Dollar General's California Dream Becoming Reality

Tennessee-based discount retailer Dollar General has been moving hard and fast in Northern California, particularly in the Central Valley, since we first revealed the discount retailer's big plans for the market region in this December 5, 2011 story: Dollar General Jump-Starts California Launch: Taking Over 5 Centro Mart Supermarkets For Early 2012 Openings.

In the mere four months since we published the report, Dollar General has hit the ground running, focusing on its Dollar General Market grocery stores and traditional dollar format stores in the region.

Below is what the mega-discount retailer, which operates 10,000 stores in 39 U.S. states, is up to:

>First store opened: Dollar General opened its first Dollar General Market grocery store in the region March 31, at 1729 West Highway 140, in Merced, California.

The grocery market was store number 10,000 for Dollar General, and it went all out for the grand opening, offering activities for shoppers including: a free make-up consultation from representatives of  L’Oreal and Maybelline; photographs for the kids with characters Sponge Bob, Bimbo Bear and the Energizer Bunny; and food sampling, offering numerous products sold at Dollar General. Additionally, the first 500 customers to arrive at the store for the 9 a.m. grand opening received a free ham and a reusable tote bag filled with product samples and coupons

>Store manager search: The retailer is currently advertising for store managers for its three Dollar General Markets in Stockton, California and the unit in the East Bay Area city of Brentwood. These are four of the five stores Dollar General is leasing from Stockton-based supermarket chain Centro Mart, as we detailed in our December 5, 2011 story. The fifth former Centro Mart unit, in Stockton, will be a Dollar General dollar format store. The four Dollar General Market grocery stores and the dollar store are set to open in the coming weeks.

>Regional director wanted: Dollar General is advertising for a regional director for its dollar stores and Dollar General Market stores for California and Nevada.

According to our sources, the retailer plans to open 150-200 units combined of both formats in California and Nevada over the next two-to-three years.

So far Dollar General has seven stores open in Nevada and six units in California. Dollar General CEO Rick Dreiling said in a March 22, 2012 conference call with financial analysts that the retailer plans to have 50 (grocery stores and dollar stores combined) units open and operating in California by the end of the year.

>More stores: In our December 5, 2011 story we reported Dollar General had plans to open numerous other Dollar General Market (which offer groceries along with perishables, fresh meat and produce) and dollar store units, which carry perishable and dry grocery consumables along with general merchandise items but not meat or produce, throughout Northern California, with a major focus on the Central Valley.

Above: The location of the Dollar General Market in the Gregory Gardens shopping center, Modesto, California.

Thus far we've discovered the following planned Dollar General Market grocery store units in the region: two units in the Fresno area, at Fruit and McKinley in Fresno and Bullard and Minnewawa in nearby Clovis (both are former Save Mart supermarkets which the Modesto-based chain had previously closed); a Dollar General Market in Modesto, in the Gregory Gardens shopping center at 2003 Tully Road, between Bowen and Briggsmore (the retailer has also signed a lease for a dollar format store at 510-560 North Main Street in Modesto); and a Dollar General Market in Winton, which is next door to Merced, where the first store in the region opened March 31.

Dollar General is currently advertising on a variety of online job sites for managers for the Modesto and Winton grocery markets, which are set to open in the coming weeks.

Distribution center

As we reported in our December 5, 2011 story, Dollar General has established a distribution center near Bakersfield, California to service its grocery and dollar format stores in California, Nevada, Arizona and New Mexico. The facility opened this month.

Major growth plans

Dollar General plans to open approximately 625 new stores this year, the majority of which will be its flagship dollar format stores, which average about 7,000 square feet, CEO Dreiling said in the March 22 conference call. Additionally, according to the CEO, the retailer plans to remodel and relocate about 550 stores in 2012.

The retailer opened 625 new stores in 2011, along with remodeling or relocating 575 units, for a net increase in square footage of 7%, Dreiling said.

Dreiling said in the March 22 conference call that Dollar General has about 40 new Dollar General Market grocery stores set to open this year, the majority of which will be in California, Nevada and Arizona.

Last year the retailer opened seven new Dollar General Market stores, seven of which were in Nevada (its first new market since 2006), and remodeled 25 existing grocery markets.

There are currently 70 Dollar General Market grocery stores in the U.S.

The grocery stores, which average 10,000-15,000 and offer a selection of grocery items, perishables, frozen foods, produce, meats and general merchandise, are a key element of Dollar General's strategy for California.

Part of that strategy is to focus on food deserts, regions and cities that are currently underserved by grocery markets offering fresh food and groceries at reasonable prices.

The Dollar General Market format is focused on everyday low prices. A number of industry surveys, for example, put the store's prices on par with Walmart for fresh food, groceries and general merchandise items. Dollar General also runs weekly ads for the grocery markets and sometimes offers store coupons, such as $5 off purchases of $25 or more.

Inside a new generation Dollar General Market. [Photo credit: Dollar General, 09/27/11.]

Good fiscal 2011

Dollar General had a good 2011 fiscal year on all metrics. Its full-year sales increased 13.6% to a record $14.8 billion. There was an extra week in the fiscal year. Excluding that 53rd week, full-year sales increased to 11.4%.

Sales-per-square-foot for fiscal 2011 increased to $209, compared to $201 a year ago. Average sales-per-store came in a bit over $1.5 million.

The 2011 fiscal year also marked the 22nd consecutive year of same-store-sales growth for Dollar General. Same-store-sales were up 6% for the year, with all regions reporting positive comps, according to CEO Dreiling. Dollar general is forecasting a same-store-sales increase of between 3%-5% for the current fiscal year.

Dollar General's adjusted operating profit grew 17% in 2011 over the previous year to a record $1.5 billion and a record 10.2% of sales.

The retailer posted a 31.7% gross margin rate for 2011, which was 31 basis points below the previous year but was 246 basis points higher than in 2008, the first full year of the "great recession."

On the bottom line, Dollar General's adjusted net income increased 26% over 2010, which is an impressive performance.

Dollar General also launched and e-commerce website in 2011, which will not only bring it added revenue but should prove to be a good source of data over time. For example, the retailer is currently in 39 states. Purchasing data from the site over time could prove valuable as Dollar General looks at which of those remaining states it wants to open stores in first.

A closer look inside the Dollar General Market. [Photo credit: Dollar General, 09/27/11.]

Dollar General's impact

It's difficult to forecast whether or not Dollar General will be a major player in the food and grocery retailing business in California in general and in the Northern California/Central Valley region specifically for a couple reasons.

First off, selling food and groceries isn't something the retailer has a solid track record of doing. In fact, a couple years ago Dollar General considered shuttering its Dollar General Market format and stores completely. However, it instead developed a new Dollar General Market prototype in Dallas, Texas, which is the model for the remodeled and new stores, and is going forward with the chain, including emphasising the grocery markets as part of its two-format strategy in California and Nevada, as previously noted.

Second, California has no shortage of seasoned grocery chains and independents, with more coming, like Walmart with its Neighborhood Market supermarkets (see the story link at bottom), for example. But Dollar General's focus on undeserved regions and cities in the Golden State, such as the locations in the Central Valley detailed earlier, could be a very smart move for the retailer with its Dollar General Market stores, which have a low everyday price focus.

For example, Tesco's Fresh & Easy Neighborhood Market, which continues to lose millions of dollars a week with its 10,000 square-foot grocery markets, isn't opening any new stores in California's Central Valley despite having numerous sites in cities like Bakersfield, Fresno, Modesto, Los Banos and Stockton, most of which its been sitting on for three to four years.

Fresh & Easy did finally open its first five stores in Sacramento (see story links at bottom), where Dollar General also plans to open a number of its grocery markets and dollar stores (the first unit we've discovered will be in the Grand Oaks shopping center at 7963 Auburn Boulevard in the Sacramento suburb of Citrus Heights), in March. Tesco now has 196 Fresh & Easy stores. There are 142 units in California, 24 stores in Arizona and 20 units in Arizona.

