Sacramento, California-based Raley's, a multi-banner and multi-format operator of 129 supermarkets and warehouse stores in Northern California and Nevada, is currently looking to expand its store count in both regions, Fresh & Easy Buzz has learned.
Commercial retail real estate sources in Northern California first tipped Fresh & Easy Buzz off that Raley's was looking for locations for new stores in the regions, with a particular focus on Northern California, including its hometown Sacramento and Central Valley markets.
Kent Haggarty, who is heading up the search for West Sacramento-based Raley's, confirmed the grocery chain is looking for locations in Northern California and Northern Nevada, but says he isn't at liberty to say exactly where and how many.
Raley's operates four retail banners. It's number one banner is Raley's, which are 55,000 -to- 80,000 square foot combination food and non-foods superstores, featuring large natural foods departments, a wide-variety of in-store, fresh prepared foods, and extensive selections of specialty, gourmet and ethnic food and grocery products, along with basic groceries and lots of non-foods and general merchandise items.
The stores also have large in-store bakeries and pharmacy's. Additionally, most of the Raley's banner superstores also have in-store eating venues and cafes. Newer Raley's banner stores also have gasoline fueling stations next to the stores.
The format is upscale but value-based in that the Raley's banner isn't a specialty supermarket but rather a combined basic supermarket and upscale specialty store. Raley's banner stores are located all over Northern California and Nevada.
The Sacramento-based supermarket chain, which is the leader in market share in the Sacramento Metropolitan region, also operates the Bel-Air Markets banner. Bel-Air stores are upscale supermarkets which average from about 30,000 -to- 50,000 square feet.
The stores carry a complete selection of food, grocery and non-foods items, lots of specialty and natural foods products, and in-store fresh, prepared foods. They have in-store bakeries, eat-in venues and cafes, all in an upscale but complete supermarket format.
Raley's acquired Bel-Air, which was the grocer's leading competitor in the Sacramento area, in the late 1980's from the Wong family. Most of the stores are located in Sacramento and surrounding areas.
The third supermarket banner Raley's operates is Nob Hill Foods. Raley's acquired then Gilroy, California-based Nob Hill in the 1990's from the Bonfante family, which operated the family-owned chain for about 65 years.
The Nob Hill banner is an upscale supermarket format similar to Bel-Air. The stores are about the same size on average (newer stores are in the larger range for both the Nob Hill and Bel-Air banners) and merchandised in a similar manner.
The Nob Hill banner supermarkets are located in the San Francisco Bay Area and central coast region, along with a couple in the Central Valley in Northern California. This is due primarily to the fact these were the chain's historical market regions when owned by the Bonfante family before the Raley's acquisition.
Lastly, Raley's operates about a dozen warehouse format discount stores under the Food Source banner. These stores are essentially basic warehouse format stores--cement floors, warehouse shelving--with a slightly upscale twist compared to a Food-4-Less or similar warehouse stores, for example. The focus of the Food Source stores is price and value.
Raley's, with about 129 stores currently in the four formats, does nearly $4 billion in annual sales. Our sources tell us the Raley's banner will be the one the grocery chain expands primarily in Northern California and Northern Nevada.
The new generation Raley's banner stores are big: about 65,000 -to- 80,000 square feet, and as mentioned include fueling stations as part of the format.
Raley's recently opened two new Raley's banner stores in the Northern San Joaquin Valley in Northern California. These stores include a new service the food retailer is trying out, which is a drive-up quick customer pick-up service for grocery orders. Customers can place their grocery orders online and then pick them up curbside at a special location outside the store. A clerk wheels the grocery order out and puts it in the customer's car. The customer pays for the order as part of the online ordering process.
Tesco plans to start opening an initial 40 of its small-format, combination discount basic grocery and fresh foods markets in Northern California starting either at the end of this year or more likely early in 2009.
Fresh & Easy Buzz has identified 21 Fresh & Easy grocery store locations in the San Francisco Bay Area thus far, 18 of which Tesco's Fresh & Easy Neighborhood Market has confirmed, and 19 stores set to open in the Sacramento Metropolitan region. The company has confirmed all 19 of those stores. The retailer is currently looking for additional store sites in both Northern California market regions.
Raley's is the food and grocery market share leader in the Sacramento Metro market, as well as being the number two leader in the northern San Joaquin counties of San Joaquin, Stanislaus and Merced, after number one Save Mart, Inc., which is based in Modesto, about 70 miles from Sacramento.
The Sacramento-based chain also is a major player in parts of the San Francisco Bay Area, as well as in the southern coastal region of Northern California and in northern Nevada.
However, it's the food retailer's market share lead at home in the Sacramento market, where its corporate headquarters are located along with the greatest number of its stores, that Raley's will attempt to protect aggressively from any competitive attempts by Tesco's Fresh & Easy to steal market share away from the grocery chain. This includes price reductions if deemed necessary, based on the grocer's history of meeting competition head on, such as that currently being attempted by Safeway Stores, Inc. and Save Mart in the Sacramento Metropolitan region market.
However, by opening so many stores, 19, at one time (over a period of months of course), and with more new stores planned in the Sacramento area market, Tesco is showing it's serious about taking on the long time dominant grocery retail player in its hometown market.
While the Raley's stores (all banners) aren't similar to Fresh & Easy in that they are larger, far more upscale in design, sell lots of non-foods (especially the Raley's banner), offer far greater fresh and shelf-stable product selections along with a much more extensive prepared foods offering (prepared in-store), there's only so much share of consumer stomach in any given market. Therefore, Tesco's Fresh & Easy, with its low-price focus, could steal business away from Raley's, particularly in the basic grocery category.
Currently, Fresh & Easy's everyday low prices in its stores in Southern California, Nevada and Arizona are considerably lower than Raley's everyday prices on basic grocery items are. As a result, if Raley's maintains it current pricing once a critical mass of Tesco's Fresh & Easy stores open in the Sacramento regional market, it could find even its loyal customers cherry picking for grocery deals a bit at Fresh & Easy, then shopping at Raley's for fresh and other foods.
Raley's however has thus far fought off every major competitive challenge--and in the case of former competitor Bel-Air Markets, acquired it--come its way for decades. (The grocery chain will celebrate its 75-year anniversary in 2010.) Therefore, it will adjust and adapt its merchandising and pricing as it sees fit, if it believes Fresh & Easy begins to pose a threat to its market share dominance.
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