More UK Retailers Jump On The 'Banish The (Plastic) Bag' Campaign

On March 4 and 5 we wrote here about the London Daily Mail newspaper's "Banish The Bags" campaign, which is designed to get retailers in the United Kingdom to come up with ways to dramatically reduce, if not eliminate, the use of single-use plastic carrier bags in their stores.

The anti single-use plastic carrier bags' campaign also is designed to encourage shoppers to bring their own "bags for life" to the store with them each time they go shopping. ("bags for life" are reuseable shopping bags.

Just a couple days after the Daily Mail began its anti-plastic bag campaign, with front page headlines, stories and graphics in its February 28 edition, UK grocery and hard/soft goods retailer Marks & Spencer announced it would start charging shoppers a per-plastic bag fee of about 10 cents U.S. if its customers want their purchases packed in a plastic carrier bag rather than in a paper or reusable tote bag.

As we reported here, just a week after the "Banish The Bags" campaign began, Britain's Debenhams' department store chain joined Marks & Spencer as the second major retail chain to announce it would start charging for the thin plastic shopping bags. Debenhams, which has about 320 stores in the UK, said it will soon begin a trail program, charging the equivalent of about 10 cents U.S. per plastic carrier bag, if shoppers' choose them over other options.

Now, less than two weeks after the "Banish The Bags" campaign began, a number of additional UK retailers are announcing various steps they plan on taking to reduce the number of single use plastic carrier bags they give away for free in their stores:

>UK High Street department store chain Woolworths says it will begin a trial in which the retailer will charge 1-pence per-bag fee for the plastic carrier bags. If the trail is a success (read, not too many shopper complaints), the company says it will rollout the scheme to all its stores. Woolies has 820 stores in the UK. The goal of the trail is to get shoppers to use reusable bags, the retailer says. The chain says it gives out about 220 million plastic shopping bags a year.

>B&Q, a general merchandise retailer, said a trial it has conducted in its stores in Scotland and North East, in which it charged 5-p (about 10 cents U.S.) in some of its stores, has resulted in an 88% reduction in the amount of plastic carrier bags those stores used during the trail period. It's expected B&Q will implement the per-bag fee in all its stores soon.

>Specialty retailer Help the Aged announced it will stop using plastic carrier bags in all of its shops in June.

>Oxfam, the non-profit group which operates retail shops in the UK, has also announced it will phase out using plastic shopping bags in all of its stores.

Additionally, two of the UK's 'big four" supermarket chains--Sainsbury's and Asda--have announced initial measures they say will reduce the amount of single-use plastic carrier bags their stores use to pack customers grocery purchases. (Tesco and Morrisons are the other two "big four" members.)

Sainsbury's, the UK's number two grocery market share leader, after number one Tesco, says beginning on March 24 it will instruct all store staffers to ask each shopper if they have brought back a bag from home they want to use before packing their groceries in a plastic grocery bag. The store clerks' also will tell each customer the stores' sell reusable bags, and ask them if they would like to purchase one or more and have their groceries packed in them rather than in a plastic bag.

Sainsbury's says last year it gave out for free 15 million "bags for life," which are reusable shopping tote bags. The retailer says it plans to continue giving out free reusable bags on a periodic basis to customers.

Our UK industry sources tell us they expect Sainsbury's to take further measures to reduce plastic bag use in its stores, since they agreed in February on a plan to reduce the number of single-use plastic carrier bags the chain uses by 25% by the end of 2008. Last year, Sainsbury's handed out 1.78 billion plastic carrier bags, which is the equivalent to about 68 for every household in Britain. (All of the "big four" UK supermarket chains voluntarily agreed on this 25% reduction.)

Asda, the number-three supermarket chain in the UK, announced it will remove its free plastic bag dispensers from its checkouts, where they currently are located, and put them behind the counter. Additionally, the chain, which is owned by U.S.-based Wal-Mart, Inc, says it will instruct its store-level employees to only use plastic bags if a shopper requests one. If one isn't requested, the store clerk is to use a paper bag, or if the shopper has one or buys one in the store, a reusable shopping tote.

The Co-op, another leading food retailer in the UK, has began a six week trial in which it is using a new type of home-compostable carrier bag as a way to cut down on the number of free plastic carrier bags it gives out in its stores. The bags can be tossed in a home compost pile. The bags biodegrade at a fairly rapid rate. The Co-op says it's goal is to stop using single-use plastic carrier bags in its stores completely.

Tesco, the UK's leading retailer (and the world's number-three retailer) with a 34% market share, hasn't made any changes regarding its single-use plastic carrier bag policy to date since the plastic bag banishment campaign started on February 27. The retailer, parent company to Fresh & Easy Neighborhood market in the U.S., announced shortly after the "Banish the Bags" campaign began, that it has no plans to either institute a per-bag fee or to eliminate the plastic shopping bags in its United Kingdom stores.

The UK's other leading grocery chains--Morrisons, Somerfield and Waitrose--haven't made any minor (like Sainsbury's and Asda) or major announcements to date in the wake of the "Banish the Bags" campaign. Our sources tell us to look for some type of an announcement from Waitrose in the next week.

It is estimated by goverment sources that British retailers give out about 13 billion free single-use plastic carrier bags each year. It's further estimated that on average each bag is used for 20 minutes, and then dumped in the trash.

It takes the plastic carrier bags years to biodegrade in a landfill, and of course many never make it to the landfill. The bags can be recycled. However, the infrastructure to do so is poor--and consumer plastic bag recycling behavior is even worse.

Weekend Humor: Tesco Comes Up With the Ultimate New Format Concept

With a nearly 35% market share in the United Kingdom, Tesco is head-over-heels that nation's leading retailer. It's to the UK, what Wal-Mart is to the U.S.--the 500 pound big-box Gorilla.

