Fresh & Easy Buzz: July 2010

Friday, July 30, 2010

Fresh & Easy Neighborhood Market Store at Central & Adams in South Los Angeles is Now Accepting WIC Vouchers; Additional Stores to Follow

Thursday, July 29, 2010

Smart & Final Opens Four SmartCo Foods Stores in Metro Denver Since June 23; Store Five to Open August 4

A long line of waiting customers enter the SmartCo Foods store in Centennial, Colorado at 6 a.m. on grand opening day, Wednesday, August 28. A Fresh & Easy Buzz correspondent counted about 300 shoppers waiting in line outside the store early yesterday morning before the doors opened.

In the first paragraph of our July 14, 2010 story [July 14, 2010: Smart & Final Opens Second SmartCo Foods Store Today in Metro Denver, Colorado] about Southern California-based Smart & Final's opening of its second SmartCo Foods store in Metropolitan Denver, Colorado, we said this: "Southern California-based Smart & Final isn't letting any dust gather on the thousands of new grocery aprons it purchased earlier this year for the employees of it's first five SmartCo Foods stores, which are set to open in Metropolitan Denver, Colorado this year."

Nothing could be more true just a couple weeks later.

Since we published the story on the opening of the second SmartCo Foods combination warehouse format, supermarket and farmers market-style grocery store in Metro Denver (the region is also referred to as the Front Range), Smart & Final has opened two more of its first five stores in the region (for a total of four) - the store in Longmont, Colorado, July 20 (grand opening July 21), and the store in Centennial, yesterday, July 28.

And on August 4, the fifth SmartCo Foods store, this one in the Denver suburb of Littleton, will open. The store is at 3615 West Bowles Ave.

The four SmartCo Foods stores now open are located at:

>16746 E. Smoky Hill Road in Centennial
>1442 S. Parker Rd. in Denver
>5141 Chambers Rd. in Denver
>1750 North Main St. in Longmont

The store in Centennial, Colorado, the most recent SmartCo Foods unit to open, is 49,000 square-feet. Like all five of the stores, it's housed in former Albertsons supermarkets, which were closed quit some time ago by the retailer.

Also, like the other four stores, Smart & Final has hired a veteran of the Colorado food and grocery retailing market as store manager of the Centennial store. He is Pat Dolan, who has 37 years of experience in the grocery industry, including retail positions at Safeway Stores and Sunflower Farmers Market.

The produce department in the SmartCo Foods store in Centennial, Colorado. Its design and merchandising is very similar to Smart & Final's Henry's Farmers Market stores.

Smart & Final also went all out for the Wednesday, July 28 grand opening of the Centennial, Colorado store, like it has for the previous three units, and like it will on August 4, when it opens the fifth SmartCo Foods store in Littleton.

The grand opening celebration started bright and early at 6 a.m. on Wednesday, when store manager Dolan and other representatives from the grocery chain were joined by local city officials and business leaders in opening the doors to the new store. Shoppers were already lined up outside the store and were welcomed inside for an official welcoming ceremony, which included the cutting of a huge sheet cake decorated with the SmartCo Foods logo.

The SmartCo Foods store that opened on July 28 in Centennial, Colorado features a full-service fresh meat and fresh seafood department.

Among the grand opening day events at the Centennial store were giveaway's of SmartCo Foods' gift cards of $20 to $100 to the first 250 customers in line, food demos and free samples, free reusable shopping bags, various kids activities and free gifts, live entertainment and loss leader specials throughout the store. It was an old school grocery store grand openings with some modern day twists.

SmartCo Foods also made two $2,500 donations to two local non-profit groups - The Gathering Place and Colorado Storm Soccer Association - at the grand opening.
The grocer has made the same $5,000 donations at all of its grand openings this summer. For example, at the Longmont, Colorado store opening a week earlier, Smart & Final's SmartCo Foods donated $2,500 to OUR Center and LiveWell Longmont, two local non-profit groups.

When Smart & Final opens its SmartCo Foods store in Littleton, Colorado next week (August 4), it will have opened five stores in a period of just a little over a month. The first store, at 1442 South Parker Road in Denver, opened on June 23.

The Littleton store, which is 42,000 square-feet, will be managed by another veteran of the grocery retailing business and Colorado market region, David Crookston, who has 17 years of experience in the industry, including positions at Sunflower Farmers Market, Wild Oats and Reay’s Ranch Markets, according to a SmartCo Foods' spokesperson.

The grand opening of the Littleton store on August 4 will start at 6 am and include all the bells and whistles that have become the hallmark of the previous four SmartCo Foods' grand openings.

Each of the SmartCo Foods stores are staffed by about 100-115 employees, according to the grocer. Smart & Final has established a standalone SmartCo Foods division in Metro Denver, which is headed by Scott Drew, SmartCo Foods' vice president and general manager. Drew says the company has hired 600 employees to staff the five stores so far.

As we've reported previously, Smart & Final says it plans to open 20-25 SmartCo Foods stores in Metropolitan Denver, Colorado over the next few years. The first five stores range in size from 61,000 square-feet to 41,000 square-feet. The other stores are expected to be in the same size range.

According to Smart & Final president Dave Hirtz, the retailer also plans to open SmartCo Foods stores in California and Arizona before the end of this year. Smart & Final, which also owns and operates the Henry's Farmers Market chain, also plans to open its first Henry's store in Northern California next month.

California and Arizona just happen to be the two states where Tesco's Fresh & Easy Neighborhood Market has the majority of its 159 fresh food and grocery stores. There are currently 98 Fresh & Easy stores in Southern California and the Central Valley and 34 units in Metropolitan Phoenix, Arizona. The other 27 Fresh & Easy stores are in Metro Las Vegas, Nevada. If Smart & Final hits the ground running with its SmartCo Foods format and stores in California and Arizona like it has thus far in Colorado, it could add yet another layer of competition - like it's doing in competitive Metro Denver - in two other Western U.S. states where hyper-competition is already the norm.

Related Stories:

July 14, 2010: Smart & Final Opens Second SmartCo Foods Store Today in Metro Denver, Colorado

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

June 29, 2010: A Pictorial Look Inside Smart & Final's First SmartCo Foods Store in Denver, Colorado

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

Tesco's Fresh & Easy Neighborhood Market Putting Together List of Managers Interested in Transferring to Northern California

Pictured above is an artist's rendering of the future Fresh & Easy store at Third and Carroll Streets in San Francisco's Bayview neighborhood. The store is the retail anchor of a residential condominium development, the first phase of which is nearly completed. Details here.

Breaking Buzz: Northern California Special Report - News & Analysis

Tesco is currently taking a major step in it's plans to launch Fresh & Easy Neighborhood Market into Northern California, Fresh & Easy Buzz has learned.

Members of Fresh & Easy's senior management are asking headquarters workers, district-level managers and store managers at its 159 stores, particularly those in Southern California and the Central Valley but also in Nevada and Arizona, if they're interested in transferring to Northern California next year, when as we've reported the fresh food and grocery chain will likely start opening the first of its stores in the region.

