The Friday Fishwrap: End-Of-The-Week News, Analysis, Insight and Musings

Retail Whispers: Heard on the Street and Read on the Net

Profit and Loss: Canada's Planet Organic Health Corp., which recently acquired two U.S. natural foods' retailers--Mrs. Green's Natural Foods in New York and New Leaf Community Markets in Santa Cruz, California, had a whopping 99% increase in sales over the same period last year in its just-reported second quarter of this year. Sales were C$27.5 million (Canadian dollars), compared to C$13.8 million for the same period last year. However, sometimes such soaring sales growth results in a loss. Planet Organic reported a net loss for the quarter of C$45,000, compared to a net income of C$537,000 in the same quarter last year. Oouch, growing pains. (more here.)

Britain's Green PM: British Prime Minister Gordon Brown warned his nation's supermarket chain and corner retail shop proprietors that unless they get with it and start charging consumers for plastic grocery bags if they choose them, like Marks & Spencer announced earlier this week it would begin doing, then he just must impose the fees on the grocers and other retailers in the form of a law. Read what the UK's Daily Scotsman has to say about the issue in tomorrow morning's edition. Marks & Spencer (M&S) is charging shoppers the equivalent of about 10 cents U.S. per plastic bag. No charge for paper. Reusable shopping totes are sold at the stores and encouraged.

U.S.-based Whole Foods Market, Inc., which has a large natural foods superstore in London, will go M&S one better next month. The supernatural grocer will stop using plastic grocery bags at all of its stores in the U.S., Canada and in the London store beginning on April 22, which is Earth Day 2008.

We predict the United Kingdom's other major chains will follow Marks & Spencer's lead on charging shoppers for plastic tote bags. Our prediction: Waitrose will be next to announce, followed by Sainsbury's, then Asda and Morrisons, with Tesco last. Why Tesco last? Take a look here.

London's Daily Mail newspaper has started what it calls its "Banish the (plastic) Bag Campaign." Here is what the paper's latest poll of British consumers found: A solid 83% of consumers said they are 'Concerned' about the impact on the environment of plastic bags. Only 16% said they are unconcerned. A full 76% of those consumers said supermarkets should stop giving out plastic bags all together. And, a whopping 86% of the consumers said a per-plastic bag charge by retailers would encourage them to bring their own reusable shopping bags to the store. You can read more on the survey here.

Food & Street Theatre Memo: Peta's 'Unhappy Mother's Day For Pigs'

The pro-vegetarian animal rights group People for the Ethical Treatment of Animals (Peta) kicked its public performance art-oriented displays designed to get people to renounce their meat-eating ways up a notch today in London, England's Covent Garden.

As pictured at left, they had a visibly pregnant woman crawl into a replica of a farrowing crate, similar to the ones used to house sows when they are pregnant and nursing their young.

While the "human sow," played by a pregnant human woman crawled into the farrowing crate to depict the actual sow, fellow protesters held up a banner which read: 'Unhappy Mother's Day for Pigs, Go Vegetarian.'

Our London correspondent, who was having lunch at Covent Garden when the street theatre-style protest was presented, reports the Peta protesters definitely got lots of attention. However, he also said a number of other folks, who were eating lunch just like him, not only lost their appetites, but had some digestion problems as well, after viewing the protest, which went on for some time. And yes, we asked; and the answer is no, he wasn't having a pork sandwich for lunch.

Retail Whispers: Heard on The Street and Read on the Net--Part Deux

The Greening of Emeril @ Whole Foods Market: The Discovery Channel, Whole Foods Market, Inc. and that hyper-celeb chef Emeril Lagasse are partnering up. Emeril (no last name needed) will star in a new show, Emeril Green, on the Discovery Channel four nights a week at 8pm. The show will take place inside a Whole Foods Market store. All of the ingredients the rapid-fire chef uses to cook with in the show will come from Whole Foods, of course. The ingredients--and resulting dishes--will be organic, fresh, upscale, sustainable---and all "green." Read all about the show and partnership here.

Whole Foods Market Haight (Ashbury): If healthy and crunchy loving Whole Foods Market can't get a store built in San Francisco's Haight-Ashbury neighborhood (which was known as Hashbury in the 1960's) then what grocer in the world can? "The Haight," as the locals call it, was the home to the 'Summer of Love', student protests, frequent acid (and not car battery) tests, and numerous other hedonistic pursuits in the 1960's and 1970's.

Throughout the 1980's, the neighborhood was considered undesirable by many. However, beginning in the late 1980's--and into the 1990's to today--"The Haight" has undergone a resurgence. The neighborhood, which is near the famed Golden Gate Park, is packed with unique ethnic and upscale restaurants, brew pubs, cafe's and bookstores. There's still lots of young folks hanging out in the neighborhood--perhaps looking to find what maybe their parents (or grandparents) might have found (if they could remember it) in the 1960's--but gentrification is the rule of today in the neighborhood.

Enter Whole Foods Market. The supernatural grocer wants to locate it's fourth lifestyle supermarket in San Francisco in an empty building that formerly was a Cala Foods supermarket for decades.

Cala Foods was most recently owned by Kroger Co. as part of its Ralph's Supermarkets division. It sold most of the other Cala Foods' stores in San Francisco to independents and closed the remaining handful of stores, including the Haight-Ashbury market. Even though the store is much smaller than Whole Foods' desires, they plan to remodel the building and open a store there. Retail space is a premium in the neighborhood. So the Cala Foods' site is a major get for Whole Foods.

Haight-Ashbury, however, has a couple of dueling neighborhood groups. Those two groups, the Haight-Ashbury Neighborhood Council and the Haight-Ashbury Improvement Association, are butting heads over a laundry list of issues regarding the Whole Foods store's going into the neighborhood. Read what's going on here. For those of you in the heartland, this happens in San Francisco all the time. And, Whole Foods is familiar with it. Just ask Walter Robb.

Food Safety in America Memo: And Now it's the Alfalfa Sprouts.

Attention, Re-calling All Sprouts: The latest food item (among the numerous) in the U.S. to be recalled is that famous sandwich and salad add-on loved by nearly all natural foods'-oriented folks: alfalfa sprouts. Dixon, California-based Salad Cosmo USA Corporation and J.H Caldwell and Sons of Maywood, in Southern California, are recalling the crunchy sprouts throughout the western USA. Among the stores involoved in the recall are Trader Joe's, Save Mart Supermarkets and others. Read more here. Tests to the sprouts detected salmonella, which can be fatal. That's why the alfalfa sprouts are being recalled.

What Gives? First it was bagged spinach, then bagged salads, and now sprouts. Although the U.S. has a good, overall food safety record, its been declining for the last 10 years or so. Are you listening President Obama, McCain, Huckabee Clinton or Nader?

Election Year Memo: Presidential Candidates As Grocery Stores

Speaking of U.S. candidates for President (we like segways. Not the scooters, the word transitions.) Our evenings of late have been consumed primarily by two activities: writing this blog and watching the Presidential debates and related coverage. So, naturally, we got to thinking about what the Democratic and Republican candidates for President have in common with grocery stores or supermarkets.

As a result, we bring you our very own version of, "Presidential Candidates as Grocery Stores:"

Barack Obama: Obama is the Whole Foods Market, Inc. candidate. Like a Whole Foods' store Barack is eclectic, smooth, thoughtful and urbane. But, like Whole Foods, Obama also comes from humble origins. Whole Foods targets its stores primarily to the well-educated; college grads and post-grads. College educated Democrats are choosing Obama over Clinton big time.

But, also like Whole Foods Market, Obama does not want to be viewed as elitist, which he isn't. He wants organic foods for everyone, just like Whole Foods' does. And, he is appealing more and more these days to lower and middle income Democrats. Just like at Whole Foods,' the message is important.

Like Whole Foods Market, Obama has crossover appeal. He attracts indpendents and even some Republicans, along with Democrats. there's even a group of Independent and Republican voters termed "Crunchy Cons," who are supporting Barack for President. These folks are conservative, but don't embrace the traditional GOP line. They shop at places like Whole Foods Market, are generally young and well-educated, are environmentalists and health-oriented consumers, and are looking for political and social change. They aren't liberals though...we like to call them "Whole Foods Market Conservatives."

Hillary Clinton: Hillary Clinton on the other hand is trying to appeal to everyone, especially lower and middle income Democrats, who are proving to be her base of support. That's why Hillary is the Wal-Mart candidate. Her motto, "I'm ready to assume the duties of President on Day One," reminds us of Wal-Mart's can-do attitude. Her pep-rallies also remind us of how Wal-Mart store managers rally the troops every morning before the store opens by leading them in the "Wal-Mart Cheer."

Just like a Wal-Mart store, Hillary can be all things to everybody. She can out-Liberal the Liberals and out-Conservative the center-right. Similar to Wal-Mart, Ms. Clinton has had to be the "Low-Price Leader" in her race against Obama, as he has beat her in fundraising hands-down. Her cheerful optimism even reminds us of the Wal-Mart smiley face.

And, of course, Hillary is no stranger to Wal-Mart, Inc. She spent a number of years on the mega-retailers board of directors when she was First Lady of Arkansas during her husband's two-terms as the state's Governor.

John McCain: Johnny Mac, as his friends call him, is without a doubt the Trader Joe's candidate. Like Trader Joe's, McCain is small, but stout. He packs a huge punch into a little frame, just like the small-format specialty grocer packs tons of goods into its 10,000 square foot stores.

McCain also is quirky, just like TJ's operations and product mix. Johnny Mac might one day present himself as a "Conservative's Conservative," then do something "liberal" like being the only Republican to vote against George W. Bush's famous tax cuts, saying, "They benefit only the rich."