Like Wal-Mart in the U.S., Tesco in the UK seems to open two or three new stores every week. If the mega-retailer isn't opening one of its huge superstores or hypermarkets, it's opening a smaller Tesco Extra store, or an even smaller Tesco Express, its small-format UK version of a Fresh & Easy Neighborhood Market.

Similar to Wal-Mart in the U.S.--which has numerous municipalities and community groups througout the country trying to stop the the brawny big-box brawler from Bentonville from opening its Supercenters in their towns--so too does Tesco have similar groups in the UK, that feel the retailer has enough stores already, and will do whatever it takes to keep a Tesco store out of their respective neighborhoods.

The humor publication, The Daily Squib, has its own take on Tesco in the UK. One of the Squib's star writers, a fellow by the name of Grzegorz Teodozjusz Januariusz (haven't used the Z key that much in years), offers his analysis and opinion on what he says is Tesco's latest retail format brainstorm. Read the piece here.

Former NBA All-Star and Sacramento Native Kevin Johnson is the Driving Force Behind a Fresh & Easy Market in Sacramento's Oak Park Neighborhood

Former NBA basketball star, and Sacramento, California native, Kevin Johnson is the driving force behind bringing one of the 19 Tesco Fresh & Easy Neighborhood Markets we recently reported are coming to the region, to the city of Sacramento's Oak Park neighborhood.

And, that's not all: yesterday, the former ex-Phoenix Suns' guard announced he is running for Mayor of Sacramento, challenging current, three-term incumbent Mayor Heather Fargo, who last week joined Tesco Fresh & Easy Neighborhood Market CEO Tim Mason at a press conference in front of a future Fresh & Easy grocery store in Sacramento, to announce the retailer's plans to enter the Sacramento market with 19 stores, seven of which will be in the capital city.

Johnson made his announcement in a press conference at the Guild Theatre in Sacramento's low-income Oak Park neighborhood, where the 42 year-old basketball star was raised.

Echoing U.S. Democratic Presidential candidate Barack Obama's call for "change," Johnson said: "We need a change in the city. As I went out the last month and talked to people around the city, folks have said to me they believe city government is nonresponsive, tired, uninspired and bureaucratic. they want something different in Sacramento. (They're) clamoring for change."

It is in this very Oak Park neighborhood, Johnson's boyhood home, where he is bringing a Fresh & Easy grocery store. Since retiring from the NBA and moving back home to Sacramento, the former NBA star has been a real estate developer, including establishing a non-profit community development corporation called St. Hope.

Johnson devotes a great deal of his time to his St. Hope non-profit organization. Among its projects has been transforming the failing Sacramento High School into a successful Charter School.

The St. Hope community development organization also has developed the '40 Acres Art Gallery and Cultural Center' in the low-income Oak Park neighborhood. The cultural center includes residential lofts, a bookstore and a Starbucks cafe.

Oak Park is one of the city's oldest neighborhoods. It's been seeing a renaissance in recent years, as projects such as those by Johnson's organization, as well as those by private developers, are revitalizing it. The neighborhood also has become popular in recent years because it's one of the most affordable in the city in terms of housing. Numerous young professionals have moved into the neighborhood, buying old houses and remodeling them, which is changing the area's demographics somewhat, although it's still low-income.

Johnson owns about 37 properties in the Oak Park neighborhood. He recently had to issue a public apology regarding the condition of a number of these properties, when the Sacramento Bee, which is the region's major daily newspaper, ran a story reporting that half of his properties had been sighted by the city for code violations over a 10-year period. The violations included vacant lots being fallow, along with garbage being allowed to fill the empty lots.

Johnson responded quickly to the Bee article however, and has moved to clean up all the lots in the neighborhood, according to the Sacramento planning department, which enforces the city's residential and commercial property codes.

Johnson's latest project is bringing one of the 19 Sacramento area Fresh & Easy grocery markets to the commercial core in the Oak Park neighborhood, on a piece of property he owns there. The neighborhood is underserved by grocery stores, especially those that offer a selection of everyday groceries at reasonable prices, along with fresh foods like produce and meats. Johnson --in partnership with Tesco's Fresh & Easy--aims to address this lack of a grocery store in the place where he was raised.

One of Tesco's strategies with its U.S. Fresh & Easy small-format, convenience-oriented grocery stores is to locate stores in what it calls "food deserts," neighborhoods that currently are underserved by grocery stores. Oak Park fits that strategy--and with the NBA All Star, and perhaps future Sacramento mayor--behind the project the location could be gold for Fresh & Easy.

When neighborhood residents and community groups heard the news about a month ago that Johnson was bringing a Fresh & Easy Neighborhood Market to the neighborhood, the response was almost universally positive. Neighborhood groups had been trying to bring a grocery store that fits the bill of offering basic groceries along with lots of fresh foods to the neighborhood for a number of years. The Oak Park grocery market is scheduled to open in 2009, probably about mid-year.

If Johnson is elected mayor, Tesco's U.S. Fresh & Easy Neighborhood Market venture just might have an important friend at Sacramento City Hall.

Regional Market Intelligence Report: Market Research Firm Trade Dimensions, Inc. Quantifies Latest Sacramento Region Grocery Market Share Percentages

On February 28, we wrote this piece, "News & Analysis: Tesco's Fresh & Easy Confirms 19 Store Locations for the Sacramento-Vacaville Region in Northern California." Our piece included an analysis of the Sacramento region grocery retailing market, including the competitive environment Tesco's Fresh & Easy will find when it opens its first stores in the area, either late this year, or more likely in early 2009.

