Tesco CEO Terry Leahy Retiring; Philip Clarke New CEO; Tim Mason Named Deputy CEO But Will Remain Fresh & Easy Neighborhood Market Chief in U.S.

Tesco plc, which owns Fresh & Easy Neighborhood Market USA, announced today that CEO Sir Terry Leahy (pictured above in a contemplative moment) will retire in March 2011. Leahy will be 55 years-old then, and will have served 14 years as CEO of the United Kingdom-based global retailer.

In making the announcement today, which was a surprise to even those of us who follow Tesco closely, Tesco plc chairman David Reid said: "Terry (Leahy) has made an unrivalled contribution over a prolonged period. He is undoubtedly one of the leading businessmen of his generation. He has put in place a strategy which can secure the progress of Tesco for years to come."

Philip Clarke (pictured above), 50, the head of Tesco's European and Asian retail operations, it's second-largest division after the UK, will replace Leahy as CEO when he retires next year. Clarke has worked at Tesco throughout his career, spending many years in retail and commercial (buying and merchandising). He joined the Tesco plc Board in 1998 and currently has responsibility for the group's growing international operations in Asia and Europe as well as for Tesco's information technology operations, the retailer said in its announcement today.

"I am honoured and delighted to succeed Terry who has taught me so much. I am very excited by the opportunity to lead such a fantastic team of executives, many of whom I've worked with for years. Together we will build a global business which focuses on the customer and fully respects our people, our communities, our supply chain and our shareholders," Clarke said today about becoming Tesco's new CEO in March of 2011.

Additionally, Tim Mason (pictured above), 52, the president and CEO of Fresh & Easy Neighborhood Market USA, will become deputy CEO of Tesco plc when Sir Terry retires in March 2011 and Clarke succeeds him, and given the additional responsibility for corporate branding and values and climate change initiatives, along with retaining his position as CEO of Fresh & Easy and remaining in the U.S. at the grocery chain's headquarters in El Segundo, California.

Prior to coming to America as CEO of Fresh & Easy Neighborhood Market in 2006 (the first Fresh & Easy stores opened in November 2007), Mason was Tesco plc's corporate director of marketing in the UK. As such, giving him the new overall corporate responsibilty for Tesco's branding makes sense in that experiential background regard. Terry Leahy was a director of marketing at Tesco prior to becoming its CEO, and was a mentor to Tim Mason when he started in the retailer's marketing department.

Tesco's corporate values and climate change areas have been central to CEO Leahy's tenure as CEO. For example, he's expended considerable effort in building a "Tesco" corporate culture since taking over as CEO 14 years ago, making it one of his chief leadership goals.

Additionally, Sir Terry has been in the forefront of grocery industry CEO's globally on the issue of climate change. For example, he's the first, and still only, food retailing industry CEO to have created an initiative in which many of the products on Tesco store shelves in the United Kingdom have "carbon footprint" shelf signs, which indicate an item's carbon footprint from field or factory to store shelf.

Leahy also has been an outspoken advocate in the UK and globally for creating corporate and government public policy responses to climate change. The fact he's intrusting this responsibilty to Tim Mason, who is the son-in-law of Leahy's mentor, former Tesco CEO Lord MacLaurin, suggests he sees Mason as his heir apparent at Tesco in these two areas - climate change and corporate culture. [Suggested reading: September 8, 2008: Tesco PLC CEO Terry Leahy: 'We Must Go Green' December 31, 2008: 'Green' Retailing: Tesco Scores Second Overall, Number One Among Food and Drug Chains, in Ceres Coalition's Climate Change Corporate Scorecard]

In the announcement today, Tesco CEO Leahy said about his March 2011 retirement: "When I became CEO I had a plan to build Tesco around its customers, to make it number one in the UK and to find new long term growth in non-food, in services and in international expansion. I wanted to develop a purpose and values that could sustain Tesco through its challenges and encourage and grow future leaders. It has taken 14 years but that strategy has become a firm reality now and so I feel my work is almost complete."

Commenting on the naming of Phil Clarke as his replacement, Sir Terry said: "I am delighted Phil Clarke has accepted the role of CEO from March 2011. I have worked with Phil at Tesco for many years and I am confident he has all the necessary talent, energy and experience to take the group forward. He will be supported by an outstanding team of senior executives who together represent one of the strongest leadership teams in the world of retailing. 'There is no better job than leading Tesco and after retirement I will concentrate mainly on private investment. I will, of course, keep a large shareholding in Tesco and remain its biggest supporter."

An interesting note: Terry Leahy and Philip Clarke both were raised in Liverpool, England, also home of those famous lads called the Beatles. Both CEo Leahy and CEO-apparent Clarke also worked at Tesco stores stocking shelves and the like while in high school.

Leahy said today he has no plans to be a non-executive member of Tesco's board when he retires in March 2011. He says his plans are to be an investor globally. We've heard from more than one good source today that Sir Terry has a big interest in investing and getting involved in companies in the rapidly-growing "green" energy, technology and related environmental industries. If so, this would allow him to focus the next phase of his business career to a large degree in the area of climate change, which as mentioned he's put a substantial focus on as CEO of Tesco. And at only 55 that second career phase could be a very long one.