The primary emphasis in terms of potential transfers to Northern California is on district managers and store managers, and to a lessor degree on store team leaders (assistant managers). Fresh & Easy wants to have as many management-level employees as it can get who already are familiar with how the chain operates ready to staff the Northern California stores. It can then hire most of the non-management store-level employees locally, according to our sources.

The objective is to compile a list of managers interested in transferring to Northern California to be used to staff the stores with managers, as well as to have district managers in place.

Tesco has 37 publicly announced or confirmed Fresh & Easy Neighborhood Market store locations currently in Northern California - 19 in the Sacramento/Vacaville Metropolitan region and 18 in the San Francisco Bay Area.

We've identified an additional 14 Fresh & Easy store sites in Northern California. See our Northern California Fresh & Easy Store List. Tesco may not end up opening all 14 stores, just as it might not end up opening all of the 37 Fresh & Easy locations it announced in 2008. Doing so depends on various criteria.

Tesco's Fresh & Easy Neighborhood market is offering current district and store managers a higher pay rate then they're now receiving if they transfer to Northern California, reflecting the higher cost of living in the region. For example, The cost of living in the San Francisco Bay Area in particular is considerably higher than it is the Central Valley, Arizona or Nevada, as well as most parts of Southern California.

In a story on April 19, 2010 - Tesco Debating Whether to Launch Fresh & Easy Into Northern California This Fiscal Year... or Wait - we reported on an internal discussion within Tesco about when it should start opening the first of its stores in Northern California. Only a handful of the stores in the region are ready or close to ready to open. But the driving force in terms of the retailer's decision when to launch into Northern California in many ways is the store location (pictured at the top of this piece) at Third & Carroll in San Francisco's Bayview neighborhood. As we reported in this story - May 28, 2010: First Phase of Fresh & Easy Neighborhood Market-Anchored Condo Development in San Francisco's Bayview Set For Completion in June - that store is nearly completed. Based on our research and information we believe it will be the first Fresh & Easy unit Tesco opens in Northern California.

In our April 19 piece we predicted Tesco would open its first stores in Northern California before the end of its 2010/11 fiscal year. The fiscal year ends in late February 2011. Remember, that's a prediction - not sourced reporting.

At this point in time, based on our source information, we still think it could happen in the third or fourth week of February 2011. But most recently we've been hearing from multiple sources that a March 2011 date for the opening of the first few Northern California stores is in the offing. We continue to pin down the exact date, although since Northern California has been and remains a moving target at Fresh & Easy, what we're reporting is about as close as one can get right now.

We also reported in this story - June 26, 2010: Tesco Planning to Announce in July When First Northern California Fresh & Easy Neighborhood Market Stores to Open - that Tesco was/is planning to a announce its plans for Northern California before the end of this month. The clock is ticking on July. However, we stick by our report that those were/are Tesco Fresh & Easy Neighborhood market's plans. Again, because everything having to do with its Northern California launch is fluid, it wouldn't surprise us in the least bit if July passes without an announcement regarding Northern California.

Reader Resources

Below are the linked stories thus far in our '2010 Northern California Market Special Report' series:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Additionally: Click here to read a selection of past stories on Tesco's Fresh & Easy Neighborhood Market and Northern California. Click the "older posts" link at the bottom of the linked pages for additional posts/pages.

Wednesday, July 28, 2010

What A Long, Strange Trip it's Been: South Los Angeles Will Be First Fresh & Easy Neighborhood Market Store to Accept WIC Vouchers Starting Tomorrow

[Photo Credit: Fresh & Easy Neighborhood Market.]

News/Analysis/Commentary

Sometimes the lights all shinin' on me;
Other times I can barely see.
Lately it occurs to me, what a long, strange trip its been.
- Truckin': The Greatful Dead

As we reported in this July 16, 2010 story - South Los Angeles Fresh & Easy Neighborhood Market Store to Accept WIC Vouchers July 29; Additional California Units to Follow, and have been reporting on for some time prior to it - tomorrow (July 29) is the day Tesco's Fresh & Easy Neighborhood Market begins accepting WIC Vouchers (Woman, Infant & Children Program) at its first store - the Central and Adams unit (pictured at top) in South Los Angeles.

Earlier this week store employees, having recently completed training in how to accept and process the WIC Vouchers, were preparing for what one told a Fresh & Easy Buzz correspondent will be "going live" [with WIC] on Thursday.

As we also reported in our July 16 piece, Tesco's Fresh & Easy Neighborhood Market plans to roll out the acceptance of the vouchers - which are distributed to qualifying mothers by California WIC and can be used to purchase healthy food and beverage items for children like infant formula, whole milk, whole grain breads and cereals, fresh produce and other items - to additional stores about 30-45 days after the south Los Angeles store begins accepting WIC.

The South Los Angeles Fresh & Easy store, which is at 1025 East Adams in the low-income neighborhood, opened in February of this year.

There's a Superior Grocers supermarket near the Fresh & Easy which accepts WIC Vouchers, as do all of the Southern California-based chain's stores. By not accepting WIC at the Central and Adams Fresh & Easy store - or at any of its 159 Fresh & Easy stores in California, Nevada and Arizona for that matter - for the last five months, Tesco has been losing out on sales of numerous high ring WIC items like infant formula, whole milk, whole crain cereals and more to the Superior Grocers' supermarket down the street. [See - February 23, 2010: Food Deserts & WIC Vouchers: Half A Loaf For the New Fresh & Easy Store Opening Tomorrow in South Los Angeles and February 24, 2010: Fresh & Easy Store Opens its Doors in South Los Angeles]

Additionally, employees at the Central and Adams Fresh & Easy have since February been forced daily to turn away customers who shop at the store and receive WIC Vouchers but who can't use them because the grocery chain doesn't accept WIC. This also is the experience for employees at numerous other Fresh & Easy stores - and has been that way since the first batch of stores opened in November 2007.

It was in early 2008 when we first pointed out the folly of Tesco's Fresh & Easy Neighborhood Market not accepting WIC Vouchers in its stores. Our argument has basically been two-fold: That not only is the grocer losing valuable sales (a bad business decision) by not taking WIC, it's also failing to be an ethical grocer because there's a pact between nearly all food retailers, particularly those who have it as a mission to serve "neighborhoods," and the U.S. federal and state governments to honor WIC in their respective stores. Since Tesco's Fresh & Easy has "neighborhood" in its name - Fresh & Easy Neighborhood Market - it certainly claims as one of its missions to serve "all" members of the communities and neighborhoods, including those residents who use WIC, where it has its stores.

Fresh & Easy Neighborhood Market CEO Tim Mason was paid about $6.1 million for his services last year. Yet it took him nearly three years from when we first pointed it out to change the policy of not accepting WIC Vouchers at the grocery chain he runs. And opening the store in South Los Angeles in February of this year, which has one of the highest per-capita percentages of WIC users in California, without accepting the vouchers in the first place is...well, priceless.

