Analysis: The 'Cognitive Dissonance' Between Tesco's Fresh & Easy Neighborhood Market Format Strategy and Present Format Reality; Just Ask the Mayor

As Fresh & Easy Buzz has written about in a number of pieces, it's our analysis that Tesco's Fresh & Easy Neighborhood Market format has a serious identity problem among consumers, something the retailer denies publicly.

For example, according to Tesco PLC CEO Sir Terry Leahy, Fresh & Easy Neighborhood Market CEO Tim Mason, and Fresh & Easy marketing director Simon Uwins, the target market for the Fresh & Easy small-format, combination basic grocery and fresh foods markets is "everybody" (all consumers); hence the name "Neighborhood Market."

All three Tesco executives have stated this positioning statement about the format and the stores numerous times in print and verbally to multiple audiences. It's also a major part of the retailer's marketing PR materials.

The Fresh & Easy grocery stores are designed to appeal to all shopper demographics, unlike say Trader Joe's and Whole Foods Market which are more specialty-oriented food stores.

Fresh & Easy's entire strategy is based on this positioning. It's goal is to be the neighborhood grocer, which is why it is employing what we call a "critical mass" retail store strategy, opening stores within about one and a half -to- two miles of each other in the key market areas of Southern California, the Phoenix Metropolitan region, and the Las Vegas, Nevada Metro area. The retailer will be doing the same in Northern California where it will start opening stores early next year.

Fresh & Easy's merchandising strategy also is based on the premise that the stores are for "everybody." That's why the grocery markets offer a limited assortment of store brand and national brand basic grocery items priced at an everyday low price, fresh meats and produce, fresh, prepared foods priced reasonably, and a limited assortment of specialty wines and foods, along with some non-foods.

Tesco's strategy and goal with Fresh & Easy is to be a primary shopping venue, and a limited secondary one, just like Safeway, Albertsons, Basha's, Wal-Mart and other supermarkets. The difference, similar in some ways to Aldi and Sav-A-Lot for example, is the the Fresh & Easy grocery stores are small-format and limited assortment, rather than being a traditional supermarket.

As our analysis has shown we suggest, consumers are confused. Those customers who regularly shop at Fresh & Easy stores "get it" (the format). However, that is rather meaningless since if they didn't "get it" they wouldn't shop at the markets.

Rather, what has meaning (and accounts for lost potential sales) is the fact so many consumers don't "get it." And Tesco needs these shoppers to try the stores if the retailer expects to be successful.

A perfect example of this format confusion, or "muddle" as we call it, happened recently with the City Council in the Southern California city of Rancho Cucamonga, where Tesco is proposing opening a new Fresh & Easy grocery store.

Read the short story below from The Sun, a daily newspaper based in San Bernardino in Southern California's Inland Empire region where Tesco has its Fresh & Easy corporate headquarters and distribution center, an a number of Fresh & Easy stores. We will offer some analysis and comments below the piece from The Sun:

R.C. clears way for specialty market

British concept grocer Fresh & Easy eyeing location near winery building
Wendy Leung, Staff Writer, The Sun, San Bernardino
05/08/2008

RANCHO CUCAMONGA - It's not unusual for new businesses to be scrutinized by those not familiar with their concept.

When the Korean-inspired frozen yogurt chain Pinkberry came on the scene, people couldn't help but ask, "Is this really yogurt?"

Now that the British concept grocer Fresh & Easy is eyeing a location in this city, the question that keeps popping up is, "Is this a supermarket?"

The City Council mulled this query Wednesday and decided - no.

Fresh & Easy - a market with a "think small" approach - wants to open a 14,000-square-foot store on the northeast corner of Vineyard Avenue and Foothill Boulevard, behind the historic Thomas Winery building. The property is zoned speciality commercial, and the Planning Commission ruled in March that the grocer didn't fit that designation.

The City Council, perhaps lured by the display of spinach and artichoke chips and Spanish chorizo brought by the store's representatives Wednesday, overturned the Planning Commission decision by a unanimous vote, saying the grocer is indeed different from typical supermarkets.

Mayor Don Kurth said there isn't any doubt in his mind that Fresh & Easy is a specialty store. Addressing the representatives of the property owner, Kurth said, "I think you've got a home run there."

British retailer Tesco began tapping into the U.S. market last fall and has opened two locations in Upland. More stores are on the way for San Dimas, Fontana and another Rancho Cucamonga location at Haven Avenue and Town Center Drive.

Construction for the Thomas Winery Plaza store is expected to begin at the start of 2009. Property owners intend to demolish the two buildings that currently house Antonino's Ristorante, Yatai Sushi Express and other businesses before constructing a new building that would incorporate winery elements.

Existing businesses will relocate within the plaza because there is 15,000 square feet of vacant property, said Jerry Ogburn, a representative of the property owners.

The Thomas Winery building, with Coffee Klatch and Bobby Baja's as tenants, will not be affected. The historic building is billed as the state's oldest winery and is the reason for the specialty commercial designation.

