Fresh & Easy Developing Smaller Version of its 3K Square-Foot 'Fresh & Easy Express' Format Stores

Breaking Buzz & Analysis

Tesco-owned Fresh & Easy Neighborhood Market is currently developing a 2,000 square-foot version of its 3,000 square-foot 'Fresh & Easy Express' convenience-oriented food and grocery market, according to multiple sources familiar with the project.

Fresh & Easy is constructing a prototype of the 2,000 square-foot store inside a space it controls near the 10,000 square-foot Fresh & Easy Neighborhood Market unit in Los Angeles' Eagle Rock Neighborhood.

El Segundo, California-based Fresh & Easy Neighborhood Market used that very same space to build a mock-up of its 3,000 square-foot 'Express' format stores, of which their are currently about 10 units, all in Southern California.

The new 2,000 square-foot market, called an F2 in Fresh & Easy speak - the 10,000 square-foot stores for example are referred to internally at Fresh & Easy as F10's, the 3,000 square-foot stores F3's, and the handful of 7,000 square-foot markets the grocer operates are F7's - is basically a scaled-down version of the 3,000 square-foot stores, according to sources who are familiar with the project.

For example, current plans call for smaller refrigerated, frozen food and produce cases than in the 3,000 square-foot stores as a way to compensate for the reduced square footage, according to our sources. Some types of cases and shelving also could be eliminated for the same reason, our sources say.

Neither Tesco or its Fresh & Easy Neighborhood Market chain have announced the development of the 2,000 square-foot stores. This is the first time Tesco's plans for a smaller version of the 3,000 square-foot 'Fresh & Easy Express' store is being reported.

Analysis

The first question any food and grocery retailing analyst or grocer worth his or her salt should ask upon reading this report is: 'Why a 2,000 square-foot version of what already at 3,000 square feet is a very small-format grocery market.?

The answer to that question, according to our sources (and to our reporting and analysis of Tesco and its Fresh & Easy chain for five years on) - and it's what we said was the primary driving force behind the 3,000 square-foot 'Express' format in our stories about the stores last year - is that Tesco's Fresh & Easy is searching for ways to reduce its new store development and opening capital cost while still growing its store count.

Since launching its California-based small-format fresh food and grocery chain in 2007, Tesco has always said it will break even financially with Fresh & Easy - which lost about $245 million in its most recent fiscal year and has lost about $1.5 billion over its five year history - by achieving scale, which means opening numerous stores over a short period of time.

For example, from 2006 to 2010 Tesco said it still planned to have at least 500 stores in four-to-five years, on its way to 1,000 stores over an about six or seven year period, which would be 2013-end-to-2014. It said this despite the fact it's paused opening new stores for many months at least three times in Fresh & Easy's five year history. The most recent period being at present.

But in 2011, not long after he took over as CEO of Tesco in March of last year, Philip Clarke said the United Kingdom-based retailer planned to open just 400 Fresh & Easy stores, which would allow Tesco to break even with its U.S. grocery chain by the end of its 2013 fiscal year, which ends February 2013.

Not many months later Clarke and Tesco changed those plans, saying instead of the 400 Fresh & Easy units needed to break even by the end of fiscal 2013, it had figured out a way to do so with just 300 stores.

But then earlier this year Clarke and Tesco pushed back Fresh & Easy's break-even time to the end of its 2014 fiscal year, at which time the retailer says it will then break even with Fresh & Easy Neighborhood Market. Tesco kept - so far - the 300 store number as the number of Fresh & Easy units needed to break even by the end of the 2014 fiscal year.

There are 199 Fresh & Easy stores in California, Nevada and Arizona.

Tesco's 2014 fiscal year-end is about two years away. That means it will have to build and open 101 stores between now and then to reach 300 units, which Clarke and company say is needed to break even at that time.

But Tesco has essentially stopped opening Fresh & Easy stores, with the exception of one or two here or there.

Instead, the retailer has embarked on a cost-cutting campaign of limited sorts with Fresh & Easy, which begs another key question any industry analyst or grocer should ask: "How can Tesco open 101 stores in two years - which is half as many as it's opened over the last five years - when beginning a couple months ago it essentially stopped opening new Fresh & Easy stores?

In fact, even if Tesco were opening Fresh & Easy stores at its high-point-pace, it would be near physically and logistically impossible, and not very smart, to open 101 stores in two years, particularly considering the continued poor performance of the California-based grocery chain and its need to reduce costs and raise margin at it to even come close to breaking even with Fresh & Easy

The answer to the question, as it pertains to the micro small-format store prototype being developed, isn't that Tesco is going to open 101 2,000 square-foot grocery markets - the format in development. For example, it's opened just 10 or so of the 3,000 square-foot Fresh & Easy Express stores in the year or so since the first unit was opened.

There are numerous reasons why they won't do so but here's a simple reason why if they do it won't help: The best 10,000 square-foot Fresh & Easy stores do about $150,000 in average weekly sales, and there aren't many of those units. That would mean the best of the 2,000 square-foot stores would do - at best - about 40,000 in weekly sales. If scale, as in growing sales by growing store-count, matters, 101 2,000 square-foot stores, even if they all were stellar performers, which they won't be, doesn't add up to a whole lot of annual sales when one looks at the big picture.

But hopes and dreams of reduced capital costs without considering the fundamental question - can 2,000 square-foot grocery stores operated the way Fresh & Easy operates them make any money - it appears spring eternal at Fresh & Easy Neighborhood Market.

Therefore, the Tesco-owned chain is developing a smaller version of its 3,000 square-foot 'Express' store, shaving 1,000 square feet off the store size.

Perhaps Tesco hopes it can "shrink" (in terms of store size) rather than grow (recall those days of a 1,000-store chain) its way to break-even with Fresh & Easy.

But size does matter. And a 2,000 square-foot grocery market, like all small formats - including 3,000 and 10,000 square-foot grocery stores - are fraught with problems when it comes to making money. Just ask Walmart - the now folded 'marketside by Walmart' stores and its fledgling small-format Walmart Express, which despite being 15,000 square-feet is having economic struggles endemic to many small-format grocery stores, particularly those run by chains without a history of operating such stores.

Or ask Safeway CEO Steve Burd, who put an end to the California-based supermarket chain's 'The Market' format (10,000-14,000 square-foot grocery markets ) after just two test units has been opened and operated for about one-year each. Both stores, in Long Beach and San Jose, California, remain open but Burd killed further development of the format over two years ago.

According to our sources, at present there isn't a set date for when - or if - the first 2,000 square-foot Fresh & Easy store will open. However, our sources say, Fresh & Easy already has a number of locations for the stores scouted out, although much of the grocer's real estate team was fired last Wednesday, which is an important indication of the future of Fresh & Easy Neighborhood Market's new store development plans.

Those plans: Little to nothing going forward for the rest of this year in terms of acquiring new store sites - there are already dozens of Fresh & Easy sites that have been sitting fallow for as long as four-to-five years - and opening new Fresh & Easy stores.

[Editor's Note: Fresh & Easy Buzz is an independent Blog, and is not affiliated with Tesco, Tesco's Fresh & Easy Neighborhood Market, or any of its competitors. No member of the Fresh & Easy Buzz editorial team has ever or currently works for Tesco or its Fresh & Easy Neighborhood Market chain.]

Walmart Closing its Four Marketside Small-Format Markets in Arizona October 21

The soon to be vacant 'marketside by Walmart' store in Tempe, Arizona.


Walmart Stores, Inc. will close its four small-format "marketside by Walmart" fresh food and grocery markets in metropolitan Phoenix, Arizona on October 21, Fresh & Easy Buzz has learned.

Walmart representatives met with the employees of the four stores, located in the Phoenix metro-region cities of Mesa, Gilbert, Chandler and Tempe, today, informing the workers that the four stores opened on October 4, 2008 will be closed October 21, and that "marketside by Walmart" will cease to exist as a format for the retailer, according to our sources, which include employees at two of the four stores who we talked to shortly after they were told of the closings. [Click on this link to read stories about the October 4, 2008 openings.]

