for five years, extending through 2016.

"We are excited to continue our partnership with Infineon Raceway as co-title sponsor of the Cup Series event and look forward to finding new ways to celebrate with racing fans across every community we serve," Piccinini, who's a rabid auto racing and sports fan - he's also a minority owner of the Golden State Warriors professional basketball team and the Arizona Diamondbacks and San Diego Padres pro- baseball teams - says. "Our sponsorship continues to build strong brand recognition and provide great value to our loyal supplier partners and shoppers. It's been a great ride so far and we are ready for more."

One of the ways Piccinini and Save Mart found to celebrate Sunday's Toyota/Save Mart 350 NASCAR Cup Series event, along with promoting the chain at he same time, was by featuring the grocer's 12-foot high "hot rod" shopping cart, which we wrote about in the story below on the blog. [See - June 28, 2011: Gentlemen ... Start Your Grocery Cart: Save Mart Supermarkets Goes 'Big' With 12-Foot High Motorized Shopping Cart.]

Save Mart's Lucky supermarket chain, which has 76 stores in the San Francisco Bay Area and elsewhere in Northern California, is the official grocery chain of the Golden State Warrior's for promotional purposes.

Earlier this year Piccinini, who invested in the team (an about 20% ownership stake, according to our sources) last fall as part of a new ownership group that bought out the team's previous owners for $450 million, was named a member of the Warrior's four-person executive board, which is headed by majority owners Joe Lacob and Peter Guber. Read the October 27, 2010 column by our 'The Insider' about the new owners and Piccinini's involvement here: Save Mart CEO Bob Piccinini Poised to Make it to the 'Bigs' as Member of Golden State Warriors' Ownership Group.

But back at the races, Steve Page, who runs Infineon Raceway in Sonoma Valley said in announcing th new five year deal with Save Mart Supermarkets he inked with Piccinini: "Our relationship with Save Mart continues to evolve in new and positive ways." They are an engaged, active and promotionally-oriented partner and the synergy between our respective organizations has only grown stronger over these 20-years. We couldn't be more delighted to announce this new agreement and extension."

Infineon Raceway is a wholly-owned subsidiary of Speedway Motorsports, Inc., which is a major marketer and promoter of motor-sports entertainment in the United States.

The new five year deal in which Save Mart will continue to sponsor the annual NASCAR Sprint Cup Series event at Infineon Raceway, also means the grocery chain's 12-foot high motorized shopping cart, which is powered by a 454 cubic inch Chevy engine, will be getting a lot more use. And that's an added reason Save Mart should look into the world record-holding potential its giant shopping cart holds, as described in our story yesterday.

Related Stories

June 28, 2011: Gentlemen ... Start Your Grocery Cart: Save Mart Supermarkets Goes 'Big' With 12-Foot High Motorized Shopping Cart

June 19, 2011: Safeway Has A Picnic in San Francisco Featuring the 'World's Longest Picnic Table' to Showcase its 'Open Nature' Natural Foods' Brand

March 23, 2011: Tesco Opens First Fresh & Easy Neighborhood Market Store in California's Northern Central Valley Today - in Modesto

March 19, 2011: Preview: Fresh & Easy Neighborhood Market is Headed to Save Mart Supermarket's Hometown of Modesto

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

July 15, 2010: Just Like Mr. Rogers Did, Save Mart Supermarkets' Doesn't Just Talk the Talk, it Walks the Walk in the Neighborhood

Upcoming New Markets News: Tesco Will Open A Second Fresh & Easy Store in Modesto, California

Upcoming New Markets News: Central Valley - Modesto, CA

Tesco's Fresh & Easy Neighborhood Market plans to locate and open a second Fresh & Easy grocery and fresh foods store in the Central Valley, California city of Modesto, Fresh & Easy Buzz has learned.

Modesto's second Fresh & Easy market will be located at 1717 Oakdale Road in the city, in a building that formally housed a Save Mart supermarket. Save Mart built a new, larger store nearby some years ago and closed the older, smaller store at the location.

Fresh & Easy will remodel the building, turning it into one of its small-format, combination basic grocery and fresh foods markets.

The shopping center where the new 1717 Oakdale Road Fresh & Easy store will be located includes a Big Lots general merchandise discount store next door, a dry cleaner, pizza parlor, Mexican restaurant, Chinese restaurant, nail salon, Rent-A-Center store, insurance office and a Bank of America, according to a regular Fresh & Easy Buzz reader who lives in Modesto and knows the local food and grocery retailing market better than most industry professionals.

Tesco's Fresh & Easy has applied to the State of California Alcohol and Beverage Control Department for an off-sale beer and wine permit for the store at the 1717 Oakdale Road location. There's also an application sign on the window of the empty building in the shopping center. The application was first made on September 23 of this year.