One of the reasons why the Planning Commission was hesitant to give Fresh & Easy the specialty label is the city has no definition for specialty food stores.

But the council members said after several visits to the Upland locations, they were ready to deem it special.

"I couldn't classify it as a supermarket," said Councilman Dennis Michael. "And if I can't classify it as a supermarket, I have to go with a specialty store."

Ogburn said this is probably the first time that the question of whether Fresh & Easy is a supermarket became a sticking point.

Councilwoman Diane Williams agreed that Fresh & Easy was a specialty store but was far from being a fan.

"If the word specialty means unique...individual, then it doesn't necessarily have to be attractive, it can be ugly," she said. "This isn't ugly but it's certainly not the most attractive store I've ever been in. In fact, it's a real turn-off."

Councilman Rex Gutierrez, who applauded the store's commitment to environmentally friendly designs, attributed the grocer's spartan interior to its country of origin.

"I can understand the plainness," he said. "To me, it's typical English practicality."

Fresh & Easy Buzz Analysis:

Which is it: a food store for everybody? Or is it a specialty store. The mayor obviously thinks it's a specialty store; in fact he seems to have "no doubt in his mind" that's just what Fresh & Easy is.

We wonder why the Fresh & Easy Neighborhood Market representatives--the ones who brought the chips and chorizo--didn't correct the mayor and explain to him that Fresh & Easy is a grocery store for "everyone" just like a supermarket is; that in fact that's the retailer's stated positioning for the format and stores?

Well, probably because the reason the city's planning commission turned Tesco down for the new Fresh & Easy market was because they said the store didn't offer enough of a unique quality to be approved. The city has some sort of "we have enough supermarkets in the city already-oriented planning and design guideline."

Since the mayor was obviously bowled over with the "home run" specialty store aspects of Fresh & Easy--not having a doubt it is a specialty foods store--and a majority of the council felt the same way, thereby overturning the planning commission and approving the store, we would expect the Fresh & Easy representatives attending the meeting decided to leave well enough alone in terms of the format confusion, declare victory and go home.

Now it would be just fine if Fresh & Easy wants to be a specialty store; which as the format is it really basically is. But that's not the strategy or the positioning: the stores are designed to be primary (and to a limited degree secondary) food and grocery shopping venues for "everybody."

Hence the problem, or format confusion or muddle, we've been describing for a long time here on Fresh & Easy Buzz.

As we've said, a good part of this problem has been the failure of Tesco to properly communicate what Fresh & Easy is to consumers. The retailer has relied on public relations "free media" marketing to create its message and communicate its positioning. It hasn't worked.

In order to position and communicate a format such as Fresh & Easy in the desired manner, a retailer must use paid advertising it can control along with public relations-oriented marketing. Why? So it can control it's message and say what it wants and needs to, that's why.

We've also reached another conclusion in our analysis: We don't think Fresh & Easy Neighborhood market executives know what the Fresh & Easy format is. They may have at one time; but not anymore.

Here's one hint why: When Fresh & Easy executives were interviewing new public relations firms in Southern California a couple months ago, among the conflicting charges they gave to those firms was to simultaneously position and gain publicity for the stores as leaders in premium wine and specialty foods sales, restaurant-quality prepared foods purveyors, and the cheapest grocery stores in town. That's conflicting.

Of course, as we've argued previously, in many ways the advertising campaign is putting the cart before the horse, as Tesco has much to do to create a format for the Fresh & Easy stores--as well as in it's operations policies--in order for the stores to be grocery markets "everyone" (or nearly everyone) will be interested in shopping in. That's just not currently the case.

Everybody vs specialty: A few examples:

To be a grocery store for "everybody" in the U.S., you have to take checks. Fresh & Easy doesn't take traditional paper checks, just ATM and credit cards.

If you're operating a specialty foods store it's fine not to take checks.

You also need to cash payroll checks, especially in California, Nevada and Arizona, where many Hispanic immigrant consumers (and others of various ethnic groups use their supermarket as their bank, cashing their payroll checks then buying groceries after at that store every two weeks like clockwork. Ask ("everyman") Wal-Mart why it charges a flat fee of $4 to cash payroll checks regardless of their size, and encourages the practice? Ask Safeway Stores why its stores bring cash in by the armored car load on the 1rst and the 15th of every month, which generally is payroll check cashing time for most of these consumers.

Specialty foods stores hardly ever cash payroll checks, which not only is fine, but also wise.

To be a grocery store for "everybody," you can't have self-service checkout (and only assist shoppers with it if they ask).

For example, people over 65 years old, the fastest growing age group in the U.S., don't generally like to scan and bag their own grocery orders. They also don't like to have to ask for help doing so. Some will ask for help. Some will do it on their own--at least once. Many though will do it once and never return to the store. Others will hear about it and never try Fresh & Easy. With this group being the fastest growing age cohort in the U.S.--and the most affluent--that's a lot of "everybody" to exclude.

