Thursday, May 15, 2008

Small-Format Food Retailing Special Report: Safeway Opens its First Small-Format 'The Market' Grocery Store today in Long Beach, California

Pleasanton, California-based Safeway Stores, Inc. held the grand opening of the retailer's first small-format grocery store today in Long Beach, in Southern California.

It's the first of a number of the small-format stores, named "The Market," Safeway plans to open in California, and elsewhere in its market regions.

The Long Beach store incorporates the "Vons" logo along with "The Market" store name in text. The idea behind doing that is to create some co-branding credibility for the new format, according to Rojon Hasker, the president of Lifestyle stores and new concepts for Safeway.

As Natural~Specialty Foods Memo was one of the first publications to report last year, Safeway has been working on developing "The Market" small store format since last year.

Frankly we didn't anticipate the first stores to open until at least June, and only learned of the Long Beach store opening on Tuesday. However, since the Long Beach store is in a converted Vons supermarket Safeway already operated, the time-line to getting it renovated and open was faster than anticipated.

The small-format "The Market" grocery store is 15,000 square feet. It contains a selection of basic grocery items, fresh foods and fresh, prepared foods.

As we reported previously, Safeway has owned a restaurant named Citrine in Redwood City in the San Francisco Bay Area for some time. Citrine's full name is "Citrine New World Bistro." The grocer uses the restaurant and its chefs to create fresh, prepared foods for Safeway's Lifestyle format supermarkets, and now the small-format "The Market" stores as well.

The fresh, prepared foods in "The Market" were developed at Citrine restaurant as we previously reported, and carry the brand name "World Cuisine". Offering "world cuisines," as in Citrine New World Bistro, is the positioning and theme of the restaurant, so the fresh, prepared foods brand names fits that concept for Safeway.

Safeway also has been expanding its "Signature Cafe" fresh, prepared foods brand in its Lifestyle format supermarkets over the last few months. Many of the prepared foods products under the "Signature Cafe" brand also were created at Citrine.

As we reported in the past, Safeway plans to open up to an initial four of "The Market" small-format grocery stores in the San Francisco Bay Area. Originally the timeline was to start opening the stores this summer, beginning in the South Bay Area near San Jose and Redwood City, where the Citrine restaurant is located.

Safeway's Rojan Hasker wouldn't confirm or deny that timeline but did say another "The Market" store would open at another location later this year.

Hasker also added Safeway plans on converting a number of its Safeway Supermarkets that it's not converting to its Lifestyle format into "The market" stores, saying about 25 currently could be on the table to convert to the small format grocery and fresh foods grocery markets.

Safeway also plans to build new locations for "The Market" stores, although we haven't yet been able to get the specifics on where and when. Hasker does confirm it's part of the grocery chain's plan however.

Safeway's opening of its first small-format "The Market" grocery store in Long Beach will usher in a "hot" small-format food and grocery retailing summer. We expect Safeway to open up at least one--and likely more than one--of "The Market" stores soon.

Additionally, mega-retailer Wal-mart debuts its new small-format grocery store, Marketside, this summer in Phoenix, Arizona. The first Marketside store could open as early as June, and likely no later than mid-August.

There's a small-format food retailing revolution going on in the United States, with the Western U.S. shaping up as the epicenter of activity for the rest of the year.

Summer hasn't officially started yet. But the small-format grocery retailing scene is starting to "heat up" anyway. Stay tuned to Natural~Specialty Foods Memo for all the details about it.

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