Mid-Week Natural~Specialty Foods Roundup

Wal-Mart Thinks Small:

New Upscale Convenience, Health & Wellness Formats in the Works

Mega-retailer Wal-Mart Stores, Inc.has a team of executives in the San Francisco Bay Area developing plans for two new smaller format stores the global retailer hopes to begin opening in California by February of 2008, according to a story in the Wall Street Journal. NSFM confirmed this with Bay Area trade sources.

One store prototype is an urban, upscale convenience store, very similar to the Fresh & Easy Neighborhood Markets stores British retail giant Tesco is building in the U.S., starting first in California. The new Wal-Mart stores are said to be less than a tenth of the size of Wal-Mart's normal supercenter stores, according to the Wall Street Journal report. The focus of the format is upscale, offering specialty groceries and beverages, prepared foods, and other offerings geared more towards affluent shoppers.

The second store prototype is a similar size store with a format focused on health and wellness products and providing health services. This makes sense for Wal-Mart as the've been opening walk-in health centers in some of their supercenter stores, and reported success with the concept thus far. The offering of health and wellness products also fits Wal-Mart as the chain has been putting increased emphasis on wellness products, organic foods, green merchandising and related areas in the last year.

These smaller footprint, focused-format stores also could provide Wal-Mart with two models which will allow them to do more business in urban areas like San Francisco and other large, dense American cities, as well as urban suburbs. The formats also won't likely be objected to in places like California where many cities have passed laws preventing the mega-retailer's supercenter stores from being built.

The upscale convenience-type store seems a direct response to Tesco's entry into the U.S. with its Fresh & Easy format. The Fresh & Easy stores are about 10,000 square-feet and will have an upscale design, and offer specialty foods, extensive upscale prepared foods, natural products, and other goods not normally found in a traditional U.S. convenience store.

Wal-Mart and Tesco are serious global competitors and Wal-Mart doesn't want Tesco to grab a significant grocery sales market share in the U.S. One retail industry financial analyst, David McCarthy of Citigroup, has said he believes Tesco could have 500 U.S. stores with sales of $5 billion by 2010. Wal-Mart wants that additional $5 billion in sales rather than giving it to Tesco.

The Wall Street Journal reports that David Wild, Wal-Mart's senior vice president of new business development, is leading the new store/format initiative. A Wal-Mart spokesman told the Journal, and NSFM, that the company had no specific comments on the initiative at this time.

Bay Area trade sources tell NSFM the're aware of Wal-Mart's activity in the area but have few if any specifics. They did say the've heard Wal-Mart has been scouting locations in San Francisco for the urban, upscale convenience format. Further, they say the chain also is looking at some affluent Bay Area suburban cities for both formats. One trade observer said he's heard Wal-Mart also is looking at potential locations in Southern California for both of the formats. This would make since, especially for the upscale convenience grocery format, because Southern California is where Tesco plans to open its first Fresh & Easy stores in October or November of this year.

More Retailer News You Can Use

A Citigroup Inc. supermarket industry analyst says Safeway Stores, Inc. is poised for growth as food inflation moderates, their upgraded "Lifestyle" stores continue to gain traction with customers and plans are put into place to debut a "mystery growth business." More information is available in this August 20, 2007 Associated Press story. http://www.forbes.com/feeds/ap/2007/08/20/ap4036181.html

Safeway's upscale "Lifestyle" format has been paying dividends for the chain since they rolled it out a couple

years ago. The retailer continues to remodel existing stores using the upscale "Lifestyle" format, and most new store built are "Lifestyle" stores.

The Safeway "Lifestyle" format features large, upscale stores of at least 55,000 square-feet and often larger in the case of new stores. The stores have an upscale, almost gourmet, look to them with features like wood flooring in the wine sections, attractive fixtures and market-style high end produce departments. The stores also feature full-service meat and fish departments in addition to self-service. They have extensive in-store upscale prepared food programs and bakery and often in-store restaurants in the newer stores.

The "Lifestyle" stores merchandise an expanded selection of natural, organic, specialty, gourmet and ethnic grocery products as well. Many have distinct natural and international foods departments designed to look like stores-within-the store. Close to half of Safeway's total stores have been converted to the "Lifestyle" format.

Safeway's in-house specialty and natural foods program also continues to grow, fueled in large part by the "Lifestyle" format as well as consumer demand, and the chain's desire to compete with supernatural retailer Whole Foods Markets, Inc. in the natural and specialty foods categories. Safeway continues to expand it's offerings of specialty, gourmet, ethnic and natural/organic groceries, creating additional room in its new "Lifestyle" stores for products from these categories.

NSFM is currently looking into Safeway's new "mystery business" and hopes to have something to report on it soon.

United Kingdom (UK) food retailer the Co-operative Group is planning to introduce electronic shelf labels in their stores that offer customers more data than just price information. The plan would allow shoppers to access information from these "smart" shelf tags such as the origin of the food product, nutritional information and other product attributes, by using electronic key fobs or their mobile phones. This story in the UK online publication Vnunet.com provides addition information on the Co-op retailer's plans and the technology behind the"smart"shelf tags: http://www.vnunet.com/computing/news/2197202/op-shoppers-line-smart-shelf-3420731

The Co-operative Group is the world's largest consumer cooperative. It has sales of over 9 billion (British Pounds), 4.5 million members and 87,500 employees. The Co-operative Group operates 4,500 trading (retail) outlets throughout the U.K. These include food stores, pharmacies, travel agencies, funeral homes, banks, insurance agencies and legal service offices. More specific information about the Co-op's food retailing business, philosophy and merchandising methods is available here

Looking to further strengthen its green credentials UK-based mega-retailer Tesco recently announced plans to label every product in the chain's UK stores with "carbon labels." "The idea is that you can compare the carbon footprint of a product just as you would compare nutrition or price," says Sir Terry Leahy, Tesco CEO.