If you're operating a specialty foods store or deep discount niche market, it's fine to offer self-checkout, after all you're going after a niche market, not everyone.

To be a grocery store for "everybody," you need to carry more than 30-35% of the already limited assortment grocery items in your stores under national and regional brands, along with your own store brand--especially when that store brand has zero brand equity in the market. As we've suggested before, Fresh & Easy's roughly 65% store brand, 35% national and regional grocery brand mix needs at a minimum to be adjusted to a 50-50 mix.

If you're a specialty foods store like Trader Joe's, it's fine to offer 65% or even more of the grocery products under a store brand since you aren't trying to target everyone anyway.

To be a grocery store for "everybody," you need to offer at least half of all your produce items in bulk, rather than having then 100% pre-packaged. And 50% is being generous. It's probably more like 75%.

If you are a specialty foods store like Trader Joe's, its fine to sell all of your fresh produce pre-packaged because like with Trader Joe's, produce is merely a sideline rather than part of a strategy targeting of targeting all consumers. Trader Joe's doesn't care if shoppers purchase most of their produce elsewhere, although they like it when customers buy most of it at their stores.

There's a form of cognitive dissonance going on at Tesco about what Fresh & Easy really is at present and what they want it to be (and their stated strategy for it), in our analysis.

The format, marketing, merchandising and retail operations all scream specialty foods store. But the strategy and investment is one of a grocery store for all consumers: a combination basic grocery and fresh foods store with everyday low prices that is designed to be the primary and to a limited extent secondary food and grocery shopping venue for consumers in the stores' market regions.

There are numerous other examples--and you can find them throughout Fresh & Easy Buzz--of format, merchandising and operational changes which in our analysis Tesco needs to make and evolve in order to make a success of the small-format, convenience-oriented for "everyone" Fresh & Easy grocery stores; unless of course they want to reposition them as specialty foods stores, which the mayor of Rancho Cucamonga would say would be a "home run."

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

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

Prince Andrew, Duke of York, is getting a lot of letters regarding Tesco's U.S. Fresh & Easy Neighborhood Market grocery store operations during his current trip to the U.S. as Britain's official foreign trade representative.

Yesterday, we wrote about a letter written by Joseph T. Hanson, International President of the United Food and Commercial Workers (UFCW) union, to Fresh & Easy CEO Tim Mason. Hanson's letter was given to the visiting Price Andrew--who among other things was in Southern California for the grand opening of a new Fresh & Easy store in Compton, California--and the Prince was asked to personally hand-deliver it to Mason and other company senior executives. [Read our piece from yesterday here.]

But the UFCW's letter isn't the only important letter Prince Andrew recieved late last week. A Southern California-based group called The Alliance for Healthy and Responsible Grocery Stores, which is a coalition involving over 25 Southern California communties and numerous local groups and non-profit organizations, also hand-delivered a letter to the Prince, and asked him to personally give it to Tesco plc.'s CEO Sir Terry Leahy and Fresh & Easy Neighborhood Market CEO Mason.

The thrust of the letter involves the group's efforts for the last few months to get Fresh & Easy to locate more of its small-format grocery markets in poor and underserved (by grocery stores) communities like the retailer promised it would when it entered the Western U.S. Market last November with the first of its stores, which currently number 43.

Further, this particular letter had a rather important author: Democratic candidate for President of the United States Barack Obama. In the letter, Obama urged Tesco, the parent company of Fresh & Easy, to "make good on its promises to build stores in neglected neighborhoods. I hope these promises will be fulfilled," the letter stated. They are actually two letters--one from Obama to CEO Tim Mason and another from the alliance to Tesco CEO Sir Terry Leahy and Mason. You can read both letters here.

In January before he left the race, former Democratic candidate John Edwards signed a similar letter on behalf of the alliance. That letter was sent to Tesco and Fresh & Easy Neighborhood Market senior management, including Sir Terry and Mason.

The Alliance for Healthy and Responsibility Grocery Stores has been lobbying Tesco with letters and through the media primarily to sign a pledge in which the British grocer would agree to open a certain number of Fresh & Easy stores in low-income Southern California neighborhoods which are underserved by grocery stores that offer fresh foods at reasonable prices. Further, they want the retailer to agree to meet certain health and environmental pledges it made before it opened its first stores last year. Tesco says they're meeting those goals, but the coalition wants a signed agreement.

Fresh & Easy has opened at least two stores in such underserved Southern California neighborhoods thus far--one in Los Angeles and the new store in Compton--but the vast majority of the retailer's stores have so far been located in middle income neighborhhoods which have plenty of choices in terms of supermarkets.

The grocer has, however, said it will open a number of new stores in just such areas in Southern California. Tesco calls these neighborhoods "food deserts," communities which lack affordable grocery stores offering fresh foods and variety at reasonable prices. In fact, the retailer claims doing so is a key part of its Fresh & Easy store strategy in the Western U.S.