Leahy is also a big supporter of the Everton Football Club and even a special advisor to the team. Perhaps he will have even more time to participate in what is one of his favorite activities - British football and the Everton lads- when he retires in March 2011?

Tesco also announced some additional executive changes that will take place in March 2011 when CEO Terry Leahy retires. Those changes are:

>David Potts, 53, will become the first CEO of Tesco's fast-growing Asia business. He is currently the corporate director of retail and logistics in the UK, as well as having responsibility for the Republic of Ireland. Clarke, who will become CEO in March 2011, currently heads up both the European and Asian operations.

>Richard Brasher, 49, currently Tesco's corporate commercial (buying and merchandising) director, will assume the newly-created role of CEO of the UK business and take responsibility for the Republic of Ireland, a position which will open up when David Potts assumes his new position in March 2011.

Additionally, Tesco said Andrew Higginson, 52, will continue as CEO of corporate retail services, which include the company's Tesco Bank, Tesco Telecoms division, its internet business and its loyalty marketing services firm Dunnhumby. Laurie McIlwee, 48, will continue as Tesco's finance director and Lucy Neville-Rolfe, 57, will continue as corporate and legal affairs director.

The company also said Trevor Masters will continue as CEO of its Central Europe and Turkey retail operations after the March 2011 changes, and in a new position Gordon Fryett will head up Tesco's property and real estate department across the group. A new group commercial (buying and merchandising) role will also be created, Tesco said, without being specific about the nature of the position.

Fresh & Easy Buzz will be offering some analysis of the retirement of Tesco CEO Terry Leahy, and the ramifications of it and all the changes announced today on Tesco plc and its Fresh & Easy Neighborhood Market USA chain, in the days and weeks to come. Stay tuned.

Biographical sketch of Philip Clarke, who will replace Terry Leahy as CEO of Tesco plc in March 2011. Source: Tesco plc:

Phil Clarke first worked for Tesco in 1974 as a part-time assistant while he was still at school in Liverpool.

Clarke then joined Tesco's management training scheme after reading Economics at Liverpool University.

He has broad Tesco experience as a store manager, a buyer, a marketeer and as an international executive.

Clarke joined Tesco plc's Board 12 years ago with responsibility for the Supply Chain; IT was added a year later. In January 2004 he took over responsibility for International Operations and retained IT.

He is now responsible for almost 2000 stores and nearly two-thirds of group space. He has been at the heart of all our new moves and operational improvements across Asia and Europe in recent years, including China, India and Turkey, building teams and developing talent in these important markets.

Clarke has been a Non-Executive Director of another FTSE company, Whitbread PLC, since November 2005 and is a member of the board of ECR Europe.

Philip Clarke is married with two children and lives in Hertfordshire, UK.

'Bigmista' Hits the Stores in Fresh & Easy Neighborhood Markets' Free Barbeque Road Show

Fresh & Easy Neighborhood Market is taking its free summer barbeque road show to three stores in the next two weeks, one each in California's Central Valley, Las Vegas and Phoenix, Arizona, following its first store-level event on June 4 at its Fresh & Easy grocery market in Los Angeles' Glassell Park neighborhood, at 4211 Eagle Rock Boulevard. [See a selection of photos from that event here.]

See our June 3 story: Fresh & Easy Neighborhood Market Teams Up With The Los Angeles Dodgers in 'Game & Grill Sweepstakes' Promo

At the event's, Bigmista's Barbeque, which is owned and operated by the husband-and-wife team of Neil and Phyllis Strawder, grills an assortment of beef, chicken, sausage and at times other meat items for customers, all for free. Various fresh & easy store brand side dish items are also served with the grilled meats.

Here's what's on tap and where it's happening:

>Fresh & Easy, Shaw & Willow, Clovis, California. Date: Friday, June 18, 2010, 5-7 p.m. Address: 790 West Shaw Avenue, Clovis, CA

>Fresh & Easy, Fort Apache & Desert Inn, Las Vegas, Nevada. Date: Saturday, June 19, 2010, 4-6 p.m. Address: 9475 W. Desert Inn Road, Las Vegas, NV

>Fresh & Easy, West Indian School & 7th Avenue, Phoenix, Arizona. Date: Saturday, June 26, 2010, 4-6 p.m. Address: 635 West Indian School Road, Phoenix, AZ

During the time periods listed above at each store - as supplies last - Grill Master Neil 'Bigmista' Strawder serves up free barbeque to all comers.

Strawder has gained a reputation in Southern California as the "go to guy" for barbeque - be it ribs, chicken or brisket. In addition to doing events for Tesco's Fresh & Easy, Bigmista and his wife and partner Phyllis also do serious barbeque business at Southern California farmers markets, operate a food truck and do catering. The couple's website is here.