Dollar General's two-format - the grocery stores and dollar stores - strategy in California should be a powerful one though, allowing it to establish its brand in the Golden State (and in Nevada) much faster than if it was only going with a single-format approach. For example, the dollar format stores also offer a considerable selection of groceries and general merchandise items, along with some perishables and frozen foods (two categories Dollar General is expanding in the stores), which should allow the retailer to establish itself in the highly competitive Golden State faster than if it were doing a single-play strategy only.

We'll keep you updated like only Fresh & Easy Buzz can on Dollar General's march through California, which is just getting started.

Related Stories

December 5, 2011: Dollar General Jump-Starts California Launch: Taking Over 5 Centro Mart Supermarkets For Early 2012 Openings

April 3, 2012: Getting Real in the Golden State: First Group of 13 Walmart Neighborhood Market Stores Opening in California This Fall

March 9, 2012: Scoop Confirmed: Sprouts Announces Acquisition of Sunflower Farmers Market

February 9, 2012: Confirmed: First 2 Fresh & Easy Stores Open in Sacramento March 7; 3 in Metro-Area March 14

January 18, 2012: Fast-Growing The Fresh Market Chain On Track to Launch in California This Year

August 29, 2011: Meaningful Move or Too Little Too Late? Fresh & Easy Neighborhood Market Planning Early 2012 Metro Sacramento Market Launch

August 3, 2011: Fast-Growing Specialty Grocer The Fresh Market Targeting Mid-2012 For First California Store

August 31, 2011: Tesco Says Sayonara to Japan, Good Morning to Sacramento

Fast-Growing The Fresh Market Chain On Track to Launch in California This Year

California here they come: The Fresh Market opened the store pictured above, at 421 North State of Franklin Road in Johnson City, Tennessee, on January 4, 2012. Yesterday the grocery chain opened a new store on the east coast, in Scarsdale, New York. Another new Fresh Market store opens next week, on January 25th, in Rockville, Maryland. Many more stores are set to open this year.

On August 3, 2011 we reported in this story: [Fast-Growing Specialty Grocer The Fresh Market Targeting Mid-2012 For First California Store] that North Carolina-based specialty grocery chain The Fresh Market planned to open its first store in California, most likely in Palo Alto in the north, in mid-2012.

Since we published our story in August 2011, the fast-growing 112-store grocery chain has been focusing on achieving just that goal. And while it might come a bit later in the year than mid-2012, The Fresh Market plans to open its first one or two stores in Northern California's San Francisco Bay Area and metro-Sacramento region before the year is out, according to our sources.

One of the first Fresh Market stores to open - in addition to the Palo Alto store we reported on in the story linked above - could be in a vacant approximately 25,000 square-foot Borders Books store at Rocky Ridge Drive and Douglas Boulevard in Roseville, near Sacramento, a city that's seen a spate of new grocery store openings over the last couple years, including units opened by other recent entrants to the region, like Sprouts Farmers Market and Sunflower Farmers Market, both of which have additional new stores set to open this year in the Sacramento region and elsewhere in Northern California.

Publicly-held The Fresh Market, which has been turning in solid comparable-store-sales growth and profits over the last couple years, is also looking for additional store locations in Sacramento and the metro region, including Elk Grove and Folsom, where Tesco's Fresh & Easy plans to open stores in March of this year, along with in the San Francisco Bay Area.

Fresh & Easy Neighborhood Market opened two new stores in Northern California's Bay Area last week, on January 11, giving it 18 units in the northern part of the state. The two stores are in Brentwood in the East Bay and Mountain View, which is in Silicon Valley, in the South Bay region.

As we reported on August 3, 2011 [Fast-Growing Specialty Grocer The Fresh Market Targeting Mid-2012 For First California Store], The Fresh Market has been in negotiations with the developer of the Edgewood Plaza shopping center in Palo Alto, California to locate a store in a vacant building at 2800 Channing Avenue in the center. Those negotiations continue, and progress is being made toward a deal, according to our sources, who tell us they expect a lease to be signed by the developer and The Fresh Market in the first quarter of this year.

In addition to offering national, regional and local product brands in its stores, The Fresh Market has its own private brand items in the basic grocery, specialty and natural-organic categories. One of the private brand lines in the natural-organic category is TFM Live Leaner Cereal, which includes the Honey Almond Flax variety pictured above.

The Fresh Market is also looking to open a distribution facility in Northern California, according to our sources, particularly for distribution of its extensive fresh foods offerings, which include produce, fresh meats, deli and ready-to-eat and ready-to-heat fresh-prepared foods. The grocer likes to source locally and plans to take advantage of the fact that so much fresh produce and other fresh foods are grown and produced in Northern California.

Our sources tell us The Fresh Market - which isn't commenting on its specific plans in California at this point, although we expect an announcement about those plans from the grocery chain soon - wants to have its first couple stores open in Northern California by mid-to-late 2012, to be followed by additional store openings in 2013.

The fast-growing - it opened its newest store yesterday in Scarsdale, New York and one in Johnson City, Tennessee (pictured at top) January 4 - North Carolina-based specialty grocer is a serious player in its current markets, competing strongly against both Trader Joe's and Whole Foods Market, for example, in the fresh and specialty grocery niche.

The Fresh Market now plans to take its brand and style of food retailing (see our August 2011 story for details) to what is arguably the mecca of specialty grocery store competition, Northern California. And, based on what we've learned since August 2011, it plans to do so in a significant way - opening numerous stores in the Golden State over the next few years.

Related Stories

August 3, 2011: Fast-Growing Specialty Grocer The Fresh Market Targeting Mid-2012 For First California Store

June 12, 2008: Upcoming New Markets Special Report: Upscale Palo Alto, California is Laying Out the Welcoming Mat to Grocers: Will Fresh & Easy Knock On the Door?

October 15, 2008: Tesco to Locate Fresh & Easy Store in Palo Alto, California; it's First in the City and SF Bay Area Store Number 22 By Our Reporting

December 5, 2011: Dollar General Jump-Starts California Launch: Taking Over 5 Centro Mart Supermarkets For Early 2012 Openings

November 30, 2011: Fresh & Easy Neighborhood Market, Others Eyeing Closing Andronico's Store on Telegraph Avenue in Berkeley, California

January 8, 2012: Tesco to Close Up to 12 Fresh & Easy Stores

January 9, 2012: Exclusive: Tesco's Fresh & Easy Closing 12 Stores; We Have the Locations

Dollar General Jump-Starts California Launch: Taking Over 5 Centro Mart Supermarkets For Early 2012 Openings

Related Story: February 2, 2011: Centro Mart-Stockton Chairman, Veteran California Grocer Jimmy Lam Has Died.

Tennessee-based dollar-store-dynamo Dollar General plans to hit the ground running hard and fast when it launches both its traditional dollar format stores and its small-box Dollar General Market grocery stores in California next year.

To jump-start its California launch, 38-state, 9,813-store Dollar General has done a deal with Centro Mart, a 65-year-old independent supermarket chain based in Stockton, California, in which Dollar General will take over five of the grocer's seven stores - four in Stockton and one in the San Francisco Bay Area city of Brentwood.

Centro Mart CEO Mel Young says the Stockton-based chain, which until his death earlier in January was run for decades by veteran California grocer Jimmy Lam (see the related story at top), will close the five stores at the end of this month. It will keep two stores, a Centro Mart banner grocery store in the East Bay Area city of Oakley and a supermarket it operates under the Apple Marketplace banner in Lodi, which is near Stockton.

Dollar General will lease the five Centro Mart stores. Its not acquiring Centro Mart.

Dollar General will convert four of the five Centro Mart stores into Dollar General Market grocery stores, which feature fresh foods as well as groceries, and the remaining supermarket will become one of its traditional dollar stores, according to Todd Vascos, Dollar General's executive vice president and chief merchandising officer.

Vascos says Dollar General will begin converting the Centro Mart stores shortly after they are closed, targeting all five for spring 2012, most likely March-April, openings.