The 1717 Oakdale Road Fresh & Easy will be the grocery chain's second location in Modesto, a city of about 205,000 located in the Northern San Joaquin Valley, in Stanislaus County.

Stanislaus County has a population of about 500,000. Modesto is the county seat and the largest city in the county. Modesto's motto is: "Water, Wealth, Contentment, Health," as the arch at the top of this story depicts. The arch is located as the gateway to downtown Modesto.

We reported in this May 10, 2008 story, "New Markets: Tesco's Fresh & Easy to Move Into Modesto, California Market; Open its First Store in the City Early Next Year," about Tesco's plans to open its first Fresh & Easy Neighborhood Market store in Modesto. That store will be located in the city's Sylvan Square Shopping Center in a building that previously housed an independent supermarket, Michotti's Marketplace, which closed, sighting competitive pressures in the market.

Crosspoint Realty Co., which is in charge of the Sylvan Square center and building, is dividing the former Michotti's Marketplace supermarket building, which is about 30,000 square feet, roughly in half. The Fresh & Easy store will take up about 13,000 square feet of the building when completed.

Fresh & Easy moves north

Locating a second Fresh & Easy store in Modesto is a part of Tesco's California strategy. The retailer is moving north from its current Southern California store base into the Central Valley, Sacramento region and the San Francisco Bay Area as part of its strategy to be a major statewide food and grocery retailer in the Golden State.

The first two Fresh & Easy markets in the Central Valley will open next month on December 3 in Bakersfield, as we reported in this piece yesterday.

Tesco will open additional Fresh & Easy stores throughout the Central Valley, from Bakersfield and Fresno in the south valley and on north to Stockton, beginning next year, along with beginning to open units in the Sacramento/Vacaville region and San Francisco Bay Area.

The grocery chain also will open its Northern California distribution center next year in Stockton, which is located about 30 miles from Modesto in the Northern San Joaquin Valley, as we reported here on March 8 of this year.

New developments in Modesto market

There have been a number of changes and new developments in the Modesto, California food and grocery retailing market in just the seven months since we reported on the first Fresh & Easy coming to the city in our May 10 story.

The "big" development is that mega-retailer Wal Mart Stores, Inc. will open its first Supercenter in Modesto in about two weeks, on November 14.

The Modesto Supercenter is a first for Wal-Mart nationally in the U.S. in that it is the retailer's first hybrid big box store. Rather than being built from the ground up, the Modesto Supercenter is located in a former warehouse food store building of about 100,000 square feet, which is about 80,000 square feet smaller than the average size of a Wal-Mart Supercenter.

The 100,000 -to- 105,000 Supercenter however will have all of the same departments a typical 180,000 -to- 200,000 square foot unit has. The departments will just be smaller and scaled down to fit the reduced square footage of the store.

Wal-Mart has one of its discount format stores already in Modesto. Those stores though don't sell fresh produce or meats. They also offer only a limited assortment of dry grocery products and a small selection of perishables, primarily basic dairy and deli items.

The mega-retailer is in the process of building a huge Supercenter in nearby Ceres, which shares a southern border with Modesto. Ceres has a population of about 45,000. But the new Supercenter there when open also will draw from residents of Modesto, since the two cities are right next to each other. The Ceres Supercenter, which is a new construction, will be about 200,000 square feet when completed. It is set to open in 2009.

Wal-Mart Stores, Inc. also has a proposal on the table to built a regional distribution center in the city of Merced (Merced County), which is about 30 miles from Modesto. The new distribution center would serve Wal-Mart stores, including Supercenters with food and grocery products, throughout the Central Valley and Northern California.

As a result of building this new distribution center, Wal-Mart will attempt to locate many more Supercenters -- and perhaps some of its other format stores like Sam's Club, Wal-Mart Neighborhood Market supermarkets and it's new small-format Marketside that sell food and grocery products -- in the region in the coming years.

Another significant change in the Modesto market was the recent sale of two supermarkets in the city by local independent grocer Richland Markets to another local, multi-store independent, Cost Less Foods Company, in late August, early September.

Richland Markets was for decades a major food and grocery retailer in Modesto and the surrounding communities, where it operated six full-service supermarkets. Over the last few years Richland Markets has sold off its stores. After selling the two Modesto stores last month, the independent grocer is now left with just one, in Ceres.

Cost Less Foods now operates three stores in Modesto, along with one in next door Oakdale and another in nearby Turlock, which is about 10 miles from Modesto. The retailer also operates a couple more stores outside the Modesto market.

Cost Less is a privately-owned grocery chain. It operates on an everyday low price merchandising philosophy but also features about a dozen "super hot" weekly specials in a weekly full-page advertisement it runs in the food section of the Modesto Bee, the major daily paper in the market.

