Retail Memo: Breaking News: Tesco's Fresh & Easy Confirms it will Open 18 Stores in San Francisco Bay Area

As our regular readers know, we were one of the first publications to report and write about Tesco's Fresh & Easy Neighborhood Market's plans and strategy to launch a retail invasion into Northern California, with its small-format, convenience-style Fresh & Easy grocery markets.

We can now report that Fresh & Easy Neighborhood Market has formally announced and confirmed 18 "done-deal" store locations in the San Francisco Bay Area region of Northern California.

Those Bay Area store locations are:

San Francisco (2 stores), San Jose (2 stores), Hayward (2 stores) and Antioch (2 stores). Additionally, single-stores will be opened in the Bay Area cities of Oakland, Concord, Walnut Creek, Danville, Oakely,Vallejo and Farfield. These seven cities (and stores) are all located in the East Bay Area.

Further, single Fresh & Easy stores will open in the Bay Area cities of Mountain View, Sunnyvale and Napa. Mountain View and Sunnyvale are just a few miles from San Jose in the South Bay Area; Napa is about 30 miles north of San Francisco in the North Bay Area.

Fresh & Easy also will open four stores in the Sacramento metropolitan region. The grocer has applied with the state of California for liquor licenses for these new stores. Two of the stores are located in Sacramento, the other two in Folsom, which is right next door to Sacramento.

The locations of these stores are:

Sacramento:

>3311 Northgate Blvd.

>3615 Bradshaw Road

Folsom:

>25000 Blue Ravine Road

>9522 Greenback lane

Fresh & Easy Neighborhood Market isn't confirming the four Sacramento region stores at this time.

We identified most if not all of these cities in previous pieces. Additionally, Fresh & Easy is looking for more locations in the Bay Area and elsewhere in Northern California for its grocery stores. Some of those locations are in these same Bay Area cities, others are in other cities in the region.

Additionally, as we reported over a month ago, Fresh & Easy plans to build a distribution center in the Northern Central Valley city of Stockton. Stockton is about 30 miles from Sacramento and about one hour from San Francisco. The location is well situated geographically to serve the retailer's Northern California stores as far north as Napa and as far south as Fresno.

As we've reported before, Fresh & Easy would like to have as many as 40 -to- 50 grocery markets in Northern California by the end of 2009. These first 18, which are far from the only stores the retailer will open in the region, should begin opening in mid-to-late 2008, with many of them not opening until 2009.

Eventually, Fresh & Easy plans to have stores throughout Northern California, primarily in the Bay Area and Central Valley regions. The Bay Area is the grocer's prime target market. These additional new stores would be located as far south in the Central Valley as Bakersfield, which is about half-way between Northern and Southern California, with other potential locations in the Central Valley cities of Merced, Turlock, Modesto, Manteca, Stockton and Tracy. Tracy is only about 15 miles from the most far-eastern Bay Area city, Livermore. (By the way, our commercial real estate sources tell us Livermore is on Fresh & Easy's store location radar, as is nearby Pleasanton and Dublin.)

By focusing primarily on the Bay Area, and secondarily on the Central Valley as we describe above, Fresh & Easy would be able to ring the Bay and the Valley with its small-format grocery stores, which average about 13,000 square feet and feature a selection of reasonably-priced basic, everyday grocery items, a large selection of fresh-prepared foods, fresh meats and produce, and specialty, natural and organic packaged goods. The stores are sort of a neighborhood grocery store meets Trader Joe's in terms of design and format.

The confirmation of the 18 Bay Area stores by Tesco's Fresh & Easy Neighborhood Market will further activate the competitive DNA of such local food retailers as Pleasanton, California-based Safeway Stores, Inc. Safeway already plans to open at least five new, small-format stores of its own in the San Jose region. The stores will be about 20,000 square feet. Based on what we know so far, the new mini-Safeway stores will offer basic grocery items like Fresh & Easy, with a major emphasis on Safeway's private label items, which are hugely-popular in its Bay Area supermarkets.

The new, mini-Safeway's (we haven't learned the actual name yet, although some sources have told us it will be Safeway Express) also will feature a strong selection of fresh, prepared foods, in addition to other offerings.

We will be providing further analysis on the Northern California market and Fresh & Easy's potential to succeed in the region in the next few days.

Fresh & Easy Neighborhood Market Northern California Linkage:

Read a number of recent pieces we've written on Tesco's Fresh & Easy Neighborhood Market and Northern California here.