Tesco has hired the Oxford University Centre for the Environment to collate the information required to carbon label the 70,000 products stocked in a typical Tesco store. This is a massive job and there are technological hurdles to jump over in order to make such a scheme happen. Tesco doesn't know when it will be ready to introduce the green carbon labels but Sir Terry says the chain is committed to doing so as soon as possible.

Sir Terry sights the fact that Tesco has paid the Oxford University Centre 5 million British Pounds thus far as evidence of the retailer's commitment to the carbon labeling program. This story in the UK publication Vnunet.com provides further information on the Tesco carbon labeling program and some of the technology behind it. http://www.vnunet.com/information-world-review/features/2193919/digging-tesco-green-label

Specialty Foods & Beverages Roundup:

Ann Haigh of the Pittsburgh Tribune-Review visted last month's huge Fancy Food Show in New York City. In today's edition of the paper (August, 22, 2007) she has a piece called "High Fashion Foods" in which she spotlights a few of the thousands of specialty, ethnic, gourmet and natural foods items displayed at the show sponsored by the National Association For the Specialty Food Trade. This year's Fancy Food show at the Javits Center in New York City featured 2,300 exhibitors from 72 countries. her article, "High Fashion Foods," is here: http://www.pittsburghlive.com/x/pittsburghtrib/living/fooddrink/s_523295.html

Premium/specialty coffee market...Conventional coffee marketers are having a difficult time maintaining market share with brands like Folgers and Maxwell house do to the increasing consumer demand for premium brand coffees like Starbucks and other brands produced and marketed by smaller coffee roasting companies. Supermarkets are increasingly making more room on their store shelves for these premium brands, grinds and varieties.

As one way to play in this premium coffee market consumer products giant Proctor & Gamble has partnered with Dunkin' Donuts to market Dunkin' Donuts brand coffee in supermarkets, mass merchandise stores and other retail formats. P&G and Dunkin' Donuts say they have lined up at least 40,000 retail outlets to carry the premium brand of coffee. Retailers include Wal-Mart, Kroger, CVS Pharmacies, Target Stores, Rite Aid Corp., Safeway Stores, Inc, Albertson's LLC., A&P Supermarkets, and many other large retail companies.

You can read more about the partnership and their retail marketing plans in this Aug., 13, 2007 Associated Press story: http://www.forbes.com/feeds/ap/2007/08/13/ap4011808.html

Specialty/craft beer market...The fastest growing segement of the beer market is comprised of specialty or craft beers. The National Beer Wholesalers Association reports that for the first time ever these specialty beer brands captured more than a 5 percent share of total beer sales during the first half of 2007. Specialty/craft beer sales volume increased by 11 percent during this period, and dollar growth increased by 14 percent. There are currently 1,400 specialty or craft brewers in the U.S., according to the group. "The soaring sales of craft/specialty beers show how much American's of legal drinking age are taking advantage of a wide selection of flavors and variety of beer brands available to them", says Craig Purser, the associations President.

Specialty Foods Retailer Dubious Acheivement Award...Jungle Jim's International Foods, a specialty foods retailer in Farfield, Ohio, has been awarded an honor most retailers would never even think of. Cintas Corp., a provider of institutional restroom hygiene products and services, has given Jungle Jim's it 2007 Best Restroom Award. Accepting the award Jim Bonaminio, the store's owner, said "it's about putting smiles on peoples faces. People get a big kick out of these," refering to the store's 10-stall restroom decorated with a jungle motif. The entrance to the restroom has doors that look like portable toilets. But once inside it's a veritable jungle.

You can read more about Jungle Jim's restrooms--and even take a virtual visual tour of the award winning water closet-- by viewing this short article in today's (Aug., 22, 2007) Dayton Daily News newspaper. The virtual tour is included. Just click where it says Photos: "Take a virtual tour of the restrooms at Jungle Jim's." http://www.daytondailynews.com/n/content/oh/story/news/business/2007/08/22/fe082107junglesjohnsweb.html

Stew Leonard's and ranchers go naked...for beef...Stew Leonard's, an innovative independent grocer with 4 stores--3 in Connecticut and one in Yonkers, New York--is holding a Labor Day weekend meat promotion featuring the ranchers who raise the cattle for the retailer's new "Naked Beef" program. The ranchers will grill the beef, offer cooking and recipe tips and talk with shoppers about how they raise and process the cattle for the new beef line which goes on sale this week at the 4 Stew Leonard's stores.

It's called "Naked Beef" because it comes from 100 percent Black Angus cattle that have been given no hormones, antibiotics, or steroids--and are fed only grass and grain, according to the independent grocer.

The retailer also offers a "Naked Chicken" line which was introduced last year. The chickens are not given hormones, antibiodics or steroids, and are fed a special natural feed formulation.

The "Naked Beef" promotion feeds into a number of current consumer hot buttons. The all-natural aspect of the beef line (no antibiotics, hormones or steroids) fits with consumers desiring more natural and healthy foods. Having the ranchers on-hand to talk with shoppers and tell their story fits well into the "food origin" movement in which consumers desire to know where their foods come from, who produces them and how they are produced.

Stew Leonard's said it's staff also taste-tested the beef against numerous other brands and found it to be the best of the bunch. Good taste is also a consumer preference, and many consumers are willing to pay a premium for beef from cattle raised naturally that also tastes superior to beef from conventionally raised cattle. It's the growing "good for you and tastes good too" trend.