For example, in its advertisement this week, which broke yesterday, the discount grocery chain is offering chicken fryer leg quarters for 49 cents pound, boneless pork chops for $1.28 pound, Roma tomatoes for 58 cents pound, Kraft 32oz Mayonnaise for $2.28 each, and Betty Crocker Hamburger Helper for just 98 cents a box, along with another seven items at similar hot prices.

Generally, Cost Less Foods has the lowest advertised items when its dozen are so weekly promoted items are also ran in competitors weekly advertising circulars, which often is the case.

Another change in the Modesto market was the closure a few months ago of R-N supermarket, one of the city's last remaining larger independent supermarkets. The store's owners said increasing competition and higher rents were the reason they were closing the store.

The R-N supermarket building is currently vacant. It isn't very far from the Sylvan Square Shopping Center site where the first Modesto Fresh & Easy market is going. According to a commercial real estate source in Modesto, there has been talk of Tesco's Fresh & Easy possibly locating what would thus far be its third Modesto store in that now vacant building. However we have found no confirmation of that at present however.

Modesto market share leaders

In terms of market share leaders, Modesto-based regional supermarket chain Save Mart still holds that honor in Modesto and the surrounding market region.

Save Mart, which operates over 200 supermarkets in the Central Valley and Northern California under the Save Mart (in the valley) and Lucky banners (in the San Francisco Bay Area and Sacramento markets), along with a discount warehouse chain called FoodMaxx, has seven stores in Modesto -- five Save Mart supermarkets and one FoodMaxx warehouse unit.

Save Mart also has Save Mart banner supermarkets in the nearby cities of Riverbank, Oakdale, Ceres, Turlock and Patterson, along with one FoodMaxx store in Turlock.

Privately-held Save Mart, which has its corporate headquarters in Modesto, had sales of about $6.5 billion in 2007.

Sacramento-based Raleys, which also is privately-held, is gaining on Save Mart a bit in Modesto.

The 130 store chain, which operates supermarkets under the Raleys, Bel-Air and Nob Hill banners, along with a having it's own discount warehouse store chain called FoodSource, currently has four stores in Modesto, as well as one in Riverbank, Oakdale and Turlock, All of these stores are under the Raley's banner. The chain also has a store under the Nob Hill banner in the Stanislaus County city of Newman, which is about 25 miles from Modesto.

Independents and other players

O' Brien's Market, a three store locally-owned independent, is a vibrant force in Modesto as an upscale grocer. The retailer has two stores in Modesto and one in next door Riverbank. In addition to offering a full selection of basic food and grocery products in its supermarkets, O'Brien's puts a focus on selling specialty, natural and premium food and grocery products, and in-store fresh, prepared foods, along with baked goods.

O'Brien's is nearly the last vibrant independent left in the city however. And Modesto was once a thriving independent grocery store market.

Another independent, three-store Sam's Food City, which has been in Modesto and for decades, continues to operate and do well, according to local observers, although primarily as a neighborhood grocer, which there's certainly nothing wrong with. After all, that's Fresh & Easy's niche.

Sam's has one store in Modesto, one in Turlock and one in Livingston, which is about 20 miles from Modesto in neighboring Merced County. The stores niche is primarily lower-end and price and convenience-oriented.

Modesto also has a very popular Costco club store, which according to local observers does a very strong food and grocery business.

Trader Joe's has one store in the city.

The Winco supermarket chain also has a unit in Modesto. Winco stores are big and discount-priced. Winco also has a major regional distribution center located in Modesto. The fast-growing Idaho-based employee-owned chain is expected to build more stores in Modesto and the the surrounding area.

There's also a large Food-4-Less discount warehouse format store in Modesto/Ceres that does a brisk business, according to local market observers.

There are no natural foods chain stores in Modesto. However the city has a couple strong independent natural foods markets that do well, along with a number of smaller health/natural foods stores.

Since there isn't a Whole Foods or similar chain natural foods store in the city, Fresh & Easy could do well in the natural and organic categories since it offers a fairly decent selection of such products at affordable prices that will most likely be considerably cheaper than the existing independents in Modesto currently are selling similar items for.

Fresh & Easy's organic products selection is limited however since the small-format stores only carry about 3,500 total items. Therefore the larger, independent natural foods markets in Modesto should still continue to do well based on the fact they offer a much larger selection of items in a wider variety of product categories than Fresh & Easy can and does.

Tesco's Fresh & Easy Neighborhood Market has yet to publicly confirm the first Modesto Fresh & Easy store in the Sylvan Square center we reported on in March.

Fresh & Easy Buzz is the first publication to report on the second store at the 1717 Oakdale Road location.