But starting tomorrow, unless there's a glitch with the store's POS system or some other reason to postpone the WIC acceptance launch, shoppers at the Central and Adams Fresh & Easy store who use WIC will no longer have to go down the street to Superior Grocers to use their vouchers. And over the next few weeks Tesco's Fresh & Easy Neighborhood Market will start to get a good idea of how much sales they've been missing in their stores for over two years by not accepting WIC Vouchers, particularly in the stores like Central and Adams and others located in low-income areas and neighborhoods.

Tesco's Fresh & Easy and WIC - Recent Linkage:

July 16, 2010: South Los Angeles Fresh & Easy Neighborhood Market Store to Accept WIC Vouchers July 29; Additional California Units to Follow

July 7: Tesco's Fresh & Easy Neighborhood Market to Start Accepting WIC Vouchers at Central & Adams Store in South Los Angeles This Month

February 23, 2010: Food Deserts & WIC Vouchers: Half A Loaf For the New Fresh & Easy Store Opening Tomorrow in South Los Angeles

February 24, 2010: Fresh & Easy Store Opens its Doors in South Los Angeles

[Editor's Note: Nearly three years ago, Fresh & Easy Buzz first pointed out and reported on the fact that Tesco's Fresh & Easy Neighborhood Market, which opened its first stores in November 2007, didn't accept WIC Vouchers.Additionally, in analysis and commentary pieces beginning in 2008 - and right up until the grocer decided to accept the vouchers at its first store, which will be the Central and Adams unit in South Los Angeles, on July 29 - we've also pointed out in detail how, from both business (added sales) and ethical grocer perspectives, Fresh & Easy was missing the boat by not accepting WIC in its stores. [Suggested reading: September 7, 2008: Analysis & Commentary: Should Tesco's Fresh & Easy Put An Asterisk Next to its Motto? Yes; Unless it Corrects Four Operational Omissions and December 29, 2008: Tesco's Fresh & Easy, 'Food Deserts' and WIC Vouchers; A 'Year-End' Analysis & Commentary]

Below is a selection of some of those past, and related, stories from Fresh & Easy Buzz:

July 7, 2010: Tesco's Fresh & Easy Neighborhood Market to Start Accepting WIC Vouchers at Central & Adams Store in South Los Angeles This Month

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

December 29, 2008: Tesco's Fresh & Easy, 'Food Deserts' and WIC Vouchers; A 'Year-End' Analysis & Commentary

February 10, 2008: Tesco's Fresh & Easy Opens Latest New Store in 'Food Desert' City of Compton, California

July 2008: Tesco's to Open A Fresh & Easy Grocery Market in Low Income, Underserved South Central Los Angeles Neighborhood

March 7, 2009: Analysis & Commentary: The Seven Retail Operations Changes Tesco's Fresh & Easy Neighborhood Market Needs to Make to Help it Get On the Success Track

July 11, 2008: 'Food Desert' Neighborhoods and Southern California: More on the Fresh & Easy Store Planned For South Central Los Angeles

July 15, 2008: Fresh Food to Bloom in An Inner-City Food Desert: Tesco's Fresh & Easy Breaks Ground For New Store in Underserved South Los Angeles Neighborhood

February 23, 2010: Food Deserts & WIC Vouchers: Half A Loaf For the New Fresh & Easy Store Opening Tomorrow in South Los Angeles

February 24, 2010: Fresh & Easy Store Opens its Doors in South Los Angeles

April 22, 2010: Breaking Buzz: Tesco's Fresh & Easy to Accept WIC Vouchers at its East Adams Store in South Los Angeles

May 14, 2010: Fresh & Easy Neighborhood Market Not Yet Accepting WIC Vouchers at South L.A. Store; No Start Date Set

July 6, 2008: Former NBA Great Earvin 'Magic' Johnson is Working His Business Magic in Urban, Inner City Neighborhoods; We Offer An Idea For Tesco's Fresh & Easy

May 12, 2008: Food Deserts: Coalition to Create 'Blue Ribbon' Commission, Draft Report to Encourage Grocers to Open Stores in Underserved Los Angeles Neighborhoods

February 13, 2008: Leading Democratic Candidate for President Barack Obama Joins Group in Asking Tesco's Fresh & Easy to Put More Stores in Underserved Neighborhoods

June 3, 2008: Fresh & Easy Buzz Redux: Barack Obama to Tesco's Fresh & Easy in Our February 13 Piece: 'Build More Stores in Underserved Neighborhoods'

September 23, 2008: Food Retailing, Society & Economics: 'Food Deserts' and Public Health

March 20, 2009: Federal Government Spending Bill Increases WIC Voucher Program Dollars by $1.2 Billion; 21 Percent Increase

May 28, 2008: Las Vegas Market Report: A 'Food Desert' Neighborhood to Get A New Grocery Store; But it's Not A Fresh & Easy Neighborhood Market

April 27, 2008: New Study Points to Increasing Urban 'Food Deserts' In North America: Locating Stores in 'Food Deserts' A Part of Fresh & Easy's Strategy

March 7, 2008: Former NBA All-Star and Sacramento Native Kevin Johnson is the Driving Force Behind a Fresh & Easy Market in Sacramento's Oak Park Neighborhood

July 29, 2008: Tesco's Fresh & Easy and San Francisco's Tenderloin Redux: Upcoming Developments Offer First Mover Opportunity For Fresh & Easy or Competitors

Tuesday, July 27, 2010

The Winner of Fresh & Easy Neighborhood Market's Reusable Bag Design Contest Is...

Josephine Close with her $5,000 Fresh & Easy Gift Card and first place-winning reusable bag design. [Photo credit: Fresh & Easy Neighborhood Market.]

Tesco's Fresh & Easy Neighborhood Market announced today that Los Angeles resident Josephine Close is the winner of the El Segundo, (Southern) California-based fresh food and grocery chain's reusable grocery bag design contest.

Ms. Close's reusable bag (pictured below), which was one of the three-out-of-eight finalists in the contest we featured in a June 17, 2010 story - Fresh & Easy Neighborhood Market Picks Eight Finalists in its Reusable Bag Design Contest; Website Voting Through June 30 - was chosen as the grand prize winner by members of Fresh & Easy's 'Friends of Fresh & Easy' e-mail marketing program, according to the grocer's announcement today.

"I was absolutely thrilled when I found out that I won the bag design contest and want to thank Fresh & Easy's customers for voting for my design," Josephine Close says in the announcement. "I wanted to create a piece of art versus another bag with a lot of branding. Instead of drawing fruits and vegetables, I used their naturally-occurring colors to represent them in what I thought was a very abstract and unique way."

You can read Fresh & Easy Neighborhood Market's announcement about the winner here.

Bag design maven Josephine Close will have plenty of free groceries to cart home in her winning reusable shopping bag, since her prize is a gift card from Fresh & Easy Neighborhood Market worth $5,000.