Today's Sacramento Bee, the Sacramento region's major daily newspaper, has a similar story on the Sacramento area grocery retailing environment. The article in the paper's business section reports on a new study just released by the market research firm Trade Dimensions, Inc. which details the last six months of grocery retailing competitive activity in the Sacramento market.

Wal-Mart on a roll

Trade Dimensions' reports that the biggest gainer in the Sacramento region grocery retailing market is that brawny big-box bully from Bentonville, Wal-Mart, Inc. Wal-Mart, which only recently began opening its combined food and general merchandise Supercenters in the region, increased its share of the Sacramento-area market to 7.1%, from a meger 2.3 percentage points just a year earlier.

Wal-Mart has opened four new Supercenters in the market region in the last two years, and has plans to open two more soon. Wal-Mart has a number of its standard Wal-Mart discount stores in the region which sell a limited assortment of grocery products. However, Trade Dimensions, Inc.--like all retail grocery market research firms and analysts--only counts the retailer's Supercenters in terms of calculating market share numbers, since they are the format that offers a full-line supermarket inside the stores. Wal-Mart doesn't have any of its smaller, 45,000 square foot Wal-Mart Neighborhood Markets in the Sacramento area to date.

For retail grocery sales market share assessment purposes, the Sacramento market is defined as the following counties in the region: Sacramento, El Dorado, Nevada, Placer, Sutter, Yolo and Yuba counties in California, and Douglas County, which includes Carson City, Nevada in Northern Nevada. It's a population of over 2 million people.

Sacramento region market share leaders

Rounding out the retail grocery sales market share picture in the Sacramento market region, according to the Trade Dimensions' report are:

>Raley's. Raley's, which is based in Sacramento, operates 129 supermarkets under the banners Raley's Superstores, Bel-Air Markets and Nob Hill Foods. The chain also operates a fourth banner, Food Source, which is a discount warehouse store format. As we reported on February 28, Raley's is far-and-away the market share leader in the Sacramento region, with a 34.2% share of the market, according to Trade Dimensions.

>Safeway Stores, Inc. Safeway, the third biggest grocery chain in the U.S., has a 21.3% share of the Sacramento grocery market, according to the Trade Dimension's report. Safeway has its corporate headquarters in Pleasanton, California (Bay Area), which is about 70 miles from Sacramento. Safeway is the market share leader in Northern California, which includes the San Francisco Bay Area, along with the Sacramento area, and the other regions which comprise the northern-half of the golden state.

>Save Mart. Save Mart, which is a privately-held supermarket chain with its corporate headquarters in Modesto, California, which is about 60 miles from Sacramento in the Central Valley, has an 11.4% share of the region's grocery retail market. Save Mart's share of the area market dropped about 1.4% this year over last year, according to the report.

However, this is nothing to worry about for Save Mart. Three years ago it wasn't even a minimal player in the Sacramento region market. In 2006 it acquired Albertsons, Inc.'s Northern California division, which not only doubled the number of stores the grocer has, but doubled it annual sales from about $3 billion to a current $6.5 billion. The acquisition also put Save Mart into the Sacramento market for essentially its first time.

The 1.4% drop in market share is do to the fact Save Mart closed a couple of the older Albertsons' stores in the region, in addition to the fact it has had to remodel a number of the stores, and convert all of them to its Save Mart banner. We actually expect to see Save Mart's market share numbers increase by a few percentage points in 2008 because it's nearly done converting all of the area stores.

The Save Mart brand name is strong throughout the Central Valley, including in the Sacramento region. Additionally, the grocer is a value-based food retailer and promotes heavily. Additionally, the Sacramento area, like most of California, is currently experiencing bad economic times. This is a climate Save Mart has historically done very well in, compared to other grocery retailers.

Other key players in the region

Other players in the Sacramento Market, but not included in the Trade Dimensions' report, include Food-4-Less, a small chain of price-impact warehouse format big-box stores, Nugget Markets (which also owns the Food-4-Less chain), a multi-store locally-based independent which operates upscale supermarkets that feature basic grocery products, along with lots of specialty, natural and organic product offerings department-wide, Trader Joe's, which has a handful of stores in the region, and Whole Foods Market, Inc. Whole Foods currently has only one store in the market region, in Sacramento. However, the supernatural grocer is looking to open at least two more stores in the area in the near future.

Nugget Markets, which is based just outside Sacramento in Woodland, has been named one of the three best independent grocers in America by the supermarket trade publication Progressive Grocer. Additionally, the grocery retailer was named this year (and for the last three years) as one of the 100 best companies to work for (number 12 out of 100) in the U.S. by Fortune magazine in its annual "best companies to work for in the USA" survey.

Nugget Markets is growing rapidly and opening new stores in the region. The local grocer currently has eight of its upscale stores in the Sacramento area, with more on the way. While the Nugget stores are upscale in design and product selection, the grocer also puts a low-price emphasis on its everyday grocery product selections.

In fact, Nugget offers shoppers what it calls its "Price Challenge." The food retailer invites any customer to purchase $100 worth of groceries at a competitor's supermarket. The shopper can then bring the $100 grocery purchase into a Nugget grocery store, and a clerk will scan the items at a register. If the Nugget total is higher than the total on the receipt from the store where the customer bought the $100 worth of items, Nugget Markets will give the shopper double the price difference, plus an extra $10.

All of the Nugget grocery markets have a "scorecard" on the wall above the front entrance which shows how many shoppers have taken the "Price Challenge," along with how Nugget measures up on the challenge with the competition. Note: they win the majority of the time.

Drug chains Long's and Walgreen's operate numerous drug stores in the Sacramento area. The stores--Long's more so than Walgreen's--sell limited-assortments of packaged groceries, lots of beverage products, and fresh dairy and frozen foods' products in their stores at discount prices. There also are a number of long-established independent grocers in the market region--such as upscale Corte Brothers Markets--which have their own local niches.