Dollar General announced its plans to enter Nevada and California earlier this year. So far the retailer has opened five of its Dollar General Market grocery stores in metro Las Vegas, Nevada.

The retailer currently operates 62 Dollar General Market stores in the U.S.

The Nevada stores are the first Dollar General Market stores the retailer has opened since 2007. Since then it has revamped the format, making numerous changes to the original version.

Centro Mart's Young says Dollar General approached the grocer about acquiring the stores earlier this year.
He says Centro-Mart agreed to the deal in part because of long-time CEO Jimmy Lam's death earlier this year, along with the heavy competitive climate in Northern California, which has made it tough for the independent chain to compete.

Dollar General is also looking for additional locations in Northern California for both its traditional dollar stores and its Dollar General Market.

Our commercial real estate sources, many of whom are regular readers of Fresh & Easy Buzz, tell us the retailer is looking in the San Francisco Bay Area, Sacramento metro region, the Central Valley and farther north for locations, including paying special attention to the numerous vacant big and small-box store buildings currently on the market.

The dollar store retailer's plans also include Southern California, for both its dollar stores and Dollar General Market grocery stores. Like in the north, our commercial real estate sources tell us Dollar General is looking for numerous locations in the region.

Dollar General reported its third quarter financials today.

In a conference call reporting the results, CEO Richard Dreiling didn't address the Centro-Mart deal specifically, but said the retailer plans to open about 40 Dollar General Market grocery stores nationally in 2012. That number includes the five stores in Northern California, plus additional units in "new and existing markets."

Dollar General is entering into a short-term lease for a distribution center near Bakersfield, California which will serve the new stores in California and Nevada, along with existing stores in Arizona, Dreiling said today. The facility will open in the first half of 2012, he said. That timing fits with the April-May planned opening of the five to-be-converted Centro-Mart stores in Northern California.

Dreiling also said today that a major effort with Dollar General Market in its newest two markets, (Nevada and California) as well as nationally, will be to focus on food dessert regions where residents are underserved by grocery stores offering fresh foods and groceries at reasonable prices.

The CEO also said today that Dollar General is expanding its perishables offering in both the grocery markets and in its traditional dollar format stores.

"Fresh and refrigerated foods helped us drive customer traffic and increase basket size by serving a greater share of our customers' needs," Dreiling said. "We will continue to take an aggressive stance towards improving our in stock position. This is a never ending effort which requires focus on store-level perpetual inventory accuracy as well as improved execution across ordering, fulfillment, stocking and delivery."

CEO Dreiling also said today that private brand expansion is a key part of the Dollar General's ongoing strategy, saying the retailer is expanding product sourcing to new categories and importing from new countries. "To further expand our private brands we’ll be adding 150 new SKUs as we move into new categories," he said.

Dollar General reported fiscal 2011 third quarter (13 weeks ended October 28, 2011) net income of $171 million, compared to net income of $128 million in the third quarter (13 weeks) of fiscal 2010.

Excluding expenses in the 2011 third quarter of $0.9 million ($0.7 million, net of income taxes) relating to a secondary offering of the company's common stock by certain selling shareholders and excluding losses in the 2010 third quarter of $8 million ($5 million, net of income taxes) relating to the early repayment of long-term obligations, Dollar General's net income increased 29 percent, according to the retailer.

Consumable product sales continued to increase at a faster pace than non-consumables in Dollar General's third quarter, with the strongest growth across the food and snack categories, according to CEO Drieling. "Salty snacks, carbonated beverages, coffee and milk were the largest contributors," he said today.

The fact consumable sales are outpacing all other categories for Dollar General is in part what's making the retailer high on growing its Dollar General Market grocery store format, including in California, which with nearly 40 million residents has the highest population in the U.S.

Dollar General's entry into California next year adds yet another competitive layer to what already is a highly competitive food and grocery retailing scene, from Southern California and the Central Valley, to Northern California, where the retailer will open its first five grocery stores in the soon to be former Centro-Mart locations in early 2012.

Raley's Combining High-Tech and High-Touch Tools to promote its Stores For the Holidays

Above: Inside the Raley's superstore on Colusa Avenue in Yuba City, California. The 'Raley's Kitchen' in the photo offers in-store, chef-prepared entrees, sides and more, including meats hand-carved to order by the chef. It's part of the extensive deli and fresh-prepared foods offering in the store, which is a category Raley's is noted for. Photo courtesy I-5 design. March 3, 2011.

Turkey & Technology -- Grocers, new technologies and holiday promotions

West Sacramento, California-based Raley's Family of Fine Food Stores is using a combination of high-tech digital and high-touch low-tech tools to create promotions it hopes will drive shoppers into its stores in Northern California and Northern Nevada during the crucial-for-grocers mid-November to December 31 holiday food and grocery sales period.

Text for a discount and chance to win

On November 16 (and running to December 31) Raley's kicked off a promotion in which shoppers are invited to send a text message to the number "678678 Save" in order to receive $10 off any purchase of $100 or more in one of the grocer's Raley's (superstores) Bel Air Markets and Nob Hill Foods (supermarkets). Raley's operates a handful of discount warehouse stores under the Food Source banner. The promotion doesn't apply to the Food Source stores.

After sending the text message, consumers get a confirmation code back, which they give the store clerk at checkout in order to get the $10 discount of their purchase of $100 or more.

Sending the text message also enters shoppers into a contest, which offers the chance to win a free deli party tray.

Raley's is giving away 10 of the deli party trays, which include: two Spinach Dip trays valued at $19.99 each; four deli meat and cheese trays (valued at $29.99); and four Quesadilla Party Trays, which have an estimated value of $44.99, according to the grocery chain.

Participants must be 18-years-old or older in order to enter the text message-based contest.

The drawing for the deli party trays, which is being conducted by the Pocketshop LLC firm for Raley's, takes place December 15. Any remaining prizes will be rewarded on December 31, according to the grocer.

Raley's promoted the send-a-text-for-a-discount promotion and contest on the front page of its November 16-24 weekly advertising circular, which is direct-mailed and inserted in daily newspapers, and distributed to homes throughout Northern California and Northern Nevada.

The grocer also promoted the send-a-text-for-$10-off promo using Twitter's Promoted Tweet program, doing so during the week running up to the Thanksgiving holiday.

Raley's is currently promoting it on its Facebook page, on Twitter and in its stores.

We like the text-for-a-$10-dollar discount for three main reasons.

First, it requires shoppers to do a little work in order to get their $10 discount, unlike merely putting a coupon in the weekly ad circular or posting it online. And since text messaging is so common and popular, it's second nature for consumers to take a few seconds and text for their discount, which helps to ensure a higher participation level (than say sending an e-mail to get the discount) in the promotion and contest because it uses what's become a fast to use and near-ubiquitous digital technology.

Additionally, having shoppers send a text in order to get the $10 off and participate in the contest also has the added marketing benefit of capturing all those phone numbers from which the texts are sent. Such a data base could be used by Raley's in the future, say to send out special text-based promotions our other communications, for example.

Lastly, the text-for-a-deal promotion and contest creates some excitement among shoppers who participate.

It also offers the potential to generate some good word-of-mouth PR for Raley's. For example, it's likely some people sent a text messages to family members and friends telling them about the $10 off deal and the contest, and in turn those folks might have sent text messages to others, sharing the message.

Using social media - Twitter and Facebook - to communicate the promotion also has the potential to create additional virally-spread excitement around it, resulting in even more word-of-mouth buzz for the text message-based promotion.

Retweet to help the hungry

Speaking of social media and creating buzz, on Monday Raley's launched a charitable promotion for its Food For Families program, which donates food and cash to food banks in the communities where it operates its stores.

Using Twitter - both the Promoted Tweets program and its own Raley's feed - along with its Facebook page, the grocer posted this tweet yesterday, November 28: "Giving goes viral! Please RT this message and @raleysstores will donate 25 cents to Food For Families. Visit us here at Facebook."