Walmart currently has no plans to open stores in the soon to be vacant "marketside by Walmart" locations under either its Walmart Market/Walmart Neighborhood Market smaller-to-medium format chain or its new Walmart Express small-format, according to our sources.

Walmart Stores, Inc. held its Annual Meeting for the Investment Community today. Presentations were made by CEO Mike Duke, Walmart U.S. chief Bill Simon and other key senior executives. But no mention was made of the retailer's plans to close the four "marketside by Walmart" stores, perhaps because the store employees were being told of the October 21 closure plans at the same time the investment meeting was taking place.

That Walmart Stores is closing the small-format stores (originally called "marketside") it opened as a test three years ago doesn't come as a surprise to Fresh & Easy Buzz. For example, we reported in September 2010 that Walmart planned to either close or convert the four "marketside by Walmart" stores to a different format by early this year.

We were correct about Walmart's plans to close the grocery markets at the time, although according to our sources the retailer eventually decided to wait until the fall, this month, to do so for a variety of reasons. As such, we did get the specific date wrong.

The fact of the matter is, as we've previously reported, Walmart essentially decided to shelve the "marketside by Walmart" format in late 2009. In 2010 the retailer made the decision to not open any additional stores and to close the four units in Arizona before the end of 2011.

Instead of "marketside by Walmart" becoming its small-format strategy for the U.S., Walmart then decided to go forward with a dual smaller-format store strategy: Walmart Market (smaller-to-medium format stores in the 28,000-to-60,000 square-foot range) and the small-format Walmart Express, which averages 10,000 (some urban versions like the one recently opened in Chicago) -to- 15,000 square feet.

In addition to the first urban region Walmart Express opened last month in Chicago, there are four other units, two in Arkansas and two in North Carolina. Those stores, all in rural towns, are in the 15,000 square-foot range.

In this December 21, 2009  piece - Wither Walmart's Small-Format 'marketside' Stores and Format? - we wrote about the eventual decline of Walmart's "marketside by Walmart" small-format experiment. On October 21 the final chapter of the test (and the withering) will come to an end when the four stores in metro Phoenix, Arizona are closed.

Perhaps it's appropriate (and also a bit ironic) that the four stores involved in Walmart's first new small-format experiment of its modern era, "marketside by Walmart," are located in metro Phoenix, because like in the story of the mythical "Phoenix" that rose from the ashes, a revamped smaller-to-medium format version of Walmart Neighborhood Market and a new small-format convience-oriented grocery chain, Walmart Express, have risen from its ashes.

Walmart U.S. president Bill Simon said at the investor conference today that the retailer plans to open an additional six Walmart Express stores by January, 2012, for a total of 11.

The format is still in test mode, according to Simon, and Walmart will decide whether or not it will go forward with more 'Express' stores once all 11 units are open and have a little history behind them.

"The roll out of Walmart Express is predicated on the review of our pilot program, and the opportunity to build greater scale in a particular market," he said.

Simon also said today that Walmart plans to open between 80-100 of the smaller-to-medium-format (28,000-60,000 square-foot) Walmart Market/Walmart Neighborhood Market stores next year.

This is a major smaller-to-medium format push for Walmart. To put the 2012 plans into perspective, Walmart has opened just under 200 Walmart Neighborhood Market stores in the U.S. since it launched the format and chain about 15 years ago.

The original Walmart Neighborhood Market stores averaged about 42,000 square-feet. The 28,000-60,000 square-foot Walmart Market/Walmart Neighborhood Market format is a revamp of the format.

But despite all this small (format) talk, the mega-supercenter will continue to be Walmart's primary format going forward over the next couple years.

Bill Simon said today Walmart plans to open 130-135 supercenters next year. The new supercenters will average 90,000-120,000 square-feet, although many will be larger than that. As such, the amount of new supercenter square-footage dwarfs that of the planned new smaller-to-medium and small format stores.

Additionally, he said Walmart plans to open as any as 385 new stores in the U.S. over the next two years, with the vast majority of those new units being supercenters.

The "marketside" brand name will live on in the form of Walmart's fresh foods brand (see here) of the same name, which includes a variety of fresh-prepared foods, deli items, bakery goods and packaged fresh produce.

The fresh food products under the"marketside" brand are sold in most of Walmart's supercenters, Walmart Neighborhood Market and Walmart Express stores.

But as Walmart expands its smaller format store base in the U.S. over the next couple years, none of those numerous planned new smaller stores it opens will be "marketside by Walmart" units.

Related Stories

December 21, 2009: Wither Walmart's Small-Format 'marketside' Stores and Format?

October 19, 2010: Walmart's Four 'Marketside by Walmart' Stores Set to Be Closed Soon Never Came Close to Weekly Sales of $100,000

October 11, 2010: Walmart to Outline its Urban-Focused Smaller-Format Grocery Store Plans Wednesday; What Might Be In-Store?

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

September 9, 2010: Walmart Plans to Close Arizona 'marketside by Walmart' Stores, Dump Format By Year-End or Early 2011

October 6, 2008: 'The Promotional Pundit:' How Wal-Mart Can Use its Supercenters to Create Customers For its New Small-Format Marketside Stores in Arizona

Additionally, click here, here, here, here and here for more related stories. Also see the links on the pages.

Back to the Future at Walmart: Walmart Express Today and Walton's Five and Dime in the 1950's

The Gentry Walmart Express above opens Wednesday. [Photo: Justin Wedgworth.]

Walmart Stores, Inc. and Smaller-Format Retailing USA

Walmart Stores' new Walmart Express format can be fairly described as one part modern small-format fresh food and grocery store, one part dollar format store, and one-part post-modern drug - and food - store, as in what Walgreens' and CVS Pharmacy have been doing for the last couple years in terms of adding additional grocery SKUs and fresh foods to their respective stores, for example.

The Walmart Express prototype stores in Gentry and Prairie Grove, Arkansas opening on Wednesday offer a selection of 11,000 -to- 13,000 SKUs of fresh and fresh-prepared foods, perishables, frozen foods and packaged groceries, along with paper goods, health and personal care items, toys, clothing items, office supplies, household goods, DVD's, pre-paid phones and other sundries in their 15,000 square-foot small boxes.

The Gentry and Prairie Grove stores also feature pharmacies in-store and gasoline pumps out front. Most of but not all the Walmart Express stores will have in-store pharmacies. The gasoline pumps are optional, depending on the location of the particular store.

The Gentry (population 3,100) and Prairie Grove (population 3,113) Walmart Express units open June 8. They are two of three stores Walmart has planned so far in three small towns in Arkansas. The third unit will be in Gravette (population 2,300). All three towns are near the retailer's global headquarters in Bentonville.

Next week Walmart will open its third Walmart Express store, in Ridgefield, North Carolina.

Later this summer the first Walmart Express store will open in an urban region - in Chicago, Illinois.

The retailer plans to open 15-20 of the Express format stores this year, including in rural Arkansas, North Carolina and metropolitan Chicago, Anthony Hucker, vice president of strategy and business development for Walmart U.S. said during a tour of the Gentry Walmart Express unit on Thursday, during Walmart's annual meeting week. The retailer's annual meeting was on Friday.

The Walmart Express stores also feature Walmart USA's "Site-to-Store" program, which we reported they would in this March 9, 2011 story -March 9, 2011 - Going Rural: First Three Smaller-Format 'Walmart Express' Stores Will Be in Small Town Arkansas. Also note in the March 9 story we reported the format would offer a significant selection of fresh-prepared foods. It does, as noted earlier about the Gentry unit.. Walmart had not announced either offering prior to the store tour on Thursday.

The "Express" units will also except and cash customers checks like Walmart does at its other format stores, along with excepting food stamps and W.I.C. Vouchers.