The free summer barbeque road show is a way for Tesco's Fresh & Easy Neighborhood Market to promote its 14 varieties of "grill packs," which are packaged fresh meat items featuring various meats, including combinations like its chicken, pork sausage and quarter-pound beef patty combo pack.

The grocery chain also introduced eight new value-added grill pack items right before the beginning of the Memorial Day grilling season. It's currently promoting those items, along with the other grill packs, in its stores. [May 16, 2010: Two Grocers, Fresh & Easy and Raley's Offer Two Very Different Approaches to Ready-to-Grill Fresh Meat Merchandising]

Additionally, Fresh & Easy has launched a summer grilling season sweepstakes promotion with the Los Angeles Dodgers baseball team, which ties into its store-level free barbeque road show. [Read our story on the promotion - June 3, 2010: Fresh & Easy Neighborhood Market Teams Up With The Los Angeles Dodgers in 'Game & Grill Sweepstakes' Promo.]

Interesting, the tie-in conclusion is our reporting, not from Fresh & Easy. The grocer hasn't tied the two events into a marketing message, nor publicized it as such, despite the fact it's an excellent summer promotional event waiting for a marketing person at the grocery chain to put some effort into. It would be a real missed opportunity not to combine the related events and promote them comprehensively in order to create real excitement (and incremental sales) and get all the bang for the buck out of the promotional expenditures as possible, in our analysis and opinion. Perhaps it's coming?

Meanwhile, who doesn't love free barbeque? The answer: Hardly anyone - although vegans might like some grilled veggies to be available. Therefore, we suggest 'Bigmista' stock up for his road show next week, and get a little rest before it starts.

Henry's Farmers Market Opening its First Northern California Store in August With A Big 'Local' Push

Smart & Final's Henry's Farmers Market chain puts a huge focus on fresh produce in its stores. The produce departments comprise about 25% of total store selling space and are the leading department in terms of category percentage of sales. Henry's offers 350 different varieties of fresh produce throughout the year, and an additional 100 or more in the summer. The stores carry conventional and organic produce, with a key emphasis on "locally-grown.

Northern California Special Report: Sacramento Metro-Market Region

Henry's Farmers Market, which is owned by Southern California-based Smart & Final but is operated independently in most regards, plans to open its first store in the Northern California city of El Grove near Sacramento earlier than it originally expected - in August rather than November 2010 - according to Janet Little, the grocer's nutritionist and spokesperson.

Irvine, (Southern) California-based Henry's originally planned to open the store at 8211 Laguna Boulevard in Elk Grove this fall, most likely in November. But progress in renovating the former Circuit City store has progressed even faster than the grocer hoped, and it's therefore planning to open the store two months from now, in August.

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

Smart & Final-owned Henry's, which currently has 39 stores operating under the Henry's Farmers Market and Sun Harvest Farmers Market banners in Southern California and Texas, puts a big emphasis on offering locally-grown and produced foods in its stores, particularly in the fresh produce category.

Local grower and vendor fair

The grocery chain plans on maintaining that "locally-grown" merchandising philosophy and focus in Northern California. In fact, next week its holding a Henry's Farmers Market vendor fair on Thursday, June 10, from 9 a.m. to 5 p.m., and on Friday, June 11, from 9 a.m. to 3 p.m. at the Hilton Garden Inn, 9241 Laguna Springs Drive in Elk Grove, according to Little. Executives from Henry's buying and merchandising staff will be at the two-day event to meet with potential vendors. The purpose of the vendor fair is to establish relationships with local and regional farmers and food producers.

"We are looking for tasty products that are healthy, all natural and-or organic and made with the highest quality ingredients," Little says. "We like working with vendors and sellers who can demonstrate the ability to work with a professional retailer, provide a solid means of distribution, hold adequate liability insurance and can guarantee product quality and safety," she notes in explaining the qualifications local growers and food companies need in order to sell their products in the Henry's stores.

Henry's has long-standing relationships with farmers and producers in Southern California and hopes to establish similar ties with growers in the Sacramento region, Little says.

That shouldn't be difficult to do: Northern California and the nearby Central Valley comprise the leading agricultural growing region in the U.S., as well a being a center for natural, organic, specialty and artisan food companies. Therefore there shouldn't be a shortage of potential vendors from the region for the vendor fair next week. In fact, the Henry's Farmers Market stores in Southern California already carry products from numerous Northern California-based companies, large and small, so many are already familiar with the Henry's format and stores.

Additionally, as we mentioned in our May 8 piece, Henry's Farmers Market is establishing a regional produce hub in Northern California, which will allow it to procure locally-grown produce and other foods to distribute to its first store and to the numerous other units it plans to open in the region.

Job fair

Henry's is following up next week's vendor fair with a job fair to collect applications in preparation for hiring employees to staff the Elk Grove store for its August opening. The job fair will also be at the Hilton Garden Inn and will run from 10 a.m. -to- 4 p.m. on June 22 through June 24, according to Little. Henry's says itplans on hiring about 100 employees for the store.

