West Coast Bound - Aldi USA Headed to Southern California; First Stores to Open in 2013

Discount grocery chain Aldi USA is headed to Southern California in a big way -- and soon.

The hard-discount grocer, which is headquartered in Germany and has its U.S. corporate office in Illinois, will set up shop in Southern California in the coming months, with plans to open its first stores in the region in nine months to a year, Fresh & Easy Buzz has learned.

Aldi plans to open about 100 stores on the west coast during its first two years (starting in 2013) of operation, according to our sources who are familiar with the grocery chain's plans.

Aldi also has longer-term plans in the west, following those first stores in Southern California, to eventually open its small-format (about 10,000 square-foot) grocery markets throughout California and in other nearby western states, including Nevada, Arizona and others, according to our sources.

Aldi USA currently plans to build and open a distribution center in Riverside County, California, where Tesco has its 850,000 square-foot facility for its 190-plus-store Fresh & Easy Neighborhood Market chain, to serve its stores in Southern California and elsewhere on the west coast. Construction of the distribution facility is set to begin soon, according to our sources.

As part of its plans to open its first stores in Southern California in nine months to one year, Aldi USA is currently looking for a buying director and buying manager, both of which will be based in the region.

Aldi representatives are interviewing candidates for the positions tomorrow and Wednesday in Southern California. Once hired, the buying managers will move to Chicago for an eight month training period, where they will be trained at Aldi's corporate office and in its stores in the region. They, along with numerous other regional employees, will then be based in Aldi's west coast offices in Southern California.

The buyer manager candidates being interviewed this week have been selected for Aldi by an executive search firm, Reaction Search International.

In addition to the key buying/merchandising positions, Aldi USA will soon be hiring for other positions for Southern California and the west coast, ranging from other corporate headquarters functions to the planned distribution center in Riverside, and for the stores.

The arrival of Aldi in Southern California will be a major game-changer in the region, as has been the case in each market the discount grocer has entered in the U.S., which includes the Midwest, South, Mid-Atlantic, eastern and Southwest (Texas) regions in the U.S. Aldi currently has about 1,300 stores in the U.S.

Aldi, which is privately-held and keeps such developments very close to the vest, has not announced its upcoming plans for Southern California and the west coast, not is it confirming our report. But our information comes from multiple sources, all in positions to know the details reported on in this piece.

More to come...

Fresh & Easy Buzz will be on hiatus from May 3-June 1, 2012.

Reshuffling at the Top at Tesco: Retail Chief Adams Leaving Fresh & Easy For Turkey; China CEO Ashdown to Replace Him; Richie to Head China Operations

Jeff Adams, Fresh & Easy Neighborhood Market's top retail operations executive, is leaving the El Segundo, California-based grocery chain to become CEO of Tesco Kipa in Turkey, Fresh & Easy Buzz has learned.
He will be moving to Izmir, Turkey, where Tesco Kipa is based, later this month.

Adams is being replaced at Fresh & Easy by Tim Ashdown, a 31-year Tesco veteran.

Ashdown has held a variety of international positions at Tesco. Currently he's CEO of Tesco's operations in China. Before taking over in China, Ashdown was chief operating officer of Tesco-Homeplus in Korea. Prior to that was operations director at Tesco's global headquarters in the UK.

Paul Ritchie is replacing Tim Ashton as CEO of Tesco China.

Richie joined Tesco in 1980. He's been CEO of Tesco Kipa in Turkey for three years. Prior to that position he was head of development for the retailer's Tesco Express stores and business in the UK. Trevor Masters, Tesco's CEO for Asia, is also going to be spending more time in China, which is a key growth market for Tesco, Clarke said in the internal e-mail to company employees.

The changes involving Adams' move from Fresh & Easy to Tesco Kipa, along with those involving Ashdown and Richie were announced today by Tesco CEO Philip Clarke in an internal memo to company employees. Neither Tesco or its Fresh & Easy chain have publicly announced the leadership changes.

A Tesco source familiar with the reasons behind the move says it in part has to do with a desire by CEO Philip Clarke to bring in somebody new at Fresh & Easy who the believes has a strong operational focus and isn't afraid to "crack the whip" on store operations.

Shortly after he became CEO of Tesco in March 2011, Clarke, who ran Tesco's operations in Asia and Europe - Ashdown reported to Clarke at that time - announced that the United Kingdom-based retailer would break even with Fresh & Easy by February 2013. But when Tesco reported a $245 million loss for Fresh & Easy on April 18, Clarke announced it would instead push-back that date, saying it will now break-even with Fresh & Easy by early 2014.