Groups like the Southern California coalition aren't so sure of that promise however since only two or three of Tesco's 43 grocery stores opened to date are in these "food deserts." The grocer did sign leases a few weeks ago though in Northern California for two stores in underserved neighborhoods in San Francisco and for three stores in underserved neighborhoods in Oakland.

Since the letter from Barack Obama was given to Prince Andrew on Friday--the same day he participated in the opening of the Fresh & Easy grocery market in Compton--which not only is one of the poorist and most underserved city's in California, but in the entire U.S. as well--we wonder how the Prince responded after reading the letter?

Compton, a city of about 100,000 residents had only one supermarket until the Fresh & Easy grocery store opened last Friday. City officials and community groups have been trying for years to get local chain's Safeway Stores, Inc., Kroger-owned Ralph's Grocery Co., and numerous others to open a store in the city. However, all of the chains and independents have declined to do so. According to the city's mayor, Tesco's Fresh & Easy was the first to take them seriously.

The residents of Compton are happy with Fresh & Easy for locating a brand new store in their city when all others refused. Of course, that doesn't mean the alliance doesn't have the right to hold Tesco's feet to the fire in terms of opening more stores in similar underserved neighborhoods, especially since Fresh & Easy executives have used this promise much to their own benefit in terms of garnering much positive publicity.

We just wonder what the Prince--who was given the name "Fresh Prince of Compton" at the store grand opening Friday--thinks about not only getting the two back-to-back letters, but also about having to be the deliveryman to Tesco. Both groups--the union and the alliance--have said they've been unable to get Fresh & Easy Neighborhood Market CEO Mason to meet with them in person, which is why they decided to use the "Fresh Prince" as there emisssary last week. We suppose they figured since he is already an emissary--for Britain's foreign trade in the U.S.--they might as well take advantage of his experience in the field.

>You can read the letter signed by Barack Obama to Tesco executives here, along with reading additional information about the group's efforts.
>Tesco (here) and Fresh & Easy (here) have nothing on their respective web sites regarding the letter.

Associated Press: Barack Obama Cinches the Nomination For Democratic Party Nominee For President of The United States

..."I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character."-- Martin Luther King, Jr., from his famous "I Have A Dream" speech, August 23, 1963. Dr. King gave the speech on the steps of the Lincoln Memorial in Washington, D.C. You can read the full-text of the speech here.

The Associated Press (AP) is reporting Democratic candidate for President Barack Obama has cinched his party's nomination for President of the United States.

According to the AP, Senator Obama now has obtained enough delegates to put him over the top in the delegate count to beat out fellow Senator and former U.S. First Lady Hillary Clinton for the nomination. This is even before the results from today's primaries in South Dakota and Montana have come in, which will happen later tonight. Even if Obama were to lose both states by a substantial margin tonight, he would still cinch the nomination, according to the AP report.

You can read the Associated Press' breaking news report here.

First-term Illinois Senator Barack Obama becomes the first African American in the history of the United States to be nominated for President by his political party.

It was another man from Illinois, Abraham Lincoln, who abolished black slavery in the United States while he was President. The poignancy of Senator Obama being the Senator from Illinois is striking in that regard.

Obama, 46, the son of a white mother from Kansas in America's heartland and a father from Kenya in Africa, took a long journey to become not only a politician but now his party's nominee for the highest office in the United States.

Raised by his mother and grandparents in Hawaii, Kansas and for even a time in Indonesia, Obama says he didn't want to be President as a child or even a teenager. Rather, what he says he wanted most was to know his father, who left the family shortly after Barack was born. Senator Obama did eventually get to know his father better, but not personally. Rather, he did so by researching and writing his best selling book, "The Dreams of My Father."

You can learn more about Barack Obama's life story and biography here.

Forty years ago in 1968, civil rights leader Martin Luther King Jr. was gunned down by a sniper as he relaxed on the balcony of the Lorraine Hotel in Memphis, Tennessee.

Campaigning for the Democratic Party nomination for President that very day in 1968 in Indianapolis, Indiana when he heard the news of King's death, Robert F. Kennedy, who many say Barack Obama reminds them of in some ways, waded out into a crowd of mostly African American voters who thought they were at a rally to hear a political campaign speech from the Senator, brother of the late President John F. Kennedy, civil rights leader, and Democratic candidate for President that year.

Instead, Robert F. Kennedy broke the news to the largely African American group that Martin Luther King Jr. has been assassinated in Memphis and had died just a short time earlier.

There was widespread fear in Indianapolis that evening riots would break out. However, Robert F. Kennedy gave a speech to the group without notes, talking about what he felt like that night, telling the crowd what it was like to have a brother (JFK) shot down just a few short years earlier in the same way a sniper ended King's life that very day.

In his speech to the grieving Indiana residents, Robert F. Kennedy evoked the words of his favorite poet, Aeschylus:

"Even in our sleep, pain which cannot forget falls drop by drop upon the heart, until, in our own despair, against our will, comes wisdom through the awful grace of God."