Wal-Mart the big growth factor in region

The big factor in the market however is Wal-Mart. With only a handful of Supercenters in the region, it's already controlling over 7% of the grocery dollar market share. When it opens its two newest Supercenters, that percentage should increase by at least two points based on the sheer volume the mega-stores do. We also know Wal-Mart has plans for more Supercenters in the market, if it can get them approved and built.

Wal-Mart hasn't even started to scratch the surface in terms of the number of Supercenters it wants to build and open in the market. It's biggest onstacle to doing so is that it faces opposition by cities and organized groups each time it proposes a new big-box store in the market. In fact, many cities in the area have enacted "big-box store" ordinances specifically designed to keep a Wal-Mart Supercenter out of their communities.

The Tesco Fresh & Easy factor

Tesco's Fresh & Easy Neighborhood Market, with an initial 19 stores in the region, is likely to inject additional competition into this already competitive market. However, one has to put the chain's entrance into the market in perspective relative to Wal-Mart. Fresh & Easy grocery markets average about 10,000 -to- 13,000 square feet. In other words, the 19 new Tesco Fresh & Easy stores in the region will add about 209,000 square feet of new retail grocery sales square footage to the market.

In contrast, Wal-Mart's Supercenters average about 215,000 square feet. About 40% of that square footage, or about 100,000 square feet is dedicated to merchandising food and grocery-oriented products. That means the two new Wal-Mart Supercenters set to open later this year in the Sacramento market will have roughly the same amount of overall square footage devoted to selling groceries as all 19 of the Fresh & Easy grocery markets will have.

Of course, total square footage is only one measure. The goal of Tesco with the Fresh & Easy stores is to locate in neighborhoods throughout a region, creating a "critical mass" of stores that will hopefully serve as the primary and secondary neighborhood grocer for the residents of those neighborhoods. In contrast, Wal-Mart Supercenters are generally located outside of residential neighborhoods, and require residents to drive a distance to shop at them.

Raley's won't just observe the new competition

Of course, local guy Raley's has for decades had the role of the Neighborhood grocer--even though its stores range from about 45,000 square feet -to- as big as 75,000 square feet. But in Raley's case, size doesn't matter. It is the local brand. [Read more about Raley's as the local brand in our piece here.] Trying to convert Raley's primary customers to a Wal-Mart Supercenter or a Fresh & Easy Neighborhood Market is no easy task in the Sacramento region. And, the locally-based chain isn't about to sit still and let it happen either. It's an innovator, and is planning some new innovations to meet all its new competition.

For example, Raley's recently introduced a service into some of its stores in which a shopper can place their grocery order online via Raley's website. The store then picks the customer's order, which the shopper pre-pays online using his or her credit card. When the customer arrives at the Raley's store, a clerk brings the grocery order out to the shoppers car, so she doesn't even have to go into the store to get her groceries.

Raley's also is very customer service oriented, a feature most Sacramento shoppers seem to like. Store clerks offer to carry every grocery purchase out to a shoppers car, for example. Additionally, the chain has a policy in which is will special order any item a customer wants for them, even if they don't carry it in any of their stores.

The West Sacramento-based grocery chain also is a long-time leader--not just in Sacramento but nationally in the U.S.--in natural, organic and prepared foods merchandising. Most of its stores have large, store-within-a-store natural products' departments, which are staffed with clerks who assist shoppers with any questions they might have. The departments carry an extensive selection of natural, organic and healthy foods across all dry grocery, beverage and perishable foods categories.

Raley's also is respected for its position on food safety, which leads to strong fresh produce and meat sales. It is one of the only supermarket chains in the U.S. which has all of its fresh produce inspected by a third-part professional company, which tests the produce items and certifies them as having either low or zero-detectable levels of pesticide residue. Raley's started this program after the infamous Alar chemical in apples scare in the U.S. in the 1980's, and has continued and even expanded the third-party testing program today.

You can read the full story,"Wal-Mart gains ground in Sacramento grocery stores," by the Sacramento Bee's Jon Ortiz here.

Britain's 'Banish The (Plastic) Bag' Campaign and Tesco: London Street Artist 'Celebrates' the Tesco Plastic Bag; More UK Retailers to Charge Bag Fee

Yesterday, we wrote here about how the London Daily Mail newspaper's campaign to "Banish The (Plastic) Bag," started on February 27, is sweeping across the United Kingdom. In just the one-week since the campaign to banish single-use plastic carrier bags was started by the Daily Mail, British politicians, environmental groups, citizens and retailers have jumped on the anti-plastic shopping bag bandwagon.

Popular UK grocery and hard-soft goods retailer Marks & Spencer was the first merchant to announce it would begin charging shoppers the equivalent of about 10 cents per-bag U.S. if they wanted their purchases packed in a single-use plastic carrier bag.

Today, the British department store chain Debenhams said it is working on a scheme to charge for single-use plastic shopping bags, along with offering reusable tote bags in all of its 140 stores, beginning with a trial soon in some of its shops.

Another development occurred today in the UK's Channel Islands, where supermarkets including Safeway, Marks & Spencer, and Checkers will soon begin charging customers about 5 cents U.S. per plastic carrier bag. Tesco doesn't have a store on the Islands.

Speaking of Tesco, as we wrote yesterday, the UK's biggest retailer is square in the line of fire in the "Banish The Bag" campaign, as it announced last week it has no plans to either charge shoppers for the single-use plastic carrier bags or eliminate their use in its stores.

Tesco gives shoppers who bring their own reusable shopping bags to its stores points on their Tesco Club Cards, which are good for discounts and other store specials. The retailer said it believes this is an option which encourages consumers to bring their own bags, and reduces plastic bag use, while still preserving shopper choice.