As the tweet says, for every RT, which stands for retweet and is a way people can share other users' tweets with their followers on Twitter, Raley's is donating 25 cents to its Food For Families program, and thus to the food banks, every time the tweet, and additional ones like it, are retweeted on Twitter.

Like the text message promotion, this donation-backed, cause-related promotion also offers Raley's a solid opportunity to have a considerable amount of buzz created around its brand and stores, along with doing good at the same time. The grocer obviously realizes the potential, as it hopes it's giving offer goes viral.

Raley's also has an additional - and generous - promotion going on for its Food for Families program for the holiday season.

The grocer is offering grocery bags of food for the hungry in its stores for $10 per-bag. Between now and Christmas, for every bag customers buy to donate, Raley's is doubling the offer, donating another $10 bag of groceries to local food banks, for a total of $20.

Shoppers don't even have to visit a Raley's-owned store to donate. They can do so online here, and Raley's will match the donation. The grocer will then donate the groceries directly to the food bank closest to where the person lives.

Free black coffee on Black Friday

On Friday November 25 (Black Friday) Raley's put away the high-tech tools and used old fashion human-power and shoe leather to promote its stores in its hometown Sacramento area, offering a touch of warmth and much-needed caffeine to early-bird holiday shoppers.

We call the approach high-touch, as compared to high-tech.

The privately-held grocer, which has sales of about $3.1 billion annually and is owned by Joyce Raley-Teel (daughter of founder Tom Raley and the company's chairwoman) and headed up by her son, CEO Michael Teel, sent street teams armed with hot cups of Peets Coffee and discount coupons out to numerous jam-packed malls and shopping centers in Sacramento and the nearby cities of Folsom, Roseville and Natomas on Black Friday (and the following Saturday and Sunday).

The Raley's ambassadors armed with free hot coffee and the discount coupons were "warmly" received by the early bird Black Friday shoppers on what was a fairly chilly late night/early morning in the Sacramento region, according to a Fresh & Easy Buzz reader from Sacramento who wrote us and said she was out shopping with her daughters on Black Friday and received a much-appreciated free hot cup of Joe (or in this case Peet) from members of the Raley's street team.

A Christmas tree lighting meets Foursquare 

The street team promotion on Black Friday came just two days before what is a big annual event for Raley's and the Sacramento area.

That event, held the night before Thanksgiving on November 23, is the annual Raley's-sponsored Theatre of Lights Christmas Tree lighting in Old Sacramento, which is an historic and popular part of the city that dates back to the California Gold Rush era of the 1800's. [Kati Garner, a writer for the local Sacramento Press blog has a write up and great photographs of the event, which was attended by over 4,000 people, here]

Raley's Stores, which also uses the Foursquare social media site in addition to Facebook and Twitter, offered consumers a $5 digital coupon if they checked in on their smart phones at its Foursquare home while attending the tree lighting event on November 23.

'Tis the season

The less than two month Thanksgiving through New Year's Day holiday selling season offers a huge opportunity for food and grocery retailers in the U.S. The three holidays are numbers one, two and three respectively in terms of the amount of money consumers spend on food, compared to all other holidays, for example.

But this opportunity, like most do, also comes with challenges, the big one for grocers being the fierce competition out there during this time of year. Every grocer knows, after all, what we just told you, which is that the period from mid-November to the end of December is a time when grocery shoppers are spending big. And each grocery chain wants the majority of those holiday food dollars to be spent in its stores, which generally means heavy promoting.

And, usually, to the victor go the spoils.

Beyond the season

Raley's is currently conducting a number of promotions in addition to those we've highlighted. One of the things the Raley's promotions we've discussed in this piece have in common is that each one also offers a secondary marketing/branding element to them for the chain, although we doubt the grocer planned it that way.

For example, the new-school digital and social media promotions help better brand Raley's as a modern and high-tech savvy of grocer, while the old-school street team event is a reminder of the high-touch aspect of the retailer.

And the generous food drive and assistance program to help the hungry, both in its digital and non-digital aspects, continues to brand Raley's as a caring grocer that helps people in the communities where it has its stores.

Raley's has been struggling financially for the last three or so years. Last year Michael Teel returned as CEO of the 75-year-old-plus family-owned grocer founded by his grandfather and owned by his mother, and has since been leading a reorganization strategy.

It's difficult to know how the plan is working because being closely-held Raley's does not release revenue or profit/loss information. Teel previously was CEO of Raley's in the 1980's-90's. He left to persue a variety of other business interests.

On the cost-cutting side of the balance sheet Raley's has so far gotten by fairly lightly, laying off about 300 people at its corporate headquarters and closing a few stores, in addition to most-recently announcing it will no longer pay health benefits for its retired except employees. Store-level workers, which comprise the vast majority of the grocery chain's employees, belong to the UFCW union. Therefore the move doesn't affect those already retired or future retirees.

As part of the restructuring which began last year when Teel took over as CEO, he flattened the organizational structure, eliminating many senior-level people, including in the marketing, buying and merchandising departments at the corporate headquarters in West Sacramento.

The move seems to have worked in our observation and analysis because since then Raley's marketing, merchandising and promotional activity has gotten not only better but more creative, along with becoming much more aggressive, as evidenced in part by the programs featured in this story.

The retailer has also sharpened its everyday pricing profile since early 2010, along with offering improved promotional prices on the items it advertises in its multi-page weekly advertising circular, among having made a number of other changes for the better.

The competition in Northern California, where the majority of the stores are located, is only going to get tougher, beginning next year, so Raley's will need to, among other things, continue sharpening its pricing pencil, along with continuing down the path it been on for a little over a year in developing, launching and implementing creative and effective promotions, both for the holidays and everyday, in order to meet the new challenges and increased competition coming its way.


[Editor's Note: It's a brave new high-tech, digital, social media world out there for food and grocery retailers. And the new tools offer retailers a myriad of new ways to promote their stores for the holidays. Between now and the end of December we'll be running a number of stories focusing on many of these new technologies, using the theme in the sub-head at the top of this story - Turkey & Technology to identify the stories. This piece about Raley's is our first.]

Andronico's to Close Another Store in Berkeley as Part of 'Comeback' Strategy

The Insider - Heard on the Street

On October 17, 2011 San Francisco Bay area-based Andronico's Community Markets and its new owner, Renovo Capital, said in a press release announcing the closing of its store on University Avenue in Berkeley, California that it didn't plan on closing any of the shrinking grocery chain's remaining three stores in the University city (Cal Berkeley) where it's had a major presence for decades with four supermarkets.

In my column the following day - October 18, 2011: May-to-October at 82-Year-Old Andronico's Markets: New Owner, 2 Stores Closed ... Now What? - I said this (below in italics):

"The new owner (investment firms Renovco Capital and Rosewood Private Investments) said yesterday that it doesn't plan to close any of the remaining three stores in Berkeley. But it wouldn't surprise me in the least bit if the investment firms aren't forced soon to close one of the remaining three Andronico's stores in the city, even though I believe it would like to keep all three for reasons of having a better retailing critical mass in Berkeley.

My predicted candidate for closure in Berkeley, if it comes, is the Telegraph Avenue Andronico's unit, which over the last couple years has lost considerable sales to a nearby Whole Foods Market store and Berkeley Bowl, a very popular and high volume local two-store independent grocer. Both Berkeley Bowl stores are located in the city."

Yesterday, Andronico's said in a prepared statement that it will close the Telegraph Avenue store in Berkeley.

Adam Alberti, who's acting as a spokesperson for the grocer and its new owner, said yesterday that the specific date the store will be closed has yet to be determined. I'm told by my sources though that Andronico's will most likely close the Telegraph Avenue store by the end of the year.

The closing of the Berkeley supermarket leaves Andronico's with just five stores - two units in Berkeley (East Bay area) and one store each in San Francisco, Los Altos (South Bay Area) and San Anselmo (Marin County) - down from a high of 14 units less than a decade ago.