Tesco's 175-store (California, Nevada and Arizona) Fresh & Easy Neighborhood Market, for example, doesn't except paper checks of any kind, nor does it except the Women's & Children's Program vouchers in its small-format stores, accept for excepting W.I.C. in one unit, its store at Central and Adams in south Los Angeles. [Read what we've written about the paper check and W.I.C. Voucher issue at Tesco's Fresh & Easy at this link WIC Vouchers.]

The Walmart Express stores are in a basic small-box, just like dollar stores and CVS' and Walgreens' stores are.

The interior of the Walmart Express store in Gentry, Arkansas, which is located less than half-a-mile from a Dollar General store and about 15 miles from the nearest Walmart supercenter, is utilitarian, including having exposed ducts and pipes and simple yellow-painted walls.

But it's also colorful and has plenty of signage throughout the store, including a number of signs that say: "If you want it, we'll get it," which are in reference to Walmart's "Site-to-Store" program, in which shoppers can order items from Walmart.com and have the goods delivered to the Walmart Express store for easy pickup. The feature could be a a significant source for pulling shoppers into the stores, in our analysis.

Walmart is also using the prototype or test aspect of the first Walmart Express stores in rural Arkansas in its favor: There's a suggestion box and forms at the stores' front-end, where customers can offer their opinions on items that should be carried.

There's also a "local" positioning aspect in the Gentry store's produce department, which features signs touting various produce items as coming from local growers.

Walmart has also attempted some cross-merchandising of food and non-food items in the Gentry store. For example, toasters were merchandised in the bread aisle and tea kettles and some coffee-related items were located in the packaged coffee and tea aisle.

Walton's small-format 5-10 variety store in the 1950's.

Walmart Express: Sam's' five and dime' with a modern twist

In looking closely at Walmart Express, we have some breaking news: It's not so much a new format for Walmart as it is a return of sorts to founder Sam Walton's beginnings, because the small-box fresh-food-and-grocery-dollar-store-modern-era-drug-store hybrid format isn't all that different from what Sam started out with as a retailer over six decades ago - which was the old "five and dime" or variety store format.

Before the late Sam Walton opened his first Walmart store in Rogers, Arkansas in 1962 at age 44, he was a variety store retailer. Some might suggest that's what Walmart still is in the U.S. - just on a super-sized scale with its supercenters, which average abut 180,000 square-feet.

After getting out of the U.S. Military, Walton worked briefly for J.C. Penney (then a variety store chain) in Iowa, then bought and operated a Ben Franklin franchise variety store, and later a few more in other cities, in Newport, Arkansas.

Then in 1951 Sam opened the landmark Walton's Five and Dime store in Bentonville, Arkansas, where Walmart Stores, Inc. has been headquartered ever since.

Sam's "5-10" store, which has been preserved and is part of the Walmart Visitor's Center on North Main Street in Bentonville, offered what variety format (and many drug stores) stores of the era offered, which was a little bit of everything - sundries, health and personal care items, clothing and other soft goods, household items, toys, grocery items, prepared food, most often at a "lunch counter," and a whole lot more.

The closest and best example today of the 1950's-60's-era "five and dime" or variety store format is the dollar or 99-cent format store, which in addition to offering a variety of non-food items across many categories also offers packaged groceries, household package goods, health and personal care items, other traditional grocery store items and, in a growing number of cases, fresh foods like produce, meats, deli, perishables and frozen foods, as do a growing number of drug stores like some operated by CVS and Walgreens.

Enter Walmart Express - or "Walton's Five and Dime 2.0," the nickname were giving it in this piece today.

The 'dollar' and 'drug store' challenge

Dollar format stores have been the biggest competitor to Walmart in the U.S. over the last few years, as shoppers have searched for variety at low prices during the down economy. The small but packed-with-variety-at-a-cheap-price dollar format stores operated by chain's like Dollar General, Dollar Tree and numerous others have and continue to grow exponentially throughout the U.S., along with becoming places where American consumers love to shop.

Walmart hundred hopes Walmart Express will help it counter the dollar and 99-cent store challenge, along with allowing it to sell food and groceries in more places in the U.S., such as in small towns like Gentry, Arkansas (population 3,000) and more significantly in urban America, in places like metro Chicago, New York City, Los Angeles, San Francisco and elsewhere where it has little or no food and grocery retailing presence.

So like Sam hoped in 1951 when he opened Walton's Five and Dime, Walmart in 2011 is hoping to cash in on America's love of variety, with a focus on food and groceries, at a cheap price, by opening convenient-to-shop, smaller-format stores - Walmart Express.

Back to the future with Walmart Express

It's not 1951 and Walmart is no longer Sam Walton, his wife and a few hundred associates. Instead, Walmart is now the largest retailer in the United States and the world, along with being the number one-seller of food and groceries in America.

But as the old saying goes - the more things change the more they stay the same.

Among the many things Sam Walton built into the Walmart culture that remain today is the "Big C" - competitiveness.

Therefore, despite its status as America's leading retailer of everything, Mike Duke's (CEO) Walmart wants essentially the same thing Sam Walton wanted (and got) from those variety store beginnings so many decades ago - to dominate.

And were he here today, we suggest Sam Walton would be leading the merchandising charge on the Walmart Express format, reminding all those around him that, after all, he does have a little experience in variety store merchandising.

The big question is: Can Walmart do its variety store origins proud with Walmart Express?

Its small-format efforts over the last three decades - Neighborhood Market, marketside by Walmart and a couple other earlier attempts - suggest the answer is ... "maybe?"

However, Walmart's historical legacy, based on Sam's variety store origins and success, suggests the answer is ... it had better this time around. After all, Sam is probably watching.

Related Stories

June 1, 2011: Walmart Week 2011 - All Aboard the 'Walmart Express:' First Two Stores Open June 8

February 22, 2011: Walmart Stores, Inc. Announces the Name For its New Smaller-Format Food & Grocery Stores: 'Walmart Express'

March 9, 2011: Going Rural: First Three Smaller-Format 'Walmart Express' Stores Will Be in Small Town Arkansas

January 10, 2011: Walmart 'Gets Real' With Smaller-Format Grocery Store Initiative in California; First Stores On Tap

January 11, 2011: A 'New York State of Mind': 'The Insider' On Walmart, Apollo Global Management, Tesco's Fresh & Easy and the NRF in New York City

October 13, 2010: Simon Says: Walmart U.S. CEO Outlines Smaller Store Strategy and Plans; Walmart to Offer Groceries Online in USA

October 12, 2010: 'The Insider': Live-Blogging Walmart Stores' 17th Annual Meeting For the Investment Community.

October 11, 2010: Walmart to Outline its Urban-Focused Smaller-Format Grocery Store Plans Wednesday; What Might Be In-Store?

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

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

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

Also see these links - Walmart Stores,  20K Neighborhood Market by Walmart prototye, marketside by Walmart, Tesco Fresh and Easy California March, Wal-Mart, Walmart, Walmart Express, Walmart Market, walmart small store strategy, Walmart Stores - for related stories.

Walmart Week 2011 - All Aboard the 'Walmart Express:' First Two Stores Open June 8

The Walmart Express in Gentry, Arkansas [Photo: Justin Wedgworth.]

[Editor's Note: Walmart Stores, Inc. holds its annual meeting, the Superbowl for retail geeks, on Friday. Starting today Fresh & Easy Buzz will be reporting on the mega-event, as well as offering analysis and commentary on the world's largest retailer, which also happens to be the number one seller of food and groceries in America. Below is our first story in the series.]

News/Analysis

All aboard the Walmart Express.

The title of this piece and the phrase above have a double meaning this week.

Walmart Express is the name of Walmart Stores, Inc.'s newest U.S. smaller-format (average 15,000 square-foot) convenience-oriented grocery store venture, the first two stores of which are set to open June 8 in the small towns of Gentry (see above) and Prairie Grove, Arkansas, near its corporate headquarters in Bentonville.

It's also "Walmart Week" this week - the annual week long series of events for investors and the media the retailer puts on Sam-Walton-style leading up to its annual meeting, which is on Friday (June 3).

And it's no accident the first two Walmart Express food and grocery markets are set to open a mere five days after the annual meeting on Friday.