The $245 million loss at Fresh & Easy Neighborhood Market for Tesco's 2011/12 fiscal year is only an $8 million improvement from the $253 million Tesco lost on Fresh & Easy two years ago. If Clarke's promise that Tesco will break even with Fresh & Easy by early 2014 were to come true, it would mean in just two years the retailer would be able to go from a $245 million loss this year to a zero loss by the end of February 2014.

United Kingdom-based Tesco transferred Jeff Adams, who at the time was the CEO of its Tesco-Lotus division in Thailand, to its then start up El Segundo, California-based Fresh & Easy chain in 2008 to co-direct (co-executive vice president of retail operations) retail operations with Brian Pough, who left Tesco and Fresh & Easy not long after Adams' arrival and currently is a senior retail executive with the Walgreens' drug chain, where he focuses on the food and grocery segment at its corporate hheadquarters in Illinois.

Following Pugh's departure, Adams was put in sole charge of Fresh & Easy's retail operations and given the title of executive vice president of retail operations.

Adams is the second senior executive to leave Tesco-owned Fresh & Easy Neighborhood Market in six months. In early November, Fresh & Easy Buzz broke the news that chief marketing officer Simon Uwins was out at the El Segundo-headquartered grocery chain. Following our scoop, which revealed the changes being made in the marketing department at Fresh & Easy, the grocery chain's spokesperson announced his departure.

Related Stories

September 22, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

May 29, 2008: Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 5

March 12, 200: Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team

November 10, 2011 Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market

Dollar General's California Dream Becoming Reality

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

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

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

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

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

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

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

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

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

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

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

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

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

Distribution center

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

Major growth plans

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

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

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

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

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

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

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

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

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

Good fiscal 2011

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

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

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

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

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

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

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

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

Dollar General's impact

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

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

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

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

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

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

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

Related Stories

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

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

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

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

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

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

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

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

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

Walmart Neighborhood Market in California

We first reported in this July 2010 story [July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store] that Walmart Stores, Inc. was looking for locations in California for its Walmart Neighborhood Market supermarkets, which range in size from about 30,000-45,000 square feet.

To date Walmart has operated its mega-supercenters and discount format stores only in California, many of which it's been converting over the last few years to hybrid supercenters offering food and groceries, but not its Neighborhood Market grocery stores.

We followed our July 2010 report and analysis piece up with other stories, like this one in January 2011 about the Bentonville, Arkansas-based global retailer's plans to launch its Walmart Neighborhood Market format in the Golden State. In the January piece and in others, we reported on specific locations in California where Walmart would be opening its Neighborhood Market stores.

It's been a long reportage road from our first reports in 2010 about the mega-retailer's plans to open Walmart Neighborhood Market supermarkets in California to the present.

But it's been a fruitful journey.

Why? Because Walmart Store's, Inc. has now announced - and in our case confirmed because many of the store locations it's announced are those we already reported on - the first Walmart Neighborhood Market locations it plans to open, beginning this fall, in California.

Inside a Walmart Neighborhood Market supermarket. Photo courtesy Walmart Stores, Inc.

Below are the locations of those 13 (Walmart obviously isn't superstitious) supermarkets, along with all the key data grocery industry wonks and consumers alike like to see.

Walmart has other Neighborhood Market locations already booked in California, a couple of which are mentioned in our previous stories. In addition, the retailer is looking for more sites for its Walmart Neighborhood Market supermarkets throughout California.

We will be writing about Walmart's launch of its Walmart Neighborhood Market supermarkets in California from now until the end of the year, including reporting on some of those additional locations.

We'll be using this header: 'Walmart Neighborhood Market in California,' in those stories.

As of today we expect the first Walmart Neighborhood Market stores in California to open in the October-November time period. One of the first, if not the first unit, will be in Lincoln, California near Sacramento, where Tesco's Fresh & Easy Neighborhood Market opened a store in March 2012.

Walmart Stores, Inc. currently has 168 Neighborhood Market stores in the U.S., with plans to double the store- count over the next couple years. As we've said a number of times in Fresh & Easy Buzz, California will play a major role at Walmart in the growing of that store-count. Stay tuned.

[Read our extensive four-plus years of reporting, analysis and commentary about Walmart Stores, Inc., including its Walmart Neighborhood Market and other smaller format grocery stores at the following links: Wal-Mart, Wal-Mart Stores Inc, Walmart, Walmart Stores.]