Prior to July 2011 there were eight Andronico's grocery stores in the San Francisco Bay Area.

So far this year Andronico's has closed three supermarkets - a unit in Palo Alto in July, the store on University Avenue in Berkeley last month, and now the Telegraph Avenue-Berkeley store, which of the three was the largest unit in terms of square-footage.

In a follow-up column on October 30 - 'The Insider' Offers Some Advice He Suggests the New Owners of Northern California's Andronico's Markets Should Take Post-Haste - I offered Renovco Capital and Bill Andronico (who remains president of the grocery chain his family owned for 82-years until last month) a five-step playbook of suggested actions to take immediately regarding the turning around of Andronico's.

One of those action steps including the closing of an additional store, as you can read in the October 30 column linked above.

I also suggested Andronico's senior management team do a complete review of the chain's operations, marketing, merchandising and promotional functions. The closing of the Telegraph Avenue store is part of that evaluation process, which began around the first week of November.

If you bake it will they come? A selection of cakes on display in the bakery at an Andronico's store this month.

Additionally, I had a chance to visit two of the Andronico's Community Markets stores last week - the unit in San Francisco's Inner Sunset District and the store on Shattuck Avenue in Berkeley.

Both stores were fully-stocked and ready for the Thanksgiving holiday. The fresh foods departments - produce, meat, bakery and deli-prepared foods - all looked good, as did the numerous displays throughout the store.

Andronico's is using the signs above to communicate to shoppers it's stocking the stores and back in business.

When I last visited the two stores in late summer, they were looking a bit rugged, although not nearly as bad as the University Avenue store in Berkeley closed last month and the Telegraph Avenue store set to close did at the time.

But last week the two stores I visited - and I have a history of knowing what the two units look like at their best - were attractive and well-merchandised.

In my first column about Andronico's financial struggles, on May 30, 2011 here - 82-Year-Old Grocer Andronico's Needs A Sugar Daddy of Sorts: 'The Insider' Suggest Tesco and its Fresh & Easy Neighborhood Market Might Fit the Bill - I suggested one of the first things the grocer should do was to establish a social media presence, particularly on Facebook and Twitter, which is something it wasn't doing at the time.

As I noted in my October 30 column, three weeks later, on June 20, Andronico's Community Markets became active with a Facebook page, and on July 29 launched a feed on Twitter (@andronicos1).

In that same October 30 column (as one of the five action steps I suggested the grocer take immediately), I suggested Andronico's "Hold a 'Thanksgiving' community celebration at each store, thanking shoppers for sticking with Andronico's through tough times - and letting them know better days are coming soon," along with promoting the events on its Facebook page and Twitter feed.

Andronico's did just that in mid-November. For example, take a look (here) at the Thanksgiving-themed customer appreciation days the grocer has been hosting at its stores this month and promoting on its Facebook page. The grocer also used its Twitter feed to promote the "Thanksgiving" customer thank you events.

Andronico's also took advantage today of the nationwide small business Saturday event that's being promoted as the shop locally/small business version of Black Friday.

The grocer created the attractive poster pictured at top to promote the event, touting its stores as the place to shop locally for food and groceries today.

Andronico's Community Markets has also been conducting a variety of special promotions in its stores over the last few weeks, including a fall food festival at its Shattuck Avenue store in Berkeley that featured food samplings from the store's fresh foods departments and tastings conducted by numerous specialty foods vendors, like Dulce Chutney, pictured above.

The event also featured local guitarist Lucas Gonze (below) performing in the wine and spirits department at the Shattuck Avenue-Berkeley Andronico's store.

It's been about a month since Renovco Capital officially took over ownership of Andronico's, although its been providing financing for the small chain since around August-September of this year.

The senior management team and store employees have hit the ground running in the last 4-6 weeks, getting the remaining stores back in shape and promoting the "Comeback."

There's much more to do - and I will elaborate on my playbook for Andronico's, which I began in my May 30 column, continued on October 15 and October 30, and recapped here today, in the near future.

The future looks much better for Andronico's Community Markets (I still think the new owner should drop the community markets from the name and return back to the original Andronico's Markets) than it did just a couple months ago. But, as noted - there's still a long way to go in what is a very competitive market region.

Related Stories

October 30, 2011: 'The Insider' Offers Some Advice He Suggests the New Owners of Northern California's Andronico's Markets Should Take Post-Haste

October 18, 2011: Look for Fresh & Easy Neighborhood Market to Grab Closing University Avenue Andronico's Supermarket in Berkeley CA ... If it Can

October 18, 2011: May-to-October at 82-Year-Old Andronico's Markets: New Owner, 2 Stores Closed ... Now What?

May 30, 2011: 82-Year-Old Grocer Andronico's Needs A Sugar Daddy of Sorts: 'The Insider' Suggest Tesco and its Fresh & Easy Neighborhood Market Might Fit the Bill

>You can read all of our 'The Insider' columns at this link -  The Insider - along with all past coverage about Andronico's here.

May-to-October at 82-Year-Old Andronico's Markets: New Owner, 2 Stores Closed ... Now What?

Companion Story: October 18, 2011: Look for Fresh & Easy Neighborhood Market to Grab Closing University Avenue Andronico's Supermarket in Berkeley CA ... If it Can

The Insider - Heard on the Street

In May I wrote in detail about the financial problems facing one of California's oldest family-owned grocery chains, 82-year-old Andronico's, which at the time operated eight supermarkets in Northern California's San Francisco Bay Area.

[Read my May 30, 2011 here: 82-Year-Old Grocer Andronico's Needs A Sugar Daddy of Sorts: 'The Insider' Suggest Tesco and its Fresh & Easy Neighborhood Market Might Fit the Bill.]

In the column I said the survival-mode shoes would soon start dropping at financially troubled Andronico's, which underwent a name change last year from Andronico's Markets to Andronico's Community Markets. They did ... And continue to do so.

The first shoe dropped in July, when the upscale-oriented food and grocery chain, which was founded in 1929 by Greek Immigrant Frank Andronico and has been headed for two-plus decades by his grandson, Bill Andronico, closed its store in the Stanford Shopping Center in Palo Alto, California. I pointed out in the May piece that the store was one of the three worse-performing of the eight Andronico's units.

In August the other shoe - perhaps better described as a heavy-heeled boot - dropped: Andronico's, with one less store than it had a month earlier, filed for Chapter 11 bankruptcy protection, listing debts in the $10-$50 million range, with assets about equal to its debt load.

Not long after the August filing in federal bankruptcy court in Oakland, California, Renovo Capital, a financial firm that invests in companies in financial distress, provided about $5 million in asset-secured debtor-in-possession financing to Andronico's to keep it alive. Renovo also began negotiations with Andronico's to acquire the grocer, which has been owned by the Andronico family since 1929 (three generations).

Last Thursday Renwood Opportunities Fund, a partnership created in October 2010 between Renovo Capital and Rosewood Private Investments, acquired Andronico's from the family for about $16 million, having received final approval to do so from the bankruptcy court. The $50 million Renwood Fund was established last year by the two investment firms to invest in distressed middle-market companies and special situation opportunities.

Two days before, on Tuesday, the financial firms also bought bankrupt nine-store San Francisco Bay Area specialty foods store chain A.G. Ferrari Foods through the $50 million Renwood Fund.

Like Andronico's, A.G. Ferrari, which has three stores in San Francisco, two in Oakland, and one each in Berkeley, Lafayette, Corte Madera and Los Altos, is a food retailing institution in the San Francisco Bay Area. It was founded as a family-owned and operated importer of Italian Foods in 1919. The first store was opened shortly thereafter.

The small stores offer imported and domestic specialty and gourmet groceries, including under it's own label, some frozen foods, and an extensive selection of ready-to-eat and ready-to-heat fresh-prepared foods, with a specialization in Italian cuisine.