The winning bag design will be featured on a bag that will be offered for sale in all of the Fresh & Easy stores by the end of this year, allowing Josephine Close to see her design offered for sale in over 159 grocery markets in California, Nevada and Arizona, in the form of a Fresh & Easy reusable shopping bag.

A reusable shopping bag design star just might be born. Could there be a reality show in the future: "The Next Reusable Shopping Bag Design Star," perhaps?

Fresh & Easy's Design-A-Bag contest had more than 1,300 submissions, which were made through its website, according to the grocer. As we reported in our June story, eight bag designs - and designers - were then named as finalists in the contest. Fresh & Easy says in its announcement today that nearly 24,000 votes were cast by the 'Friends of Fresh & Easy' members to choose the first place winner - Josephine Close.

With the California State Senate set to likely approve a bill next month - which the Governor has said he will sign into law - banning single-use plastic carrier bags from being used to pack groceries at grocery and drug stores, along with other format stores over 10,000 square-feet that have a pharmacy, followed by convenience stores 18 months later - the timing of Fresh & Easy's bag design contest winning announcement is good.

Further, If Fresh & Easy can get Ms. Close's bag design out into the California stores very soon after the Governor signs the bag ban bill, which could be as early as September, into law, assuming it passes of course, even the better to gain some favorable "green grocer" publicity, if handled well from a media relations standpoint. [Read: July 20, 2010: California's First-in-the-Nation Plastic Carrier Bag Ban Legislation Looks to Be On its Way to Victory]

Fresh & Easy Buzz likes Ms. Close's bag design - it's creative and different than the usual designs chosen by professional designers for reusable shopping bags.

In fact, the paisley design evokes a bit of a 1960's look, in our opinion. And that's a look that surely reflects at least California's history, since the state was the epicenter of the counter-cultural, anti-Vietnam War, mod and related movements collectively known as "the 1960's." Remember how hot paisley was in the 1960's and 1970's old-timers?

The 1960's is also when the "green" or environmental movement took off, with California as it's epicenter. Half a century later it's California that still leads - although the state needs to kick it up a notch as others are gaining on it fast - in the modern day "green" movement, including preparing to pass the first single-use plastic carrier bag ban in the nation.

Therefore, Josephine Close's winning reusable shopping bag design for a grocery chain based in California - El Segundo in the Southland - with its 1960's-evoking paisley motif - is sort of a come full-circle experience, in that it invokes the Golden State's "green" roots while ushering in a new era in which California is posed to lead the nation in the use of reusable bags if and when the current single-use plastic carrier bag ban legislation is passed and becomes law.

April 19, 2010: Tesco's Fresh & Easy Joins Kroger Co. in Holding Earth Month-Earth Day Reusable Bag Design Contest

July 20, 2010: California's First-in-the-Nation Plastic Carrier Bag Ban Legislation Looks to Be On its Way to Victory

June 19, 2010: 'Paper or Plastic' Likeley to Be Replaced By 'Reusable or Paper' (For a Fee) in California Grocery Stores

June 18, 2010: Kroger's 2010 Reusable Grocery Bag Contest Has Ended; Winners to be Named in July

[Readers: Click here for a complete selection of posts on the reusable shopping bag topic and issue from Fresh & Easy Buzz.]

Monday, July 26, 2010

Fresh & Easy Neighborhood Market Now Giving Cash Back With Debit Card Purchases

Among the numerous complaints about Fresh & Easy Neighborhood Market's self-service checkout-only policy we've heard from readers and shoppers since we started Fresh & Easy Buzz in 2007 - they don't accept paper checks, they don't cash checks, they don't accept manufacturers' coupons, they don't take WIC Vouchers, for example - is that a customer can't receive cash back from his or her debit card at the fresh food and grocery markets, like shoppers can at nearly every other grocery store.

On July 24, Fresh & Easy Buzz reader Russell from Southern California sent an e-mail, informing us the Fresh & Easy store he frequents at Rosecrans and Douglas in Manhattan Beach, California has started giving customers cash back on purchases made with debit cards. Russell was even kind enough to send a photograph (above) of his Fresh & Easy receipt, showing the $50 cash back he received on his $4.99 purchase.

The scoop

Nearly three years after opening its first stores, Tesco Fresh & Easy Neighborhood Market's executives have decided to listen to those numerous shoppers who've complained to store employees since early on about not being able to receive cash back on debit card purchases. That's a good thing - but the execs are a little late on the draw. Better late than never though, right? Tesco opened the first batch of Fresh & Easy stores in November 2007.

The Manhattan Beach Fresh & Easy store, along with other units in Southern California, is one of the first Fresh & Easy stores to start allowing cash back.

Fresh & Easy is in the process of retrofitting the point-of-sale systems in all 159 of its stores in California, southern Nevada and Metropolitan Phoenix, Arizona, so customers at those stores can receive cash back when they use their debit cards to buy groceries at the grocery chain.

According to our sources, all 159 of the Fresh & Easy stores are set to offer cash back with debit card purchases by the end of August, 2010.

Sunday, July 25, 2010

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

Northern California Market Special Report - San Francisco Bay Area

Safeway Stores, Inc. is planning to break ground soon on its new flagship "Lifestyle" format supermarket in a mixed-use development at Valley Avenue and Bernal Avenue, off reeway I-680, in the grocer's headquarters city of Pleasanton, California, which is in the eastern part of the San Francisco Bay Area. Safeway's corporate campus and Northern California Division offices are in Pleasanton, just a short drive from the Bernal flagship store site. Safeway, which operates about 1,714 stores in the U.S. and Canada, employees about 3,000 at the corporate headquarters.

The new flagship Safeway store will be located on a 12.5 acre parcel which Safeway Stores, Inc. has acquired from San Francisco Bay Area developer South Bay Construction, which is heading up the development at Valley and Bernal avenues. The 12.5 acre retail portion of the development is called the Pleasanton Gateway center

An artist's rendering of the planned Safeway flagship supermarket in Pleasanton, California. [The artist's rendering is by Ken Rodrigues.]

The total mixed-use development parcel is 40 acres. South Bay Construction plans to construct seven office buildings on the remaining 27.5 acres. Homes and apartments have already been build next to the 40-acre parcel, on what is a 370-acre parcel dedicated to residential housing, along with various public facilities being built by the City of Pleasanton. For example, the city build a number of baseball fields for public use on the site last year.

In addition to the new Safeway supermarket, the 12.5 acre parcel owned by Safeway Stores, Inc. is slated to include numerous smaller retail buildings and restaurants. Safeway is developing the 12.5 acres through its in-house development firm, Property Development Centers.

Current plans for the new flagship Safeway store show the supermarket to be about 55,000 -to- 60,000 square-feet. In addition, Safeway is reserving 10,000 square-feet next to the store for future expansion of the store.