Nor for that matter is it a coincidence the first three Walmart Express stores - there's a third unit opening soon in nearby Gravette - happen to be in Arkansas and close to Walmart's Bentonville corporate headquarters.

It's all a part of Walmart's grand plan this time around, which is to hang a big bright lantern on its smaller-format store plans.

This is unlike the last time it launched a small-format chain in the U.S., marketside by Walmart - opening four stores in four metro Phoenix, Arizona cities in August 2008 with little fanfare.

This time Walmart is doing smaller-format up big with Walmart Express, which is a very different format from marketside by Walmart, which as we've reported for some time is history - the four stores remain open for now - but also incorporates a number of the fresh and fresh-prepared foods aspects of those small-format stores, including a significant offering of Walmart's Marketside fresh foods brand, which was developed out of its three-plus year experiment with the namesake food and grocery markets in Arizona.

"Walmart Week" also includes a sneak peek at the two Walmart Express stores opening June 8 in the two small Arkansas towns near Bentonville.

The two stores are about 15,000 square-feet, as will be the size - give or take a couple thousand square-feet in either direction - of all the 'Express' format stores.

In a nutshell, Walmart Express is one-part small neighborhood grocery store, one-part convenience store and another part fresh food market, with a decent sprinkling of general merchandise tossed in. There are also a couple other surprises we'll talk about in a follow up piece.

The Walmart Express stores offer considerably more food and grocery items and general merchandise than Tesco small-format (10,000-12,000 square-foot) Fresh & Easy markets do. They also go head-to-head in the fresh foods category, albeit probably a little less extensively than Fresh & Easy's category positioning. An in-store pharmacy is also included in many of the Walmart Express stores.

Although small-box grocery store economics are extremely challenging - Walmart learned this with its 15,000-16,000 square-foot marketside by Walmart stores, none of which is even doing close to $100,000 in average weekly sales. Just one of the four marketside stores, the unit in Gilbert, is averaging in the $60,000 week range, while the other three marketside units average between $45,000-$50,000 in weekly sales, according to our sources, who are in a direct position to know the sales figures - the once big-box-only (at least in the U.S.) retailer from not-so- big-Bentonville is bound and determined it get it right this time.

Two-pronged smaller-format strategy

Walmart Express is part of the retailers two-pronged smaller-format food and grocery retailing strategy.

The second format is Walmart Market, which in addition to the new name for its existing Walmart Neighborhood Market stores (average 42,000 square-feet), is the name for a bunch of stores the retailer will soon start opening throughout the country, including in California.

The new Walmart Market stores, which will be similar to the existing Walmart Neighborhood Market units except for a few significant twists (see here), average 30,000-60,000 square-feet.

Walmart says it plans to open 30-40 smaller-format stores this year - which means from June -to December - and could have as many as 300-plus Walmart Express and Walmart Market stores open by the end of 2012, although its our analysis that number is overly ambitious.

Like Walmart Express, the mega-retailer plans to locate its new Walmart Market stores in urban rural and selected suburban areas, although the main focus for both smaller formats will be urban, at least in terms of percentage of overall store-count.

Next stop California

California, where Tesco has 126 of its 175 (28 in metro Phoenix, Arizona and 21 in metro Las Vegas) Fresh & Easy Neighborhood Market stores is, as we've been reporting for sometime now, a major focus for Walmart with its two-pronged smaller-format strategy - Walmart Market and Walmart Express.

And, as we've also been reporting for sometime, many of the locations Walmart is locking up in Califonia for both of the smaller-formats are near existing and future Fresh & Easy stores, in Southern and Northern California primarily.

The locations are both urban - metro Sacramento region and San Francisco Bay Area in Northern California; Los Angeles in Southern California, for example - suburban - Southern California's Orange County and elsewhere in the region - and rural, such as in a few small towns near Sacramento and the far southern portion of Southern California, to offer two examples.

Based on our knowledge of both the Walmart Market and Walmart Express formats and now stores - product selection, pricing and other criteria - a store of either format located near a Fresh & Easy fresh food and grocery market is going to put serious pressure on the sales at that existing Fresh & Easy store. And as noted, in California many stores of both of the Walmart smaller formats will eventually be located close to Fresh & Easy Neighborhood Market units.

Walmart is the number one food and grocery retailer in Arizona, based largely on its numerous supercenters in the state, so it's already a key pressure point for Tesco's Fresh & Easy in metro Phoenix - along with Koger's Fry's, Safeway, Albertsons and about five other chains - where Tesco has a mere 28 units.

And in Metro Las Vegas, Nevada, where Tesco has just 21 Fresh & Easy stores, the competition from Walmart and others - Safeway, Kroger, ect. - is so strong Tesco hasn't opened a new Fresh & Easy market in the region for over a year. In fact it closed five stores (along with five in Arizona and one in Southern California) in November 2010.

Fresh competition makes it less easy for Tesco

This leaves California for Tesco, where as we've written about in a serious of stories starting last year and into 2011, the United Kingdom-based retailer is betting the store when it comes to the success of Fresh & Easy Neighborhood Market. With 126 of its 175 Fresh & Easy stores in California, along with California being the near-exclusive focus of new store openings - the 21 Fresh & Easy stores opened so far this year are all in California, for example - it's the make-it-or-break it market region for the retailer.

The competition in the Golden State is already extensive for Tesco, as it tries to stem its losses - $300 million in the last fiscal year which ended February 26, 2011 - and break-even with Fresh & Easy by the end of its 2012/13 fiscal year, which is just 21 months away.

Walmart Express, the first two units of which will be open for business in Arkansas in seven days, and Walmart Market - both California bound, including numerous units in "Fresh & Easy neighborhoods" are going to ratchet up the already heavy competitive pressure on Tesco's Fresh & Easy even further.

And the 15,000 square-foot "Express" stores, with a major fresh and fresh-prepared foods offering combined with a more extensive grocery and general merchandise product selection than the Fresh & Easy format and stores have, will likely in our analysis take a significant number of shoppers from the Fresh & Easy small-format markets in those neighborhoods where the two formats have stores near each other.

If we were Tesco CEO Philip Clarke and his deputy, Fresh & Easy Neighborhood Market CEO Tim Mason, we would have made sure to have bought stock in Walmart Stores' earlier this year.

Then this week - perhaps wearing fake mustaches and using a southern USA accent, along with wearing hats with a "press" card tucked in the brim in order to get into the Walmart Express Arkansas store media tour - they could make their way to Bentonville and attend "Walmart Week," paying special attention (as we are) to every word spoken by Walmart CEO Mike Duke and Walmart U.S. president Bill Simon, as it pertains to the retailer's two-pronged smaller-format store initiative - and particularly as it pertains to California - where Tesco is betting it all with Fresh & Easy, and where Walmart will soon be opening numerous Walmart Express and Walmart Market stores, many eventually coming to a "Fresh & Easy neighborhood.

Related Stories

February 22, 2011: Walmart Stores, Inc. Announces the Name For its New Smaller-Format Food & Grocery Stores: 'Walmart Express'

March 9, 2011: Going Rural: First Three Smaller-Format 'Walmart Express' Stores Will Be in Small Town Arkansas

January 10, 2011: Walmart 'Gets Real' With Smaller-Format Grocery Store Initiative in California; First Stores On Tap

January 11, 2011: A 'New York State of Mind': 'The Insider' On Walmart, Apollo Global Management, Tesco's Fresh & Easy and the NRF in New York City

October 13, 2010: Simon Says: Walmart U.S. CEO Outlines Smaller Store Strategy and Plans; Walmart to Offer Groceries Online in USA

October 12, 2010: 'The Insider': Live-Blogging Walmart Stores' 17th Annual Meeting For the Investment Community.

October 11, 2010: Walmart to Outline its Urban-Focused Smaller-Format Grocery Store Plans Wednesday; What Might Be In-Store?