Lastly, with tongue planted firmly in cheek of course, rumor has it that some of McCain's U.S. Senate colleagues used to call him "Two-Buck Mac" for the amount of money he likes to spend when he bought them lunch. As we all know, Trader Joe's is famous for its $1.99 bottle of wine nicknamed "Two-Buck Chuck."

Mike Huckabee: Huckabee is the Kroger Co. candidate. He's a little bit upscale--well educated, dresses well, loves good food, is articulate--but is mostly still just folks. Like a typical Kroger store, Huckabee isn't going to knock your socks off. He's likes to say, "What you see is what you get." That's sort of Kroger's motto in many of its store banners.

Huckabee, like Kroger, also is essentially middle-America. Although Kroger operates supermarket chains on the left and right coasts in the U.S., they are known as the grocer for middle-America primarily. Huckabee also has left and right coast tastes--he plays the base guitar with a rock band, loves appearing on talk shows in Hollywood and New York City, as well as loves hosting Saturday Night Live--but has firmly positioned himself as the favorite of middle America and Christian Evangelicals. Huck is just a small town preacher from Hope, Arkansas.

Kroger, though, has been moving into the natural, organic and healthy foods' categories in a big way the last couple years. So has Huckabee. He lost a couple hundred pounds over the last few years by giving up a high-salt, high-fat and high-carb diet for a healthy one. He also says he eats natural and organic foods as much as possible. Weight loss and diet is a major plank in his platform in fact.

So, there you go. As a voter you now have an additional variable--grocery stores--whichyou can use in choosing which Presidential candidate you will support and vote for in the 2008 election. Consider it a public service offering form us to you.

[To our readers: We would love to read which grocery stores you match-up with which Presidential candidates. Use our comment box to express your opinion, and to VOTE on your favorite from our four "candidates as grocery stores" above.]

The Friday Fishwrap Week-Ender

The Topic: Honest Food Labeling

Enjoy your weekend!

Retail Memo: News & Analysis: Tesco Confirms 19 Fresh & Easy Grocery Markets for the Sacramento Metro and Suburban Region in Northern California

Tesco's Fresh & Easy Neighborhood Market confirmed today it plans to open 19 stores in the Sacramento Metropolitan region of Northern California, as well as in nearby Vacaville and Galt.

Seven of the small-format grocery stores, which average 10,000 square feet -to- 13,000 square feet, will be in the city of Sacramento. Nine of the markets will be in the nearby suburbs. (See the graphic below.) Two of the Fresh & Easy stores will be in Vacaville, which is about 25 minutes from Sacramento, and one store will be in Galt, which is less than 15 miles from Sacramento, and is about midway between the capital city and Stockton, where Tesco plans to locate its Northern/Central California distribution center.

On Monday, January 28 we reported that Tesco had applied for liquor licenses for four Fresh & Easy grocery stores in the city of Sacramento (2 stores) and two stores in the nearby suburb of Folsom. We discovered this fact via liquor license applications, which are public data. As a result, we were one of the first publications to report that Tesco would enter the Sacramento region in Northern California, along with signing leases for 18 stores to date in the nearby San Francisco

Tesco's confirmation of the 19 Sacramento/Vacaville-area grocery markets, along with the confirmation it will begin opening the first of its initial 18 Fresh & Easy stores in the San Francisco Bay Area at the end of this year or in early 2009, brings to a total of 35 the number of Fresh & Easy Neighborhood Market small-format grocery stores the retailer has thus far confirmed for Northern California.

Vacaville is located about 20 miles from Sacramento, off Interstate I-80, which is the primary route from Sacramento to the San Francisco Bay Area. Vacaville is about an hour drive from San Francisco and a little over 30 minutes to the East Bay Area cities of Berkeley and Oakland. Interstate 80 rings the Bay from the Bay Bridge east, out to Fairfield (where Fresh & Easy is locating a store), then on to Vacaville, the University city of Davis, and into Sacramento.

Locating a critical mass of stores in the Sacramento Metropolitan region, then out to Vacaville and Farfield, then into the Bay Area, is the same strategy Tesco is using in Southern California. This "critical mass" strategy emulates retailers like Starbucks and Walgreen's Drugs, small format retailers which locate a critical mass of stores in city's and neighborhoods so as to position their stores as a "neighborhood" retailer.

Additionally, we can report that Tesco is looking for additional new store locations in both the Sacramento and Bay Area regions. In fact, the British grocer already has a number of other location leases locked-up (in addition to those announced) and is in negotiations for more store sites in both the Sacramento and Bay Area regions. We hope to be able to report some of those locations soon here.

As we reported first in December and again in the January 28 piece, Tesco also plans to open a new distribution center in Stockton, California to serve its Bay Area and Sacramento region Fresh & Easy stores. Stockton is located in the Northern San Joaquin Valley, about 30 miles from Sacramento, and about 60 miles from San Francisco. The location is generally no more than one hour's drive-and in many cases less--to all of the 35 confirmed Northern and Central California store locations to date. Tesco's Fresh & Easy Neighborhood Market has not yet confirmed the Stockton distribution center. Additionally, Stockton is about a 15 minute drive from Galt, where one of the 19 Sacramento-area stores will be opened.

Sacramento's Mayor joins F&E CEO Mason for AM presser

Tesco's Fresh & Easy Neighborhood Market CEO Tim Mason made the Sacramento region new store announcement with a splash this morning. He was joined by Sacramento Mayor Heather Fargo and City Councilman Ray Tretheway in front of an empty commercial building located at Northgate Blvd. and San Juan Blvd. in the city of Sacramento. The grocer will remodel the empty building into a Fresh & Easy grocery market.

By having the city's mayor at his side, Mason signaled Fresh & Easy wasn't just another grocery retailer opening a new store in town, but rather is a grocer that's making a major commitment to the city and region by opening an initial 19 stores in the region next year, with more to come.

Having Mason at her side also was good for the Mayor. Sacramento, like all of California is being battered by the sub-prime housing crisis, increasing unemployment and a host of other economic ills. Being able to announce a new business venture like Fresh & Easy moving into her city at this time will score her some major political points with voters.

The retailer also made another smart move by choosing the empty Tower Records building on Watt Avenue in Sacramento as one of its future Fresh & Easy grocery store locations. Tower Records, which later grew into a national chain, which went bankrupted in 2006, was founded in Sacramento in the 1960's--and the Watt Avenue location was its flagship store.

When the Watt Avenue Tower store closed, there literally was a period of mourning in Sacramento for the local independent record store that went on to be a huge mega-chain, then fell on hard times and was shut down.

Tesco's Fresh & Easy should gain considerable goodwill from the community for leasing, remodeling and opening one of its grocery markets in the Tower building, which is what it's called. The building has been empty for over two years.

[Note to Fresh & Easy Management]: It would be wise, and good business, to preserve aspects of the former Tower Records building when you remodel it into a Fresh & Easy market. Perhaps you should call it "Tower Fresh & Easy," or some version of that. Remember, everything is local in America, especially in Sacramento. And, in the case of an iconic building like the Tower Records' site, retaining some aspects of the building's history and culture (a plaque on the front of the new Fresh & Easy store with the history of the building would be a nice touch) will not only go a long way towards creating excellent community relations--but customers as well.]

The timing and style of the announcement was particulary good for Fresh & Easy since analysts like us and others have been writing about how the retailer's current 55 stores in Southern California, Arizona and Nevada are not performing up to expectations. [You can read our most recent analysis on Fresh & Easy store performance in posts made on Tuesday and yesterday on the blog.]

Of course, marketing an PR are only part of being a successful grocer. As we've suggested in our pieces this week, Tesco's Fresh & Easy has major operations challenges to solve and improve in addition to opening dozens of new stores and creating good PR events.

The retailer shouldn't be counted out though. Doing doing so is foolish. Tesco is the world's number three retailer, and it's track record at home in the UK and elsewhere in the world is impressive.

Tesco also has lots of cash. That's helpful to any start up. What we believe Tesco hasn't learned yet though is: it can't do retailing in the U.S. in the same way it does retailing in the UK and Europe.

Fresh & Easy is missing a key American element: localism. This missing element can't be fixed as easily as the operational problems we've pointed out in our analysis. However, its just as important--maybe even more so. And, it's essential.

Competitive environment: Welcome to Sacramento

Nowhere does Tesco need to grasp the importance of tailoring its Fresh & Easy stores better to the local environment and neighborhoods than in Sacramento and its metropolitan and surrounding region.

Sacramento has been one of the fastest-growing cities in California throughout the last decade. The Sacramento Metropolitan region has a population of nearly 2 million people. The city of Sacramento has a current population of about 600,000. In addition to being California's capital city--which means lots of well-educated state government workers--Sacramento has a mixed economy. Agriculture and agribusiness remain huge in the region, as does light manufacturing, warehousing and transportation.

The fastest growing sector in the Sacramento region's economy is in the service sector, both in state government, associated non-profit organizations like law and lobbying firms, and in the private sector. This includes the health professions, law, finance and retail. In the last 15 years the city has been transformed from being a central city in a primarily agricultural region (with the exception of state government), to the urban city center of a booming metropolitan and somewhat cosmopolitan area.

Grocery retailing in Sacramento and the surrounding region has a decidedly local flair. The region's number one (in market share and store count) grocer is Raley's, which is based in the nearby city of West Sacramento. Raley's is a prvately-held, family-owned supermarket chain that's been in business in the Sacramento region for 73 years. The locally headquartered grocery chain has 120 stores and does about $3 billion a year in sales.