Going local: Fresh produce and more

Henry's local focus will go over very well in the Sacramento market. The region's two leading grocers (by market share), Sacramento-based Raley's (number one) and Modesto-based Save Mart Supermarkets, both put a major focus on selling locally-grown and produced food and grocery items, identifying the items as "local" with shelf signs in-store and promoting their respective local foods positioning in their weekly advertising circulars, and in radio, television and print advertisements.

Raley's operates under three banners in the Sacramento metro market, which El Grove is part of: Raley's and Bel-Air (supermarkets); and Food Source, a discount warehouse format. Save Mart operates its Lucky banner supermarkets in the Sacramento region, along with it's FoodMaxx discount warehouse stores.

Both chains are privately-held. Save Mart has 250 stores under the Save Mart, Lucky and FoodMaxx banners, with annual sales of about $6 billion. In addition to the three banners mentioned above, Raley's also operates supermarkets in the San Francisco Bay Area and southern coastal region of Northern California under the Nob Hill Foods name. Raley's has 139 stores and annual sales of about $3.4 billion.

The farmers market format

Similar to Sprouts Farmers Market, which opened its first Northern California store in the Bay Area city of Sunnyvale on June 2, Henry's puts a major focus on fresh produce in its stores, devoting about 25% of the store's selling area to the category. And like Sprouts, produce contributes a significant percentage of overall store sales for Henry's Farmers Market.

Further similar to Sprouts Farmers Market, Henry's format focuses on natural and organic products, but also sells a limited assortment of conventional food and grocery brands and items.

Henry's Farmers Market stores also have bulk foods departments, like Sprouts, and the fresh meat departments, like at Sprouts Farmers Market stores, in many cases have both full-service and self-service merchandising cases. Both Sprouts and Henry's grind their hamburger fresh in the stores rather than buying it factory pre-packaged and having it shipped to the stores, for example, stressing the "fresh" focus.

Lastly, like Sprouts Farmers Market, Henry's sells vitamins and nutritional supplements, non-foods items and fresh, prepared foods.

It's no accident the two chains have similar formats since Henry's was founded by the Boney family, members of which founded Sprouts Farmers Market in 2002. The family sold Henry's Farmers Market to Wild Oats many years ago. Wild Oats operated the chain for over a decade. When Whole Foods Market, Inc. acquired Wild Oats in 2008, it sold Henry's to Smart & Final because the store format didn't fit with its merchandising focus and strategic plans. Selling Henry's to Smart & Final also allowed Whole Foods to generate a nice chunk of cash to apply to the Wild Oats acquisition.

Henry's Farmers Market and Sprouts Farmers Market also have another thing in common when it comes to Northern California: Both grocers plan numerous additional stores in the region.

Tesco's Fresh & Easy Neighborhood Market has 19 confirmed future store locations in the Sacramento-Vacaville Metropolitan region. Fresh & Easy first announced those stores over two years ago. The fresh food and grocery chain originally planned to open the stores no later than early 2009. However, it's postponed its launch into Northern California indefinitely, as we've reported on and written extensively about in Fresh & Easy Buzz. [April 19, 2010: Tesco Debating Whether to Launch Fresh & Easy Into Northern California This Fiscal Year... or Wait

Fresh & Easy's officially stated reason for not yet opening any stores in Northern California (the grocer also has 18 confirmed stores in the San Francisco Bay Area) is because it has decided to wait until the economy improves before starting to open some of the stores in the region.

The economy has and is improving in Northern California. And although it isn't yet perfect, it's apparently good enough for Sprouts Farmers Market and Smart & Final's Henry's Farmers Market to feel confident enough to enter the market, Sprouts already opening its first store, and Henry's set top open its first Northern California unit just two months from now.

Related stories in our 2010 Northern California Special Report

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

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

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

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

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

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

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

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

Large farmers market-style produce departments are a key feature of the Sprouts Farmers Market format. The stores also offer a full-selection of natural and organic groceries and a limited assortment of conventional brands, along with fresh meats, perishables, deli and fresh-prepared foods, non-foods, bulk foods, and vitamin-nutritional supplements departments. The produce departments, which offer about 500 items in the summer and about 350 in winter, on average contribute about 20%-25% of overall store sales (Suggestion: Double-click on the photograph to enlarge so you can see the full extent of the produce department.)

Northern California Market Special Report

Arizona-based grocery chain Sprouts Farmers Market opened its first store in Northern California on Wednesday, June 2 at 111 E. El Camino Real in the south Bay Area city of Sunnyvale, which is in the heart of the famed Silicon Valley, and not far from San Jose.

In addition to being family-owned Sprouts' first store in Northern California, the Sunnyvale market is the chain's 50th store. Along with the new store there currently are 13 Sprouts Farmers market locations in Southern California and 36 more units located in Arizona, Colorado and Texas.

Sprouts Farmers Market was founded in 2002 by members of the Boney family, who are also the founders of the Henry's Farmers Market chain, which today is owned by Southern California-based Smart & Final. Henry's was named after family patriarch Henry Boney.