Later that year (1968) Robert F. Kennedy--like his brother John before him and his friend Martin Luther King Jr. (as well as Abraham Lincoln)--would have his life come to an abrupt end when he was shot by a sniper at the Ambassador Hotel in Los Angeles during the celebration of his winning the California primary in his quest to be the 1968 Democratic nominee for President.

You can read the entire Indiana speech by Robert F. Kennedy, and even listen to it if you like, here.

The poignancy of Barack Obama's becoming the first African American to be nominated by his party for President coming on the 40th anniversary of the death of America's leading civil rights leader, Dr. Martin Luther King, along with the same year anniversary of Robert F. Kennedy's death is equally striking

Regardless of ones political affiliation--Democrat, Republican, Libertarian, Independent or decline to state--Obama's cinching the nomination is a cause to celebrate as America.

Through decades of pain and suffering, America has gone from a nation which enslaved people because of the color of their skin, then denied them the vote, decent jobs, housing and other basic rights, to tonight when an African American man with what he calls the unusual name of Barack Obama, will stand on a stage in St. Paul, Minnesota, where the Republican Party will hold its convention later this summer, and perhaps announce he is proud and humbled to be the Democratic nominee for President of the United States of America.

Billionare and Major Tesco PLC Shareholder Warren Buffett Says He Wants A Democrat as U.S. President in November '08

Warren Buffet, the world's second-richest human, founder and chairman of mega-holding company Berkshire Hathaway, Inc., and one of the largest single shareholders of Tesco PLC stock, with current holdings of about $1.4 billion or around a 4% ownership stake in the company, says he wants a Democrat to win the U.S. Presidency in November, 2008.

Tesco PLC owns Fresh & Easy Neighborhood Market in the U.S.

During the "Oracle of Omaha's" recent tour of Europe, where the Berskshire Hathaway chairman and CEO was looking for companies to acquire or make major investments in, he told members of the world press traveling with him he's told both Democratic candidates Barack Obama and Hillary Clinton he would support either of them once one or the other gets the Democratic Party nomination for President.

Buffet added he believes either one will be a better President than Republican John McCain--who he said is a "first-class guy" who he respects much--for the economy and the nation as a whole, along with being a better choice in terms of global relations and policy.

"I told both Hillary and Barack I'd support them, and I'd be equally happy if either of them were the nominee. "Barack appears to have the nomination, Buffet told the Associated Press and other publications.

As for Republican John McCain, Buffett described him as a "first-class human being. I think he's admirable. I don't agree with him as much as I agree with Barack. I think the U.S. will do well over time whether the president becomes Barack or John McCain."

Buffet likens the Presidency to running a business.

"They say in the stock market, 'Buy into a business that's doing so well an idiot could run it, because sooner or later, one will,'" Buffett said. "The U.S. is sort of like that. I think the country will do fine whether it's the Democratic or Republican candidate, but I strongly prefer the Democrats."

Since it does look like Obama will get the Democratic party nomination for President, he might want to think about how he can use the "Oracle of Omaha" in his administration if he wins in November.

In addition to being called the "Oracle of Omaha," Buffett also is often referred to as the "Sage of the Plains," for his wisdom not only in economic, financial and business matters, but for international and domestic issues as well--along with just plain living.

What about Warren Buffett for Vice President? Or Secretary of Treasury or Commerce.

There's no better cheerleader for the United States' economy than Buffett. The "Oracle of Omaha" also knows both Wall Street and main street, understands global markets better than most, and is a no-nonsense, humble, modest man.

Despite his billions, Buffett is loved by people of all economic classes, due primarily to the fact he lives a very simple life, with a few exceptions, mostly all business-oriented.

Obama wouldn't have to worry about Buffet's wanting to "cash in" on his Vice Presidency or Cabinet position, would he? After all, at last count the "Sage of the Plains" was worth around $50 billion, nearly all of which he is giving away to his friend Bill Gates' charitable foundation.

America could use an experienced and wise man--with money and with life--advising the next President, couldn't it?

Tesco PLC News: A Man and His Dog Fight Tesco Over Pet Insurance

Patrick Weston (standing behind his protest sign wearing the suit) protests Tesco's not paying for his dog Fred's leg surgery outside a local Tesco store in his community. Weston, 61, says it's his first time ever protesting anything, but vows to return again and again to the store and protest until Tesco agrees to pay for Fred's surgery. (Photo: Courtesy: Suffolk Free Press.)

Patrick Weston, a 61-year old British man suffering from cancer, might be ill himself but his main concern is his beloved dog and companion, three-year old Fred, his Rottweiler dog.

According to this piece in today's Suffolk (UK) Free Press newspaper, Fred ruptured the cruciate ligament in his right hind leg while chasing a rabbit through a field behind his--and owner Weston's--home in Twinstead, UK.

Being a responsible pet owner, Patrick Weston had a pet insurance policy for Fred through Tesco's Personal Finance and Insurance business division. [As we wrote in this May 31 piece, Tesco also is in the personal finance and insurance business in a big way in the UK, along with being the nation's leading retailer.]