The Sacramento-based food retailer operates four store banners: Raley's, Bel-Air Markets, Nob Hill Foods and Food Source. Raley's stores are 55,000 square foot -to- 80,000 square foot superstores. The stores are fairly upscale and offer lots of prepared and other fresh foods, along with tons of grocery products (including lots of organics) and a huge selection of non-foods. Most of the new Raley's banner stores are closer to the 80,000 square foot size. The Raley's banner is the chain's original retail brand.

The Bel-Air banner is an upscale supermarket format. The stores average 40,000 square feet (older stores) -to- 60,000 square feet (newer stores). They're similar to the Raley's stores--lots of upscale fresh foods, but fewer nonfoods do to their size (but still plenty). Bel-Air was an acquisition for Raley's. The Bel-Air chain at one time was Raley's chief competitior in the region. In the 1980's, Raley's acquired the grocery chain from the Wong family, who founded and operated the chain for over 50 years.

Nob Hill Foods also is an acquisition for Raley's. Like Bel-Air, Nob Hill was a long-time family-owned chain. It was based in the South Bay Area city of Gilroy, where two generations of the Bonfonte family operated it for about 60 years. Raley's acquired Nob Hill Foods in the 1990's and consolidated its headquarters in its West Sacramento facility.

Food Source is Raley's discount warehouse-type store format. The grocer created the banner in the 1980's as a way to get into the growing no frills, discount warehouse store category in the region at the time. It's the grocer's smallest banner in terms of the number of stores, but does significant sales volume in its niche.

Citizen Raley's

Raley's also is a leading corporate citizen in the Sacramento region. Sacramento's semi-pro baseball team, the River Cats--which in a big city like Sacramento without a professional baseball team serves as a very popular popular equivalent--plays it games at Raley Field, a state of the art baseball stadium in the city built in large part by the grocer.

The grocer is the number one donor to programs that feed the hungry and homeless in the region. Last year it gave over $15 million dollars to food pantry's and other programs which provide food assistance to families and individuals in need.

In fact, Raley's has its hand in nearly every charitable venture in the region--from Boy Scouts and Girl Scouts, to educational scholarship assistance, environmental causes and literally many dozens more. Additionally, the Raley-Teel family, majority-owners of the Raley's grocery chain, also has its own charitable foundation, which gives additional millions each year to local non-profit groups and supports other charitable causes locally.

The other two major grocers in the Sacramento region--Safeway Stores, Inc. (number two market share) and Save Mart, Inc. (number three market share) are fairly local guys as well. Safeway, which has about 21% of the region's grocery sales market share, has its corporate headquarters in the East Bay Area city of Pleasanton, which is only about 70 miles from Sacramento. Save Mart, which entered the Sacramento region market for the first time last year when it bought Albertsons' Northern California Division from an investment banking firm, is headquartered just 60 miles away in the Central Valley City of Modesto.

Between the three grocery chains--Raley's, Safeway and Save Mart--they control about 85% of the total grocery sales market share in the Sacramento market region. The remaining 15% share is split between Food-4-Less, a multi-store deep-disount warehouse format grocer, numerous independents, Longs Drugs, a couple Trader Joe's stores, and the one Whole Foods Market, Inc. store in the region, which is located in Sacramento. (Note: Whole Foods' is looking to add at least one, and maybe two stores in the region in the next two years.)

Union supermarket chains vs. non-union Fresh & Easy

Raleys, Safeway Stores and Save Mart also are union supermarket chains. On average, the three chains pay their full-time store-level retail clerks about $21.00 hour. Full-time means the clerks' have one full year of full-time hourly experience as a union grocery clerk. Part-timer pay ranges from about $12.00 hour -to- the $21.00 hour amount. The $12.00 hour is an entry-level wage for some positions, and it goes up in increments about every three months per the agreed upon contract between the grocery chains and the union. Nearly all store level workers with six months' to a year's experience make between $15.00 and $21.00 hour.

The union contract also provides store workers with one of the best medical insurance plans in the U.S. It is comprehensive, has lower than average employee contributions, doctors office co-pays and prescription drug out-of-pocket costs for the workers. The plan also offers very affordable dental, vision and mental health plans for reasonable employee contributions.

The union supermarkets also provide a career path for workers who choose to make a career out of the retail grocery industry and work at store-level for 25 -to- 30 years and then retire. The joint employer-union pension plan pays out about $3,500 -to- $4,000 month to union clerks who retire after 25 -to- 30 years in the industry. This is in addition to collecting monthly Social Security pension payments.

Employers make the largest contribution to the worker pension plan. Employees contribute a small percentage out of their paychecks every two weeks as well. Additionally, all three of these union grocery chains--Safeway, Raley's and Save Mart--offer some form of additional retirement plans on their own to workers. Safeway offers a discount stock-purchase plan, while Raley's and Save Mart offer profit-sharing-type programs, since both are privately-held companies. Save Mart has 255 stores throughout Northern and Central Califronia, and annual sales of about $6.5 billion.

Tesco's Fresh & Easy Neighborhood Market currently pays store-level workers $10.00 hour. There currently is no established higher hourly wage for current workers when they achieve one year's experience like at the union supermarket chains.

The 10,000 square foot -to- 13,000 square foot grocery stores employee about 20 workers per-store, according to the company. All of the store employees, with the exception of a couple managers, work part time. Those part-timers who want to can work up to 20 hours a week, which qualifies them for a health insurance plan.

However, we've compared a Fresh & Easy store employee's health plan to the union food retail chains' plan, and the union plan wins across the board: it's more comprehensive, has less of an employee contribution, provides for lower employee co-payments, and offers a number of other benefits.

According to a Tesco Fresh & Easy spokesman, the retailer also offers bonuses of up to 10% to store-level workers if they meet certain performance criteria. The bonus is once a year. Fresh & Easy doesn't currently offer store-level employees a retirement plan. They also don't get discounts at present on Tesco plc. stock, like Safeway employees do with Safeway stock.

Trader Joe's, which has only a couple stores in the region, Whole Foods (it has one store), and Wal-Mart, which only has a handful of Supercenters in the Sacramento area, also are non-union shops like Tesco's Fresh & Easy Neighborhood Market.

Sacramento shoppers are historically 'local-loyal'

Sacramento region shoppers have long been super-loyal to Raley's. Just ask Safeway Stores, Inc. Despite the fact that its a chain based nearby, has more than 10 times the number of stores and does at least $40 billion more in annual sales than Raley's, its never been able to overtake the local grocer in market share in the region, despite trying hard to do so for at least four decades.

Tesco's Fresh & Easy Neighborhood Market would be wise to learn as much as it can about the "local nature" of grocery retailing in the Sacramento region. Over the last 40 years, Safeway left the market twice, under two different ownership structures, because of Raley's domination. It was only again in the 1980's--and particularly in the 1990's with its Lifestyle format stores--that Safeway began to make some inroads in the market.

Fresh & Easy senior management can expect a strong response by Raley's, Safeway and Save Mart when it enters the Sacramento market next year. For example, in terms of retail pricing, all three--but especially Raley's and Save Mart--won't hesitate to lower prices if Fresh & Easy comes in with its discount pricing structure on basic grocery items like it has in Southern California, Arizona and Nevada, which it will do in Sacramento because doing so is key to its format and positioning. As the ancient Chinese saying states: 'May you live in interesting times

Related Stories From Our Archives:

>Retail Memo: "Tesco's Fresh & Easy Neighborhood Market @ 50 (Stores): Analysis, Observation and A Few Suggestions for Some Ways Forward. >Retail Memo: "New Details and Analysis About Safeway's Small Format Summer Bay Area Surprise for Tesco's Fresh & Easy Neighborhood Market." >Retail Memo: "Wal-Mart Heating-Up the Competition Against Tesco in the UK (As Well as At Home in the USA).

>Retail Memo: "Wal-Mart's New Small-Format 'Marketside' Grocery Store Logo Unveiled." >Retail Memo: "Tesco Fresh & Easy Insight: A New Store Blooms in Compton, CA; F&E's Chicagoland March; A Sacramento Neighborhood and F&E Get Hiched." >Retail Memo: "Raley's Attempts to Come Full-Circle With New Private-Label Natural and Organics Products' Brand." >Tesco Fresh & Easy Neighborhood Market Update: "New Nielson Study Analyzes the Chain's Affect on Competitors."

>Breaking News: "Tesco's Fresh & Easy Confirms it Will Open 18 Stores in San Francisco Bay Area." >Retail Memo: "Designing the 'Perfect' Small-Format Grocery Store in A 'Near-Perfect' Place." >Retail Memo: "Wal-Mart and Safeway Stores Could 'Box' Tesco in With New Small-Format Stores." >Tesco Fresh & Easy Neighborhood Market Update: "Fresh & Easy and the UFCW Union." >Retail Memo: "The Small-Format Revolution Continues to Heat Up."

>Mid-Week Marketing Memo: "Three Reasons Why Tesco's Fresh & Easy Neighborhood Market's Venture Could be a Huge Success--and Three Reasons it Could be A Historic Food Retailing Failure." >Monday Morning Java: "Safeway Small-Format Stores on the Way." >Tesco Fresh & Easy Update-Northern California: "Tesco Inks Deals for Three New Fresh & Easy Store Locations in Northern California's San Francisco Bay Area, Distribution Center in Stockton."

>Tuesday Talking Points Memo: "Eastward Bound for Fresh & Easy." >Tesco Fresh & Easy Update: Oakland: "Oakland May be the Central Front in Tesco's Fresh & Easy Neighborhood Market's Northern California Invasion in 2008." >Breaking News: "First Fresh & Easy Market Opens A Week Early." [Click here to read one or more of these pieces from our archives.]