The 30,865 square-foot Sunnyvale store is in an old Circuit City store building, which Sprouts renovated from stem-to-stern.

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

The June 2 grand opening found at least 200 shoppers waiting in line at 7 a.m, about an hour before the store manager turned the key in the lock and opened the Sunnyvale store's doors. But the wait wasn't all that bad for the grand opening day customers: Sprout's staff treated the group to a free breakfast of muffins, along with providing coffee, orange juice, milk and bottled water, while they waited in line.

Among the numerous grand opening day events on June 2 at the first Northern California Sprouts Farmers Market store were:

>The One Big 5-day sale: Numerous grocery items were sold for $1, $2 and $5; about half off the regular prices.
>All customers purchases were bagged in free, reusable Sprouts Farmers Market grocery bags.
>The store held raffles for free grocery carts full of food and groceries throughout the day.

The store, which hired about 100 workers, also offered scores of hot grand opening specials, ranging from a dozen organic, cage-free eggs for $1.99 and 64 ounce bottles of apple juice for $1.00, to avocados for 49 cents each. Sprouts also sent out an advertising circular prior to the store opening in which it offered these and a number of other items for free with a coupon.

And today, the store is holding what its calling a "cheesy event": From 9 a.m. -to- 5 p.m. Sarah "The Cheese Lady" Kaufmann will carve a "50 store" theme into a 300 pound wheel of chipotle cheddar cheese to celebrate the Sunnyvale store being Sprouts' 50th market.

In introducing the grocer to Sunnyvale residents, president and coo Doug Sanders said: "Sprouts, with its playful setting and high quality fresh foods, is a great addition to the fun, active community that has been dubbed the "happiest place in America." We are thrilled to open this landmark market - our 50th and first in Northern California - in the city of Sunnyvale and provide local residents with high quality, affordable foods. We welcome new friends from all over the area to come out and enjoy our low prices on great-tasting healthy and natural foods... a perfect fit for this progressive community."

As part of its entry into Northern California and the Bay Area, Sprouts, which puts a big focus on locally-grown and produced fresh produce and other foods in its stores, has created a partnership with Full Circle Farm, an 11-acre sustainable farm located just three miles from the Sunnyvale Sprouts Farmers Market store. Sprouts' president Sanders says the grocer will be helping to raise funds for the non-profit farm, and will help it to develop agricultural-based curricular programs targeted toward middle-school students in Sunnyvale and Silicon Valley. The farm also will sell some produce to the store.

To kick off the partnership, Sprouts presented Full Circle Farm with a $2,000 check to help fund a new irrigation project. "We are very pleased to initiate a partnership with Sprouts Farmers Market, and their generous donation will launch a much-needed irrigation system for Full Circle's historic 300-tree fruit orchard," says Rebecca Jepsen, the farm's executive director. This orchard is one of the first to be put back into the Valley of the Heart’s Delight in more than 75 years and provides education on how to live a healthier, more sustainable life."

The south Bay Area region, now famous as the high tech capital of the world and called Silicon Valley for shorthand, was not all that many years ago equally famous for being one of the most productive fruit-growing and packing house regions in the world. For example, it's no accident Apple Computer, which is located next door to Sunnyvale in Cupertino, named many of the streets on its corporate campus using fruit-growing themes. An example is Mariani Avenue, which is named after one of the region's pioneering fruit-growing and packing families. The Mariani fruit brand remains popular today.

Full Circle Farm is a two-year-old non-profit, community-based neighborhood farm located on property owned by the Santa Clara Unified School District right in the heart of Sunnyvale. It's mission is to help promote sustainable agriculture and enable people, especially kids, to reconnect with the natural world, according to executive director Jepsen. They use the farm to put students in charge of the work, responsibility and rewards of growing, harvesting, preparing and eating locally grown foods. Full Circle Farm also oversees Sunnyvale’s one-acre community-based Charles Street Gardens, and hopes to serve as a model for other urban agricultural projects around the country, says Jepsen.

"Sprouts leadership has been looking for ways to fulfill its 'healthy living' mission beyond just the stores, and hopes to work together with Full Circle Farm to develop food and nutrition-based educational materials, as well as more programs to promote and sell locally grown produce," says Sprouts Farmers Market president Sanders.

"This is a golden opportunity for Sprouts to support the very kind of mission our company was created to promote," Sanders says. "Anyone who has ever grown their own food knows what it feels like to get reconnected to the soil. It's important to understand where our food comes from, and to convey that learning and the life lessons that go with it to the young people of Sunnyvale."

As we noted in our May 8 piece, Sprouts Farmers Market is in the process of setting up a regional produce facility in Northern California. This is to allow the grocer to source locally-grown produce (and there's an abundance of it within a less than 200 mile radius of the San Francisco Bay Area) for its Sunnyvale store and the other units it plans to open in the region.