Therefore, when Fred's veterinarian told Mr. Weston it would cost ~2,500 pounds to repair the Rottweiler's ruptured ligament in its right hind leg, the dog's adoring owner wasn't worried about the cost despite his own health problems and related expenses, since he assumed his Tesco pet insurance policy would pay for the surgery.

But that appears to not be the case.

Read what Patrick Weston is doing about Tesco's denial of his pet insurance claim for Fred's leg surgery here in the Suffolk Free Press.

Upcoming New Markets Special Report: From Food Desert to Urban Oasis? Tuesday Election Could Change San Francisco's Bayview-Hunters Point Forever

The details--and the future--of Florida, USA-based Lennar Corp's. massive mixed-use development, detailed in the graphic above, will be voted on by San Francisco voters on Tuesday. Click her to view a larger version of the graphic.

After decades--some locals even say a lifetime--of neglect by the city, developers and the business community, San Francisco's Bayview-Hunters Point neighborhood--where Tesco is building a new Fresh & Easy grocery store which will be the retail anchor of a brand new residential condominium complex--is suddenly being flooded with local government and commercial attention.

[You can read more about the Fresh & Easy grocery store going into the Bayview-Hunters Point development in our March 13 piece, "San Francisco: Cool Bay Breezes, A City Full of History--And A Fresh & Easy State of Mind," here.]

History: A World War II shipbuilding dynamo

Bayview-Hunters Point, a historically African American neighborhood, has its growth origins in World War II when the U.S. government developed the now-closed naval shipyard on the waterfront in the neighborhood. The Hunters Point facility was one of the most productive ship-building facilities in the United States during the war effort, drawing thousands of workers from throughout the country to work at the shipyards, many who remained in the neighborhood after the war ended.

History: Changing economics and demographics

After World War II and throughout the 1950's, most Bayview-Hunters Point residents were homeowners, many able to buy their first homes in the neighborhood using the GI Bill. It was a moderate to low-income neighborhood, but primarily on the moderate income side. A 1,200 hundred square foot three bedroom one bath house sold for about $12,000 -to- $16,000 in the 1950's in the neighborhood. That same house today sells in the $600,000 -to- $700,000 range in the neighborhood, according to local residential real estate agents.

That majority home ownership trend began to change dramatically in the 1960's due to a variety of circumstances. In the 1960's and into the 1970's the city of San Francisco built numerous public housing developments in Bayview-Hunters point as part of then President Lyndon Johnson's war on poverty. At the time, the neighborhood was majority African American.

Throughout the 1960's and into the present, poverty in the neighborhood grew a bit, stayed the same a lot, but hasn't improved percentage-wise. The "projects" as they are called remain, although the city no longer builds large-scale "poor people only" public housing projects in the neighborhood any longer.

The modern era

Today, there still is a substantial African American population in the neighborhood--many of whom are the original homeowners or their children--along with many also living in the housing projects, and still others who are renters.

The demographic makeup of the neighborhood has changed much though. Hispanics or Latinos comprise a growing number of Bayview-Hunters Point's residents today. Additionally, there's been growth in the white and Asian population, as young San Franciscans have and are moving into the neighborhood since it's the most affordable district in a completely unaffordable for housing city.

San Francisco's current mayor, Gavin Newsom, made improving Bayview Hunter-Point a major element of his campaign when he ran and was elected mayor of the City by the Bay. Since getting elected, Newsom has devoted more personal and city effort to the neighborhood--including redevelopment efforts--than all of the city's previous mayors have. His success is mixed however, according to neighborhood leaders and city hall watchers in the city.

This effort includes working with commercial and residential developers and the business community--before being elected mayor, Newsom was an entrepreneur who owned a chain of successful restaurants in the city, along with a winery in the Napa Valley--to create new housing and commercial developments--and jobs--in Bayview-Hunters Point.

Fresh & Easy and Bayview-Hunters Point

One of those developments is the large mixed-use retail and residential development--of which Fresh & Easy will be the ground floor retail anchor--on San Francisco's Third Street in Bayview-Hunters Point. As part of the city's and neighborhood's agreement with the developer, a portion of the condominium units in the building must be sold at below market rate prices. Current residents of the neighborhood also get priority in buying or renting the units as part of the agreement.

Since the early 1990's, a coalition of Bayview-Hunters Point community groups and the city has been trying to lure a grocery chain into opening a supermarket that offers basic groceries and fresh foods at affordable prices into the neighborhood. The only current such supermarket is a Kroger Co.-owned Foods Co banner warehouse store which has to serve tens of thousands of neighborhood residents and is at one complete end of the neighborhood, making a trip to that store from the other end of the neighborhood a long one for residents, many of who use public transportation.

Tesco's Fresh & Easy Neighborhood Market was the first grocer to say yes to the city and neighborhood coalition when it decided to build a new store inside the new Third Street project currently being constructed.