The new supermarket will feature all of the newest aspects of Safeway's "Lifestyle" format - its in-store Signature Cafe prepared foods department with a sit-down area for dining, spacious store-within-a-store areas for the grocer's 'O' Organics' and 'Eat Right' organic and healthy foods store brands, numerous bulk features like in-store nut, salad and sandwich bars, a coffee bar as part of the in-store fresh bakery. [See - April 8, 2010: The Branded 'Signature Cafe' in Safeway Stores' Soon to Open 'Social Safeway' in Washington D.C. Should Turn A Few Heads]

The store will also include an in-store pharmacy. Safeway originally planned to include one of its gasoline fueling stations next to the store. However, based in part on objections by local residents and a Shell gasoline station across the street from where the store will stand, the grocery chain has decided not to include it in the development.

Over the last few weeks, David Zylstra, senior vice president of Safeway's Property Development Centers and Scott Trobbe of South Bay Construction, have both made presentations to various groups in Pleasanton about the new flagship store, as well as the 12.5 acre retail portion of the 40-acre development as a whole. Those groups include the city's Chamber of Commerce, the Pleasanton Downtown Association and other neighborhood and business groups in the city.

In those meetings, the two men described the new flagship Safeway supermarket as being similar to the grocery chain's newest "Lifestyle" format stores opened in the nearby cities of Livermore, San Ramon and Alameda. Those stores are the newest "Lifestyle" version, as described earlier. A Fresh & Easy Buzz correspondent attended a couple of those meetings.

The vice president of Safeway Stores' development arm also said in the meetings that Safeway is planning to clear the land for the store on the 12.5 acre parcel and start construction either late this year or in early in 2011. He said the target date to open the new store is before Thanksgiving 2011.

The start date depends on gaining approval first from the Pleasanton Planning Commission and then from the city council. The city's planning commission says it's planning to review Safeway's plans in early September. Planning Commissions in California review and approve or disapprove of such projects. However, their approval isn't legally binding. Once approved, the city council of a given municipality must give the final approval. They can also overturn a planning commission's approval.

Safeway first talked to the City of Pleasanton about the new flagship store in 2008. The grocer has sought input from the city and numerous local groups since then, as it developed its plans for the store. As such, most local observers say they expect approval for the project in fairly short order following the first review by the planning commission in September, as does Zylstra of Safeway's development firm.

The Bernal store will be Safeway's second in its hometown city. The existing Safeway unit is at Santa Rita Road, which is on the other side of the city. The store does well. Safeway has told the city and others it has no plans to close the store when he flagship supermarket opens in 2011.

Tesco's Fresh & Easy Neighborhood Market has one future store site in Pleasanton, not far in fact from the Safeway store on Santa Rita Road. The future Fresh & Easy is in the Rose Pavillion Center, which is at Santa Rita Drive and Rosewood in Pleasanton.

Tesco's Fresh & Easy has not publicly announced or confirmed the Pleasanton store. However it's one of the numerous non-announced or confirmed Northern California Fresh & Easy locations we've reported on. See our April 19, 2009 story here: April 19, 2009 - Tesco's Fresh & Easy Signs Lease For New Store in Pleasanton, CA; We Reported 15 Months Ago the SF Bay Area City Was in its Strategic Sites. Also see the links to the other stores on our April 19, 2009 piece.

As of late April 2010, when a Fresh & Easy Buzz correspondent last visited the future Fresh & Easy Neighborhood Market location in the Rose Pavillion Shopping Center, no remodeling work has been done on the vacant building that's to house the Fresh & Easy store. Sources in Pleasanton tell us that's still the case.

However, the Ranch 99 supermarket mentioned in our April 19, 2009 piece has opened.

Our Safeway Stores' sources tell us that since the new Safeway store is so close to corporate headquarters, meaning frequent visits from company brass when it opens, that nothing will be spared in terms of making the store a showcase flagship store. They also tell us close to 200 employees will be hired to staff the new store when it opens in 2011.

Meanwhile, as we've been reporting on and analyzing in our ongoing "Northern California Market Special Report," series, the market as a whole, with some exceptions, is booming with activity by food and grocery retailers at this point in time. Safeway's plans to open its new flagship supermarket in Pleasanton next year just adds to that boom - and increased competitive activity, particularly in the San Francisco Bay Area region, home to about 7 million people, who all have to shop for groceries and eat.

Below are the stories thus far in our '2010 Northern California Market Special Report' series:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Additionally: Click here to read a selection of past stories on Tesco's Fresh & Easy Neighborhood Market and Northern California. Click the "older posts" link at the bottom of the linked pages for additional posts on the topic.

Saturday, July 24, 2010

Employees at the Glassell Park-Eagle Rock Fresh & Easy Neighborhood Market Store in Los Angeles Seeking Union Recognition From Tesco

A group of employees at the Fresh & Easy Neighborhood Market store (pictured above) at 4211 Eagle Rock Boulevard in the Glassell Park neighborhood in northeast Los Angeles, California, say they have or are close to having a majority of store workers in agreement that they want to join the United Foods & Commercial Workers (UFCW) union.

The store was one of the first six Fresh & Easy units opened by Tesco on November 8, 2007.

A number of the store's employees met with Tesco Fresh & Easy Neighborhood Market executives at corporate headquarters in El Segundo, California on March 26, and requested to be recognized as a union store. Tesco has thus far denied the Glassell Park store workers' request, which isn't uncommon for a company to do when employees make such a request informally.

The store employees are working with representatives of the Los Angeles UFCW union local to eventually hold an up or down vote of store workers to become a union shop. There are numerous steps that must first be taken, however. One of those steps was the attempt on March 26 of this year to get recognition from Tesco's Fresh & Easy.

Tesco's official position on becoming unionized is that "it's up to the Fresh & Easy employees" to decide if that's what they want. However, it's clear to those involved, as well as to close observers, that Tesco doesn't want Fresh & Easy unionized, which is a position they have a right to hold, just as other non-union food and grocery retailing companies like Walmart, Trader Joe's, Whole Foods Market and others do.

Additionally, at Tesco's annual meeting earlier this month, CEO Terry Leahy spoke out publicly for the first time we're aware of on the Fresh & Easy Neighborhood Market unionization issue, as we reported in this July 5, 2010 story - Verbal Fireworks at Tesco's 2010 Sharholders' Meeting in London.

Below (in italics) is the exchange at the shareholders meeting this month between the UFCW union's Dempsey and Tesco CEO Terry Leahy, as described in our July 5 piece:

Then the really colorful verbal fireworks started - the Tesco 2010 AGM verbal equivalent of yesterday's huge Macy's Fourth of July fireworks display in New York City.

Bill Dempsey, director of the UFCW union's Capital Stewardship Program, stepped to the microphone and charged Tesco's senior management of taking a "litigious, divisive approach" in the U.S. with its Fresh & Easy Neighborhood Market and refusing to meet with the UFCW, which represents 1.3 million retail grocery store workers and employees at allied businesses in the U.S., Canada and Puerto Rico.