The Walmart Neighborhood Market supermarket (an urban version) in Chicago's West Loop Neighborhood, which opened earlier this year. The store is about 31,000 square feet. Photo courtesy blog.chicagoarchitecture.info.

Walmart Neighborhood Market in California

Walmart Neighborhood Market - 13 Confirmed California Store Locations

Confirmation sources: Delia Garcia, Walmart West. Steven Ristivo, Walmart Stores, Inc., senior director of community affairs.

SOUTHERN CALIFORNIA

1. City: Los Angeles
County: Los Angeles
Address: Corner Grand Avenue and Ceasar Chavez Avenue. Downtown, on outskirts of Chinatown.
Square-footage: 33K. Ground floor of senior citizens' residential complex.
Current target opening: Early-to-mid-2013. Construction to begin summer 2012

2. City: Huntington Beach
County: Orange
Address: Corner Beach Boulevard and Atlantic Avenue. Former Rite-Aid drug store building
Square-footage: 31K
Current target opening: August 2012

3. City: Rancho Santa Margarita
County: Orange
Address: 30491 Avenida de Las Flores. Avenida de los Flores and Antonio Parkway
Square-footage: 33K
Current target opening: August 2012

4. City: Camarillo
County: Ventura
Address: Camarillo Town Shopping Center. 275 West Ventura Boulevard. Vacant Linens and Things building
Square-footage: 34-36K
Current target opening: Late 2012

5. City: San Diego
County: San Diego
Address: Logan Heights. Imperial Avenue between 21rst and 22nd Streets, near downtown. In historic former Farmers Market building. Neighborhood is underserved by grocery stores offering fresh food and groceries at affordable prices.
Square-footage: 48,800K
Current target opening: Late 2012/Early 2013

NORTHERN CALIFORNIA

San Francisco Bay Area

6. City: Pleasanton/East Bay
County: Alameda
Address: Meadow Plaza shopping center. 3112 Santa Rita Road. Santa Rita Road and Stoneridge Drive
Former Nob Hill Foods' (Raley's owned) supermarket building. Near Safeway Stores, Inc.'s corporate headquarters. Less than a mile from a Safeway store and a Fresh & Easy market.
Square-footage: 31K
Current targeted opening: Late 2012/Early 2013

7. City: San Ramon/East Bay
County: Contra Costa
Address: Country Club Village Shopping Center. 9100 Alcosta Boulevard. Former Ralphs' supermarket and La Asia supermarket building. Closest competitor: Save Mart-owned Lucky supermarket, less than one mile away.
Square-footage: 33-36K
Current target opening: Fall 2012

8. City: Hayward/East Bay
County: Alameda
Address: 2480 Whipple Road. Former Circuit City building
Square-footage: 33-35K
Current target opening: Late 2012/Early 2013

9. City: San Jose
County: Santa Clara
Address: Westgate Mall. 1600 Saratoga Avenue
Square-footage: 38K. Recently closed Safeway store
Current target opening: Fall 2012

Sacramento Region

10. City: Sacramento
County: Sacramento
Address: Taylor Center. 2700 Marconi Avenue. Marconi Avenue and Fulton Avenue. Former Goore's children's store building. Prior to 1999, when Goore's moved in, was a the American Stores' Inc. Lucky supermarket. Goore's closed in fall 2011.
Square-footage: 32-36K*
Current target opening: Late 2012/Early 2013

11. City: Granite Bay (Roseville border)
County: Placer
Address: Sierra Oaks shopping center. Douglas and Sierra College boulevards. Former Grocery Outlet store, plus additional square-footage attached to the building but previously not used by Grocery Outlet.
Square-footage: 43K
Current target opening: Late 2012-to-early-2013

12. City: Lincoln
County: Placer
Address: Highway 65 and Second Street. Former Rainbow Market building
Square-footage: 31-32K
Current target opening: Fall 2012

13. City: Modesto
County: Stanislaus
Address: Coffee and Orangeburg shopping center. Corner Coffee Road and Orangeburg Avenue. Former Dollar Superstore building (26K sq. ft.. Plus, former Leslie Pool Supply building next door (10K sq. ft.)
Square-footage: 36K.
Current target opening: Late 2012-to-early 2013

Shoppers Can Swap 'Pink Slime'-Laced Ground Beef For 'Slime-Free' At Fresh & Easy

Fresh & Easy's fresh&easy brand ground beef (above) is free of the ammonia-treated filler "pink slime," Photo courtesy of www.ninjashopper.blogspot.com.