Retail Memo: New Details and Analysis About Safeway's Small-Format Summer Bay Area Surprise for Tesco's Fresh & Easy Neighborhood Market

We were one of the first publications to report on December 10, 2007 that Pleasanton, California-based Safeway Stores, Inc. was developing a new, small-format (15,000 -to- 20,000 square feet) grocery store similar to Tesco's Fresh & Easy Neighborhood Market, which the San Francisco Bay Area-based supermarket chain plans to initially open in the San Jose area sometime this summer.

Tesco plans to open an initial 18 of its small-format, combination basic grocery/semi-upscale fresh foods and specialty grocery stores in the San Francisco Bay Area beginning in late 2008, or more likely in early 2009. A number of these 18 initial stores will be located in the South Bay Area, in San Jose and the surrounding communities.

Since we reported the Safeway small-format grocery store development story, we've followed up with a couple analysis pieces, and have been following Safeway's development process closely, doing research and talking to as many industry--and industry-affiliated--sources as we can. As a result we've learned some additional facts about the new small-format stores.

Stores likely to open in July or August, 2008

First, based on information from our various sources, we believe the first of the four -to- five pilot Safeway small-format grocery stores will open in either July or August of this year in the San Jose area. Part of Safeway's reason for wanting to open the stores this summer, is so that the retailer can have the intial stores opened for a significant period of time prior to Tesco entering the market in either late 2008 or early 2009.

It was initially believed Tesco would open the first of its Bay Area Fresh & Easy stores this summer. However, Tesco says it won't open stores in the region until 2009. We still believe its possible Tesco will try to open a few Fresh & Easy markets in the Bay Area in late 2008. The first store location lease (of the 18 signed to date) the British retailer signed in the Bay Area was for an empty Albertsons supermarket building on Bird Avenue in the city of San Jose, which it will remodel into a Fresh & Easy Neighborhood Market store.

Safeway wants to have its small-format grocery stores open and doing business before Tesco's Fresh & Easy even comes to town, so to speak. By opening the first stores in July or August of this year, it could give Safeway anywhere from six months to close to a year of retail operations before the first key is even turned in a Fresh & Easy store door by Tesco in the Bay Area.

Safeway small-format grocery stores: A few snapshots

We don't have a complete picture of what the Safeway small-format grocery stores will look like in terms of design or overall product mix. However, based on conversations with sources and much analysis ,we do have some pieces of the puzzle filled out thus far.

In terms of design, we expect something fairly upscale inside and out. However, the stores aren't going to be super upscale. Rather, they will be attractive in terms of design but also somewhat utilitarian looking. They aren't designed for only high-end consumers.

In October, 2007 Anthony Gilmore, the former Northern California Region President for Whole Foods Market, Inc. resigned his position with the supernatural foods grocer to accept an executive position with Safeway Stores, at its corporate headquarters in the East Bay Area city of Pleasanton.

While leading Whole Foods' Northern California division, Gilmore completed an aggressive and varied new store opening program for the supernatural grocer in the region. His strength was in being able to organize and lead the development of "new generation" Whole Foods' stores, giving each of the new stores its own local flair.

Small-format grocery stores aren't really a new development for Safeway. In fact, it's more of a retro, "back to the future" concept, if not in actual store format, at least in size. Pictured above is a small Safeway grocery store located in San Francisco, California circa the 1940's. The store was located in either the city's Nob Hill or Tenderloin neighborhoods. Notice the "tag line" on the Safeway sign, "Distribution Without Waste." It's a perfect slogan for 21rst century "green" grocery retailing. (The grocer might want to bring the slogan back.) Pictured below, is a small-format Safeway store which was located at 228 Seventh Street SE in Washington D.C. The market was built and opened in 1940 and remained open and profitable for 46 years, closing in 1986.

For example, under Gilmore Whole Foods built its biggest and most comprehensive food store in Campbell, California, which is located in the famed Silicon Valley, and is only a few miles from San Jose. This store, which is now called the Northern California flagship, is nearly 80,000 square feet. It's a double-story superstore, filled with numerous in-store dining venues, a wine bar, a mini day spa, and much more. The store also fits its location well, both in design and in its product mix.

Further, Gilmore lead the creation of what is arguably Whole Foods' most innovative store to date: its European-style market hall store in downtown Oakland, California. The store, which opened in October, 2007, is designed like a European food hall, yet contains all of the departments--and more--the supernatural grocer is famous for.

In addition, Gilmore pioneered the building of Whole Foods' lifestyle-oriented superstores as retail anchor stores for upscale multi-unit housing developments in the city of San Francisco.

For example, the newest San Francisco store, which is located in the hip, up-and-coming Potrero Hill neighborhood, is the ground floor retail anchor of a huge, high-end condominium development which is becoming a very popular place to live in the city. The store design is modern, like the condo project, but also incorporates the history of the neighborhood. Among the store's unique features are an indoor-outdoor wine bar and bistro which features a DJ who spins tunes for customers on weekend evenings.

Gilmore's charge in his position at Safeway is primarily retail format development. He's been working on the chain's successful lifestyle format, including a project which involves creating a "second generation" lifestyle format for Safeway's supermarkets. Some of these "second generation" developments are already beginning to show up in the retailer's new lifestyle stores.

What we refer to as the "second generation" aspects include more upscale design and interior packages--colors, flooring, shelving, and the like--and added in-store features like the fresh nut bars and similar new in-store venues appearing in a number of the grocery chain's recently-opened lifestyle supermarkets.

Gilmore also was brought on, in part, to work on the small-format grocery store project, both from a format design and product selection and merchandising standpoint. Expect to see his input in how the 15,000 -to- 20,000 square foot grocery markets look, the products sold in them, and how they reflect the communities (localism) they are in. We expect some unique and creative flourishes in the store's design and product selection.

Prepared foods to be central to the small-format Safeway stores

Safeway is nearing completion of a line of fresh, prepared foods which it will begin rolling out in its lifestyle stores soon. The prepared foods' line includes ready-to-heat and ready-to-eat entrees, side dishes and grab-and-go type foods. Some of the prepared foods' items will be under the retailer's O' Organics brand, others under its Eating Right healthy foods brand, and still others under one or more new brands. These prepared foods items will be sold in all of the grocer's lifestyle stores--as well as in the new, small-format grocery markets, we believe.

Safeway already has extensive prepared foods offerings--which it has grown dramatically over the last couple years--for sale in its lifestyle supermarkets. For example, it offers fresh soups, sandwiches, pizzas and other items under its Safeway signature brand. The grocer also offers prepared entrees and side dishes under various store brands, along with many other ready-to-eat and ready-to-eat items.

A little over a year ago, Safeway bought a restaurant in the San Jose area. The grocer has been using that restaurant to develop and test items with consumers as a way to develop its fresh, prepared foods items. Look for an extensive array of fresh, prepared foods in the new small-format Safeway grocery stores. These items should range from basic, inexpensive items, to much higher-end gourmet items, which are being developed by professional chefs at the company-owned restaurant.

A limited assortment of discount groceries

In a conference call with supermarket industry analysts last week, Safeway CEO Steve Burd said because of the inflationary and recessionary nature of the U.S. economy, consumers are increasingly filling their shopping carts with cheaper groceries in his stores. He even said the company is seeing more shoppers buying generic groceries in Safeway-owned stores.

Safeway's stock tumbled to a 52-week low last week, even though the grocer's fourth-quarter profit met analysts expectations. Analysts--and Burd--attribute this decline in stock value to the current bad economic climate in the U.S., which like Burd argued to the analysts is causing even middle-to-upper end consumers to buy more discount grocery products.

During the conference call, Burd described the current rate of grocery inflation as "the highest I've seen in my 15 years as Safeway's chief executive."

We wouldn't be surprised to see Burd and company use the new, small-format stores to merchandise a limited assortment of basic grocery items (say 60% store brand/40% national brand) at discount prices, along with the fresh, prepared foods and other offerings. (We don't know this for a fact, and nobody at Safeway has gone on the record with us either confirming or denying this. Our view is based on discussions with numerous sources, as well as our own analysis.)

Safeway has two very strong selling value-positioned store grocery product brands. One is a low-end, near generic line, the other a mid-range brand. They also have Safeway Select, a premium, yet competitively-priced multi-category store brand, in addition to a number of other store brands.

In fact, these three--low-end, midrange and premium--store brands are the top market share sellers in many of their respective categories, such as various canned fruits and vegetables and other packaged goods. These product brands--like the Safeway retail brand--are strong in the Bay Area. Unlike Tesco's Fresh & Easy store brand, which will be new to the region, Safeway's brands have extremely strong equity with Bay Area consumers.

For example, the San Francisco Chronicle, the region's highest-circulation newspaper, runs a column in its food section every Wednesday in which it compares at least 10-12 grocery brands in a different grocery products category each week. Safeway's store brands (even the value brands) frequently place in the top three, beating out in many cases the top national brand in a given category, which sells for much more at retail than the Safeway store brand.

Safeway has a huge advantage over Tesco in this approach. First, the grocer knows the Northern California (and especially Bay Area) market inside-out. It's far-and-away the number one market share leader in the region. Second, the grocer has decades of market-specific scan data in its databases. This is an invaluable tool when choosing a limited basic grocery products selection for a store.

Lastly, Safeway has over 20 years' of consumer/shopper data from its club card program. From a consumer-buying and behavior perspective, this information, combined with the market-specific scan data, can help the grocer not only choose the optimum limited-assortment basic grocery selection for its new, small-format stores, but also the club card data can guide the retailer in custom-tailoring the stores to each and every neighborhood. This is powerful information that even the world's number three retailer Tesco can't buy for any price. If they could, the retailer's Southern California stores would have a different basic grocery item product mix, and be tailored much better to the city's and neighborhoods they are located in.