Dempsey, who's last name happens to be the same as that of the late and famous Irish-American boxer, Jack Dempsey, who's nickname was the "The Manassa Mauler," then counter-punched, saying: “If the Tories and the Lib Dems can agree to form a government, why can’t the [Tesco] management agree to one meeting with the union?" he asked the board.

Apparently Dempsey's comments got Tesco CEO Sir Terry Leahy's Irish up. Feeling his steel cut oats, Leahy replied: "Your union [UFCW] has never welcomed Tesco to the US. You opposed Tesco from day one, and you have gone on opposing and obstructing. This is no basis for a partnership."

Leahy then went on to tell Bill Dempsey, who is no shrinking Irish shamrock himself, that Tesco has "excellent relations" with its Fresh & Easy Neighborhood Market employees in the U.S., who - he added with emphasis - don't wish to join the UFCW union.

This is the very first time Tesco CEO Leahy has spoken out in such a public forum on the Fresh & Easy-UFCW issue in any length, beyond saying: "It's up to our employees to decide if they want to join a union in the U.S." It appears Sir Terry has now determined that Fresh & Easy's store-level workers have decided they don't want to join the UFCW, at least based on his response to Bill Dempsey's question at Friday's shareholder meeting.

In the case of the group of employees at the Eagle Rock Boulevard Fresh & Easy store, who requested union recognition in March, it's obviously not the case not that they don't want to join the union.

Additionally, the Glassell Park/Los Angeles neighborhood store isn't the first one to request union recognition from Tesco Fresh & Easy Neighborhood Market's senior management, led by Tesco director and Fresh & Easy CEO Tim Mason.

That honor goes to the employees of the Fresh & Easy store at 16672 Beach Boulevard in Huntington Beach, California. The workers at that store requested recognition in mid-2008. [See - September 17, 2008: Store Workers at Huntington Beach Fresh & Easy Demand Union Recognition From Tesco Fresh & Easy Neighborhood Market and October 2, 2008 Tesco Fresh & Easy Denies Huntington Beach Store Employees Request to Be Recognized As A Union Store; Next Step Likley to Be Open Ballot Election] No employee open ballot election has yet taken place at the Huntington Beach Fresh & Easy market.

On September 26 we reported in this story - "News & Analysis: Employees At Two More Fresh & Easy Grocery Stores Could Soon Request UFCW Union Recognition From Tesco's Fresh & Easy," - that workers at two additional Fresh & Easy stores were in the process of preparing to request recognition as a union shop. The Glassel Park neighborhood Fresh & Easy market at 4211 Eagle Rock Boulevard in Los Angeles is one of those two stores. It's been nearly two years since our report but the store workers' have persisted in working towards their goal.

The employee group at the Glassell Park Fresh & Easy store appears determined, working with the UFCW, to fight to become a union shop. In fact, store workers have been working to build support among numerous customers and members of the neighborhood as part of their campaign.

The UFCW local, working with the employees, is also putting a significant amount of its organizational energy into the campaign to obtain recognition from Tesco for the store.

The union believes the key to unionizing Tesco's Fresh & Easy Neighborhood Market is to get at least one store recognized as a union shop, based on the majority of the store's workers agreeing to be unionized. Once that happens, union representatives think other stores will fall in a domino-like fashion. But it's been a hard slog. And it's far from universal among the employees at the 159 Fresh & Easy stores that they desire union representation.

However, we've been covering the Fresh & Easy unionization issue since the beginning, in late 2007. And the employees at the Glassell Park store are among the most determined group of workers we've seen thus far in terms of being determined to obtain union recognition from Tesco's Fresh & Easy Neighborhood Market.

[Reader Resources: Readers, Click here and here to read past stories in Fresh & Easy Buzz on the Tesco Fresh & Easy Neighborhood Market/UFCW union topic and issue. Use the "Older Posts/Newer Posts" links at the bottom of the pages to view additional pages/posts. Also, note the story links at the end of various stories.

An additional aspect of the UFCW union-Tesco Fresh & Easy Neighborhood Market unionization topic and issue involves the bringing of labor law violation cases before the National Labor Relations Board (NLRB) by the union and two Fresh & Easy store employees. The UFCW also brought a case against Fresh & Easy's meat supplier, 2 Sisters Food Group, which was privately-owned but was recently bought out by Tesco. See our stories about each of these cases below:

June 20, 2010: NLRB Judge Rules Against Fresh & Easy Neighborhood Market in Spring Valley CA Store Labor Law Violation Case

March 4, 2010: Aministrative Law Judge Finds Tesco's Fresh & Easy Violated Labor Relations Act in Ex-Store Employee, UFCW Union Complaint

June 20, 2010: NLRB Judge Rules Against Key Fresh & Easy Neighborhood Market Supplier '2 Sisters Food Group' in Labor Relations Violations Case.

June 21, 2010: The Missing Link in Tesco's Purchase of Fresh & Easy Neighborhood Market Meat Supplier '2 Sisters Food Group'

Thursday, July 22, 2010

After Four Years in the High Weeds in Northern & Central California, Kroger Co. is Emerging to Grow its Foods Co Chain

Kroger's Foods Co store in Redwood City, California. Foods Co is a price-impact chain. The format is discount warehouse but has traditional supermarket elements mixed in, making it somewhat of a hybrid. Everyday low-price is the key positioning element.

The Insider: Heard on the Street

After four years of retrenchment in Northern California by Kroger Co., which saw the retailer close its Ralphs Supermarkets division in the region in 2006 - which included selling and closing all of its Ralphs banner supermarkets and beginning to sell off and eventually close all but one (the Cala Foods unit on Hyde Street in San Francisco, which is slated to close soon) of its Cala Foods and Bell Market stores - the second-largest grocery retailer in the U.S. is in the process of making a comeback in the region, focusing on growing its Foods Co discount warehouse store chain. (Note: Harley Delano, the former president of Ralphs' Northern California division, and his son bought five of the Cala Foods/Bell Market stores. The stores - three in San Francisco and two in Marin County - operate today under the Delano's IGA Markets banner.)

Although Kroger closed its Ralphs division in Northern California in 2006, and sold off or closed all of the about 20 Cala Foods and Bell Market supermarkets (except the one) in the market over the following two years, it kept its price-impact Foods Co stores, which today number 11 in Northern California. There are five Foods Co units in the San Francisco Bay Area - two in San Francisco, one in Richmond, one in Pittsburg, and one in Redwood City. There are four Foods Co stores in Sacramento and two units in the south coast region - one in Salinas and another unit in Soledad.

There are 21 Foods Co stores in total. In addition to the 11 above, the remaining units are located as follows below.

Kroger has five Foods Co stores in the Fresno region in the Central Valley - three in Fresno, and one each in nearby Hanford and Tulare. There are also two Foods Co units in Bakersfield and another two stores in the Central Coast region of the state (closer to Southern California like Bakersfield is). Those stores are in Santa Maria and Lompoc.