Upcoming New Markets Special Report: Raley's Trying Out New, Smaller Footprint Supermarket Format in Central Valley, California City of Oakdale

West Sacramento-based Raley's Family of Fine Stores is trying out a new, smaller-format (about 40,000 -to- 45,000 square feet) supermarket concept under the new "Raley's Fresh Market" banner in the northern San Joaquin Valley city of Oakdale, in Northern California's Stanislaus County, Fresh & Easy Buzz has learned. Previously the supermarket chain has only used the Raley's name on its superstore format stores.

Oakdale, which calls itself the "Cowboy Capital of the the United States" because it holds one of the largest annual rodeos in the U.S., as well as has the most national competitive rodeo champions in the nation, is a small city of about 20,000 residents, located right next door to Modesto, which has a population of about 210,000. Stanislaus County currently has a population of about 500,000. The three-county northern San Joaquin Valley region, comprised of San Joaquin, Stanislaus and Merced counties, has a population of about 1.4 million residents.

As we reported in this piece earlier today, Raley's, which currently operates about 129 supermarkets and warehouse stores under the Raley's, Bel Air Markets, Nob Hill Foods, Food Source and now Raley's Fresh Market banners, is looking for new store sites throughout Northern California and in the Reno/Sparks/Lake Tahoe region in northern Nevada.

The new Raley's-owned store in Oakdale, called Raley's Fresh Market, is at 40,000 -to- 45,000 square feet much smaller than most of the modern day Raley's banner stores, which range from about 55,000 -to- about 75,000 square feet. It's also unique in that the "Fresh Market" banner store is located in a former supermarket building the retailer remodeled for its Oakdale store.

For example, nearly every new Raley's, Bel-Air, Nob Hill Foods and Food Source store the grocery chain has opened in recent years has been a brand new, built from the gound up supermarket, or in the case of Food Source, a discount warehouse format store.

The Oakdale store also is the first time Raley's has used the "Fresh Market" name along with its Raley's name on a supermarket.

The Oakdale store previously housed an independent supermarket named Oak Ridge Fresh Market, which was a spin-off by the owners of the building's previous grocer, Richland Markets, which built the building and operated a Richland Market banner supermarket in it for a number of years.

Richland Markets, a long-time family-owned area multi-store independent, has been selling off most of its seven supermarkets in the cities of Modesto, Turlock, Ceres and Oakdale over the last few years due to family succession and competitive issues, according to a Modesto-area food broker and regular Fresh & Easy buzz reader.

Just recently, Richland Markets agreed to sell two of its remaining three supermarkets to another locally-based multi-store independent, discount grocer Cost Less Foods, leaving Richland left with only its flagship supermarket in Turlock, which is a city of about 75,000, located 10 miles from Modesto, according to the local area food broker.

The decision to locate the store in a vacant supermarket building and to try out the new Raley's Fresh Market banner name was made for a couple of different but related reasons, Fresh & Easy Buzz has learned.

We've learned Raley's decided to acquire the vacant building this spring--the Oakdale Raley's Fresh Market just opened a few weeks ago--and turn it into a new format using the Raley's Fresh Market name for three primary reasons.

First, the store is located right across the street from a Save Mart supermarket. Savemart, which is headquartered in Modesto and operates supermarkets throughout the Central Valley under the Save Mart banner and warehouse stores under the Save Maxx banner--along with supermarkets in the San Francisco Bay Area under the Lucky banner (it acquired those stores in its 2006 acquisition of Albertson's, Inc.'s Northern California Division)--is the market share leader in the northern San Joaquin Valley.

When Save Mart acquired Albertsons Inc.'s Northern California stores in 2006 (close to 200 supermarkets), for the first time the Modesto-based chain entered Raley's home turf market of Sacramento. Prior to that, Save Mart had never opened a Save Mart banner supermarket in the Sacramento market, even though its only about 65 -to- 70 miles from Modesto. The retailer always had stores as close as 20 miles from Sacramento, so going into Sacramento would not have been unusual.

Additionally, Raley's only operated a handful of stores (literally two or three only) in Save Mart's home market region of Stanislaus, San Joaquin and Merced counties.

Further, Raley's and Save Mart are partners in a grocery distribution warehouse located in the Northern San Joaquin Valley city of Lathrop. The two chains even shared the same private label, Sunny Select, as their respective store brand, until Raley's started converting most of its store brand items to the Raley's label a couple years ago.

Raley's also uses the Nob Hill Foods brand for store brand specialty and premium foods items. Raley's still sells items in certain categories under the Sunny Select brand. Save Mart continues to use it as its primary store brand across all categories.