Paul Ferrari, a member of the founding A.G. Ferrari Foods' family and who remains president of the chain - for now - expanded the operation over the last couple decades, ending up most recently with 13 stores. Six stores have been closed as part of the specialty retailer's financial problems, which resulted in it filing Chapter 11 earlier this year.

The new owner has brought on ex-Whole Foods Market man John Clougher, who as I reported in my May 30 column has been a top executive at Andronico's since 2010, as CEO of A.G. Ferrari.

Renovo-Renwood hopes it can create some synergies between the seven-store A.G. Ferrari Foods and six-store Andronico's, which is a major reason why they bought both out of bankruptcy, and which is one reason why Clougher, who's been at Andronico's since last year, was named CEO of A.G Ferrari.

In terms of that attempt to find synergy, here's a scoop: Look for A.G. Ferrari's private brand of Italian and related specialty and gourmet food products to start showing up on the shelves and in the perishable cases at the six Andronico's stores in the coming weeks.

Back at Andronico's, as part of the Renovo-Renwood acquisition, Bill Andronico remains CEO of the food and grocery chain founded by his grandfather, Frank, and headed for decades by his father, John, until he took over in the 1980's - at least for the time being.

A week after acquiring Andronico's, Renovo-Renwood made its first move yesterday, announcing it's closing the Andronico's unit on University Avenue in Berkeley, California.

The closing will leave the grocer with three grocery stores in the Easy Bay Area city of Berkeley - one each on Shattuck, Telegraph and Solano avenues.

The other three stores are in the Bay Area cities of San Francisco, Los Altos and San Anselmo.

As I correctly reported in my May 30 column, based on information from my sources, the University Avenue unit was the poorest performing of the four Berkeley stores, something the new owner confirmed yesterday.

The new owner said yesterday that it doesn't plan to close any of the remaining three stores in Berkeley. But it wouldn't surprise me in the least bit if the investment firm's aren't forced soon to close one of the remaining three Andronico's stores in the city, even though I believe it would like to keep all three for reasons of having a better retailing critical mass in Berkeley.

My predicted candidate for closure in Berkeley, if it comes, is the Telegraph Avenue Andronico's unit, which over the last couple years has lost considerable sales to a nearby Whole Foods Market store and Berkeley Bowl, a very popular and high volume local two-store independent grocer. Both Berkeley Bowl stores are located in the city.

The store on Solano Avenue has seen better days as well. And in the coming year-to-two years it will face increased competition from Safeway Stores, which plans to expand and renovate a store nearby, and Whole Foods Market, which is planning a second store not far from the Shattuck Andronico's unit in Berkeley.

The Shattuck Avenue Andronico's market has historically been the grocer's top-performer in the city, but it too is coming under increased competition from Safeway Stores, which also has plans to expand and renovate an existing supermarket not far from the location.

The new owner also must take a serious look at the Andronico's units in the North Bay Area city of San Anselmo (Marin County) and Los Altos, which is in Silicon Valley in the South Bay and not far from the Palo Alto market the grocer closed in July.

Each of the units are Andronico's only grocery stores the respective regions. Having a single store in a market-area - and the North and South Bay are both heavily populated and competitive areas - is a difficult proposition for a grocer because of a lack of critical mass (stores) when it comes to marketing, advertising and promotion. Renovo-Renwood, which doesn't have deep experience in operating grocery stores, will find this out sooner rather than later.

Selling or closing one or both of these stores is something I believe could come before a closing or selling of the Telegraph Avenue store in Berkeley would. Under this scenario, the new owners could sell one or both of these stores and use the cash to improve and promote the remaining four stores, the three units in Berkeley and the supermarket in San Francisco, which is the top-performing store out of the six grocery markets.

Even Andronico's best performing store, the unit in San Francisco's Inner Sunset District noted above, has its challenges. Last year Whole Foods Market opened a new store at Haight and Stanyon Streets in the San Francisco's Haight-Ashbury District.

The Haight-Ashbury Whole Foods store, which is about a five minute drive from the Andronico's unit in the Inner Sunset, has taken some business away from Andronico's, which like Whole Foods specializes in natural, organic and specialty foods, as well as fresh-prepared foods.

The Inner Sunset Andronico's should be able to hold its own though for a couple key reasons.

First, it's the only full-service supermarket in the highly-populated Inner Sunset District. The store has also been a fixture in the neighborhood for decades and has fairly strong customer loyalty.

Additionally, unlike Whole Foods, Andronico's offers a full-selection of mainstream food and grocery products - think big brands like Kraft and Coke and products like Kellogg's Frosted Flakes and French's Mustard - in its stores, including the unit in San Francisco. This is a big plus for the grocer at the Inner Sunset location vis-a-vis the nearby Whole Foods Store.

Additionally, the nearest major mainstream competitor to the Andronico's store is a fairly small Safeway Store a couple miles away on Noriega Street in the Outer Sunset District. There's very little available space in the Inner Sunset for a competitor to open a decent-sized grocery store, as well, which makes the Andronico's location valuable from a geographical perspective.

It's too early to know if Renovo-Renwood can turn Andronico's around, let alone make a success out of the small chain, which has a history of innovation in the Bay Area, which include innovations in interior store design, display fixture use and merchandising that have been copied locally by Safeway Stores, Whole Foods Market and others.

The new owner faces numerous challenges. These include: the diminution in quality and poorer-then-historical appearance of the stores over the last couple years, which the new owner says its going to reverse by investing in renovations; increased competition in every city where the six stores are located; the debt load the new owner is assuming, which includes $1 million owned the United Food & Commercial Workers (UFCW) employee pension fund - Andronico's is a unionized grocer - and more.

Of course the investment firms just might want to turn Andronico's and the six stores around "just enough" to sell the chain off as a whole or sell the stores off individually to multiple grocers, which is the strategic plan I believe Renovo-Renwood is attempting and hopes to pull off.

And speaking of unions and grocers, the contract between the UFCW and Northern California's unionized grocers, which includes Andronico's, expired ten days ago. Contract negotiations are currently taking place between representatives of the union locals and Northern California's three-largest unionized chains, Safeway Stores, Inc., Save Mart and Raley's.

Based on Andronico's poor financial condition, competitive challenges and the fact Renovo-Renwood is going to have to invest substantial capital in the grocery chain in order to keep it alive, not to mention make it successful, it wouldn't surprise me in the least bit if the new owners ask the UFCW union locals for a number of contract concessions, or even attempt to leave the union completely, although that will be near-impossible, when it comes to negotiating and signing a new three-year contract this year.

In the past, Andronico's, like most of the unionized small chains and independents in Northern California - and there are many of them - essentially agreed on the terms of the contract - often called a "me too" contract deal - negotiated and agreed to between the union locals and the region's "Big Three" chains.

Andronico's did this last time around, three years ago. But that was then and this is now. Were it not for Renovo-Renwood providing emergency financing for and then acquiring Andronico's, the 82-year-old grocer would likely have gone out of business. That would have put around 350 unionized store-level grocery workers out of a job.

I expect the new owners to attempt to use this leverage on the union locals in contract negotiations, probably in separate talks from those currently going on between union officials and the "Big Three" chains, although the fact the pension fund is owned $1 million by Andronico's, a debt which the bankruptcy court hasn't discharged according to the my recent review of the court's records, should give the UFCW locals leverage of their own, in turn.

The store-level employees of Andronico's, many who've been in the UFCW union for 10 or more years, and in the case of others are close to retirement, will also join with the union if the new owners make any attempts to go non-union. Many are already very concerned about the debt owed the union pension fund, for example.

The good news, if you appreciate the saving of an 82-year-old regional food and grocery retailing institution - Andronico's Community Markets, or Andronico's Markets if the new owners take the advice I offered in my May 30 column to go back to the old name - is six of the eight stores remain in business, as for now does the "Andronico's" name and brand.

I say "for now" because those of us with experience in food and grocery retailing acquisitions know they seldom end up down the road turning out like the buyers and sellers say they will, particularly when the acquired retailer is a financially distressed grocer and the buyer is a fund, with an expected return on investment, created by two investment firms.