Only the first 11 listed - the five Foods Co stores in the San Francisco Bay Area, the four in Sacramento, and the Salinas and Soledad units - are considered in the Northern California market proper. Fresno is classified as the Central Valley. Bakersfield and the Central Coast are much farther south. However, all 21 of the stores under the Foods Co banner are operated as an integrated chain by Kroger's Ralphs division, which is headquartered in Southern California.

Kroger Co. inherited most of the 11 Foods Co stores when it acquired the Ralphs/Food 4 Less chain, which was based in Southern California, from Ron Burkle's Yucaipa Company in 1999, in a mega-deal worth $13.5 billion.

In the deal here's what Kroger bought from Burkle: Southern California chains Boys Markets, Hughes Markets and ABC Markets, which were all acquired by Burkle and consolidated over a number of years into Ralphs; Cala Foods/Bell Markets and Foods Co in Northern California; the QFC chain in Washington state; Fred Meyer in the Pacific Northwest and Intermountain region; Smitty's in Arizona; and Smith's Food & Drug Co. in Arizona, Nevada and Utah. The deal is what put Kroger where it is today in terms of being the second-largest food and grocery retailer in the U.S.

Yucaipa had named the Northern and Central California discount warehouse stores, which are similar to the Food 4 Less format but a bit more supermarket format looking in design, Foods Co because the Food 4 Less name was already taken in the regions. Food 4 Less started out as a franchise format and banner for independent grocers. There are a number of different independent, multi-store Food 4 Less owners in Northern and Central California today.

With this brief history established, let's look to the future.

After four years of thinking about what if anything to do in the Northern and Central California market regions - a period in which Kroger didn't grow the Foods Co chain much if any - the retailer has now decided to move forward and open numerous new Foods Co stores, which average about 55,000 -to- 72,000 square-feet, in the San Francisco Bay Area and Sacramento regions in Northern California primarily, but also in the other existing regions.

The Foods Co store growth isn't going to be fast and furious. But but if Kroger's strategy goes as planned, based on what I've been able to learn thus far, the Foods Co new store growth program will be significant and substantial over time.

The first two new stores Kroger hopes to build and open are in the San Francisco Bay Area city of Oakland. In a story on July 17, the Oakland Tribune newspaper reported on the development in the city. Kroger has been working with city officials for nearly a year on the two projects. Read the Tribune story here.

Both of the two planned new Foods Co stores (72,000 square-feet each) are at locations in East Oakland, a low income part of the city that's underserved ("food desert") by food and grocery retailers. One unit is slated for 66th Avenue and San Leandro Street. The other store for an area called Foothill Square.

Most of the existing 21 Foods Co stores in Northern and Central California are in low income neighborhoods. As such, "food dessert" neighborhoods aren't new to the chain. For example, two of the top performing Foods Co stores are in low-income neighborhoods in San Francisco that are underserved by grocers. Those two stores are at 1800 Folsom Street and 345 Williams Ave.

Members of the Oakland City Council have been courting grocers, including Safeway Stores, Inc. which is based in Pleasanton near Oakland, for many years, trying to get one or more supermarkets for East Oakland.

Among the other grocers the members of the Oakland City Council and its Redevelopment Agency have talked with over the past three or so years is Tesco's Fresh & Easy Neighborhood Market. Tesco has one of its 37 confirmed (and additional 14 Fresh & Easy Buzz has uncovered and reported on) Northern California future store locations in Oakland. (See our Fresh & Easy Northern California store list here). Tesco came close to doing a deal on a second location in Oakland but decided not to go forward for various reasons. The grocery chain continues to look for additional sites in Oakland.

I've known about the Oakland sites for some time, since as I mentioned the city of Oakland has been talking to Kroger representatives for many months. But what makes the development interesting now is that the two new Oakland stores are part of a real stategy by Kroger Co. to build the Foods Co chain in Northern and Central California. There's been speculation for the last four years that Kroger might sell or close Foods Co. Clearly the retailer has decided not to do so.

But Oakland isn't a solo play for Kroger with its Foods Co discount warehouse chain in Northern California and the Central Valley.

Kroger is currently looking for Foods Co sites throughout the nine county Bay Area, with a particular focus on the East Bay Area and the South Bay Area regions. Oakland is in the East Bay. The Pittsburg and Richmond Foods Co stores are in the East Bay. The Redwood City unit, near San Jose, is in the South Bay. It's important to note Kroger isn't limiting its Bay Area site search to just the two regions. But they are the key priorities at present.

Kroger Co. also is looking for future Foods Co store locations in the Sacramento Metropolitan region and north of Sacramento. All four of the current units in the region are in the city of Sacramento.

And although its lower on the agenda list, Kroger is also interested in sites in the Northern Central Valley - the Stockton, Tracy, Manteca, Modesto and Merced Metropolitan regions.

Lastly, the retailer is looking for good sites in the Fresno and Bakersfield Metro regions in the Central Valley, along with in the Central Coast region near where it has the two existing stores, in Lompoc and Santa Maria.

Based on the information I have, the two highest priority regions for new Foods Co store locations at present are in Northern California's San Francisco Bay Area and Sacramento Metro regions, however.

Fresh & Easy Buzz has been running an ongoing series since March 2010 on the Northern California market. (See the links at the bottom of this post.) Today's column will become part of that series by virtue of its subject matter.

What is clear from what Kroger is up to with Foods Co - and what all of the grocers the blog has written about thus far in the series are up to in various ways vis-a-vis Northern California and the Central Valley - is... growth. They see loads of opportunity in the region even though it's hyper-competitive.

In fact, Northern California, and to a somewhat lessor degree the Central Valley, is rapidly becoming one of the most hyper-competitive regions in the Western U.S. At present I would rate it as being less hyper-competitive than Arizona and Southern California, but right after Metropolitan Denver, Colorado. And Northern California is rapidly gaining on my hyper-competitive rankings list.

In late June of this year at the company's annual shareholders meeting, Kroger Co. CEO David Dillion said the retailer is interested in making selective acquisitions of healthy grocery chains located in or near its existing markets in 31 U.S. states. Kroger recently raised some cash to do just that, by the way.

The CEO said Kroger is being "highly selective" regarding such acquisitions and doesn’t want turnaround projects or "somebody else's problem." That rules out distressed chains I suppose, if Kroger keeps true to Dillion's word at the shareholders meeting last month.

All my good information right now is that Kroger's current focus and strategy in the Northern California and Central Valley, California market regions is on organically growing the number of Foods Co discount warehouse stores it operates in the markets, along with growing the overall sales of the banner.

But let's remember what Kroger Co. CEO Dillion said about "healthy" acquisitions...in or near the various markets the retailer currently operates in. I plan to take up that discussion in my next column, which will be coming soon. Stay tuned.

['The Insider,' a feature column in Fresh & Easy Buzz, runs weekly -to- fortnightly.]