Tuesday's election could change neighborhood forever

On Tuesday, San Francisco voters will go to the polls in a special election which among other ballot measures includes to competing ballot initiatives--Propositions G and F--regarding a massive residential development for Bayview-Hunters Point proposed by Miami, Florida-based residential developer Lennar Corp.

The huge development would include low-rise residential, medium and high-rise residential buildings, research and development facilities, and retail and commercial development, along with space set aside for public use like parks and other recreational activities.

The development not only includes Bayview-Hunters Point but nearby Candlestick Point as well, which is where the San Francisco 49-ers' football team's 'Monster Stadium is located. There has been discussion about the development including a new stadium for the football team, which is threatening to move south to nearby Santa Clara if one can't get built in San Francisco. [The Bayview and Hunter's Point neighborhoods are technically two separate neighborhoods located side-by-side. However, everybody in San Francisco, including the city most of the time, includes them together as Bayview-Hunters Point.]

Dueling ballot measures

Proposition G is a ballot measure sponsored by the developer and a coalition of Bayview-Hunters Point community groups, the San Francisco Building and Construction Trades Council (the union group representing construction and trades workers) and the San Francisco Chamber of Commerce. The mayor also supports Proposition G, and the San Francisco Chronicle newspaper endorsed the measure over rival Proposition F on Friday.

Two Bayview-Hunters point neighborhood groups, Bayview ACORN (Association of Community Organizations for Reform Now) and SFOP (San Francisco Organizing Project) have signed a Community Benefits Agreement with developer Lennar which guarantees a certain percentage of housing in the development will be sold at below market rate, that neighborhood residents get priority in buying and renting the new housing, that the developer will hire and train a certain percentage of neighborhood residents to build the development, and a number of other conditions in return for the coalition's support of Propostion G and the developer.

Proposition F on the other hand is being supported by other Bayview-Hunters Point neighborhood groups who don't feel the Community Benefits Agreement offers enough to neighborhood residents. Proposition F gives the neighborhoods more control over the development and requires the developer to set aside more jobs for Bayview Hunters-Point residents, offer more units at below market-rate cost, and spells out a number of other criteria.

A number of San Francisco faith or religious organizations also are supporting Proposition F, as is a powerful member of the city's Board of Supervisors, and numerous other community groups and organizations.

Residents split over neighborhood's future

The Tuesday election on the development is splitting longtime Bayview-Hunters Point residents down the middle, according to San Francisco political analysts.

Today's San Francisco Chronicle has a piece for example in which it describes one such split between two African American woman, both who have lived in the neighborhood for over 50 years each respectively.

Read the story, "Props F, G split two longtime Bayview residents," here.

Strange bedfellows

The coalition between labor (the building trades union) and business (the Chamber of Commerce) is also an odd and unique one in San Francisco politics. Historically, labor and business in the city are nearly always at opposite sides of any political issue or ballot measure.

However, in Friday's (May 30) San Francisco Chronicle, Steven Falk, the CEO of the San Francisco Chamber of Commerce and Michael Theriault, the head of the San Francisco Building and Construction Trades Council, co-authored an opinion piece together urging San Franciscans to vote for Proposition G (the developer measure) rather than Proposition F (the opposing measure).

Read their Op-Ed piece, "Labor and business urge yes on G, no on F," here.

Two important leaders of the "Yes on F, No on G" campaign, Bayview-Hunters Point resident and coalition for Proposition F leader Joanne Abernathy, and Bishop Ernest Jackson, director of a nearby neighborhood outreach center and a affordable housing developer in the city, co-authored their own opinion piece arguing in favor of Proposition F over Proposition G, which they say (Prop. G) is a far more neighborhood-oriented measure.

Read their Op-Ed piece, "Change begins in the neighborhood; vote yes on F," here.

No shortage of 'coalitions' on either side

Meanwhile, two longtime Bayview Hunters Point residents and members of the neighborhood coalition that signed the Community Benefits Agreement with the developer Lennar Corp., say they want San Francisco voters to know all neighborhood residents and groups aren't opposed to Proposition G and in favor of Proposition F.

These two neighborhood leaders, Jackie Phillips and Eleanor Williams, co-authored a pro-Proposition F piece in that same Friday edition of the Chronicle titled, "What the Bayview community wants," which you can read here. In the piece they explain the Community Benefits agreement signed with the developer and argue why they support Proposition G.

You also can read the San Francisco Chronicle's pro-Proposition G editorial here.

The San Francisco Bayview, a popular newspaper based in the Bayview-Hunters Point neighborhood, is in favor of Proposition F and against Proposition G (the developers initiative). You can read what the paper has to say in favor of Proposition G here.

Welcome to San Francisco politics. This is the norm in the city rather than the exception.

Food retailing and the neighborhood's future

If Proposition G (the developer measure) passes over Proposition F, which is a toss-up at this point in time according to San Francisco political analysts, that means the huge mixed-use development would go forward theoretically as planned, meaning thousands of new residents, new industry and retail, as well as new jobs.