'Pink Slime-Free Wednesday' at Tesco's Fresh & Easy - Analysis & Commentary

When the news many U.S. food and grocery retailers sell ground beef laced with the ammonia-treated filler "pink slime" (we've known about it for many years, as have many others with experience in the industry) hit the mass media like a ton of frozen ground chuck last week, we offered grocers some immediate advice via these two tweets on the Fresh & Easy Buzz Twitter feed, on March 17:

>Tweet One, March 17, 2012: #Grocers take note: If you don't sell #hamburger containing #pinkslime, tell the world. Why? It's now a point of competitive advantage.

>Tweet two, March 17, 2012: "The Corollary: if you're a #grocer selling #hamburger containing #pinkslime, drop it. Slime and #food are antithetical in consumers' minds.

Tesco's Fresh & Easy Neighborhood Market, which does not use "pink slime" in its hamburger, is doing just what we said grocers should do in the first tweet above on March 17, which is to tell the world - in Fresh & Easy's case consumers in California, Nevada and Arizona where it has its nearly 190 grocery stores - there's no "pink slime" being used as filler in the ground beef offered for sale in its stores.

And Tesco's Fresh & Easy is "telling the world" it doesn't and has never used "pink slime" in its ground beef in a smart and creative way.

On Wednesday, March 28, Fresh & Easy Neighborhood Market is holding a "Pink Slime Swap Meat" at all its stores. Consumers can bring up two two pounds of fresh or frozen ground beef from another retailer to any Fresh & Easy store and exchange it for a package of fresh&easy (80/20) ground beef at no cost.

As part of the promotion Fresh & Easy is also asking interested customers to use the hashtag #SwapMeat on their Twitter and Facebook sites on Wednesday as part of the "pink slime" ground meat swap out. (80/20 refers to the ratio of lean meat to fat in the ground beef.

According to Tim Mason, CEO of Fresh & Easy, the Tesco owned fresh food and grocery chain "grinds all of its own meat, using only fresh, never frozen beef."

Mason is also inviting customers who have questions about the "pink slime" issue, Fresh & Easy's meats, or any other and Fresh & Easy private brand products to e-mail him at tim@freshandeasy.com, saying in a statement issued just moments ago: "It’s understandable that people would lose confidence in food retailers because of the use of pink slime. Fresh & Easy has never been about shortcuts or fillers - just high-quality fresh food that we produce ourselves, so we know it’s the best."

All the meat sold in the Fresh & Easy stores is cut and ground at the retailer's food and distribution facility in Riverside County, California, where its also packaged. The fresh meats are then shipped to the stores in California, Nevada and Arizona. Unlike most other grocery stores and supermarkets, the Fresh & Easy markets don't have meat departments in-store.

In our March 17 tweet advisory to grocers that don't use "pink slime" in their ground beef, we said touting that fact offers a competitive advantage if done in a timely manner.

The reason this is so is because the "pink slime issue has already a major food safety - not to mention a gastronomical nightmare - with consumers. Like we said on March 17 in our second tweet to grocers that do use "pink slime" in their ground beef: "The Corollary: if you're a #grocer selling #hamburger containing #pinkslime, drop it. Slime and #food are antithetical in consumers' minds." The conflicting concepts are also hard to swallow when it comes to consumers' stomachs.

Most grocers that have been using pink slime are doing just that - stopping the practice and announcing it to the consuming public.

In our analysis Fresh & Easy's "Pink Slime Swap Meat" is a home run on numerous levels.

First, it's a creative yet a simple concept, which are the best kind to communicate to consumers.

Second, and most importantly, it takes advantage of the competitive advantage opportunity not using "pink slime" in ground beef offers grocers like Fresh & Easy, in terms of offering to exchange consumers "pink slime"-laced ground beef for a "pink slime"-free substitute - fresh&easy brand - at one of the grocery chain's stores.

The key potential short-term competitive advantage with this is that it might drive shoppers who've previously never stepped foot into the Fresh & Easy stores into the small-format grocery markets. There's also a branding opportunity for the grocer with its fresh&easy brand in the fresh meat category.

Fresh & Easy's "pink slime"-laced ground beef swap out on Wednesday should draw some attention to the grocery chain in general, and more significantly to the healthier food store position and brand Tesco has been and is attempting to stamp on its Fresh & Easy Neighborhood Market operation. This offers a potential competitive advantage element in the chain's long-term efforts to convince consumers that Fresh & Easy equals healthy, safe and tasty foods.