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

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

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

Also see these links - Walmart Stores,  20K Neighborhood Market by Walmart prototye, marketside by Walmart, Tesco Fresh and Easy California March, Wal-Mart, Walmart, Walmart Express, Walmart Market, walmart small store strategy, Walmart Stores - for related stories.

New 'Marketside' Brand Fresh Food Items From Walmart - Part Deux

Private Brand Showcase

In the Private Brand Showcase piece linked here - December 18, 2010: Walmart Launches New 'Marketside' Fresh Food Lines - Plus A 'Fresh' Campaign to Create Brand Buzz - we wrote about (and included photographs) three new fresh food product lines, along with some new item line extensions, Walmart Stores, Inc. recently introduced under its fast-growing "Marketside" brand.

Today we thought we would give Fresh & Easy Buzz readers an additional pictorial look at some of the new items not pictured in the story on Saturday.

Pictured above, the items are, from left to right:

>"Marketside Mushroom And Cheese Half-Moons and Grilled Chicken and Spinach Ravioli. The varieties are two of the numerous SKUs (and shapes) in the new"Marketside" brand refrigerated fresh pasta line, which we wrote about in the in the Saturday piece. [See - December 18, 2010: Walmart Launches New 'Marketside' Fresh Food Lines - Plus A 'Fresh' Campaign to Create Brand Buzz

>"Marketside" Chicken Tortilla Soup. This a fairly new item (line extension) Walmart has added to it existing "Marketside" line of ready-to-heat, fresh-refrigerated soups. [See - February 28, 2010: Walmart Introducing New Ready-To-Heat Prepared Entrees, Fresh Soups Under its Marketside Brand]

>"Marketside" Classic Smooth Guacamole. This SKU is a larger version (2/7oz Trays instead of pouches) of the same item we ran a picture of in the piece on Saturday. That item: "Marketside" Classic Smooth Guacamole; but in 6/2oz Pouches instead of the trays. [See the photo at the December 18, 2010 story link above.

>"Marketside" Artisan Petite Cranberry Walnut Loaf. This new specialty bread is one of a number of new varieties Walmart is launching to go with its existing "Marketside" bread, roll and baked goods lines. [See - September 9, 2010: Walmart Introduces 'Marketside' Brand Packaged Fresh-Baked Breads, Sub Rolls and Chocolate Chunk Cookie]

>"Marketside" Roasted Garlic Hummus. The variety is one flacor in the multi-SKU new line of "Marketside" packaged, fresh-refrigerated Hummus.

As we noted in the story on Saturday, Walmart Stores, Inc. is developing additional new "Marketside" private brand fresh food lines, and preparing to introduce some of those new lines, along with numerous new item line extensions, in the first half of 2011.

Stay tuned.

Related Stories

March 31, 2010: Walmart Adds Additional Marketside Fresh Food Items to Marketside.com Not Long After Our February Reports

March 9, 2010: Walmart Adds Two More SKUs to its Marketside Ready-To-Heat Fresh, Prepared Entree Line

March 2, 2010: Walmart Launching New 'Marketside Fresh Garden Salsa' Line Under its Fast-Growing Fresh Foods Store Brand

February 28, 2010: Walmart Launching New Value-Added Pre-Packaged Fresh Produce Line Under its Marketside Fresh Foods Brand

[Private Brand Showcase is a regular feature of Fresh & Easy Buzz. In it we report on, write about and offer analysis and commentary on the fast-growing private or retailer brand (sometimes called private label) movement, along with featuring various private brand products being offered by Tesco's Fresh & Easy Neighborhood Market, along with those of other grocers and retailers operating various types of formats. Below is a selection of 2010 stories in our Private Brand Showcase]

Private Brand Showcase 2010

December 18, 2010: Walmart Launches New 'Marketside' Fresh Food Lines - Plus A 'Fresh' Campaign to Create Brand Buzz

December 13, 2010: House (Sparking) Cider Rules at Fresh & Easy Neighborhood Market

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

October 16, 2010: Fresh & Easy Neighborhood Market 'Bags' the Humble and Nutritious Plantain For A New Snack Chip Item

October 16, 2010: Fresh & Easy Neighborhood Market's Private Brand Kids' Cereal Wins Bronze 'Pentaward' in 2010 Packaging Design Competition

October 9, 2010: 'Use Me': Should Reusable Packaging Be Part of Tesco's Sustainable Private Brand Offering? A Student-Designer Thinks So

September 27, 2010: First Items in Fresh & Easy Neighborhood Market's 'eatwell' Brand Frozen Foods Line Arriving in Store Freezer Cases This Week

September 4, 2010: Fresh & Easy Neighborhood Market Unveils New fresh&easy 'goodness' Brand Items and Packaging

August 29, 2010: Fresh & Easy Neighborhood Market Expanding its fresh&easy 'goodness' Co-Branded Line; Launching Numerous New Items

August 18, 2010: Fresh & Easy Neighborhood Market Extending 'eatwell' Healthy Foods' Private Brand Into Dry Grocery Category

July 21, 2010: 'Sipsational' & 'Quenchtastic': Safeway Introduces New 21-Flavor Line of Soft Drinks Under 'refreshe' Private Brand

July 17, 2010: New Fresh & Easy Neighborhood Market Clock-Shaped Private Brand Candy Line Hits the Shelves at Fresh & Easy

July 12, 2010: Tesco Launches Private Brand 'Lasagne Sandwich' in the UK Today...With No Apologies to The Earl of Sandwich

June 24, 2010: New Fresh & Easy Clock Logo-Shaped Candies Are A Pretty Sweet Idea

May 11, 2010: Tesco Might Want to Get 'fresh & naked' at 'fresh & easy'

April 2, 2010: Fresh & Easy's New 'EatWell' Healthier Fresh, Prepared Foods Brand to Hit Stores on April 7

April 11, 2010: When it Comes to Fresh, Prepared Foods, New York City's Duane Reade is Simply 'deLish' for Walgreens

February 22, 2010: Food, Drug Retailers With Stores in California, Nevada & Arizona Honored for Private Label-Store Brands' Excellence

[Photo credit: Photo courtesy of Sophistisishe.com.]

Walmart Launches New 'Marketside' Fresh Food Lines - Plus A 'Fresh' Campaign to Create Brand Buzz

Private Brand Showcase: Fresh Foods

Walmart Stores, Inc. has been busy creating and launching new fresh food product lines under its "Marketside" private brand, along with adding new SKUs to its existing lines, since we last reported on and wrote about the introduction of a new line of "Marketside"artisan breads and related baked goods in September. [Read the story - September 9, 2010: Walmart Introduces 'Marketside' Brand Packaged Fresh-Baked Breads, Sub Rolls and Chocolate Chunk Cookie.]

Since then, Walmart has launched three notable new "Marketside" lines: a line of ready-to-use refrigerated dips (for chips, crackers, fruits and veggies); a cook-in-three-minute fresh, refrigerated pasta line; and a companion line of ready-to-heat fresh-prepared pasta sauces.


Dips: The extensive line features numerous SKUs, including Guacamole; a range of ranch dips like Chipotle Ranch and Buttermilk Ranch; Bleu Cheese; a cream cheese and vanilla bean fruit dip; and others.


Fresh Pasta: The "Marketside" line of fresh, refrigerated pasta includes numerous pasta shapes, along with ravioli and tortelloni varieties filled with meat and cheese, like the Three Cheese Tortelloni pictured above. All of the fresh pasta varieties take three minutes to boil.

Pasta Sauce: The "Marketside" refrigerated, fresh-prepared pasta sauces come in tomato-based and cream varieties, as well as pesto. The cream-based sauce varieties include the Asiago and Smoked Provolone cheese sauce pictured above. The tomato-based marinara sauce varieties include the Tuscan-Style Marinara Sauce, also pictured above.

Walmart has yet to add the new "Marketside" fresh pasta, pasta sauce and dip lines, as well as some of the new SKUs added to the existing lines, to its Marketside.com product website.

Walmart's "Marketside" private brand now includes lines and products in the fresh-prepared foods, fresh produce and bakery categories.