Recent columns by 'The Insider'

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

~July 13, 2010: A Few Words on The Life and Death of Veteran Southern California Grocer Roger K. Hughes

~June 27, 2010: The Insider: Will Tesco Acquire Supervalu, Inc. and Change its 'Fresh & Easy' Game in America?

~June 12, 2010: Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

~May 20, 2010: Welcome to Discountopia USA

~April 29, 2010: Heard on the Street: There's Something About Albertsons ... In Southern California

Wednesday, July 21, 2010

Fresh & Easy Neighborhood Market CEO Tim Mason Leads All Directors in Tesco Stock Share Incentive Plan Payouts

Tesco director and Fresh & Easy Neighborhood Market CEO Tim Mason at the opening of the grocery chain's 150th store, on April 7, 2010. The store is at Olive and Verdugo in Burbank, California. [Photo credit: Fresh & Easy Neighborhood Market.]

News/Analysis/Commentary

Yesterday (July 20, 2010), eight Tesco directors - CEO Terry Leahy, current director of international operations and IT and incoming (March 11, 2010) CEO Philip Clarke, Fresh & Easy Neighborhood Market USA CEO Tim Mason, Richard Brasher, Andrew Higginson, Laurie McIlwee, Lucy Neville-Rolfe and David Potts - received ordinary shares of 5p each in Tesco plc stock, according to a required regulatory announcement from Tesco today. In March 2011, Tim Mason will have the title of Co-CEO (of Tesco plc) added to his director and Fresh & Easy Neighborhood Market CEO titles.

The stock shares were released to the eight directors, who also comprise Tesco's senior executive ranks, yesterday, at the end of the required three-year holding period. The shares come from: (1) the Tesco Long Term Incentive Plan, (2) the Tesco Executive Incentive Plan and (3) the Tesco Performance Share Plan.

Tesco's share price on Tuesday, July 20, when the directors received the stock, was 394.025p per share ($596.790 at today's exchange rate), according to Tesco plc. The company says it retained a proportion of the gross number of shares to cover the income tax and national insurance liability of the directors.

The top beneficiary of the stock share payout wasn't Tesco plc CEO Terry Leahy, who is retiring in March 2011. And it wasn't Philip Clarke, who will take over as CEO when Leahy retires early next year. Rather, it was Tesco director and Fresh & Easy Neighborhood Market CEO Tim Mason, who bagged the highest number of shares from the retailer's plans, even more than CEO Leahy.

Below is a list of the eight directors, ranked by the number of shares they received yesterday.

Director/number of shares received:

1. Tim Mason
388,524 shares

2. Terry Leahy
372,099 shares

3. Richard Brasher
198,024 shares

4. Philip Clarke
125,311 shares

5. David Potts
125,311

6. Andrew Higginson
125,311

7. Laurie McIlwee
44,236 shares

8. Lucy Neville-Rolfe
1,876 shares

At the close of the market today (July 21, 2010), Tesco plc shares were trading at 397.75 pounds per share ($602.432 at today's exchange rate). The stock shares from the plans were released to the directors yesterday at a price of 394.025p per share ($596.790).

Since the shares are being released to the Tesco directors after a three year holding period, in the case of Tim Mason, the time period tracks closely to when he came to America to start up Fresh & Easy, which was in late 2006-early 2007.

Mason's compensation has been a hot topic of late in light of the poor performance of Tesco's El Segundo, California-based chain of 159 Fresh & Easy Neighborhood Market fresh food and grocery stores, which are located in California (Southern and the Central Valley), Metropolitan Las Vegas, Nevada and Metro Phoenix, Arizona.

Read our stories linked below, for the details:

July 5, 2010: Verbal Fireworks at Tesco's 2010 Sharholders' Meeting in London

July 2, 2010: Tesco's Director Remuneration Report Approved at Today's AGM; But 47% of Shareholders Voice Opposition to Director Pay Packages

July 1, 2010: A Preview of Tomorrow's (July 2, 2010) Tesco Annual General Meeting

June 23, 2010: Tesco Fresh & Easy Neighborhood Market CEO Tim Mason Gets Big Stock Award Featuring a Singular Twist

June 24, 2010: Warren Buffett Strikes Again: Buys 2 Million More Shares of Tesco Stock For 3.2% Ownership Stake

June 4, 2010: Every Little (Bit) Helps: Tesco Fresh & Easy Neighborhood Market CEO Mason Paid $6.188 Million For 2009

Tesco reported a loss of $253 million, on sales of $544 million, for its Fresh & Easy Neighborhood Market USA fresh foods and grocery chain for the 2009/10 fiscal year, which ended in February of this year. [See - April 20, 2010: Strong Group Revenue & Profit For Tesco... But $253 Million Loss at Fresh & Easy]

In addition, Tesco reported a loss of $208 million for Fresh & Easy in its 2008/09 fiscal year. Fiscal year 2008/09 revenue for Fresh & Easy was $305 million.

Tesco has also projected a loss in the $200 -to- $253 million range, about the same as fiscal year 2009/10, for this fiscal year (2010/11), which ends in early 2011.

The first Fresh & Easy stores opened in November 2007.

Tesco and its Fresh & Easy Neighborhood Market chain under Tim Mason's leadership has also missed its goal of having 200 stores opened by the end of 2009 - there were about 120 units - and had set a goal of having about 300 stores opened, including in Northern California, by the end of 2010. It will miss the benchmark considerably. Based on current projections, there will be just under 200 Fresh & Easy markets open and operating at the end of this year. Tesco has yet to open any stores in Northern California.

If Tim Mason were to redeem the 388,524 shares of Tesco stock he received yesterday at today's share price he could do all sorts of fun things with the cash, like invest in a bicycle racing team in the UK, perhaps, or in surf shop in Santa Monica, California, maybe. Or he could give each of the employees of Fresh & Easy Neighborhood Market a nice little gift - or at least a reusable grocery bag full of food and groceries, which would have the secondary benefit of being a nice one shot sales boost for Fresh & Easy.

We don't begrudge Mr. Mason his stock shares or huge 2009 compensation package. And, he is a director of Tesco, which has been performing very well, with the exception of Fresh & Easy, in addition to running Fresh & Easy. But his $6.1 million compensation for last year and stock share payout looks (and frankly is) odd in relation to the performance of Fresh & Easy Neighborhood Market, which has been pretty much 100% of his focus since 2006. [See - June 4, 2010: Every Little (Bit) Helps: Tesco Fresh & Easy Neighborhood Market CEO Mason Paid $6.188 Million For 2009]

It's not up to us though to do anything about it, even if we wanted to. That's for Tesco's board, seven members of which received stock shares along with Tim Mason yesterday, and its investors to deal with. We report and analyze - they decide.

However, with a $200 million-plus loss predicted by Tesco for Fresh & Easy at the end of the current fiscal year - and based on our analysis there being nothing we can currently see that will change that for the 2011/12 fiscal year - you've got to wonder. And a reasonable man or woman - investor or non-investor - should ask such performance-related questions.

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