What's in a name?

Lastly, and actually the most fun, is the question: What will Safeway name its small-format grocery stores?

While we don't have any specific information from sources inside or outside of Safeway Stores, Inc. who can provide us with information credible enough for us to go on the record and give you the name Safeway's new, small-format grocery stores will go by, we are willing to go out on a limb and offer a potential or even probable name, based on three key factors we've identified and anlalyzed. Those three factors are:

>First, Safeway Stores, Inc. likes the Safeway name and brand. All of its 271 stores in Northern California are branded Safeway, with the exception of a small division of warehouse stores called Pak 'n Sav. In addition, all of the grocery chain's stores in the Pacific Northwest, Arizona, Colorado and western Canada fly under the Safeway banner, as do the stores in the Washington D.C./Maryland/Virgina tri-state region.

All of the company's other banners--Vons, Pavillions, Dominicks, Randall's, Tom Thumb, Genuardi's and Carr's--were formerly independent chains which Safeway acquired, and as a result decided to keep the chain's names rather than change them to Safeway. The grocer sells its Safeway brand-named private label products, such as the Safeway Select, in all of these banner stores however.

The Safeway food retailing brand has strong consumer equity in Northern California, and especially in the Bay Area, where most of its stores are located, along with its corporate headquarters. As a result, we believe the grocery retailer is likely to use "Safeway" as part of the name for its new, small-format grocery stores when they open this summer.

Second, over the last four or five weeks we have floated a name for the small-format stores around to industry sources inside and outside of Safeway. We also have heard this name used by some Safeway suppliers, and others such as food brokers, who do regular business with Safeway at its corporate headquarters in Pleasanton.

While none of our sources (in the case of those outside Safeway) know for sure what the grocer will name the new, small-format stores, a number of them told us they've heard the name we put out there discussed among some fairly serious industry people in Northern California. In terms of people inside Safeway (who either don't know the name, or if they did likely wouldn't tell us) the name we floated received some interesting responses. Not one of the insiders dismissed the potential name for the new, small-format stores we mentioned out of hand to us.

All this is purely anecdotal, and we aren't claiming otherwise. Rather, its merely one part of the three-part puzzle we are analyzing, along with a couple other factors. (Did you really think we would give you everything?)

The third piece of this three-part analysis puzzle involving the possible name for the small-format, convenience-style grocery stores involves history. Many of our readers may not know this but there is a Safeway chain in the middle eastern country of Jordan.

Safeway Jordan isn't owned by or affiliated with U.S.-based Safeway Stores, Inc. However, there

is an historic connection. U.S.-based Safeway Stores, Inc. once was an international food retailing company. Among it's international operations was Safeway plc. in the United Kingdom. Safeway Stores, Inc. USA sold UK-based Safeway a long time ago. And non- Safeway USA-affiliated Safeway plc. was recently acquired by Britain's Morrison's supermarket chain, which has nearly completed removing the Safeway banner from the stores in the UK.

Prior to selling UK-based Safeway plc. to Morrison's, the companay owned Safeway Jordan and operated stores in that country and in Kuwait. In 2003, Safeway plc. sold its Jordan division to The Sultan Center (TSC), a Jordanian supplier and retailer of food, grocery, perishable and general merchandise items in the middle east. Jordan is a monarchy, so although it has a vibrant private sector, the ruling government family and business sectors are strongly tied-in together.

This is where the history gets interesting. Now, remember UK-based Safeway plc. was once long ago owned by USA-based Safeway, Inc. Safeway USA sold its UK operations to a group there who named it Safeway Plc. That group established Safeway Jordan, then sold the Jordan division to Jordanian-owned TSC.

TSC-owned Safeway Jordan operates three Safeway branded retail formats in that country. Those three retail grocery store formats are:

>Safeway service stores or supermarkets, which are similar to a western supermarket.

>Safeway Wholesale Center, which are a cash & carry-type format.

>Safeway Express, which is a hybrid basic neighborhood grocery store/convenience store/food-service store.

Yes, you guessed it: we are suggesting (not stating as fact or saying we have any confirmation) there is a decent probability that Pleasanton, California-based Safeway Stores, Inc. will name its new, small format grocery stores, which will open this summer in the San Francisco Bay Area, Safeway Express.

There's an added caveat for Safeway Stores, Inc. in going with the Safeway Express name for its new, small-format grocery markets as well: Tesco, parent company of Fresh & Easy Neighborhood Market, operates Tesco Express small format grocery stores throughout the UK and in other parts of Europe. These stores are the model from which Tesco created its Fresh & Easy grocery market format in the U.S. There are significant differences between the two formats--Tesco Express and Fresh & Easy--but also many similarities.

It would be ironic if Safeway names its new 15,000 square foot -to- 20,000 square foot grocery stores in the Bay Area--which will go head-to-head with Tesco's 10,000 square foot -to- 15,000 square foot Fresh & Easy grocery markets beginning at the end of this year or in early 2009--Safeway Express. In many ways, using that name for the stores would set the stage for an all out premptive summer surprise by Safeway for Tesco's Fresh & Easy Neighborhood Market in the Bay Area and elsewhere in Northern California.

Retail Memo: Whole Foods Market, Inc. Coins a New Retail Format Term, 'Groceraunt,' for Its New Scottsdale, Arizona Store

Remember, you read it here first...

Austin, Texas-based Supernatural grocer Whole Foods Market, Inc. has coined and introduced a new term into the food retailing lexicon to describe its new, 50,000 square foot lifestyle-oriented grocery store in Scottsdale, Arizona.

Whole Foods' company executives are calling the store a "groceraunt," because it not only offers a wide variety of prepared foods' options--along with tons of fresh foods and natural and organic grocery products--but also has numerous and varied in-store dining or restaurant venues in it. This eclectic mix of foods, beverages and much more, which shoppers can take home to eat or cook, or enjoy by dining in the store, equals a Whole Foods' "groceraunt", rather than a mere grocery store or supermarket.

The new store (oops, "groceraunt") opens tomorrow morning in Scottsdale. (It's located at 7111 E. Mayo Blvd.) Among the store's eclectic mix of prepared foods and in-store dining options which earn it the "groceraunt" title are:

>An in-store wine and tapas bar which features an extensive selection of wines from throughout the world, along with cheeses, Charcuterie, olives, peppers, nuts and more. Tapas is the "small plate" style of eating which originated in Spain.

>The Smokehouse Grill, which offers chicken, beef, pork and other meats and vegetables grilled to order. The Smokehouse Grill, which is an in-store sit-down restaurant, also offers wines by the glass, seasonal draft beers and other beverages.

>An Asian foods dining bar, which features made-to-order sushi and other Japanese foods, Chinese, Korean, Thai and other Asian dishes. Customers can eat at the attractive dining bar, which has plenty of seating, or get their items to go.

>A hot specialty sandwich shop, where customers can get a wide-variety of prepared-to-order, handmade, hot sandwiches to either eat in-store or take home.

>An Indian foods bar, which offers a selection of hot and cold prepared foods from India.

>The Pasta Bar, which offers customers dozens of varieties of hot, fresh-prepared or cold pasta dishes.

>An in-store homemade soup and fresh-made stew station, which features a number of fresh soup and stew offerings daily.

>The Organic Salad Bar, which offers nearly everything (and all organically-grown), and then some, a person could think about putting into a salad.

>There's the Brick-Oven Pizza Center, where chefs make specialty pizzas in a wood-burning brick oven for shoppers. The center has a dining area where customers can eat their pizza's or they can order the gourmet pies to go.

>A rotisserie chicken station and meat carving station. Shoppers can get rotisserie-roasted chickens and all kinds of roasted meats at the station, where carvers will slice the chosen items to a customers specifications.

>Additionally, the new "groceraunt" has 30 feet of self-serve prepared hot and cold foods offerings, along with salad, olive & pepper, and nut bars.

If that's not enough of a variety of eat-in-the-store or to go prepared foods options, the "groceraunt's" store departments--produce, bakery, meat & seafood--also have their very own eat-in or to go prepared foods venues.

There's the "Veggie Grill" in the produce department, where a chef will grill-to-order shoppers' fresh produce choices. In the huge in-store bakery, there's a Gelato bar, along with a tapioca and rice pudding bar. There's also a cafe that serves scores of treats as well as dozens of fresh-brewed coffee drinks.

The "groceraunt's" meat and seafood departments feature, along with what seems like a mile of fresh meat and seafood cases, a catch-full of prepared foods offerings. There's a fish and seafood smoker right in the department, where shoppers can have their fish and seafood selections smoked by a store specialist. The meat department also has an extensive selection of meats--steaks, roasts, poultry and even exotics--that are marinated and otherwise ready for a customer to merely take home and cook as instructed. The department features organic, grass-fed, sustainably-grown and local meats, along with dry-aged beef, including prime varieties.

And, of course, the grocery and non-foods' portions (the grocery in "groceraunt") are super-extensive per Whole Foods' "new generation" and "lifestyle-oriented" retailing format.

The new store's (oops, "groceraunt's") shelves are packed with every imaginable brand of natural, organic, specialty, ethnic, gourmet and artisanal packaged food and grocery items, including lots of the retailer's own store brand goods. There's also a strong offering of locally-produced grocery products, as well as perishable, fresh produce and other local foods.

The "groceraunt's" Whole Body department features over 20,000 natural and organic health, body and beauty care items; eco-chic clothing, books, DVD's, music, candles, vitamins, dietary supplements, herbs and homeopathic remedies. It's an in-store version of a big, stand-alone health and wellness store.