The Daily Mirror, environmental groups, some politicos and numerous citizens have been heavily critical of Tesco for not doing more as the largest retail user of the single-use plastic carrier bags in the nation. Tesco is the UK retail grocery market share leader, with 34% of total retail sales.

The Tesco Plastic Bag Flag

Now, a street artist has done his or her part to back the "Banish The Bag" campaign, while hoisting Tesco plc. on its own plastic bag petard it appears. A few days ago, a large painting appeared on the side of a chemist shop in Islington, in north London. The painting shows two children, with their hands on their hearts, pledging allegiance as a third child hoists a waving Tesco plastic bag up the flag pole. [See the picture of the art work at the top of this story.]

The painting is unsigned. However, the word on the north London street is that it's the work of the famed London street artist Banksy, who has sold similar pieces of his work for hundreds of thousands of dollars.

Tesco says its position on banishing plastic bags remains the same today as it did yesterday, according to a company spokesman: the retailer says it has no plans to either charge shoppers a per-bag fee or to eliminate single-use plastic carrier bags in its stores.

In our piece yesterday, we said we think Tesco will change, and modify, its position on the issue sooner rather than later. If life imitates art, we think that modification will come fairly soon. Further, we hear from our grocery industry correspondents in London, that Waitrose and Sainsbury's, may be making announcements, which could include a per-plastic bag fee similar to the one announced by Marks & Spencer last week.

Here's a rundown on where the major UK grocery chains stand vis-a-vis single-use plastic carrier bags. The retailers are listed in order of their market share position.

1. Tesco: Says won't charge for or eliminate plastic grocery bags


2. Asda: Still using plastic bags. Says considering charging; other options.


3. Sainsbury's: Still using plastic bags. Says considering charging; other options


4. Morrison's: Says is evaluating the options.


5. Co-op: Doesn't offer single use plastic carrier bags in its stores. Supports a ban.


6. Marks & Spencer: Plans on charging for plastic bags.


7. Waitrose: Still using plastic bags. Says considering charging; other options.

All seven of the grocery chains above sell a variety of reusable shopping bags in their stores, ranging for inexpensive carrier bags made out of a synthetic material, to low price -to- higher-priced cotton canvas shopping totes. All of these above retailers who offer plastic bags in their stores also offer some sort of Club Card bonus point system or a "cents off" per bag discount for each reusable shopping tote bag shoppers' use in lieu of accepting a plastic bag for their groceries.

Retailers throughout the world need to create a policy

Tesco is far from the only major international retailer that is going to see itself in the middle of the plastic carrier bag issue; it's just the major target right now in the UK because of the position it took on the issue, and because the issue is front and center in the nation.

U.S-based Wal-Mart, the world's number one retailer, and France's Carrefour, the second-biggest global retailer, shouldn't take glee in Tesco's situation at home. The non-democratic government of China's decision to completely ban the use of thin plastic bags at retail stores in the nation is going to spur other countries throughout the world to follow suit, although many of them already were even before enacted it's new law.

What big, international retailers like Wal-Mart, Carrefour, Tesco and others are already beginning to find, but will soon start finding regularly, is that there will be a patchwork quilt of laws and ordinances throughout the world regarding if and how the retailer's can offer plastic shopping bags in their stores.

In some places, like China, parts of Africa, parts of Canada and Australia, the bags are already banned. In other places, like Ireland and possibly India, the single-use carrier bags will be taxed. And, in the United States, the retailers' will be required to place recycling bins in stores in some states--like California, New York and New Jersey--but will also find city-by-city bans, such as those already in place in San Francisco. There are at least 40 cities in the U.S. currently debating plastic grocery bag bans for their communities.

We think international retailers like Tesco, Wal-Mart and Carrefour--and others like the "big three" supermarket chains in the U.S.--Kroger Co., SuperValu, Inc. and Safeway Stores, Inc.--would be smart to get their ducks in a row and create and announce their own single-use plastic carrier bag policies--be they a per-bag fee, elimination of the bags' in their stores, or some other scheme. If not, the state and local legislators will define that policy for them by creating a law--which is happening with increasing frequency.

We predict when Whole Foods Market, Inc, eliminates the use of the plastic carrier bags in all its U.S. stores next month on Earth Day, April 22, the "Banish the Bag" campaign will begin across the pond here in the U.S.

We aren't saying a major U.S. daily will launch a campaign similar to what the Daily Mail has done in the UK--although they might think about doing so as most U.S. newspapers need as many readers as they can find--rather, we believe the Whole Foods Market self-ban will serve as a symbolic and real signal in the U.S., which will elevate the issue even higher than it currently is.

Tesco Opens Three New Stores in the Phoenix, Arizona Metro Area Today; Ten More on the Way

Tesco Fresh & Easy Neighborhood Market achieved a trifecta today in the Phoenix, Arizona Metropolitan area, when it opened three stores in the same day.

Additionally, Tesco plans to open an additional 10 stores in the Phoenix Metro region this year. This will bring to 37 the number of stores the grocer will have in the region.

The three stores that opened today in the Phoenix area are at: 32nd Street and Greenway Road in Phoenix, at Sossaman and Southern Roads in Mesa and at Higley and Ray Roads in Gilbert. Mesa and Gilbert are suburbs located right next door to the city of Phoenix.

The three new stores bring Fresh & Easy Neighborhood Market's total grocery store count to date in the Phoenix Metro area to 15.

The additional 10 small-format, convenience-oriented Fresh & Easy stores Tesco will open in the Phoenix Metro region demonstrate what we call the retailer's "critical mass" strategy, which is to follow the model of U.S. retailers like Starbucks, Walgreen's Drug and a few others, and open numerous stores in neighborhoods throughout various regions (the critical mass) so as to try to establish a presence as the defacto or default "neighborhood" retailer.