Free, as in bring in your pink slime ground beef, and get pink slime-free hamburger in return for no charge, is a powerful message and concept, as is the fact the trade out is as easy as meat pie.

Lastly, the creative "pink-slime"-laced ground beef for "pink slime"-free swap out concept has an element of fun to it, which combined with all of the above elements adds power to the event. It's also a good news hook which we are certain the mainstream media will pick up on.

One important caveat though to such promotions: Grocers must be very careful they operate a fully integrated "clean food" operation when they go this route. Why? Because if they don't, they could be caught in a pink slime situation of their own, and having challenged competitors previously with this type of promotion therefore would put them in an extremely vulnerable place should such a thing occur.

We give Tesco's Easy Neighborhood Market high marks across the board - creativity, practical application competitive advantage opportunity, ect., for its ground beef trade out event planned for Wednesday.

Most all grocers who've been using "pink slime" in the ground beef they offer for sale are dropping it. Many have already done so. In our analysis, the rest will do so in the days ahead. After all, what food retailer in its right mind wants to be know as the grocer with the "pink slime"-laced hamburger in its stores?

Therefore, we predict any competitive advantage from the "pink slime" issue will be rather short-lived. Most food retailers are acting rapidly to no longer stock ground beef laced with the garbage. Consumers will forgive, as long as those grocers guarantee their ground beef is now "slime free."

As a result, grocers like Fresh & Easy are wise to strike while the grill is hot because a couple months from now we doubt the topic of "pink slime" will be getting much attention.

California Resident Launches Online Petition to Encourage Repeal of State's Self-Service Checkout Booze Ban Law

News/Analysis

California resident Rich Saavedra today launched an online petition designed to encourage the California State Legislature to repeal AB 183, the law passed by a majority of legislators in both houses last year and signed into law by Governor Jerry Brown, that banned the purchase of alcoholic beverages at self-service checkouts in retail stores in the Golden State.

In the petition, which is posted at thepetitionsite.com (view it here), Saavedra says self-service checkouts, such as those used exclusively at Tesco's Fresh & Easy Neighborhood Market - he doesn't mention Fresh & Easy specifically - have safeguards built-in that prevent minors from being able to purchase alcohol using the checkouts, which is the primary reason supporters of the law gave for enacting AB 183 last year.

Those safeguards in place at Fresh & Easy include the fact the self-service checkout system locks up whenever a customer scans an alcoholic beverage item.

Once the system locks up a store worker comes to the checkout, checks the shopper's identification card - the chain's policy is to do so if the customer looks to be under 40-years-old - and if the shopper is 21, the minimum legal age to buy alcohol in California, the employee then punches a special code into the machine, which allows the checkout process to continue.

Since AB 183 has become law we've observed the store clerks remaining at the checkouts, monitoring the process, or scanning the customer's alcoholic beverage items for them.

Explaining his reason for launching the online petition today, Richard Saavedra says: "Let's send a message to the lawmakers of the state of California that we will not stand for frivolous laws.  They should be concentrating on the bigger decisions that impact the residents of California, like the state budget, and making sure we have enough Police and Firefighters."

So far Saavedra's just-posted online petition has three signatures, including his. He hopes to get at least 10,000 signatures on the petition.

Although AB 183 is law in California, it isn't currently being enforced because the California Grocers Association (CGA), the trade group for food and grocery retailers doing business in California, has filed a lawsuit challenging the enforcement mechanism put forth in a December 23, 2011 advisory memo early this year by the California Alcohol Beverage Control Agency (ABC), which is charged with enforcing the law.

Tesco's Fresh & Easy Neighborhood Market is a member of the state grocers' association.

Mary Kasper, Fresh & Easy's general counsel/corporate secretary and a vice president at the chain, has played a major role in the CGA's filing of the lawsuit.

Kasper's worked with the trade group in the past. For example, prior to joining Tesco's Fresh & Easy she was general council and corporate secretary for Kroger-owned Ralphs' Grocery Company, which is the market share-leading food and grocery retailer in Southern California.

In its lawsuit the grocers' association asked the California Third District Court of Appeals, which is where CGA filed the suit, to halt the ABC's enforcement plan, which the court did, until the lawsuit is resolved.