Such investment vehicles are designed to eventually make money for the firms, usually within a five-year time horizon. And that money is generally made by selling the financially distressed property (read Andronico's) that was bought at a discount.

My bottom line: The new owners will restructure the Andronico's operation, lowering labor costs (they've started that process already with the decision to close the store on University Avenue in Berkeley); invest some cash in improving the looks of the stores (any they don't sell soon); pump up the marketing and promotional budget and spend somewhat; and then attempt to either sell all six supermarkets as a whole or sell off the six stores in pairs or individually.

The predicted time horizon: One-to-four years, with a preference from the new owners to achieve the objective, with a decent profit, sooner rather than later.

Mollie Stone's Markets' Year of Passionate Improvement Continues With Launch of New Website Tomorrow; But There's Also More In-Store

Northern California Market Region

Mollie Stone's Markets' uses the slogan "The Best of Both Worlds" to describe its retail format and approach to food and grocery retailing, which is to offer basic necessities - what it calls necessity shopping - along with specialty, natural, organic and gourmet foods - passion shopping - under the same roof.

But the theme or slogan also aptly describes 2011 for the privately-held, nine-store San Francisco Bay Area grocer, in that so far this year Mollie Stone's has been passionately focusing on the necessity of continuous improvement in what today have become the two worlds of food retailing - a grocer's stores and its use of cyberspace and social media to communicate with shoppers.

Mollie Stone's Markets' year of passionate improvement takes another step tomorrow when the Mill Valley (Marin County), California-based food retailer launches its brand new website, which according to co-owner Dave Bennett will not only look good but will also be filled with added features, along with being a work of continuous improvement in and of itself.

The website is at: http://www.molliestones.com/. If the new website isn't working right away on Friday it's probably because it's being tweaked by the designers.

The launching of the new website tomorrow comes on the heels of Mollie Stone's hiring of its first social media manager, which we reported exclusively on in this July 14, 2011 story: Mollie Stone's Markets' Takes Next Step in its Social Media Journey By Hiring First In-House Manager.

As we noted in the story, Mollie Stone's Markets' has been growing its use of social media significantly. As part of that growth the new website will over time integrate the grocer's social media sites with features on the website, according to Elizabeth Milks, the retailer's social media project manager.

Speaking of integration, Mollie Stone's isn't letting its passion for cyberspace and social media take its focus off the nuts and bolts of food retailing - its stores.

In fact the opposite is true. Since January of this year the retailer has been waist-deep in various store remodeling projects as well as acquiring its ninth store in late January in San Francisco's Castro District and opening it less than two months later, on March 9.

Along with opening the new store in San Francisco's Castro District, which is Mollie Stone's third store in the city, the grocer has remodeled the produce, bakery and deli departments in its Burlingame, California supermarket, a project it started in January and completed in April. (You can see a photo here.)

Additionally, Mollie Stone's has just completed the remodeling of the produce department (pictured above) in its Sausalito, California store, along with doing major resets of the in-store bakery and cheese shop.

As part of the produce department remodeling project, the store's manager and the Mollie Stone's team heading it up decided to extend the fresh fruit and vegetable-filled department outside, adding the merchandising feature pictured below in front of the store.

The concept fits the outside of the store well because Sausalito, which is just over the Golden Gate Bridge from San Francisco, is a European-style village community located on the water and its residents are very healthy food and foodie-oriented. The fresh produce outside therefore makes a very locally relevant message, as well as lending itself to impulse purchases and thus added sales for the store, which is exactly what happened last week as the fresh fruits featured in the tropical-themed display below were selling briskly.

Next up for Mollie Stone's Markets, which is co-owned by Mike Stone and Dave Bennett who founded the chain together in 1985, is a remodeling of the deli-prepared foods department in its Greenbrae (Marin County) supermarket. The store's produce department was remodeled in December 2010.

Stone and Bennett have also channeled some of their passion for the grocery business and specialty foods into a new brand of products called "Mike & Dave's." The first product under the eponymous brand, Mike & Dave's Wing Sauce, was launched in May of this year (see our stories linked at the end of this piece). Additional "Mike & Dave's" products are in development, Bennett tells Fresh & Easy Buzz.

Back in cyberspace, Mollie Stone's has launched a new "Secret Sales" promotion on its Facebook site. The promotion works this way: Each Tuesday the grocer posts a deal item along with a promotional code which allows shoppers to get the product at the special Facebook-only price. Customers note the promotional code number and give it to the checker at a Mollie Stone's store in order to get the "secret sale" item at the special price.

The promotion, although brand new has, based on our observation and research, been driving shoppers to the Facebook site and in-turn is driving users of the site into the stores for the deals, depending of course on the specific product and how good the deal is.

Social media project manager Milks' tells us it's the first of what will be many social media site-based promotions Mollie Stone's Markets will be doing in the coming months.

In addition to Facebook, Mollie Stone's has a very active Twitter feed, and also uses the location-based site Foursquare. It also has a YouTube channel where it posts videos.

The launching of the brand new website on Friday will tie-in Mollie Stone's Market's eight month year of passionate improvement - and neither are over yet - in a solid way in our analysis because it will be a bigger and better central place online where the grocer can showcase all it's been doing to improve its stores (and open a new one), along with its growing social media efforts, allowing it to better communicate to shoppers its focus on both the necessities and passions of food and grocery retailing in the San Francisco Bay Area.

Mollie Stone's Year of Passionate Improvement: Follow the Story Below

July 14, 2011: Mollie Stone's Markets' Takes Next Step in its Social Media Journey By Hiring First In-House Manager

June 23, 2011: Mollie Stone's Markets' Owners' Eponymous Mike & Dave's Wing Sauce Grows Display Wings

May 16, 2011: 'Wing Man-to-Wing Man' - Mollie Stone's Markets' 'Mike & Dave' Create, Set to Launch 'Personal Brand' Wing Sauce

March 7, 2011: Fresh & Easy Neighborhood Market, Superior Grocers, Mollie Stone's All Opening New Stores in California Wednesday

March 1, 2011: Mollie Stone's Markets Will Open its New Store in San Francisco's Castro District On March 9

February 17, 2011: Mollie Stones Markets Planning to Open Newest Store in San Francisco First Week in March

January 28, 2011 Mollie Stone's Markets Confirms Our January 13 Report; Announces New San Francisco Store Via Twitter & Facebook

January 13, 2011: Mollie Stone's Markets Taking Over Closed 18th Street Delano's IGA Market in San Francisco's Castro District

November 30, 2010: DeLano's IGA Markets Closing Five Stores in San Francisco & Marin County; Fairfax, Davis Units to Remain Open (For Now)

November 29, 2010: Veteran Grocer Harley DeLano's 'DeLano's IGA Markets' Chain On the Verge of Closure in San Francisco Bay Area

Also see Northern California Special Report for related stories.

Mollie Stone's Markets Takes Next Step in its Social Media Journey By Hiring First In-House Manager

Two very different ways to drive business. But both are social: One of the many ways Mollie Stone's Markets uses its Facebook, Twitter and YouTube sites is as a way to help "drive" food and grocery shoppers into its nine stores in the San Francisco Bay Area. The grocer also uses stickers like the one pictured above, which it put in the window of its newest store in San Francisco's Castro district in January 2011 in advance of the store's opening in March, to alert and "drive" customer traffic to its social media sites...

But Mollie Stone's doesn't rely on social media alone to "drive" business, particularly not in the case of its three stores in San Francisco. Instead, the grocer literally drives shoppers who live anywhere in the city to the stores, picking them up at home and returning them back with their groceries in tow, in its Mollie Bus (pictured above at the March 9 grand opening of its newest store in San Francisco's Castro District), as long as the customers buy at least $30 worth of groceries.

Food & Grocery Retailing in the 21rst Century: Social Media

Social media is for people of all shapes, sizes and ages (although not too young).