The locations of the 10 new stores Tesco will open in the Phoenix Metropolitan area are:

• 43rd Avenue and Bell Road, Phoenix
• 19th Avenue and Greenway Road, Phoenix
• Seventh Street and Thunderbird Road, Phoenix
• Gilbert Road and Chandler Blvd., Chandler
• Gilbert and Guadalupe Road, Gilbert
• Gilbert Road and Southern Avenue, Mesa
• Higley and Queen Creek Roads, Queen Creek
• Pima Road and Union Hills Drive Drive, Scottsdale
• Scottsdale Road and Shea Blvd., Scottsdale
• Baseline and Kyrene Roads, Tempe

Many of these 10 new store locations aren't far from existing Fresh & Easy grocery markets, demonstrating the grocer's use of the "critical mass" strategy. In fact, note the three new stores that opened today, and a number of the locations of the 10 new store locations to come soon.

Tesco plc. is the number-three retailer in the world in terms of gross annual sales, and the biggest retailer in the United Kingdom. The retailer's Fresh & Easy Neighborhood Market USA division opened its first stores in Southern California, Arizona and Metropolitan Las Vegas, Nevada in November, 2007. There currently are 59 Fresh & Easy grocery stores in these three states.

Fresh & Easy stores are small-format, convenience-oriented grocery markets which average 10,000 square feet -to- 13,000 square feet. The grocery stores sell a limited-assortment combination of Fresh & Easy store brand and national brand basic or everyday grocery products at discount prices, along with selections of fresh produce and meats, prepared foods, specialty, natural and organic grocery items, wines and craft beers (spirits in some stores), fresh flowers, and a limited assortment of non-foods items.

The small-format stores feature self-scanning checkout counters, where customers checkout their own groceries with the assistance of a store clerk if needed. The stores are utilitarian in design but have a semi-upscale interior. They are positioned to be everyday neighborhood markets with a slightly upscale twist in terms of design and product selection. We describe them as sort of a warehouse-style discount supermarket meets Trader Joe's.

New Details and Analysis About Safeway's Small-Format Summer SF Bay Area Surprise for Tesco's Fresh & Easy Neighborhood Market

We were one of the first publications to report last year that Pleasanton, California-based Safeway Stores, Inc. was developing a new, small-format (15,000 -to- 20,000 square feet) grocery store similar to Tesco's Fresh & Easy Neighborhood Market, which the San Francisco Bay Area headquartered supermarket chain plans to initially open in the San Jose area sometime this summer.

Tesco plans to open an initial 18 of its small-format, combination basic grocery/semi-upscale fresh foods and specialty grocery stores in the San Francisco Bay Area beginning in late 2008, or more likely in early 2009. A number of these 18 initial stores will be located in the South Bay Area, in San Jose and the surrounding communities.

Since we reported the Safeway small-format grocery store development story, we've been following Safeway's development process closely, doing research and talking to as many industry--and industry-affiliated--sources as we can. As a result we've learned some additional facts about the new small-format grocery stores likely to open in July or August, 2008

Small-format stores will likely open in July or August, 2008

First, based on information from our various sources, we believe the first of the four -to- five pilot Safeway small-format grocery stores will open in either July or August of this year in the San Jose area. Part of Safeway's reason for wanting to open the stores this summer, is so that the retailer can have the intial stores opened for a significant period of time prior to Tesco entering the market in either late 2008 or early 2009.

It was initially believed Tesco would open the first of its Bay Area Fresh & Easy stores this summer. However, Tesco says it won't open stores in the region until 2009. We still believe its possible Tesco will try to open a few Fresh & Easy markets in the Bay Area in late 2008. The first store location lease (of the 18 signed to date) the British retailer signed in the Bay Area was for an empty Albertsons supermarket building on Bird Avenue in the city of San Jose, which it will remodel into a Fresh & Easy Neighborhood Market store.

Safeway wants to have its small-format grocery stores open and doing business before Tesco's Fresh & Easy even comes to town, so to speak. By opening the first stores in July or August of this year, it could give Safeway anywhere from six months to close to a year of retail operations before the first key is even turned in a Fresh & Easy store door by Tesco in the Bay Area.

Safeway small-format grocery stores: A few snapshots

We don't have a complete picture of what the Safeway small-format grocery stores will look like in terms of design or overall product mix. However, based on conversations with sources and much analysis ,we do have some pieces of the puzzle filled out thus far.

In terms of design, we expect something fairly upscale inside and out. However, the stores aren't going to be super upscale. Rather, they will be attractive in terms of design but also somewhat utilitarian looking. They aren't designed for only high-end consumers.

In October, 2007 Anthony Gilmore, the former Northern California Region President for Whole Foods Market, Inc. resigned his position with the supernatural foods grocer to accept an executive position with Safeway Stores, at its corporate headquarters in the East Bay Area city of Pleasanton. (Gilmore actually began his retail grocery career years ago with Safeway Stores, Inc.)

While leading Whole Foods' Northern California division, Gilmore completed an aggressive and varied new store opening program for the supernatural grocer in the region. His strength was in being able to organize and lead the development of "new generation" Whole Foods' stores, giving each of the new stores its own local flair.

For example, under Gilmore Whole Foods' Northern California built its biggest and most comprehensive food store in Campbell, California, which is located in the famed Silicon Valley, and is only a few miles from San Jose. This store, which is now called the Northern California flagship, is nearly 80,000 square feet. It's a double-story superstore, filled with numerous in- store dining venues, a wine bar, a mini day spa, and much more. The store also fits its location well, both in design and in its product mix.