However, with Save Mart's arrival with multiple supermarkets in the Sacramento regional market following its acquisition of Albertsons Northern California Division, Raley's got its competitive juices flowing and decided to hit Save Mart a bit harder than in the past in its home base. In the last year, Raley's has opened brand new Raley's banner superstores in Modesto and in Riverbank, which is a right next door to both Modesto and Oakdale. Raley's now has three Raley's superstores in Modesto, one in Riverbank and now the Raley's Fresh Market in Oakdale.

The Oakdale location right across the street from the Save Mart supermarket was too good to pass up for Raleys as part of its upping the competitive ante on Save Mart on its home turf.

Second, since the Raley's Fresh Market store building is smaller than a normal Raley's banner superstore (and is more a supermarket), Raley's decided it would have to limit the assortment it normally puts in its Raley's banner stores. Therefore, the retailer wanted to differentiate its name by adding "Fresh Market" to it, among other reasons fro choosing the name.

Additionally, Raley's wanted to go head-to-head with the Save Mart across the street on price and value, which meant offering lower everyday prices than it does in its Raley's superstores, along with deeper store-specific promotions. Therefore, the format tweaks required by the smaller store footprint, along with the name change, are allowing the retailer to focus more on price and price promotions in the Raley's Fresh Market in Oakdale, without creating confusion in terms of its merchandising and pricing in the Raley's superstore format stores.

Lastly, since the store is in a smaller footprint as well as existing building, its overhead and operating costs are much lower for Raley's than is the case with its newer Raley's banner superstores, which at about 55,000 -to- 70,000-plus square feet not only are bigger, which consumes more energy, but also feature lots of refrigerated and frozen cases in them. Therefore, it can offer lower everyday prices and hot promotions, which it is, designed to undercut the Save Mart across the street. In general, Save Mart supermarket prices tend to be a bit lower everyday than Raley's supercenter prices are.

Since the supermarket's previous tenant, the Oak Ridge Fresh Market, used "Fresh Market' in its name, Raley's also decided to use it as part of its new banner (or hybrid Raley's banner perhaps is a better way to phrase it) because the supermarket chain felt it allowed for some consistancy in the tranistion from the previous grocer to Raley's.

The Oakdale Raley's Fresh Market is a conventional supermarket essentially with a few twists. For esxample, it puts a much stronger emphasis on fresh foods--meats, produce, prepared foods--than a traditional 40,000 square foot supermarket does.

Price and heavy promotion also are part of the store's focus. Since opening, the store has been conducting numerous hot, store-specific promotions, which have included heavy couponing, free gasoline cards to customers who spend a certain amount of money per-purchase, deep discounts on fresh foods and groceries, and other heavy price and value-oriented promotional campaigns.

The Oakdale Raley's Fresh Market also is offering customers a $5 back on every $25 spent promotion currently, along with coupons for free items like fresh eggs, meats, produce items and other food and grocery items throughout the store.

Save Mart hasn't stood still though. It recently fired back with a thick coupon book specific to the Oakdale Save Mart location across the street, offering higher coupon values on many of the same items the Raley's Fresh Market offered in its coupon book. Save Mart also last week launched a special promotion in which it gave a gas rebate of $40 in the form of a gas card to the first 500 customers to spend $40 on groceries in the store.

Raley's has now come out with another thick coupon book for the store; which no doubt will be met by another similar one from Save Mart. Oakdale shoppers, and from what we are told those from surrounding towns, are definately benefiting from the competition between the two across the street situated grocers.

A Raley's spokesperson recently told Fresh & Easy Buzz it's possible the grocery chain may open more Raley's Fresh Markets of approximately the same size as the Oakdale store in other cities, in vacant supermarket buildings. However, she said the Oakdale store currently isn't any sort of test for rapidly rolling out a smaller-format, Raley's Fresh Market banner chain of stores anytime soon. However, the retailer isn't ruling out more, similar stores.

As we reported in this May 10 piece, Tesco plans to open its first Fresh & Easy Neighborhood Market grocery store in Modesto next year in a currently vacant building which most recently housed an independent supermarket that went out of business earlier this year.

That building, which is about 30,000 square feet, is set to be split in half by the shopping center's owner, with nearly half of it then remodeled into a Fresh & Easy small-format grocery store. Ironically, that now out of business Modesto independent supermarket, Michotti's Marketplace, bought the store (the business not the building) from Richland Markets, which is the same retailer that built and operated the Oakdale store the new Raley's Fresh Market is now located in.

We also know from our commercial real estate sources that Tesco Fresh & Easy Neighborhood Market is currently searching for additional store sites in Modesto and in the surrounding cities and towns.

Additionally, as we reported here, Tesco plans to locate its Northern California Fresh & Easy distribution center facility in Stockton, which is about 30 miles from Modesto. Stockton and Modesto (as well as Sacramento)--and the other cities mentioned above--are all conveniently connected along California Highway 99.