The fresh-prepared food lines include both ready-to-eat items - grab-and-go salads and sandwiches; party trays; Rotisserie chicken and other meat and non-meat items and side dishes; plus the dips and sauces - and ready-to-heat or quick-cook items, such as entrees, side dishes, pizzas, pastas and sauces.

There's also a line of "Marketside" packaged fresh cheese and a line of packaged lunch meats which are sold in some Walmart stores.

The fresh food products are sold in the retailer's Walmart Supercenter, Walmart Neighborhood Market and marketside by Walmart banner stores in the U.S. Additionally, selected "marketside" items are also sold in some of the retailer's discount format stores.

The product grouping above - the ready-to-eat rotisserie chicken and take-and-bake pizza, along with a bag of fresh spinach, a loaf of fresh bread and a cookie - is a good graphic depiction of the "home meal replacement" marketing positioning focus Walmart is using for its "Marketside" fresh foods brand.

Home meal replacement positioning, building brand buzz

Walmart's strategic vision and marketing strategy for "Marketside" is to create a multi-line family of fresh food products and position them to shoppers as an affordable, fresh and high-quality "home meal solutions" brand and concept, which it has started doing, using a handful of marketing and promotional vehicles.

The retailer's new campaign for "Marketside," which began the first week of November, is designed to create online buzz around the brand by engaging food-oriented bloggers and "mommy" bloggers, many who are members of Walmart's moms' blogger group.

The "home meal replacement" positioning for brand "Marketside" is the central theme of the campaign. Boulder, Colorado-based design and corporate identity firm Mighty Fudge Studios, the creators of the "Marketside" product packaging, prepared an attractive and detailed collateral piece for the week-long promotion. The package was sent to the bloggers as an information piece about the brand, along with inviting them to receive a selection of free "Marketside" products over a period of time, which they could try and hopefully write about in their respective blogs, thereby creating some desired online grassroots buzz for and around the brand.

The marketing communications piece (pictured above) uses the "home meal solutions" positioning as its overall theme, focusing the "Marketside" brand message on that key element.

A number of the food-oriented and "mommy" bloggers who received the free products and market communication piece have since posted about the "Marketside" products, along with posting recipes they created using the fresh food items.

More brand 'Marketside' to come

In addition to introducing the new "Marketside" fresh food lines, Walmart has added new SKUs to many of its existing lines over the last couple months, such as new fresh bread items, ready-to-heat refrigerated soup varieties, value-added produce items and a some others.

New line creation and SKU expansion are far from over at Walmart for brand "Marketside." The retailer is currently working on additional new fresh food lines, including prepared-foods, and new SKUs to add to the existing lines, for introduction in the first half of 2011.

Stay tuned.

Related Stories

September 9, 2010: Walmart Introduces 'Marketside' Brand Packaged Fresh-Baked Breads, Sub Rolls and Chocolate Chunk Cookie

March 31, 2010: Walmart Adds Additional Marketside Fresh Food Items to Marketside.com Not Long After Our February Reports

March 9, 2010: Walmart Adds Two More SKUs to its Marketside Ready-To-Heat Fresh, Prepared Entree Line

March 2, 2010: Walmart Launching New 'Marketside Fresh Garden Salsa' Line Under its Fast-Growing Fresh Foods Store Brand

February 28, 2010: Walmart Introducing New Ready-To-Heat Prepared Entrees, Fresh Soups Under its Marketside Brand

February 28, 2010: Walmart Launching New Value-Added Pre-Packaged Fresh Produce Line Under its Marketside Fresh Foods Brand

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

News & Analysis

In this September 9, 2010 piece - Walmart Plans to Close Arizona 'marketside by Walmart' Stores, Dump Format By Year-End or Early 2011 - we reported that Walmart Stores, Inc. will end its small-format 'marketside by Walmart' format and close the four stores in Arizona, either by the end of this year or in early 2011, and discussed and offered analysis on the issue. The stores and format were called 'marketside' until the retailer added "by Walmart' to the name in 2009.

Since we reported and published the piece, we've learned about some additional thinking and discussion at Walmart, involving the four 'marketside by Walmart' stores, which range in size from a little over 15,000 square-feet to about 18,000 square-feet.

Although the 'marketside' fresh food and grocery format as we know it now is going away, Walmart is considering not closing some or all of the four stores, and instead converting them to one or more different formats.

Here's what we know right now:

Even though the 'marketside by Walmart' stores are smaller than Walmart's 20,000 square-foot 'Neighborhood Market by Walmart' prototype store in Rogers, Arkansas [See our July 6, 2010 story - July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store], Walmart Stores' is considering converting some or all four of the 'marketside' stores, which are in Gilbert, Chandler, Mesa and Tempe, Arizona, into a slightly scaled-down version of the 20,000 square-foot 'Neighborhood Market by Walmart' format and store. Based on what we know today, this is the most likely option of the three we're laying out in this piece.

Second, Walmart could replace one or more of the 'marketside by Walmart' units with a smaller version (a true bodega) of its 'Supermercado de Walmart' Latino format stores.

Walmart has a couple of these stores in Metro Phoenix. However, the stores are in renovated Walmart Neighborhood Market stores that, like this one in Phoenix, are 39,000-42,000 square-feet. All four of the 'marketside by Walmart' stores are less than half that size, which is why it would have to be a smaller, hybrid version the the current 'Supermercado de Walmart' units open and operating in Arizona.

Walmart has been working on such a smaller format though. It also operates such stores - in the 15,000 square-foot range, and even smaller - in Mexico. So it wouldn't be a stretch at all. The demographics, however, are only decent for a Hispanic format store in two of the four cities/neighborhoods where the 'marketside' stores are located. Therefore, it would only make sense to convert one, and maybe two, of the 'marketside by Walmart' stores into a Latino consumer-focused store, as described above.

Lastly, Walmart could put a new, "corner grocery store" (our term) type of format it's been working on into one or more of the four 'marketside by Walmart' stores in Arizona. Think of it as an "American" bodega. Walmart first started developing this format, both Latino and non-Latino consumer-focused versions, two years ago. Read our report: September 29, 2008: Special Report: Wal-Mart, Inc. Studying Second Small-Format Food and Grocery Store Concept; the 'Bodega' or Modern Version of the Corner Grocery Store.

What we know about this format is that it's more focused on basic groceries than Walmart's 'marketside' format is, less upscale and, although it offers some prepared foods, isn't fresh-prepared foods-focused like the 'marketside by Walmart' format is.

We don't know conclusively at this point in time what Walmart is going to do with the four Arizona 'marketside by Walmart' stores. But, based on our most recent information, our analysis is it's likely the retailer will retain at least two, and perhaps all four of the stores, converting the format. A key reason - but far from the only reason - for this is because Walmart Stores, Inc. has long-term leases on the four buildings the stores are housed in.

Further, it's our analysis, based on what we know today, the most-likely format to replace 'marketside' in one or all of the four Arizona 'marketside by Walmart' stores, is a slightly scaled-down, smaller version of the 20,000 square-foot 'Neighborhood Market by Walmart' format.

For example, the 20,000 square-foot prototype store in Rogers, Arkansas includes a pharmacy and fairly good-sized in-store deli. These two departments could be reduced in size, along with shrinking the overall footprint of the 20,000 square-foot store a bit, and then dense up the core of the store, and the format as it is, with just the changes described above, could easily fit in the four 'marketside by Walmart' boxes (the stores.)

Walmart should announce the fate of the format and the four stores at its upcoming analysts meeting in October. We're further reporting the story, and will probably have something additional before then. Stay tuned.

Also, read our December 21, 2009 story: Wither Walmart's Small-Format 'marketside' Stores and Format? And our January 9, 2010 piece - Walmart's 'marketside': What's 'In-Store' for 2010? They offer a good, integrated road map to the present.