That halt, and thus the ABC's ability to enforce the self-service checkout alcohol sales ban, which primarily affects Tesco's Fresh & Easy because its the only chain or independent in California that uses a self-serve checkout system only (which it calls assisted checkout because store clerks assist customers if asked), remains in place until the court rules on the lawsuit, which has yet to occur.

Assisted checkout at Tesco's Fresh & Easy.

All of the other grocery chains, independents and other format retailers in California using self-service checkouts and offering alcohol for sale, also offer the option of full-service checkout in their respective stores. AB 183 also applies to the self-checkouts in those stores, meaning customers purchasing alcoholic beverages can't, under the law, self-scan purchases of alcohol at the self-service checkouts.

Fresh & Easy and all other retailers are allowed to continue using the self-service checkouts to sell alcoholic beverages until there's a resolution by the court over the CGA's lawsuit challenging the ABC's enforcement scheme and plans. This is why, for example, if you shop at a Fresh & Easy store in California, you haven't seen any changes in the self-checkout system pertaining to alcohol purchases, even though AB 183 became law January 1, 2012.

Repealing a bill that's been passed into law and signed by the Governor, such as AB 183, is difficult to do in California.

What has to occur from a realistic and politically practical standpoint is that a legislator essentially has to introduce a new bill addressing the issue.

For example, the new bill could be written to once again make it legal for alcohol transactions to be conducted by retailers at self-service checkouts.

Conversely, a member of the legislature could author a new bill that simply modifies aspects of AB 183, such as making it legal to sell alcohol using self-service checkouts as long as a store clerk is present while the customer scans his or her grocery purchases (or does the scanning for the shopper), and that identification is checked prior to allowing the customers to scan the order if it includes alcoholic beverages, for example.

These and/or other provisions could be attached to such a bill, so rather than a full repeal of AB 183 the current law is instead modified, allowing retailers to use self-service checkouts to sell alcohol but placing various conditions on such use.

It's this latter approach that, in our analysis, we believe offers the most politically realistic approach for those in California who want to see the current law changed.

However, since the court is still considering the CGA's lawsuit, it's really a moot point because how AB 183 is enforced, and thus the law itself for all practical terms, is now in the California Third District Court of Appeals' hands.

If the court does rule in the CGA's favor, it's likely the law's author, Assemblywoman Fiona Ma (Democrat-San Francisco), and supporters will move to amend AB 183 so it not only remains as law but makes enforcing it - banning alcohol sales completely at self-service checkouts - by the ABC possible. It is ambiguous language in the original bill that paved the way for the lawsuit in the first place.

There currently remains a solid majority in the Democrat-controlled California State Assembly and California State Senate in support of AB 183. Legislators have been known to change their minds though, with pressure - it's called politics. And this is what Saavedra says in his online petition he hopes getting the 10,000 signatures will help to do - influence members of the legislature to take a second look at the law.

Another approach that could be taken would be to put an initiative on the ballot in California that would repeal the self-service checkout booze ban law using the Golden State's popular voter-initiative process. Such initiatives can be sponsored by trade groups like the CGA, retailers, such as Fresh & Easy, other groups, and state residents (or all combined).

The direct-to-voters initiative process is an approach regularly taken in California - Governor Brown is using it himself for a set of budget and tax proposals that will be on the November 2012 election ballot.

Such an initiative might in fact be the best way to resolve the issue because it would allow California voters, who also are consumers and shoppers at the state's grocery and other retail format stores offering alcoholic beverages for sale, to decide whether or not the adult beverages should or should not be allowed to be purchased at self-service checkouts in California stores.

Related Stories

February 5, 2011: Fresh & Easy Neighborhood Market Testing 'Scan As You Shop' Mobile Self-Checkout System at Burbank Store
January 1, 2011: Fresh & Easy Neighborhood Market Gets A Reprieve of Sorts On California Self-Service Checkout Booze Ban Law

December 29, 2011 piece for details: The 'Fresh & Easy' Writ: California Grocers Association Files Lawsuit Over Self-Service Checkout Booze Ban Law.

December 8, 2011: Bad Timing With New Law Effective January 1, 2012: Fontana, California Fresh & Easy Store Cited For Allegedly Selling Alcohol to Minors

October 10, 2011: Gov. Signs AB 183: End of Self-Service Checkout Only in California For Fresh & Easy Neighborhood Market if Stores to Still Sell Alcohol

September 9, 2011: 'Son of Tesco Fresh & Easy Law': Self-Service Checkout Booze Ban Bill Passes California State Senate; Headed to Governor's Desk For Action

See additional stories and analysis on AB 183 here.