It's also something grocers of all sizes - not just the big chains - should be taking advantage of because in our experience and analysis it offers itself up to smaller (and not so small) regional grocery chains and independents as a potential "great equalizer" in their ever-increasing challenge of competing against the growing power of nationally focused chains like Walmart Stores, Target, Safeway, Supervalu, Inc., Whole Foods Market, Trader Joe's and numerous others, which continue to spread throughout the U.S., opening new stores in existing markets as well as launching into new ones.

Regardless if the operation is a chain of 250, 100, 50, five or just a single store, a grocer can create an account on Facebook and Twitter for zero cost, for example, and find someone with some talent and experience in using social media to coordinate and be in charge of it. From there, the grocer has a potentially whole new world of opportunity opened up to it to talk with customers and potential customers, to create added awareness, promote, and most of all to build, enhance and strengthen customer relationships as part of its overall customer service experience and process.

We use "potentially" above for a very good reason: Social media alone isn't a panacea for grocers, regardless of size. Instead it's a potentially powerful platform that if used regularly and used well - like a plant it must be given regular attention and care - can over time become a powerful communications and customer relationship-building tool for grocers of all sizes, along with that potentially "great equalizer" for smaller chains and independents.

Mollie Stone's social media journey

One independent grocer that's recognized both the overall potential power as well as the "great equalizer" aspect of social media is Mill Valley, California-based Mollie Stone's Markets, which operates nine stores in the San Francisco Bay Area and is majority-owned by partners Mike Stone and Dave Bennett.

Mollie Stone's joined the social media world in late 2010 (Facebook, Twitter and YouTube sites) with some very important help from San Francisco, California-based Reasonate Social Media, which was founded by Eric Harr, who's also the CEO of the firm.

Harr and his team took a comprehensive approach with Mollie Stone's Markets' in partnership with co-owner Dave Bennett, who splits the running of the food and grocery chain with Mike Stone, his partner of  25 years, having founded Mollie Stone's together in 1985.

Harr, Bennett and Stone brought all of Mollie Stone's headquarters office employees together - buyers and merchandisers, finance folks, human resources people and more - together for a number of social media training sessions, so that not only would the process be department and company-wide, but also because they realized that in order to make social media an integrated part of the grocer's overall customer service, marketing and community outreach efforts it had to be something shared by everybody, instead of ending up as a social media ghetto at the company, which often is the case at organizations of all kinds.

Mollie Stone's Markets is now humming on multiple cyber-cylinders when it comes to social media - and most importantly, in our analysis, using it as an integrated part of its overall operations, marketing and customer service functions, which even includes signs in the stores and on store windows inviting shoppers to join the grocer on Twitter and Facebook, for example.

Those multiple cyber-cylinders include very active Facebook, Twitter and Foursquare sites and campaigns, along with active and regular participation on review sites like Yelp, in which Mollie Stone's responds to both criticism and praise (and in-between) of its stores, including aspects like product pricing and customer service.

Reasonate Social Media, which has operated Mollie Stone's various social media sites as part of its consulting relationship with the grocery chain until now, also encouraged co-owner Dave Bennett to step out and become the "face" of Mollie Stone's Markets by appearing in a few videos (like the one above) the firm has produced for the grocery chain, which feature Bennett, who's latest venture, along with partner and fellow wingman Mike Stone, is a specialty foods brand, "Mike and Dave's," the first product being Mike & Dave's Wing Sauce, which we wrote about here in May and again in June.

Elizabeth Milks hired as in-house social media manager

Mollie Stone's Markets has now taken a next big big step in its social media evolutionary process, hiring its first-ever social media project manager, Elizabeth Milks, who is working in-house at the grocer's headquarters in Mill Valley, California (Marin County) and will be using that day-to-day vantage point to increase the amount and variety of social media content Mollie Stone's produces, and to do so in a real time way.

The grocer and Reasonate Social Media are currently in the process of transitioning the day-to-day social media tasks and responsibilities from the firm to in-house at Mollie Stone's Markets, Elizabeth Milks told Fresh & Easy Buzz yesterday.

Mollie Stone's Markets has not publicly announced the hiring of its new social media project manager. Therefore you're reading it here first.

Ms. Milks, who graduated from the University of California at Berkeley in 2006 with a BA Degree in Public Health, worked as a marketing assistant (2008-2011) for VR Research, which is a public records-oriented research firm in Oakland, California. Prior to that she worked in the legal services industry in the Bay Area, following graduation from U.S. Berkeley.

Grocers and social media

Ms. Milks starts her new position at Mollie Stone's with a good base.

For example, Bennett, the chain's head grocery and produce buyers, and a number of other employees regularly use social media sites such as Twitter and Facebook, having established their own accounts.

Additionally, the fact  Reasonate Social Media worked so closely with Mollie Stone's on a chainwide basis is also a big plus because there exists a strong buy-in for the use of social media throughout the grocery chain, from it's headquarters office to the stores, based on our reporting, research and answers we've received from Dave Bennet, Eric Harr and others at the chain.

Such buy-ins are key in order for a grocer to make social media more than a mere promotional vehicle, instead using it as part of the overall customer-relationship building experience, which includes face-to-face interaction where it counts most, in the stores, enhanced by using social media as a cyber-storefront of sorts, harnessing the potential power of many along with the immediacy factor.

For example, think about product recalls in terms of the power of the immediacy factor. Before Twitter or Facebook, a grocer really had no way to let customers know that the FDA or USDA were recalling this or that product for this or that reason except to post signs in all of its stores and alerting the local media, hoping they old report something about it sooner rather than later.

But today, a grocer's social media coordinator can go on Facebook and Twitter, along with a host of other sites, and communicate to followers that a food product has been recalled literally the moment it's found out. There's no longer a need to rely on third parties like the media. Instead the grocer can communicate directly to its followers (the power of many) on the social media sites. And nearly always those followers will tell others using their Facebook pages, Twitter feeds and other social media sites, which harnesses the power of many even further.

This way sound simple (or "so what") because we're already so used to social media despite its young age. But this ability to communicate immediately and directly is revolutionary for food retailers, as are many of the other ways in which social media can be harnessed by grocers who put an effort into doing so. And effort is required, because like those plants, which need attention, care and watering - along with re-potting at times - so too does the use of social media by grocers.

Mollie Stone's Markets is a good example of how grocer's of any size - but particularly those regional chains and independents we mentioned at the start of this story because of the potential "great equalizer" effect - can, if they make a commitment to it, harness the low-cost, high-impact power of social media and use it in an integrated way to enhance what they are already doing at store-level, along with using it to open new doors that previously didn't exist for food and grocery retailers in the pre-cyberspace and pre-social media eras, which seems like it was ages ago but really was only a few years ago, particularly in the case of social media.

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June 23, 2011: Mollie Stone's Markets' Owners' Eponymous Mike & Dave's Wing Sauce Grows Display Wings

May 16, 2011: 'Wing Man-to-Wing Man' - Mollie Stone's Markets' 'Mike & Dave' Create, Set to Launch 'Personal Brand' Wing Sauce

March 7, 2011: Fresh & Easy Neighborhood Market, Superior Grocers, Mollie Stone's All Opening New Stores in California Wednesday

March 1, 2011: Mollie Stone's Markets Will Open its New Store in San Francisco's Castro District On March 9

February 17, 2011: Mollie Stone's Markets Planning to Open Newest Store in San Francisco First Week in March

January 13, 2011: Mollie Stone's Markets Taking Over Closed 18th Street Delano's IGA Market in San Francisco's Castro District

January 28, 2011: Mollie Stone's Markets Confirms Our January 13 Report; Announces New San Francisco Store Via Twitter & Facebook

November 30, 2010: DeLano's IGA Markets Closing Five Stores in San Francisco & Marin County; Fairfax, Davis Units to Remain Open (For Now)

November 29, 2010: Veteran Grocer Harley DeLano's 'DeLano IGA Markets' Chain On the Verge of Closure in San Francisco Bay Area