In terms of Fresh & Easy's entrance into the Modesto-Oakdale area, the Raley's and Save Mart price fight and competitive battle in the small city of Oakdale should give Tesco some idea of how much these two regional supermarket chains want to protect their respective hometown turf--the Sacramento region where Raley's is headquartered and the northern San Joaquin Valley region where Save Mart in headquartered.

Raley's, with about 129 stores, has annual sales of about $3.5 billion, while Save Mart, which has more than double Raley's total store count, had sales of nearly $6.5 billion in its latest fiscal year.

Both chains are far and away the current market share leaders in their respective headquarter regions. Additionally, Save Mart, with its acquisition of Albertsons Northern California divsion, the stores of which it now operates under the Lucky banner, is the number two market share leader in the San Francisco Bay Area, after number one Safeway Stores, Inc.

New Markets: Tesco's Fresh & Easy to Move Into Modesto, California Market; Open its First Store in the City Early Next Year

Fresh & Easy Buzz has learned Tesco's Fresh & Easy Neighborhood Market will open its first small-format, convenience-oriented grocery store in the Central Valley city of Modesto, California early next year.

The Fresh & Easy grocery market will be located in part of a building occupied until earlier this year by independent grocery store Michotti's Marketplace, which closed for lack of business, according to Tom Klein of San Francisco-based Crosspoint Realty Services, owner of the Sylvan Square shopping center where the building and future Fresh & Easy Neighborhood Market grocery store is located.

Klein says the building which formerly housed the independent supermarket is about 30,000 square feet.

Crosspoint Realty will divide the building in half, with Tesco taking about 15,000 square foot to remodel for its Fresh & Easy format. The real estate firm will lease the other 15,000 square feet of retail space to another tenant. The retail selling space for the Fresh & Easy grocery market will be about 13,000 square feet, which is about average for the chain.

The 30,000 square foot Michotti's Marketplace was the anchor retail tenant in the Sylvan Square shopping center. The center is located on the northeast corner of Coffee Road and Sylvan Avenue in the city of about 210,000 residents. Modesto is the county seat of Stanislaus County, which has a population of about 520,000.

The Sylvan Square shopping center currently has a Walgreens drug store, Ace Hardware store and a couple of restaurants in it, according to Crosspoint Realty's Klein.

Additionally, the commercial real estate firm is currently searching for a tenant for an empty 6,000 square foot building which is located between the building that will be the future home to the Fresh & Easy grocery store and the Ace Hardware store, Klein says. The building, which Klein says was home to and education-oriented supply store, has only currently become vacant, closing about a month ago.

Region experiencing economic pains

Modesto, Stanislaus County and the surrounding tri-county region, which includes San Joaquin and Merced counties, are currently experiencing difficult economic times.

The three counties have regularly been number one (Merced County), two (Stanislaus) and three (San Joaquin) in the U.S. in the number of home foreclosures nationwide, according to monthly statistics compiled by the U.S. department of Housing and Urban Development.

Home values in all three counties are 40 -to- 50% less than they were just two years ago. However, prior to about two years ago housing values soared in the region over the last decade, providing some cushion for people who were fortunate to have bought their homes 10 or more years ago. For those who bought homes in the area in the last few years though, things are tough.

Modesto and the surrounding region also has experienced a rapid growth in unemployment numbers since late last year. Stanislaus County's current unemployment rate of about 11% is nearly double the state of California's current average of about 6.3%. And, by comparison, the nearby San Francisco Bay Area, which has a much more diverse economy, is still and overall unemployment rate of about 4.6%.

The Modesto region historically has unemployment numbers that run three points or so higher than the state average do to the seasonal natural of the agricultural industry, which remains the area's number one source of economic activity, despite lots of diversification into manufacturing, services, health care and retail over the last 20 years.

Future Fresh & Easy location has interesting history

The building in Modesto's Sylvan Square Shopping Center where Tesco will open its first Fresh & Easy grocery store in the city early next year has a long history of food retailers doing business in it for years and then closing their stores for lack of business, according to a long time Modesto-based food broker and city resident who's a Fresh & Easy Buzz reader and correspondent.

In the 1970's to the 1980's the building was home to an Alpha Beta supermarket. Until the early 1990's, when it was acquired by then Salt Lake City Utah-based American Stores, Inc., Alpha Beta was a major supermarket chain in California. Albertsons, Inc. acquired American stores in the 1990's.

Albertsons, Inc. was acquired by SuperValu, Inc. and the Cerebus investment firm two years ago. Cerebus bought Albertsons' Northern California division of about 132 stores as part of the buyout deal involving SuperValu, Inc., then sold that operation to Modesto-based Save Mart., Inc.