And Sprouts indeed plans many more stores in Northern California, with an initial focus on the San Francisco Bay Area. For example, our commercial real estate sources in the region tell us Sprouts is looking all over the nine-county Bay Area, which has a population of nearly 7 million, for store locations. The grocer also is looking at numerous other vacant Circuit City stores which, like the Sunnyvale store, it can renovate. There a many such vacant stores available in the Bay Area as a result of Circuit City going out of business last year.

Sprouts' Sanders recently said the now 50-store chain had 2009 sales of about $445 million. There were 42 stores at the end of 2009. Projected sales for 2010 are between $620 million and $670 million, according to Sanders, with about 56-58 stores open and operating by the end of the year.

The chain's 2008 sales were $350 million (with just under 40 stores), according to Sanders, which means Sprouts' revenue increased by nearly $100 million over a 12 month period, ending in 2009.

The grocer says it plans to double its store count from 50 to 100 by the end of 2013. A significant number of those new stores will be in Northern California, along with in its existing Southern California, Arizona, Colorado and Texas markets, and perhaps an additional new market or two in the Western U.S. Sprouts, which started with one store and 43 employees in Arizona in 2002, currently employees nearly 4,000 workers.

Related stories in our 2010 Northern California Special Report

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

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

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

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

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

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

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

Tesco's Fresh & Easy Neighborhood Market USA hasn't come close to break-even yet. (The first stores opened in November 2007.) The nearly three-year-old fresh food and grocery chain posted a loss of $253 million for its 2009/10 fiscal year ended February 27, 2010, which is $45 million more than the $208 million loss Tesco reported for Fresh & Easy for its 2008/09 fiscal year. But Fresh & Easy CEO and Tesco plc director Tim Mason (at left) is doing just fine in terms of compensation, thank you: He pocketed $6.188 million (£4.27 million) last year for his efforts, about $3.477 million (£2.4 million) of it as a bonus, according to Tesco.

In fact, only one other member of United Kingdom-based Tesco plc's senior management team, its leader CEO Sir Terry Leahy, carted home more money in salary, bonus and stock last year than did Mr. Mason. CEO Leahy, who's been with Tesco for 31 years and CEO for 13 of those years, took home a combined total of £5.22 million ($7.564 million) for 2009. His salary portion of the total was £1.4 million ($2.028 million), with the rest being in various forms of performance-related pay. Tim Mason was Tesco's second-highest wage earner after CEO Leahy in 2008 as well.

Interestingly, CEO Leahy's 2009 total compensation the previous year was at £5.1 million ($7.390 million) at bit less than he took home this year because he took a pay cut in 2008/09 of £370,000 ($536,167) due to Fresh & Easy's failure to hit certain performance targets. Apparently the fact Fresh & Easy lost $45 million more in fiscal 2009/10 than it did in 2008/09 didn't trigger a pay cut for Leahy this time around. And it certainly didn't for Fresh & Easy CEO Mason, who earned nearly as much total pay as Leahy did for fiscal year 2009/10.

Tim Mason's and Terry Leahy's bonuses come out of a total pool of £24 million ($34,778) allocated by Tesco for its senior executive team, the result of achieving its highest profits in the company's 91-year history for the 2009/10 fiscal year.

Tesco also said it's created a bonus pot of £105 million ($151.777 million), which will be distributed to 216,000 of its employees in the United Kingdom, ranging from store clerks and office staffers to warehouse workers, as part of its annual "Shares in Success" worker bonus program. None of those funds go to employees of Tesco's U.S. Fresh & Easy chain. Tesco hasn't disclosed, and we haven't verified one way or the other, if Fresh & Easy workers are receiving a similar bonus.

Tim Mason has worked for Tesco since 1982. Mason, who is the the son-in-law of Lord MacLaurin, the former chief executive of Tesco who groomed Sir Terry Leahy for his current CEO position, started out with the retailer as a dry grocery category buyer, moving into the marketing department after two or three years. There he learned the Tesco marketing ropes working alongside then marketing director Leahy. In 1995 he became marketing director of Tesco in the United Kingdom. Before coming to California to launch Fresh & Easy in 2006, Tim Mason also was chairman of Tesco's online operations, Tesco.com, which as marketing director he played a major part in creating.

Succeed or fail, from a compensation standpoint Fresh & Easy Neighborhood Market is a win-win for CEO Tim Mason. His total compensation, including bonus, is based on Tesco's overall performance. In addition, since he is a corporate director of Tesco plc, along with being the CEO of its U.S. operation, he gets stock options based not on Fresh & Easy's performance but on that of Tesco as a whole.

Of course if Fresh & Easy Neighborhood Market does succeed in terms of hitting certain performance standards, both CEO Mason and Tesco plc CEO Leahy stand to win big. For example, according to Tesco, Leahy and Mason are entitled to nearly 50 per cent of their respective salaries in deferred company stock if Fresh & Easy hits certain performance targets over a given period of time. From a purely compensation standpoint that's the definition of success for Mason and Sir Terry at Fresh & Easy. According to Tesco, CEO Leahy was awarded 65 per cent of the potential maximum number of those shares as part of his annual bonus this year. It didn't say if Mason was awarded any of his shares as part of his bonus for the 2009/10 fiscal year.