If Proposition F passes, Lennar Corp. says it likely will scrap the project, although many analysts in San Francisco say that might not be the case as the opportunity would still remain a lucrative one for the developer.

If the huge mixed-use development goes forward in the neighborhood as planned--or even if a scaled-down version goes forward--that would mean thousands of new potential customers for the Fresh & Easy grocery store set to open on Third Street and Carrol Avenue in Bayview-Hunters Point, on top of all the residents who already live in the neighborhood and those who will live in the condominiums above the new store when it opens next year, which is currently underserved by grocery stores.

Ironically, if such a massive development like Lennar's does go forward, which is likely in one form or another, it will probably draw other grocery chains to open stores in the neighborhood, such as locally-based Safeway Stores, Inc., which has a store (about 12 units total in the city of 825,000 residents) in pretty much every San Francisco neighborhood except Bayview-Hunters Point.

Graphic credits: The graphic of Lennar Corp's. proposed mixed-use development for the Bayview-Hunters point neighborhood in San Francisco was created by Todd Trumbull of the San Francisco Chronicle. Graphic: Courtesy of the San Francisco Chronicle.

What Others Are Saying: 'Times-Herald' Vallejo, California: City Residents Are Shopping at Home More For Food and Groceries

Yesterday we reported here Tesco's Fresh & Easy Neighborhood Market USA plans to open two additional stores--besides the one already confirmed by the grocer at Oakwood Avenue and Springs Road--in the San Francisco Bay Area city of Vallejo.

Today's edition of the local area daily newspaper, The Times-Herald--which serves readers in Solano County where Vallejo is located, along with having distribution in nearby Napa County--has a story in which it suggests--and interviews local residents for--that Vallejo shoppers are shopping locally for food, groceries and other items, rather than going out of town.

The chief reason Vallejo residents are shopping at home is the soaring cost of gasoline at the pump, according to the story. Gasoline is currently about $4.20 a gallon in the San Francisco Bay Area.

Among the local shopping venues the Times-Herald piece says Vallejo residents are shopping locally at is the city's busy farmers' market.

For example, in the story, Bill Neads of the Vallejo Chamber of Commerce says the downtown farmers' market has been bustling.

"It was packed, elbow to elbow," Neads said. "I think people don't have the money to go out and are finding things to do to save gas."

Vallejo's state certified farmers' market, like those throughout California, sells a wide variety of fresh, local bulk fruits and vegetables, along with items like locally-produced honey, dairy products and even meats at affordable prices. Only farmers can sell at California state certified farmers' markets.

Additionally, Noemi Cavalli and David Roldan of Vallejo say in the story they've started cutting out unnecessary trips to stores out of town and use their bikes as much as possible to save on gas.

"We used to go to Wal-Mart in American Canyon (which is just a couple miles away from Vallejo), but now it seems like even if what they have is 10 cents cheaper, it will cost much more than that to get there," Roldan said. "Really, it has been in the last few months we are feeling the crunch from higher food prices."

As Fresh & Easy Buzz reported in this piece yesterday, Wal-Mart withdrew a city application to open a Supercenter in the city, after four years of contentious battles with the city and community groups over issues such as zoning, labor practices and others issues.

Another Vallejo resident, Peter Krewko, says in the story he stopped shopping at the local Safeway and now does most of his food and grocery shopping at the local branch of Grocery Outlet, a chain of salvage supermarkets which sells manufacturer overruns, slightly blemished goods, grocery products with label errors, and discontinued merchandise. Grocery Outlet is based in nearby Berkeley.

Kreko also says he is shopping regularly at the local farmers market.

"I have become very price conscious in the last few months," said Peter Krewko, who was visiting the downtown farmers market for the first time. "I am definitely sticking to stores here in Vallejo and have started shopping at discount places like Grocery Outlet instead of Safeway."

Krewko said he moved to Vallejo in October and is thankful there is a farmers' market with quality produce at affordable prices.

"It's not only great to have this here in the city for the value, but I also want to support our local farmers," Krewko said.

Read the full Times-Herald story, Vallejo shoppers stick closer to home," here.

Rising gas prices, especially in California where $4 a gallon is now the norm, could be good for Tesco's Fresh & Easy and its neighborhood grocer-oriented format in Vallejo. Fresh & Easy's low everyday price structure also could be welcome by Vallejo shoppers like Peter Krewko who are looking to save money and therefore shopping more at off-price and salvage type grocery stores.

Of course, since Fresh & Easy's produce is all pre-packaged rather than bulk like at the city's bustling farmers' market, that might not be a particularly popular category when the first store opens in the city early next year.

The open year-round Vallejo farmers' market is open on Wednesdays and Saturdays from June -to- September, and on Saturdays only the rest of the year. That schedule does offer food retailers opportunity to sell fresh produce in the city of 130,000, even though the local outdoor market seems to be gaining lots of popularity with shoppers.