Save Mart operates those stores under its Save Mart banner in the Central Valley and under the Lucky banner in the Bay Area. Save Mart currently operates about 255 supermarkets and warehouse stores under the Save Mart, Lucky, S-Mart and FoodMaxx banners in Northern California and the Central Valley.

The Sylvan Square Alpha Beta supermarket closed in the 1980's. A short while later a local multi-store independent, Richland Markets, took over the location and operated a Richland Market supermarket in the building for many years, according to the Modesto food broker and long time city resident.

Then, siting a lack of business at the store, Richland closed the unit in the late 1990's, he says. Michotti's Marketplace lease the location about six years ago and closed earlier this year, sighting a lack of business as its reason for doing so, according to our Modesto food broker correspondent and source.

When we told the long time Modesto resident and 30-plus year Northern California food broker Tesco's Fresh & Easy was putting a store in the now empty once again building, his response was one of caution and ambivalence.

He says the location is a tough one, evidenced by the failure of the previous grocers to make a long-term go of the site.

However, he also says because of Fresh & Easy's small-format size and limited assortment merchandising operation, they might be able to succeed in the Sylvan Center because most of the shoppers in the neighborhood have always used the various grocery stores which have operated at the location as more limited, neighborhood or convenience shopping venues, rather than as their primary grocery store.

Of course, Tesco's positioning and goal with its Fresh & Easy stores is for the markets to be primary, and to a limited degree secondary, shopping venues for neighborhood residents. Therefore, if this long-time Modesto resident, food broker, and player in the local food and grocery retailing industry is right about the nature of how neighborhood residents have historically shopped the supermarkets in the location, Fresh & Easy will have its work cut out for it in terms of gaining primary shoppers to the Sylvan Square store.

Critical mass and Tesco in Modesto

Tesco's moving into the Modesto market isn't a surprise to Fresh & Easy Buzz. As we've written often, the retailer's goal in California, Arizona and Nevada, its current three market regions, is to build a "critical mass" of Fresh & Easy grocery stores in all three regions.

In March when we reported here that Tesco will built its Northern California distribution center in Stockton, which is only 30 miles from Modesto, we said the grocer was looking for store locations in Stockton, Lodi, Galt, Manteca, Tracy and Modesto, all cities within no more than 30 minutes of each other along Highway 99, the region's major transportation artery.

As we reported here in February, Tesco will open 19 stores in the Sacramento Metropolitan region starting early next year. One of those stores is in Galt, which we mentioned above.

The retailer also will start opening the first of 18 confirmed Fresh & Easy stores in the San Francisco Bay Area in early 2009, as we first reported late last year and Tesco confirmed in this piece we published on January 30.

Modesto is about 65 miles from Sacramento straight down Highway 99. Modesto also is only about 50 miles over the Altamont Pass to the East Bay Area city of Livermore and only about 90 miles from San Francisco.

Therefore, locating Fresh & Easy stores in Modesto and eventually the surrounding area is just part of what we call the grocery chain's "critical mass" store location strategy. Think Starbucks and Walgreens and Rite Aid drug stores in terms of how they locate stores within a couple miles of one another in key markets. Tesco's strategy in its market regions with Fresh & Easy is similar, just applied to grocery stores rather than coffee shops or drug stores.

Critical mass in the neighborhood

We also have reported, although Tesco has yet to confirm, the retailer plans to build at least an initial five Fresh & Easy grocery stores in the southern Central Valley city of Bakersfield and the surrounding metro region. Bakersfield is roughly half way between Los Angeles and Modesto.

We also reported here in March, that based on information from our commercial real estate sources in the area, Fresh & Easy representatives have been looking for store locations in the Fresno region. Fresno is less than an hours drive from Bakersfield, and only about a two hour drive from Modesto.

We also know Tesco is looking for a few sites in between Fresno and Modesto, in the Merced County region.

It's all about "critical mass." The long term California strategy for Tesco is to have stores throughout the state, about 1.5 -to- 2 miles apart, so the grocery chain can it hopes become sort of the de facto neighborhood grocery store for the states residents and grocery shoppers.

Longer term plans call for opening stores in the far north of California (thus far the farthest north stores confirmed are in the Sacramento region and the city of Napa), moving right in to Oregon and then Washington state.

Those plans have been put off a bit by Tesco for a few reasons: they've discovered just how hard it is to open a new store every three days in the U.S., Fresh & Easy store performance has been less than the retailer hoped it would be thus far, and the recessionary U.S. economy has made the British grocery chain more cautious than it was when it embarked on its Fresh & Easy venture, which at that time found the U.S. economy was doing well compared to its present state.