That's the big win. But taking home $6,188 million as the head of a grocery chain that's lost nearly half a billion dollars in the last two years isn't bad either. In fact, it's nice work if you can get it, albeit at times it's probably a bit challenging and frustrating. Perhaps there's some sort of start up-oriented incentive pay built into that $6.188 million? And, in these times, like Tesco's famous slogan says: "Every Little (Bit) Helps."

Fresh & Easy Neighborhood Market Teams Up With The Los Angeles Dodgers in 'Game & Grill Sweepstakes' Promo

Promotional Merchandising

Tesco's Fresh & Easy Neighborhood Market has teamed up with the Los Angeles Dodgers Major League Baseball team in what's being billed as a 'Game & Grill Sweepstakes' summer grilling season promotion, which kicks off today.

Shoppers can enter the sweepstakes portion of the promotion [click here] for a chance to win four Dugout Club-level tickets to a Dodgers game. Those are excellent seats, by the way.

In addition, the winner gets all the free food they can eat while watching the game, according to Tesco's Fresh & Easy. Based on the quantity of food and drink some fans put away while watching a Dodgers game, that could be a big bill for the grocer.

The second, third and fourth place winners in the sweepstakes each also get a prize: A $50 Fresh & Easy Neighborhood Market Gift Card.

Here's how Fresh & Easy Neighborhood Market positions the promotion and sweepstakes, which is featured on the Los Angeles Dodgers' team website:

"Tasty grilled food and exciting baseball. It's a classic summertime combination and it's why fresh&easy and the Los Angeles Dodgers have teamed up for an incredible sweepstakes. After all, what could be better than enjoying delicious food while watching the game from some of the best seats in the park? Just enter the sweepstakes below and you could win tickets to the Dugout Club and all the food you can eat while you're there! fresh&easy has low prices on everything you need for grilling all season long. From their Grill Pack to a wide selection of snacks and drinks, they make game day grilling simple. Find your nearest store at freshandeasy.com."

Along with the sweepstakes, Fresh & Easy is featuring a number of its fresh & easy store brand fresh meat, side dish and beverage items at special prices on the Dodgers' website as part of the promotion. We give Tesco's Fresh & Easy bonus points for including the tie-in, something we regularly preach grocers should do. You can view the items here.

Partnering with the Dodgers on the grilling season promotion and sweepstakes is a good idea for Fresh & Easy Neighborhood Market, in our analysis and opinion: It gives the grocer a strong third-party endorsement from a popular Southern California institution - the Dodgers; ties the grocery chain in with America's pastime - baseball (not a bad idea for a British grocer); and comes at a good time - the official start of summer grilling season. Americans grill about five times more than average from Memorial Day until the end of August, for example.

The promotion with the Dodgers also comes shortly after Fresh & Easy's introduction of a new line of eight value-added fresh meat grill packs. Read our recent story - May 16, 2010: Two Grocers, Fresh & Easy and Raley's Offer Two Very Different Approaches to Ready-to-Grill Fresh Meat Merchandising. The Dodgers' promotion is good timing as a way to hang a lantern on the introduction of the new grill pack items.

Fresh & Easy Neighborhood Market also is kicking off a series of free store-level grilling events featuring Bigmista's Barbeque, which is owned and operated by the husband-and-wife team of Neil and Phyllis Strawder. The new grill pack items will be featured at the in-store grilling events.

The first 'Bigmista' grilling event is tomorrow (June 4) from 5 -to- 7 p.m at the Fresh & Easy store at 4211 Eagle Rock Blvd in Los Angeles, California. In addition to free grilling tips - and free bbq - from grill master Neil Strawder, Fresh & Easy is giving out free reusable canvas shopping bags to the first 150 customers in attendance at the store in Los Angeles' Glassell Park neighborhood.

Fresh & Easy Buzz has suggested for a couple years now that Tesco's Fresh & Easy Neighborhood Market needs to do these types of promotions, which tie in store-level merchandising activity with third party promotional partnerships, on a regular, organized basis. We haven't seen much of it until just recently though.

But in a positive sign this promotion comes right on the heels of an in-store and weekly advertising flyer promotional tie-in Fresh & Easy just finished in partnership with the consumer packaged goods company Unilever and the non-profit organization Operation Homefront, which serves as a lifeline for America's wounded warriors and their families. Read our May 11, 2010 piece - May 11, 2010: Fresh & Easy Neighborhood Market Promotion Benefits America's Wounded Warriors. (The grocer ended up extending the promotion to June 1 so that it would overlap Memorial Day, by the way.)

As a result, perhaps Tesco's Fresh & Easy has seen the logic of our suggestion. The reason such promotions can and generally are powerful is not only do they create extensive awareness for a grocer - if promoted properly - but they also partner the grocer with a third party - such as Operation Homefront and the Dodgers in these two examples - which allows a retailer to leverage the good will and other positive attributes of the third parties onto its brand image.