The 50,000 square foot "groceraunt" also features an in-store organic gardening center. It features a full-scale floral shop, along with an extensive selection of plants, annuals, bulbs and garden supplies. It's designed not only to appeal to shoppers who have a "green thumb" but specializes in those gardeners' who's green thumbs also are organically-inclined.

Speaking of "green," the store is certified by the Leadership in Energy and Environmental Design (LEED) organization, a national group which rates and then certifies commercial buildings for environmental-friendliness.

When a shopper walks into the new "groceraunt" they see a huge, wide-screen LCD TV, which televises an in-store chef giving cooking lessons or grilling mouthwatering looking meats and vegetables at the in-store grill.

Although Whole Foods Market has recently built much larger stores then the 50,000 square foot Scottsdale "groceraunt," (such as its two recent 70,000-plus square-foot stores, one in Northern and the other in Southern California) the new Arizona marketplace packs in the retailer's traditional grocery and non-foods offerings, along with its traditional--and a number of new--prepared foods venues.

The combined food and grocery emporium and multi-cuisine restaurant should be a big hit in Scottsdale, which is an affluent and rapidly growing city of over 200,000 people located just a few miles from mega-city Phoenix. Scottsdale is know for its numerous, high-quality and innovative restaurants, and has a large "foodie" population.

The city and surrounding region also are major tourist attractions. Scottsdale is a popular year-round tourist hot spot do to its warm winters and sunny, hot spring and summer seasons. The region has numerous top-quality golf courses, lots of health spa's, and Scottsdale is filled with dozens of popular antique shops and scores of high-end boutiques and gift shops. Whole Foods Market should fit right in, primarily for the residents, but also for the tens of thousands of tourists who visit the area weekly.

Whole Foods will have 271 stores in the U.S. when the new Scottsdale "groceraunt" opens tomorrow. It will be the retailer's sixth store in Arizona. Other Whole Foods' markets are located in Tucson (2 stores), Tempe, Paradise Valley and Chandler.

The Supernatural grocer has plans to open a number of other, new stores in Arizona in the next couple years. In fact, Michael Besacon, president of the Southern Pacific Region for Whole Foods, who is in town for tomorrow's grand opening, also is meeting with local developers to discuss acquiring new store locations, according to Lynn Ducey, a reporter for the Phoenix Business Journal.

The natural and organic grocer is currently building a new 53,000 square foot "lifestyle-oriented" store in Tempe. It will replace the older, existing Tempe Whole Foods' store, which will be closed when the new bigger and better market opens later this year.

Regarding Whole Foods' coining of the term "groceraunt," beginning with the new Scottsdale store which will open tomorrow--but also likely to be used for many other stores that fit this hybrid supernatural grocery store/restaurant format--we think the term has legs. It's really one of the first new terms which describes the types of stores--lots of food service options along with grocery products--that Whole Foods and many other grocery retailers are building today. We have been calling Whole Foods' new stores, "lifestyle-oriented food emporiums" and "new generation stores" as two ways to describe their unique characteristics.

We will now add "groceraunt" to these two terms which we coined. Each of the three terms or phrases describes an aspect of what these new stores are. We like all three--and will use each of them--in our future discussions of Whole Foods' and its ongoing quest to redefine food retailing and create a dynamic, ever-evolving format.

Food & Beverage Packaging Innovation Memo: Coca-Cola (and Others) Target the Upscale Set With New, Sleek Aluminum Beverage Bottles

Beverage giant Coca-Cola wants to get a little love for its iconic cola drink from the upscale consumer set, so its decided to create and test-market a sleek set of contoured aluminum bottles for its flagship Coke brand. Yes, we said aluminum bottles.

The Atlanta, Georgia USA-based beverage company chose the annual Consumer Analyst Group of New York conference in the Big Apple last Friday (February 22) to introduce the attractive, new 250-ml soda bottles, which come in red, black and silver aluminum. Thus far, the beverage company is offering its regular Coke, Diet Coke and Coke Zero varieties in the red (pictured at left), black and silver aluminum bottles.

A Coca-Cola executive at the conference on Friday said the company is test-marketing the upscale-looking aluminum pop bottles in the U.S., and wanted to introduce them to the influential consumer analysts group as way to get attention and feedback on the new packaging concept.

Coke isn't doing away with its soda cans or plastic bottles. Rather, its test-marketing the aluminum containers as a new packaging option. The beverage marketer also hopes the new, sleek look will attract more younger consumers who are always looking for the next new thing, along with more higher-income, upscale consumers who are into style.

Currently, Coca-Cola isn't selling its snazzy, aluminum-bottled Coke varieties in retail stores. Rather, they have been introduced thus far in select night clubs and bars, and offered for sale at some special events.

The beverage marketer is however selling a version of its fairly new Coca-Cola Blak (pictured at left), a carbonated coffee-cola beverage, in a brown and black colored 250-ml contoured aluminum bottle in France. the aluminum bottle's color is very similar to the color of the carbonated coffee beverage inside.

In 2006, Cocoa-Cola bottled Coke and Diet Coke in similar sleek silver aluminum bottles for its year-long M5 promotion. The bottles, which were made for the beverage marketer by Exal USA, won a number of industry product packaging awards and were grabbed-up by consumers as collectors items.

Coke also recently introduced a version of its Caribou brand iced coffee line in small aluminum bottles. And Coca-Cola's number one competitor in the carbonated soda category, PepsiCo, has introduced a version of its Mountain Dew soda brand in aluminum bottles.

Exal USA also produces the current red, black and silver contoured aluminum bottles Coca-Cola is test-marketing in the night clubs and at selected venues, and is thinking about introducing to retail food and beverage stores.

Coca-Cola is far from the first U.S. beverage company to introduce its drinks in aluminum bottles. In fact, the concept of packaging beverages in aluminum bottles begin taking off in the U.S. about two years ago. Juice marketers, energy drink-type bottlers, beer companies and others began introducing beverage products in aluminum bottles in 2005, and the practice is growing. The trend also is catching on in places like France, Australia and Mexico, where some bottlers are doing the same.

In Australia, beer brand marketer Fosters recently introduced "Crown Lager" in attractive gold aluminum bottles. Fosters is now exporting the aluminum-clad lager to the U.S. as well.

In Mexico, a new beverage called "Hot Hangover Tea" is being marketed in silver, red and black aluminum bottles. The tea-based drink is said to cure a hangover in addition to tasting good. Of course, is one is drunk and drops the fairly heavy aluminum bottle on a toe, the cure might be worse than the affliction.

French juice company Teisseire is marketing a line of juice cordials in 330-ml aluminum containers in retail food stores, cafes and other venues in France. The bottles have a specially-shaped neck which is designed to make it easy for kids to grip. The bottle's graphics are colorful and bold against a brushed aluminum background. Teisseire--as do all the other beverage companies--say a key selling point of the aluminum bottles, in addition to the sleek look, is that they chill rapidly. The bottles also are 100% aluminum so are recyclable as well.

The beer category in particularly is seeing a mini-explosion in the use of aluminum bottles on a selective basis. In addition to Australia's Fosters, U.S. craft beer marketer High Falls Brewing Company, based in Rochester, New York, has two varieties of beer--Pale Ale and Honey Brown lager--which come in aluminum bottles, and which are selling extremely well, especially in bars and clubs--but also in supermarkets, convenience and liquor stores. Other brewers are following suit and introducing varieties of their beers in aluminum bottles.

Being such an international iconic brand though, the fact that Coca-Cola has introduced three of its Coke varieties in the sleek, contoured aluminum bottles is a big deal. Coke's innovation goes a long way in helping to legitimize the aluminum bottles as viable beverage packaging options.

It will obviously be interesting to see if Coca-Cola decides to expand its current pilot-test of the of the contoured aluminum-bottled sodas beyond the night clubs and selected special event venues anytime soon. The company executive at the New York conference said the success of the current pilot programs would be the primary determining factor regarding if and when Coke expands distribution of the aluminum -glad soft drinks nationally to food and beverage stores.

It seems to use the Coke in the contoured aluminum bottles would be perfect for selected distribution to upscale retailers like Whole Foods Market, Target, Cost-Plus World Market, Trader Joe's and the numerous regional, upscale food retailers throughout the U.S., like Publix in Florida, H.E.B. in Texas, Bristol Farms and Gelson's in Southern California, Wegman's on the East Coast, and many others. The same in the UK with retailer's like Waitrose, Sainsbury's and Tesco, for example.

We don't see the aluminum bottles becoming a big-selling mainstay of the giant beverage company's brand line-up though. Price competition is too aggressive in the carbonated soft drink beverage category to do any serious volume with a package that isn't dirt cheap to produce, bottle and sell.

However, we think the sleek, contoured aluminum Coke drinks could do very well as a niche item at the upscale-type of retailers we mentioned above, as well as be a big hit at higher-end night clubs across the U.S. and internationally. Think New York and Miami in the USA, London, Moscow, Mexico City and a few other international cities where style and beverage choice seem to be synonymous these days. For trend-setting consumers, packaging can be King.

Not only that, but if a consumer saves enough of the sturdy, aluminum Coke bottles, they can even melt them down and make something out of them: perhaps a backyard BBQ, a post-modern aluminum planter box for the garden, or a sleek red or silver aluminum wagon for junior.

In fact, perhaps Coca-Cola should launch a contest. Perhaps something like: Design the best

item made out of used Coke aluminum soda bottles. Not only would that be fun marketing, it would be the green thing to do. After all, reuse is even better than recycling from an environmental standpoint.