Walmart Introduces 'Marketside' Brand Packaged Fresh-Baked Breads, Sub Rolls and Chocolate Chunk Cookie

Breaking Buzz: Private Brand Showcase

Walmart Stores, Inc. has introduced its line of 'Marketside' brand pre-packaged fresh-baked breads and submarine sandwich-style rolls, along with the first item, a 3.17 ounce Chocolate Chunk Cookie, in what will be a multi-item companion line of 'Marketside' packaged, ready-to-eat fresh baked goods.

The first items in the 'Marketside' fresh-baked bread line are:

Bread Loaves, 16 ounce packages:

>Roasted Garlic Artisian Loaf
>MultiGrain Boule
>Neo Tuscan Boule
>Combo Loaf
>Ciabatti Loaf
>Seeded Rye Loaf
>MultiGrain Loaf Bread
>Sourdough Loaf Bread
>Pumpernickel Loaf Bread

Sub Sandwich-Style Rolls, 16 Ounce Packages

>Seeded Rye Sub Rolls
>Sourdough Sub Rolls
>MultiGrain Sub Rolls
>Pumpernickel Sub Rolls

As mentioned, the Chocolate Chunk Cookie (pictured below) is currently the only item in the 'Marketside' private brand fresh baked goods line. But there are more SKUs to come soon.
We said Walmart would be introducing the 'Marketside' breads and baked goods "soon" in this March 31, 2010 piece: Walmart Adds Additional Marketside Fresh Food Items to Marketside.com Not Long After Our February Reports. They retailer has done so.

The new fresh-baked bread, sub roll and baked goods lines join Walmart's other 'Marketside' store brand packaged food items - fresh-prepared foods, take-and-bake pizza's, packaged produce and salsa, giving Walmart Stores, Inc. 'Marketside' "fresh" items in three categories: Deli, produce and bakery. [Click here for a selection of past stories about Walmart's 'Marketside' brand items in the fresh-prepared foods and produce categories.]

The 'Marketside' items - and the categories they're in - are very similar in style, ingredient profile and packaging to what Tesco's Fresh & Easy Neighborhood Market has done with its fresh&easy brand, which it uses in all categories, including fresh-prepared foods/deli, and bakery.

Unlike Tesco's Fresh & Easy though, which is only able to sell the fresh&easy brand items in its 163 small-format stores in California, southern Nevada and Metro Phoenix, Arizona, Walmart is able to offer its 'Marketside' "fresh" items for sale in its thousands of supercenters (and some discount format stores) and Neighborhood Market supermarkets in the U.S., as well as in its four small-format 'marketside by Walmart' food and grocery stores in the suburban Phoenix, Arizona cities of Mesa, Tempe, Gilbert and Chandler.

Walmart is currently developing additional 'Marketside' brand items in the fresh-prepared foods, pre-packaged produce and fresh bread/baked goods categories.

The mega-retailer is also rolling out the 'Marketside' store brand items to additional stores, such as the many recent discount format stores its been converting to hybrid supercenters.

Walmart Adds Additional Marketside Fresh Food Items to Marketside.com Not Long After Our February Reports

Walmart has now added its Marketside private brand fresh soups, which we reported on in February [Walmart Introducing New Ready-To-Heat Prepared Entrees, Fresh Soups Under its Marketside Brand], to its marketside.com Web site. There are eight varieties in the ready-to-heat soup line.

In addition, Walmart just-recently added its eight-item Marketside refrigerated take-and-bake pizza line (pictured at the top) to the site.

The pizzas were the very first item Walmart rolled out in its Marketside ready-to-heat and ready-to-eat, prepared foods line. It introduced the pizzas in selected stores in fall 2009. The refrigerated pizzas take about 17-19 minutes to bake at in a conventional oven.

Walmart has recently given the Marketside pizza package a makeover, giving it a new look, and bringing its graphic design in line with all of the other Marketside private brand prepared foods products introduced to date.

You can view the pizzas, soups and other items at the http://www.marketside.com/ site.

The reason the soup line have now been added to marketside.com is because Walmart has rolled the items out to many more of its Supercenters and Neighborhood Market supermarkets than was the case when we reported on the new Marketside store brand prepared foods items in February.

The pizzas were only recently added to marketside.com because of the packaging makeover mentioned above.

Next up for brand Marketside is a line of artisian breads and baked goods. Walmart is currently preparing to start introducing some of the items in selected stores soon, we've learned.

Additional varieties of Marketside fresh, prepared entrees and other ready-to-heat and ready-to-eat food items are also in the works, as we've previously elaborated on in a number of the posts linked below.

Walmart's Marketside: Recent Biography

>March 9, 2010: Walmart Adds Two More SKUs to its Marketside Ready-To-Heat Fresh, Prepared Entree Line

>March 2, 2010: Walmart Launching New 'Marketside Fresh Garden Salsa' Line Under its Fast-Growing Fresh Foods Store Brand

>February 28, 2010: Walmart Launching New Value-Added Pre-Packaged Fresh Produce Line Under its Marketside Fresh Foods Brand

>February 28, 2010: Walmart Introducing New Ready-To-Heat Prepared Entrees, Fresh Soups Under its Marketside Brand

>January 9, 2010: Walmart's 'marketside': What's 'In-Store' for 2010?

>December 21, 2009: Wither Walmart's Small-Format 'marketside' Stores and Format?

Walmart Introducing New Ready-To-Heat Prepared Entrees, Fresh Soups Under its Marketside Brand

Fresh, Prepared Foods Merchandising

Walmart Stores, Inc. is adding additional fresh, prepared foods items to its Marketside fresh foods store brand, as we predicted it would in this January 9, 2010 piece: Walmart's 'marketside': What's 'In-Store' for 2010?

First, Walmart is introducing a new line of Marketside family-size, ready-to-heat prepared entrees. Fresh & Easy Buzz has located two items/SKUs in the new prepared entree line thus far: Marketside Macaroni & Cheese With Bacon, in a 3 pound package, and Baked Rigatoni with Italian Sausage, in a 46 ounce package. (The Rigatoni With Sausage entree is pictured above; the Mac and Cheese With Bacon is at the top.)

Additionally, Walmart has introduced a new line of ready-to-heat, refrigerated fresh soups (pictured above) under its Marketside brand.

The Marketside entrees and soups are similar to those marketed by Safeway (Signature Cafe store brand), Tesco's Fresh & Easy Neighborhood Market (fresh & easy brand) and a number of other U.S. food retailers. But the expansion by Walmart is significant from a competitive standpoint because the mega-retailer has thousands of U.S. stores in which it can sell the growing marketside fresh, prepared foods line

Walmart is in the process of launching the new Marketside fresh, prepared entree line and the fresh soup line in selected Supercenters and Neighborhood Market Supermarkets.

There will be additional items/varieties in the prepared entree line coming out soon, according to our sources and research.

The Marketside entrees and soups were originally created for Walmart's four small-format 'marketside by Walmart' fresh food and grocery stores located in the Metropolitan Phoenix, Arizona region, where the ready-to-heat fresh foods have been sold since the four stores opened in May 2008.

As we've reported and written about extensively, Walmart is using the 'marketside' stores as a laboratory for the development of its brand Marketside fresh foods program.

Walmart introduced its first Marketside branded fresh, prepared food item, a line of take-and-bake pizzas, to selected Supercenters and Neighborhood Market supermarkets last year. The pizzas were also developed at and are sold at the four Phoenix Metro region 'marketside by Walmart' stores.

Fresh & Easy Buzz reported in this December 21, 2009 piece - Wither Walmart's Small-Format 'marketside' Stores and Format? - that Walmart had replaced the Web site for its small-format 'marketside by Walmart' fresh food and grocery stores with a single page describing its new Marketside line of fresh foods.

We said this development signaled that Walmart was putting its primary emphasis regarding brand Marketside on the new fresh foods line rather than on additional 'marketside by Walmart' stores., which remains the case.

In our January 9, 2010 piece [Walmart's 'marketside': What's 'In-Store' for 2010?] we made three predictions about Walmart's brand Marketside for 2010.