Additionally, such promotions are good because they extend a grocer out into its community and the larger world - the world where customers and potential customers live. Doing so humanizes a grocer, makes it a stronger part of the community, and ties it in to where we all live and breath.

Such promotions must be regular though, not just sporadic. They need to part of a comprehensive, overall promotional merchandising strategy that's part of and tied-in to a grocery chain's marketing strategy.

New grocers on the block like Fresh & Easy Neighborhood Market need to create excitement regardless of the size of their parent company. Tesco may be the third or fourth largest retailer in the world but in California, Nevada and Arizona Fresh & Easy is just another grocer; and a young one at that.

Creating excitement through old fashion promotional merchandising like the Los Angeles Dodgers and in-store grilling event tie-in promotion is one way Fresh & Easy can create real excitement around its brand and stores - the type of excitement that sells groceries, not just grabs headlines.

No New Fresh & Easy Neighborhood Market Stores Likely This Month

Tesco's Fresh & Easy Neighborhood Market has yet to announce if it plans to open any new stores this month, June, 2010.

Fresh & Easy generally announces its new store openings at least three weeks prior to the opening dates. The lead time is needed to prepare for the store grand openings and to create awareness among shoppers via the media that a new store is set to open. In addition, the grocer seldom if ever opens new stores during the last week of a month. Therefore, unless its just merely late in announcing any June openings, it appears the grocer won't be opening any new stores in June, as was the case in May. [See - May 1, 2010: No New Fresh & Easy Neighborhood Market Stores Set to Open This Month]

There are 159 Fresh & Easy stores open and operating in the following market regions: Southern California, as far south as near the Mexican border; California's Central Valley (the Bakersfield and Fresno Metro regions); Metropolitan Las Vegas, Nevada; and Metro Phoenix, Arizona.

Tesco's Fresh & Easy Neighborhood Market started calendar year 2010 off with a new store opening bang: It opened 11 new stores in April; three new Fresh & Easy units in March [March 7, 2010: Three New Fresh & Easy Stores Opening This Month; First Opening March 10 in Palm Springs, California]; nine in February [January 27, 2010: February New Store Opening 'Big Bang' For Tesco's Fresh & Easy; Nine New Stores So Far]; and five new stores in January, for a total of 28 new stores opened in the first four months of the 2010 calendar year.

In addition, for those readers with a fiscal year bent, Tesco's fiscal 2010-11 year began on February 28, 2010. Thus far in fiscal 2010/11 it's opened 14 (11 in April and three in March) new Fresh & Easy stores. The nine new stores in February were all opened before the February 27, 2010 end date for Tesco's 2009-10 fiscal year.

June is generally a good month for opening new grocery stores. School is getting out, which means moms stock up on additional food and related groceries. It's also still too early for most people to take their summer vacations and therefore, combined with the end of the school year. can be a smart time for grocers to open new stores.

One wonders why Tesco's Fresh & Easy would rush to open 11 new stores in April, then not open any in May, and likely none in June? Perhaps something big in brewing at Fresh & Easy Neighborhood Market corporate headquarters in El Segundo, California? Stay tuned.

Fresh & Easy Buzz Linkage - Recent, Related Posts:

May 1, 2010: No New Fresh & Easy Neighborhood Market Stores Set to Open This Month

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

April 20, 2010: Strong Group Revenue & Profit For Tesco... But $253 Million Loss at Fresh & Easy

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

April 19, 2010: Tesco Reports Fiscal 2009 Results on Tuesday, April 20; Estimated $250-$259 Million Loss For Fresh & Easy

March 30, 2010: Tesco Set to Open 11 New Fresh & Easy Neighborhood Market Stores in April

March 29, 2010: Tesco's Fresh & Easy Set to Hit 150-Plus Store-Count Mark on April 7

March 16, 2010: A New Fresh & Easy Store Opens in Las Vegas Tomorrow on St. Patrick's Day; Will Tesco CEO Sir Terry Leahy's Proud Irish Eyes Be Smiling?

March 7, 2010: Three New Fresh & Easy Stores Opening This Month; First Opening March 10 in Palm Springs, California

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

February 23, 2010: Food Deserts & WIC Vouchers: Half A Loaf For the New Fresh & Easy Store Opening Tomorrow in South Los Angeles and April 22, 2010: Breaking Buzz: Tesco's Fresh & Easy to Accept WIC Vouchers at its East Adams Store in South Los AngelesBreaking Buzz: Tesco's Fresh & Easy to Accept WIC Vouchers at its East Adams Store in South Los Angeles

January 27, 2010: February New Store Opening 'Big Bang' For Tesco's Fresh & Easy; Nine New Stores So Far

January 14, 2010: UFCW Union Launches Informal Boycott of Fresno CA Fresh & Easy Stores Today; One Day After the Stores Open

April 13, 2009: Despite Postponing its Northern California Launch Again Earlier This Year Tesco's Fresh & Easy Planning Third San Francisco Store; First Stockton Unit