Modesto famous

Modesto is famous in agriculture, business and wine circles as being the home of the World's second-largest winery, 75 year old, family-owned E.J Gallo Winery, which has its corporate headquarters in the city.

Modesto also is the corporate home to Save Mart, Inc. one of the largest privately-owned supermarket chains in the U.S., with about $6 billion in annual sales and about 25,000 employees.

Save Mart and Gallo are Modesto's top two corporate employers, as well as being the leading philanthropic corporate citizens in the city and region.

For example, the city's brand new performing arts center which opened earlier this year is named the Gallo Center for the Arts. The Gallo family donated in the neighborhood of $15 -to- $20 million dollars towards building and having the state of the art performing arts facility named after them. The facility cost much more than the amount of the Gallo donation to built but the family were the single-largest donors and catalysts behind the project.

Gallo also gives money to every imaginable charity in the region, from feeding the hungry and supporting dozens of local charities, to funding medical research and providing college scholarships to high school students in need.

Save Mart, which was founded in Modesto over half a century ago, operates seven Save mart banner supermarkets and one FoodMaxx warehouse store in its home town, along with having stores in nearly every nearby city and town.

In addition to being one of Modesto's top two employers, Save Mart also is along with Gallo the cities other top philanthropist and supporter of community events and causes.

For example, this weekend one of Modesto's biggest events, the California Invitational Relays, is taking place at Modesto Junior College, the city's and region's community college campus. Save Mart not only is the main sponsor of the world renown track and field event, which is a qualifying stop for the upcoming Olympic Games, it was the local supermarket chain that stepped in and took over sponsorship of the event in the mid 1990's when it looked like its organizers would have to stop holding the annual track and field competition for lack of money.

Over the years under Save Mart's sponsorship, the event has become much more than a world renown track and field competition. Save Mart has brought major vendors/suppliers like Coca-Cola and the Kingsford Charcoal Briquets (Clorox Co.) and Budweiser Beer (Anheuser Busch) brands, along with numerous others, in as co-sponsors of the event.

This weekend, along with the world-class track and field competition, there's a nationally sanctioned BBQ grilling competition drawing world-class competitors from throughout the U.S., a parents' and kids' fun run event, a food fair, and other activities as part of the event, all coordinated by Save Mart. Further, all of the proceeds from the event go to the grocery chain's Save Mart Cares charity, and are used to support local community groups and organizations.

Through its charitable arm, Save Mart also donates millions of dollars each year to numerous groups and non-profit organizations in the region.

The retailer's annual United Way employee campaign also is the top corporate-producing one for the Modesto region's United Way office. Additionally, among its numerous charitable activities, Save Mart holds regular food drives in its stores for the region's food banks, and often matches the amount of food and grocery products its customers donate at the end of each in-store food drive.

These activities are just the tip of the iceberg in terms of the locally-based supermarket chain's charitable contributions.

Modesto also is the hometown of movie director and producer George Lucas, who now lives in the San Francisco Bay Area where his Lucasfilm empire is based. Lucas', who was born and raised in Modesto and still has family living in the city, based his iconic 1973 hit movie American Graffiti on his teenage years growing up in Modesto, where "Cruising McHenry Avenue" was the hip and cool thing to do.

Modesto infamous

Modesto also has an infamous side. Most recently, the city received worldwide attention as the place where a fertilizer salesman named Scott Peterson, who maintains he is innocent to this day as he sits on California's death row, was convicted of murdering his pregnant wife Laci Peterson.

Not too long before the Peterson case, Modesto was in the news on another infamous note because of a missing intern named Chandra Levy , who disappeared while working at a governmental internship in Washington D.C. Her remains were found and identified in 2002.

Part of the reason the case received such widespread publicity is because the Modesto region's popular at the time U.S. Congressman Gary Condit was found to be having an affair with Ms. Levy, right up until she disappeared from her Washington D.C. apartment. Condit lost his Congressional seat from the Modesto region over the affair, when a former supporter of his ran against him and won in the election following the news of his affair with the missing intern.

A growing city and region

Over the last 25 -to- 30 years, Modesto has grown from a small, primarily farm economy-oriented town of about 80,000 residents to a big central city of well over 200,000. Much of that growth is the result of San Francisco Bay Area residents who've moved to the city and surrounding region because housing costs are nearly 50% cheaper than in the Bay Area. Many of these residents commute to their jobs in the Bay Area daily.

The tri-county area--San Joaquin, Stanislaus and Merced counties--today have a population of about 1.4 million residents. The nearby nine-county Bay Area has nearly 7 million residents.

Combined, the two markets with over 8 million people, offer a food retailer the opportunity to sell lots of groceries. Both markets are very competitive food and grocery retailing markets as well, with respective healthy chain and independent food retailing sectors.