Further, Gilmore lead the creation of what is arguably Whole Foods' most innovative store to date: its European-style market hall store in downtown Oakland, California. The store, which opened in October, 2007, is designed like a European food hall, yet contains all of the departments--and more--the supernatural grocer is famous for.

In addition, Gilmore pioneered the building of Whole Foods' lifestyle-oriented superstores as retail anchor stores for upscale multi-unit housing developments in the city of San Francisco.

For example, the newest San Francisco store, which is located in the hip, up-and-coming Potrero Hill neighborhood, is the ground floor retail anchor of a huge, high-end condominium development which is becoming a very popular place to live in the city. The store design is modern, like the condo project, but also incorporates the history of the neighborhood. Among the store's unique features are an indoor-outdoor wine bar and bistro which features a DJ who spins tunes for customers on weekend evenings.

Gilmore's charge in his position at Safeway is primarily retail format development and merchandising. He's been working on the chain's successful lifestyle format, including a project which involves creating a "second generation" lifestyle format for Safeway's supermarkets. Some of these "second generation" developments are already beginning to show up in the retailer's new lifestyle stores.

What we refer to as the "second generation" aspects include more upscale design and interior packages--colors, flooring, shelving, and the like--and added in-store features like the fresh nut bars and similar new in-store venues appearing in a number of the grocery chain's recently opened lifestyle supermarkets.

Gilmore also was brought on, in part, to work on the small-format grocery store project, both from a format design and product selection and merchandising standpoint. Expect to see his input in how the 15,000 -to- 20,000 square foot grocery markets look, the products sold in them, and how they reflect the communities (localism) they are in. We expect some unique and creative flourishes in the store's design and product selection.

Prepared foods to be central to the small-format stores

Safeway is nearing completion of a line of fresh, prepared foods which it will begin rolling out in its lifestyle stores soon. The prepared foods' line includes ready-to-heat and ready-to-eat entrees, side dishes and grab-and-go type foods. Some of the prepared foods' items will be under the retailer's O' Organics brand, others under its Eating Right healthy foods brand, and still others under one or more new brands. These prepared foods items will be sold in all of the grocer's lifestyle stores--as well as in the new, small-format grocery markets, we believe.

The grocer already has extensive prepared foods offerings--which it has grown dramatically over the last couple years--for sale in its lifestyle supermarkets. For example, it offers fresh soups, sandwiches, pizzas and other items under its Safeway signature brand. The grocer also offers prepared entrees and side dishes under various store brands, along with many other ready-to-eat and ready-to-eat items.

A little over a year ago, Safeway bought a restaurant near San Jose, in Redwood City, California, called Citrine New World Bistro. The grocer has been using the restaurant--which features organic and healthy dishes and even uses the name O' Organics (Safeway's store organic grocery brand) in the menu--to develop and test items with consumers as a way to develop its fresh, prepared foods items.

Look for an extensive array of fresh, prepared food(including lots of organic) in the new small-format Safeway grocery stores. These items should range from basic, inexpensive items, to much higher-end gourmet items, which are being developed by professional chefs at the company-owned restaurant.

A limited assortment of discount groceries

In a conference call with supermarket industry analysts last week, Safeway CEO Steve Burd said because of the inflationary and recessionary nature of the U.S. economy, consumers are increasingly filling their shopping carts with cheaper groceries in his stores. He even said the company is seeing more shoppers buying generic groceries in Safeway-owned stores.

Safeway's stock tumbled to a 52-week low last week, even though the grocer's fourth-quarter profit met analysts expectations. Analysts--and Burd--attribute this decline in stock value to the current bad economic climate in the U.S., which like Burd argued to the analysts is causing middle-to-upper end consumers to buy more discount grocery products. During the conference call, Burd described the current rate of grocery inflation as "the highest I've seen in my 15 years as Safeway's chief executive."

We wouldn't be surprised to see Burd and company use the new, small-format stores to merchandise a limited assortment of private label and national branded basic grocery items along with the fresh, prepared foods and other offerings. We don't know this for a fact, and nobody at Safeway has gone on the record with us either confirming or denying this. Our view is based on discussions with numerous sources, as well as our own analysis.

Safeway has two strong selling value-positioned store grocery product brands. One is a low-end, near generic line, the other a mid-range brand. They also have Safeway Select, a premium, yet competitively-priced multi-category store brand, in addition to a number of other store brands.

In fact, these three--low-end, midrange and premium--store brands are the top market share sellers in many of their respective categories, such as various canned fruits and vegetables and other packaged goods. These product brands--like the Safeway retail brand--are strong in the Bay Area. Unlike Tesco's Fresh & Easy store brand, which will be new to the region, Safeway's brands have extremely strong equity with Bay Area consumers.

For example, the San Francisco Chronicle, the region's highest-circulation newspaper, runs a column in its food section every Wednesday in which it compares at least 10-12 grocery brands in a different grocery products category each week. Safeway's store brands (even the value brands) frequently place in the top three, beating out in many cases the top national brand in a given category, which sells for much more at retail than the Safeway store brand.

Safeway has a huge advantage over Tesco in this approach. First, the grocer knows the Northern California (and especially Bay Area) market inside-out. It's far-and-away the number one market share leader in the region. Second, the grocer has decades of market-specific scan data in its databases. This is an invaluable tool when choosing a limited basic grocery products selection for a store.

Finally, Safeway has over 20 years' of consumer data from its club card program. From a consumer-buying and behavior perspective, this information, combined with the market specific scan-data, can help the grocer not only choose the optimum limited-assortment basic grocery selection for its new, small-format stores, but also the club card data can guide the retailer in custom-tailoring the stores to each and every neighborhood.