Fair Trade Foods' Memo: Sugar Gaint Tate & Lyle to Convert All of its Retail Sugar Products to Fair Trade by the End of Next Year

United Kingdom-based international sugar company giant Tate & Lyle has made a major move which will give the international Fair Trade foods' movement a big boost in its efforts to get more food and grocery companies to procure and market Fair Trade-certified products. The food and ingredients company, which has operations throughout Europe, the Americas and Asia, announced on Saturday it would commit to making all of its retail sugar products Fair Trade by the end of next year, 2009.

Tate & Lyle operates over 50 sugar and related sweetener ingredient production companies in Europe, Asian and the America's, and is one of the biggest refiners, marketers and retail sellers of sugar products in the world. It's the biggest sugar company--and one of the only actually--to make such a commitment to Fair Trade product sourcing and marketing to date. Tate & Lyle is the number one sugar brand in the UK.

The sugar and sweetener company says its first retail product to carry the Fair Trade mark will be its Tate & Lyle Granulated White Cane Sugar. The sugar comes from an accredited Fair Trade producer/partner in the Latin American country of Belize; Belize Sugar Industries, which is the only sugar refiner in that small country, and buys its sugar cane from over 6,000 local small farmers. These small farmers will now be paid the higher, Fair Trade price for their sugar.

The accreditation comes from the established UK group Fairtrade, which worked with the supplier and Tate & Lyle for the last two years, setting up the agreement. The UK-based sugar company has purchased non-Fair Trade sugar from Belize Sugar Industries for 35 years. Tate & Lyle says it plans on exporting at least 70,000 tons of the Fair Trade cane sugar from Belize in the first year.

According to industry estimates, the weekend announcement from the sugar company will increase the Fair Trade segment of the retail sugar category in the UK from just ~4 million (British pounds), to a whopping ~60 million by the end of 2008. Tate & Lyle will be the largest UK food company to carry the Fair Trade logo on its retail products.

Tate & Lyle is an iconic sugar brand in the United Kingdom, and is known throughout most of the world. Think Tide for laundry detergent or Best Foods and Hellman's for Mayonnaise in the United States, in terms of its brand equity. Having such a popular and even loved brand such as Tate & Lyle sugar carrying the Fair Trade logo--and containing Fair Trade sugar--will go a long way towards establishing "Fair Trade" as a common scheme in the UK--and help to do so throughout the world.

The timing for Tate & Lyle in making this change--and for the Fair Trade movement in the UK and internationally--couldn't be better. Sales of Fair Trade food and grocery products are growing by leaps and bounds in the nation. a just-released report said sales of Fair Trade ethical goods (food, groceries and other products) increased by a huge 44% in 2007, over 2006 sales. The same report pegged total Fair Trade goods' sales in the UK at ~225 million. Further, at least two in three UK households buy at least one Fair Trade product, the report says.

Tate & Lyle and the upscale British supermarket chain Waitrose have struck a deal in which Waitrose will be the first UK grocery retailer to sell the company's new Fair Trade granulated white cane sugar at retail. the sugar products' will then be sold at all of the UK's leading grocery chains after that.

In fact, we suspect the UK's "big four" supermarket chains--Tesco, Sainsbury, Asda and Morrison's (plus the Co-op)--will all be anxious to sell the initial 1 kilogram bags of Tate & Lyle Fair Trade cane sugar even before the agreement with Waitrose expires. The T&L brand is a major one in the UK as we mentioned earlier, and its a power-brand for supermarkets at retail. The added cache of Fair Trade should excite these retailers considerably.

Merchandising and sales of Fair Trade products by UK supermarket and other retailers is growing as fast as the 44% consumer growth rate. Currently, Sainsbury's--the UK's third-biggest food retailer--leads in the total dollar sales of Fair Trade products in the nation. The Co-op chain is second, followed by Tesco (the country's number one chain) and Waitrose.

The UK's number two retailer, Wal-Mart-owned Asda, doesn't make it in the top four Fair Trade-selling retailers' list. However, that should change soon, as the retailer is currently adding more Fair Trade goods to its stores to reflect the growing across the board demand for the products in the United Kingdom.

Belize Sugar Industries buys all of its sugar for refining from 6,000 small sugar cane farmers in that country. These farmers are represented by a group called the Belize Sugar Cane Farmers' Association. Giovanni Loria, the chairman of the farmers' association, says the extra money paid to the farmers because of the new Fair Trade policy will be used not only by the growers to improve their businesses and the quality of life of their families, but a portion of the premium will be put to work to build new schools and health clinics in the impoverished country.

The move by Tate & Lyle, one of the largest vertically-integrated sugar and sweetener corporations in the world, to go Fair Trade with its entire retail sugar products' line is a big one for both the company and for the international Fair Trade movement.

For Tate & Lyle, it means a substantial initial investment, and an ongoing increased cost of goods, since it will pay higher prices for the Fair Trade-certified sugar than it currently pays for non-Fair Trade certified sugar. However, it's likely those extra costs can be offset easily over time since the company will be able to charge a slightly higher premium for the Fair Trade sugar to its retail customers.

Further, being the largest sugar brand in the UK and parts of Europe--where Fair Trade product sales are soaring--we expect that once the Tate & Lyle brand begins carrying the Fair Trade logo, sales will increase considerably overall, as consumers who are currently buying one of the smaller brands of Fair Trade sugar at supermarkets will switch to Tate & Lyle brand.

Retail Memo:The Whole Foods Mrkt., Inc. as Monopolist Fallacy: How Sprouts Farmers Mrkts. and Others Are Growing Into the Heart of Whole Foods Country

Somebody--such as the U.S. Federal Trade Commission (FTC) and those folks who agree with its latest federal court appeal to stop Whole Foods Market, Inc. from continuing to integrate Wild Oats' stores into its operations--forgot to tell the Boney family that since Whole Foods Market acquired Wild Oats Markets, Inc. last September it has become a natural foods' retailing monopoly.

Further, the FTC and others apparently failed to send the Boney's--owners of Phoenix, Arizona-based Sprouts Farmers Markets and founders of the Boney's Marketplace and Henry's chains in Southern California--a memo explaining to them the combined Whole Foods'/Wild Oats' corporate operation and stores are such that they can control category retail prices and erect barriers to entry in key markets--like in the grocer's home state of Texas--against competitors.

Yes, indeed, not only did the Boney family fail to get that memo, apparently they also failed to read the numerous articles in the grocery trade and newspaper business publications which have suggested the Whole Foods'/Wild Oats' deal is going to kill retail competition. And, they certainly must have turned a deaf ear to the numerous industry suppliers, retailers and others who argue the same thing.

Why, you ask, do we suggest that Sprouts Farmers Markets just hasn't been listening to all the "anti-competitive" Whole Foods'/Wild Oats' natural and organic retail category monopolistic talk?

Well, if the 25-store natural foods' retailer was listening, Sprouts wouldn't be doing what it's doing: targeting Texas (where Whole Foods Market, Inc. has it's corporate headquarters and 16 stores, with four new mega-stores currently in development) and Colorado (where the formerly-independent Wild Oats' had its corporate headquarters, and where the now combined Whole Foods'/Wild Oats' has 18 stores, with two new stores currently in development) as the top-two new states in the Phoenix-based natural and organic grocer's strategy to become a national player in natural foods' retailing in the U.S.

However, that is just what Sprouts, which currently has stores in Arizona (15), Southern California (5) and Texas (5), is doing. The natural products' retailer has stores in Dallas, Flower Mound, Frisco, Plano and Southlake, Texas, with many more on the way.

Sprouts opened its first store in Texas in 2005 in the Dallas/Fort Worth (DFW) area. Two new stores which are currently in development will open later this year in the DFW region cities of Richardson and Murphy, Texas. However, that's just the start. Stan Boney, Sprouts' chief executive, says he sees the retailer opening as many as 15 stores in the next couple years in the DFW region, and many more in other parts of Texas.

Sprouts' stores are much smaller in size than Whole Foods Market stores, especially the 55,000 square foot -to- 80,000 square foot new generation stores the supernatural grocer is building these days. However, Sprouts' packs nearly as many in-store departments (on a smaller scale) as Whole Foods' does, in its smaller-format stores, which average 15,000 square feet -to- 35,000 square feet.

The stores' feature large fresh produce departments, which is a major drawing card for the natural foods' retailer. Additionally, Sprouts Farmers Market stores' have a large selection of natural and organic dry and perishable grocery items, expansive fresh meat and seafood departments, large vitamin and dietary supplement departments, and offer lots of fresh, prepared foods.

Many of the stores' also feature small in-store restaurants and cafes. Further, Sprouts' markets have in-store bakeries, in-store service delis, large bulk foods' departments, and specialty wine and beer departments, which feature lots of domestic and imported wines and craft beers at value-oriented prices, along with higher-end items in the two categories.

Sprouts' positioning puts a focus on selling natural and organic products across all departments for lower everyday price-points than Whole Foods' and most upscale supermarkets do. They aren't discount natural-products' stores by any means. However, price-point positioning plays a big part in the retailer's overall marketing approach.

Sprouts' also is using an interesting approach to locating its new stores in Texas, especially in the DFW region. In fact, this approach is in part a result of why the retailer enter the market initially in the first place.

In 2003-2004, Stan Boney and his team, who all have decades of experience in the industry (the Boney family founded the successful 10-store Boney's natural-products' stores and the Henry's chain, which later was acquired by Wild Oats Markets, in Southern California, and the current management team have all worked in senior positions for Wild Oats Markets), noticed the DFW market had many empty supermarkets, and many displaced workers.