One of those predictions was that Walmart would soon be rolling out additional fresh, prepared foods items under its Marketside store brand.

Here's what we said (in italics below) in prediction two of the three:

"Walmart will introduce a few additional packaged fresh, prepared foods items (SKUs) under its 'marketside' brand in some of its Supercenters, discount format stores and Neighborhood Market supermarkets in 2010, following up on the 'marketside' prepared, take-and-bake pizza.

Look for some or all of these prepared foods items in 2010: 'marketside' ready-to-heat fresh soups in containers and ready-to-eat packaged salads. Plus 'marketside' ready-to-heat prepared entrees in varieties like macaroni & cheese, meatloaf and pot roast, for starters."

Walmart is doing just what we predicted it would.

Walmart will be launching additional fresh, prepared - and other fresh foods - under its Marketside store brand this year.

Stay tuned.

[Click here and here for a selection of past posts in Fresh & Easy Buzz about Walmart's 'marketside' retail format and stores.]

[Editor's Note: In the past, Walmart used all lower-case letters for 'marketside.' It still uses lower-case for its 'marketside by Walmart' stores. However, Walmart is using Marketside (with a capital M) for its Marketside store brand. Therefore, we will follow this convention.]

Walmart's 'marketside': What's 'In-Store' for 2010?

Analysis & Commentary

In December 2009 we published this piece [December 21, 2009: Wither Walmart's Small-Format 'marketside' Stores and Format?] in which we reported that the Web Site for Walmart Stores' 'marketside by Walmart' fresh food and grocery stores had been replaced by a single page site touting its new line of 'marketside' fresh, prepared foods, and examined the potential future of the four small-format stores, located in Metropolitan Phoenix, Arizona.

Our story has generated a considerable amount of interest in the food retailing industry and media, including being picked up by the convenience store industry trade publication CSP Reports on December 30, 2009 here and by CBS's BNET business news Web site on January 8, 2010 here.

Brand 'marketside' & synergy

In October 2008 we published this analysis and think piece [October 6, 2008: 'The Promotional Pundit:' How Wal-Mart Can Use its Supercenters to Create Customers For its New Small-Format Marketside Stores in Arizona] in which we suggested ways in which Walmart could use its retail power in the Arizona market to create a synergistic relationship for its start up 'marketside by Walmart' stores (then called just 'marketside'), as well as for all of its food and grocery retail formats and banners, particularly its flagship Supercenters and Neighborhood Market supermarkets.

Walmart operates Supercenters, club stores and its Neighborhood Market supermarkets in Arizona, along with the four 'marketside by Walmart' small-format food stores. Walmart is the food and grocery sales market share leader in Arizona., followed by Kroger's Fry's and Safeway Stores, Inc.

One thing we suggested in the October 2008 piece was that Walmart could open branded 'marketside' kiosks in its Supercenters. We also suggested various other things Walmart could do in this regard - the focal point being all about how the retailer could expand and extend 'brand marketside.'

Walmart in fact has recently started doing just that - extending its 'marketside' brand via a new line of store brand fresh, prepared foods products and branding 'marketside outside of the four walls of the small-format Arizona stores.

New 'marketside' fresh-prepared foods line

Recently Walmart began testing the sale of a new store/private label brand of fresh foods labeled 'marketside' in some of its Supercenters, discount format stores and Neighborhood Markets.

The first of the 'marketside' store brand fresh foods products are a line of prepared pizzas in varieties such as Three-Cheese, Pepperoni and Canadian Bacon. The retailer recently has been advertising the 'marketside' pizzas in its ad circulars and promoting them with price discounts in-store. Walmart handed out free samples of the 'marketside' pizza in many of its Supercenter and discount format stores during a special three day Thanksgiving holiday promotion in November.

Announcing the planned line of 'marketside' store brand fresh foods products in July 2009, Wal-Mart spokeswoman Amy Wyatt-Moore said in a statement: "We are testing a number of concepts on home meal replacements and chilled entrees under the 'marketside' brand in select Walmart stores."

Brand 'marketside' & Walmart's Neighborhood Markets

Walmart also started another 'marketside' branding experiment in late summer of 2009. It has rebranded the deli departments (including naming them 'marketside delis') in a handful of its Neighborhood Market supermarkets in Texas and Arizona as "marketside delis," also branding most of the bulk and packaged deli items and fresh, prepared foods under the 'marketside' brand, as it does in its four 'marketside by Walmart' food and grocery stores in Arizona.

Conceptually these two 'marketside' branding efforts outside of the four walls of the 'marketside by Walmart' stores reminds us much of what we suggested the retailer do vis-vis 'marketside' in that October 2008 piece: 'The Promotional Pundit:' How Wal-Mart Can Use its Supercenters to Create Customers For its New Small-Format Marketside Stores in Arizona. In fact, Walmart is sort of turning our concept on its head a bit.

Brand extension & synergy

The expansion of the 'marketside' brand into the test of a private label/store brand fresh foods line and 'marketside' branded deli departments also fits in with the analysis we offered in this October 5, 2008 piece [Wal-Mart's Marketside is More Than the Sum of the Parts of its Other Formats; While Time and Consumers Will Judge, We See the Format As A Stategic Fit] where we laid out the potential synergistic elements of brand 'marketside' and the 'marketside' retail format; brand extentions which Walmart wasn't attempting to develop at the time and only began doing in the late summer of 2009.

What do we make of these developments by Walmart?

First, Walmart's recent developments with brand 'marketside' conceptually follow our analysis well over a year ago about the synergistic potential of brand 'marketside,' or at least the idea that attempting to brand 'marketside' beyond the four walls of the four Arizona 'marketside' food-grocery stores is something the chain should and needs to do.

Second, we think the broader branding of 'marketside' could serve a two-fold purpose for Walmart: It could help the existing 'marketside by Walmart' food stores and any future units Walmart might open because by expanding the brand into store brand fresh food products and 'marketside' in-store deli departments in its Neighborhood Market supermarkets and its Supercenters, more consumer awareness and top of mind vis-a-vis 'marketside' will be created. That's what branding and brand extension is all about.

Lastly, Walmart needs a better position in the fresh, prepared foods space in all of its key formats - Supercenters, Neighborhood Market, discount stores and Sam's club stores. The existing four Arizona 'marketside' fresh foods stores have and could continue to serve as an idea, concept and product development incubator for the giant retailer. Think synergy again. In other words, a secondary function of the 'marketside by Walmart' food stores in Arizona is to serve as the research and development lab for Walmart's overall fresh, prepared foods program.

Three predictions for 'marketside' (brand and stores) for 2010

1. Walmart will keep the four Arizona 'marketside by Walmart' stores open in 2010. It will do so in part to serve the research and development function we mention above. Walmart won't open any new small-format 'marketside by Walmart' stores in 2010 though, either in Arizona or elsewhere in the U.S.

2. Walmart will introduce a few additional packaged fresh, prepared foods items (SKUs) under its 'marketside' brand in some of its Supercenters, discount format stores and Neighborhood Market supermarkets in 2010, following up on the 'marketside' prepared, take-and-bake pizza.

Look for some or all of these prepared foods items in 2010: 'marketside' ready-to-heat fresh soups in containers and ready-to-eat packaged salads. Plus 'marketside' ready-to-heat prepared entrees in varieties like macaroni & cheese, meatloaf and pot roast, for starters.

3. Walmart will brand the deli departments in a few (or perhaps more than a few) additional Neighborhood Market supermarkets into 'marketside delis.' Perhaps in some Supercenters as well.

Since the primary focus of the small-format (about 16,000 square feet) 'marketside by Walmart' stores is fresh foods, and particularly fresh, prepared foods, Walmart's thinking we believe is that although its Neighborhood Market store delis are much smaller than 16,000 square feet, they can still be 'mini marketside' fresh, prepared foods stores (the deli departments) within the Neighborhood Market supermarkets, which average about 43,000 square feet.

[Click here and here for a selection of past posts in Fresh & Easy Buzz about Walmart's 'marketside' retail format and stores.]

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