This is powerful information that even the world's number-three retailer Tesco can't buy for any price. If they could, the retailer's Southern California stores would have a different basic grocery item product mix, and be tailored much better to the city's and neighborhoods they are located in.

What's in a name?

Lastly, and actually the most fun, is the question: What will Safeway name its small-format grocery stores? While we don't have any specific information from sources inside or outside of Safeway Stores, Inc. who can provide us with information credible enough for us to go on the record and give you the name Safeway's new, small-format grocery stores will go by, we are willing to go out on a limb and offer a potential or even probable name, based on three key factors we've identified and anlalyzed.

Those three factors are: First, Safeway Stores, Inc. likes the Safeway name and brand. All of its 271 stores in Northern California are branded Safeway, with the exception of a small division of warehouse stores called Pak 'n Sav. In addition, all of the grocery chain's stores in the Pacific Northwest, Arizona, Colorado and western Canada fly under the Safeway banner, as do the stores in the Washington D.C./Maryland/Virgina tri-state region.

All of the company's other banners--Vons, Pavillions, Dominicks, Randall's, Tom Thumb, Genuardi's and Carr's--were formerly independent chains which Safeway acquired, and as a result decided to keep the chain's names rather than change them to Safeway. The grocer sells its Safeway brand-named private label products, such as the Safeway Select, in all of these banner stores however.

The Safeway food retailing brand has strong consumer equity in Northern California, and especially in the Bay Area, where most of its stores are located, along with its corporate headquarters. As a result, we believe the grocery retailer is likely to use "Safeway" as part of the name for its new, small-format grocery stores when they open this summer.

Second, over the last four or five weeks we've floated a name for the small-format stores around to industry sources inside and outside of Safeway. We also have heard this name used by some Safeway suppliers, and others such as food brokers, who do regular business with Safeway at its corporate headquarters in Pleasanton.

While none of our sources (in the case of those outside Safeway) know for sure what the grocer will name the new, small-format stores, a number of them told us they've heard the name we put out there discussed among some serious industry people in Northern California. In terms of people inside Safeway (who didn't confirm or deny), the name we floated received some interesting responses. Not one of the insiders dismissed the potential name for the new, small-format stores we mentioned out of hand to us though.

All of this is purely anecdotal, and we aren't claiming otherwise. Rather, its merely one part of the three-part puzzle we are analyzing, along with a couple other factors. (Did you really think we would give you everything?)

The third piece of this three-part analysis puzzle involving the possible name for the small format, convenience-style grocery stores involves history. Many of our readers may not know this but there is a Safeway chain in the Middle Eastern country of Jordan. Safeway Jordan isn't owned by or affiliated with U.S.-based Safeway Stores, Inc.

However, there is an historic connection. U.S.-based Safeway Stores, Inc. once was an international food retailing company. Among it's international operations was Safeway plc. in the United Kingdom. Safeway Stores, Inc. USA sold UK-based Safeway a long time ago. And non- Safeway USA-affiliated Safeway plc. was recently acquired by Britain's Morrison's supermarket chain, which has nearly completed removing the Safeway banner from the stores in the UK.

Prior to selling UK-based Safeway plc. to Morrison's, the company owned Safeway Jordan and operated stores in that country and in Kuwait. In 2003, Safeway plc. sold its Jordan division to The Sultan Center (TSC), a Jordanian supplier and retailer of food, grocery, perishable and general merchandise items in the middle east. Jordan is a monarchy, so although it has a vibrant private sector, the ruling government family and business sectors are strongly tied-in together.

This is where the history gets interesting. Now, remember UK-based Safeway plc. was once long ago owned by USA-based Safeway, Inc. Safeway USA sold its UK operations to a group there who named it Safeway Plc. That group established Safeway Jordan, then sold the Jordan division to Jordanian-owned TSC.

TSC-owned Safeway Jordan operates three Safeway branded retail formats in that country. Those three retail grocery store formats are: Safeway service stores or supermarkets, which are similar to a western supermarket; Safeway Wholesale Center, which are a cash & carry-type format; and Safeway Express, which is a hybrid basic neighborhood grocery store/convenience store/food-service store.

Yes, you guessed it: we are suggesting (not stating as fact or saying we have any confirmation) there is a decent probability that Pleasanton, California-based Safeway Stores, Inc. will name its new, small format grocery stores, which will open this summer in the San Francisco Bay Area, Safeway Express.

There's an added caveat for Safeway Stores, Inc. in going with the Safeway Express name for its new, small-format grocery markets as well: Tesco, parent company of small-format Fresh & Easy Neighborhood Market, operates Tesco Express small format grocery stores throughout the UK and in other parts of Europe. These stores are the model from which Tesco created its Fresh & Easy grocery market format in the U.S. There are significant differences between the two formats--Tesco Express and Fresh & Easy--but also many similarities.

It would be ironic if Safeway names its new 15,000 square foot -to- 20,000 square foot grocery stores in the Bay Area--which will go head-to-head with Tesco's 10,000 square foot -to- 15,000 square foot Fresh & Easy grocery markets beginning at the end of this year or in early 2009--Safeway Express.

In many ways, using the Safeway Express name for the stores would set the stage for an all out premptive summer surprise by Safeway for Tesco's Fresh & Easy Neighborhood Market in the Bay Area and elsewhere in Northern California.

Note: If Safeway doesn't want to put its brand name (Safeway) on the small-format stores, or wants to use a fresher, more upscale natural and organic foods' sounding name, we think Citrine--like the company-owned restaurant--also might be a name in the running.

The tagline to the "Citrine" restaurant name, by the way is: 'Citrine: discover a new world of flavor.' Not too bad of a name for a chain of small-format grocery markets which would put an emphasis on fresh and natural, is it?