In particular, Albertsons' and Rainbow Supermarkets had closed lots of stores in the market, and Boney and his team saw an opportunity to jump in with their Sprouts natural foods stores. The chance to get good leases on the empty supermarket buildings, combined with a large number of well-trained but out-of-work grocery store workers, pushed the retailer to open its first store in the region, something they had been considering but had yet to decide on until these two compelling factors came along.

When Sprouts' opens its two new Texas stores later this year, it will have nearly half as many stores in the state as Whole Foods' does. And with its aggressive store development plans in the Longhorn (and now Granola as well) state, it might even catch up to the Austin, Texas-based supernatural retailer in terms of total store count in five years, although Sprouts' gross sales won't come close to matching Whole Foods Market, Inc's sales in Texas or nationally.

However, the mere fact Sprouts Farmers Market is willing to take its own particular brand of natural foods retailing to Texas, which is Whole Foods country--and put its pocketbook behind the growth plan--demonstrates the retailer doesn't believe the Whole Foods' acquisition of Wild Oats Markets, Inc. has created an anti-competitive environment, at least as far as Sprouts and its management is concerned.

If that's not enough empirical evidence, lets look to Colorado, where Whole Foods Market now operates 18 stores, and will soon open two new stores, making its total store count in the Rocky Mountain state 20.

In many ways, Colorado--especially the Boulder and Denver regions--is Whole Foods' second corporate home. Boulder, Colorado is where Wild Oats Markets was founded, and where its corporate headquarters was for over two decades, until the acquisition by Whole Foods Market, Inc. in late 2007. In fact, recognizing the importance of Boulder as its second corporate home, Whole Foods has made sure not to close any of the existing Wild Oats stores in that city (except one, and that's because a new, bigger and better Whole Foods was being built a couple blocks away before the merger), and to maintain what is a bigger than normal corporate presence in Colorado than it normally would based on the size of the market.

Despite these key competitive facts vis-a-vis Whole Foods Market, Inc., Colorado happens to be the second key new state Sprouts' is targeting to grow its U.S. retail presence. The natural-products' retailer is currently completing two stores in Colorado, one in the city of Westminster and the other in Parker. Westminster is a northwest suburb of Denver with a population of about 107,000 residents. Parker, Colorado also is part of the Denver metropolitan area. It's a city of about 43,000, and is one of the state's fastest-growing towns. Parker's population has nearly doubled in just eight years, from about 23,000 in 2000, to 43,000 today.

Whole Foods has a store in Westminster, and four stores in Denver. Additionally, the supernatural grocer has more stores in the surrounding area. It plans to open a new and fifth 58,000 square foot lifestyle-oriented natural foods' store in Denver later this year.

It seems to us, if Sprouts Farmers Markets believed post Wild Oats-acquisition Whole Foods Market was the monopolistic supernatural bully its being accused of being by the FTC and others, one of the last places (along with Texas) it would target for expansion into would be the Denver, Colorado metro area--where Whole Foods has a strong store-base, and where it has second corporate headquarters status by virtue of buying the home state Wild Oats Markets.

However, that's right where Sprouts is going--and the natural foods' retailer plans to open numerous new stores in the Denver metro region, and elsewhere in Colorado--in addition to those first two units which are set to open later this year.

Shoppers we've talked to seem to like this concept. They say they like the size of the Sprouts' stores--small and manageable yet full of natural and organic products--and like having a traditional supermarket located close to the stores' for their basic grocery buys.

The smaller store format also helps keeps overhead lower for Sprouts. There's less space to heat and cool, fewer employees are needed than in a superstore, and upfront costs are much lower for the natural foods' grocer. This last fact is especially true because most of Sprouts' new stores, especially in Texas and Colorado, are going into empty retail buildings, many of which are abandoned supermarkets. The grocer also builds new stores from the ground-up.

Since the building shell already exists, along with the plumbing and electrical wiring, the retailer just guts the buildings interior and creates a Sprouts Farmers' Market inside. It also remodels the exterior as needed, paints the building to its specifications and brand identity, and does some exterior landscaping around the grounds. This process not only is much cheaper than building a grocery store from the ground-up, it also takes about half the time. Further, because these buildings are empty--some which have been for some time--Sprouts often obtains rather favorable lease terms on them.

The Arizona natural food's retailer has plans to enter other states it's currently not in, along with Texas and Colorado. The market and store development focus for this year is on the new Texas and Colorado markets--along with opening new stores at home in Arizona and in Southern California.

Whole Foods Market, Inc. doesn't have a whole lot to worry about from a major competitive challenge standpoint from Sprouts'. Whole Foods' annual sales are currently around $6 billion, while Sprouts Farmers' Markets do about $300 million a year. However, the Sprouts' stores' in Southern California, Arizona and Texas already have converted a few Whole Foods' store shoppers to them, and because the natural foods' grocer is focusing on beating Whole Foods' everyday retail prices, its stores could continue to eat into sales in those areas where the two natural food's retailers have respective units near each other.

After all, we remember like it was yesterday (it was only about ten years ago in fact) when major supermarket chains like Safeway Stores, Inc. and Kroger said Whole Foods Market, Inc. was just a little niche natural foods retailer, and that they weren't concerned about what it was doing, or if its sales would ever affect there stores. Well, that's sure changed. Safeway's Lifestyle format is getting closer and closer to looking like a Whole Foods' store these days, and the grocer's fastest-growing store brand is its O' Organics organic products' brand, which did $300 million in gross sales in 2007.

And over at Kroger Co., it's CEO announced last year he planned to make the company's stores the number one seller of organic groceries to the American "masses" in the next few years. In that speech, he highlighted Whole Foods' Market, Inc. as having one of the strongest influences on shoppers in terms of the fast-growing demand for organic foods in the U.S. Many Kroger banner stores also are creeping closer to a "Whole Foods Market look," just like Safeway's Lifestyle format is.

So, today's Sprouts could very well grow into tomorrow's smaller format version of Whole Foods Market, just as it grew from a seedling to a healthy sprout in just the last 4-5 years. Meanwhile, Whole Foods' senior management should actually be glad Sprouts' is moving into the Texas and Colorado markets, building more stores in Arizona and Southern California, and plotting its next move towards its strategy of becoming a national natural foods' retailer in the U.S.

Sprouts' expansion is empirical proof to the argument Whole Foods' used to the U.S. Federal Court in challenging the FTC's contention that a Whole Foods'/Wild Oats merger would create a single company (Whole Foods) monopoly in the natural and organic foods retailing category.

Whole Foods' lawyers argued--and won even though at present the FTC is appealing the ruling for a third time--that not only would the natural and organic foods' retailing category remain competitive after the merger due to the fact new entrants like Sprouts and others will come along because they will see an opportunity as a result of the merger, but because food retailing has changed altogether (see Safeway and Kroger above), traditional supermarket operators will compete head-to-head with Whole Foods now and in the years to come.

We first made this anti-competitive as hogwash argument a few days after Whole Foods' and Wild Oats' announced the merger/acquisition in August, 2007. This was even before The FTC made its monopolistic, anti-competitive argument, and before Whole Foods' responded with its counter-argument.

What we knew then, and know now, is what Sprouts' senior management knows--along with what many of you reading this know--which is that the U.S. food and grocery retailing industry is so dynamic and segmented today not only will many natural products' retailers like Sprouts, Sunflower Farmers Market, also based in Arizona, and others jump into the competitive fray, but that supermarket operators like Safeway, H.E.B, Publix and dozens more have already entered into a form of retailing that competes with Whole Foods on many levels.

In fact, we go as far as saying that although not in the short run--but in the medium to long run--the Whole Foods/Wild Oats merger is actually going to create a more varied and stronger competitive natural and organic products retailing market than existed prior to the acquisition. In fact, it's already started to happen, just five months after Whole Foods began integrating Wild Oats into its operations.

For example, in addition to Sprouts' aggressive growth plan, Just last week, Canadian natural foods' chain Planet Organic acquired 5-store, Santa-Cruz, California-based New Leaf Community Markets, a popular small chain which has been in the Northern California coastal market for two decades.

Shortly before that, Planet Organic Health Corp., which is Canada's biggest natural products' retailer, purchased Mrs. Green's Natural Markets, the Scarsdale, New York-based natural foods' chain that operates 11 stores in New York, New Jersey and Connecticut. Look for Planet Organic to make additional, similar acquisitions in the U.S.--and sooner rather than later.

Further, the above-mentioned Sunflower Farmers Markets recently raised $30 million in investment capital and plans to grow the Arizona-based natural foods' chain by ten or more new stores a year for the next five years. The natural foods' retailer currently has 14 stores in Arizona, Colorado, New Mexico and Nevada. Seven new stores are set to open thus far this year, including the grocer's first two stores in Utah, which is a new market for Sunflower Farmers Market. The other five new stores announced thus far for this yearare all located in Colorado.

Meanwhile, unlike what we knew (and know) when we first wrote way back in August-September, 2007 that the Whole Foods'/Wild oats' deal would actually create more competition in the natural products' retailing category in the medium to longer term than stifle it.

And, unlike what Sprouts Farmers Market, Planet Organic Health Corp., Sunflower Farmers Markets and many other retailers know--based on their respective aggressive expansion plans--the FTC and many others in the industry still don't get. They continue to believe the Whole Foods' acquisition of Wild Oats Markets has created a monopolist that can erect barriers to entry and control retail pricing in the natural and organic products' retailing category.

They're wrong. Food retailing in the U.S. is far to dynamic, well-financed and niche-oriented to allow that to happen at this point in time. In fact, the competition is just heating up, despite the sluggish U.S. economy. Next time we will discuss the conventional supermarket chains that are creating competitive flames in natural and organic foods' retailing in the U.S.