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.

Green Retailing Memo: California State Assembly Committee to Vote on Plastic Bag-Fee Measure Monday; Many Grocer's Support Bag-Fee Legislation

On Monday (April 14) the Natural Resource Committee of the California State Legislature is set to vote on a measure that would impose a mandatory fee of 25-cents per-bag on the use of free, single-use plastic carrier bags at all grocery stores and pharmacies in the state, regardless of the stores' size.

According to the legislation, which if passed will then go to the full California State Assembly for a binding vote, the money raised by the 25-cent per single-use plastic carrier bag fee would be divided-up using a per capita formula between the state's local governments to be used for litter prevention and reduction efforts and programs.

If the bill makes it out of committee to the full California State Assembly and then passes that body with a majority vote, it would be the first statewide mandatory per-bag fee law in the United States.

There has been very little media attention in the Golden State regarding the proposed statewide 25-cent single-use plastic carrier bag legislation. This is largely because the vote on Monday is only a committee vote. While in committee, legislation can still be amended and changed, although since the bill is coming to a vote on Monday that's generally a signal the committee majority party chair (Democrat) and the ranking member (Republican) have agreed most of the amendments to the bill if any have been made and it's time for a full committee vote.

Our California state government sources tell us the chances for the 25-cent per-bag fee legislation to pass in the Natural Resource Committee on Monday are pretty good.

One interesting aspect of the proposed legislation is that to date there has been very little if any opposition from either the state's supermarket and pharmacy retailing trade associations, such as the California Grocers' Association, or individual grocery retailing chains or independents in the state.

In part this is because as we mentioned earlier, the legislation is still in committee rather than being up for a binding vote in the full state assembly.

However, that's only a small part of the reason for the lack of any significant opposition to the proposed law.

The more interesting aspect of the story is that numerous supermarket chains and independent grocers in the state agree with the 25-cent per plastic bag fee legislation, or are at least not inclined to oppose it. Part of the reason these grocery retailers might agree with the proposed statewide law is they see either outright bans or per-bag fee laws coming on a city-by-city piecemeal basis anyway.

As mentioned above, San Francisco passed a single-use plastic carrier bag law last year, which has now been in affect for about eight months. The law is limited in that only grocery stores and retail pharmacy's which operate stores over 10,000 square feet are banned from offering shoppers the free plastic bags to pack their purchases in. Department stores and mass merchandisers regardless of size are exempt from the law, as are the city's hundreds of small mom and pop grocery stores, convenience stores and green grocers, among others.

Across the Bay, the city of Oakland has passed a similar law. However it's currently in the courts because an association representing plastic grocery bag manufacturers has challenged the ordinance.

Other California city's, ranging from nearby Bay Area cities Berkeley and Palo Alto, to tiny Willits in the north coast, Davis in the Sacramento region, and Santa Monica and others in Southern California, are proposing outright bans on the single-use plastic carrier bags.

Huge Los Angeles County also is getting ready to propose legislation that would either ban the bags completely or impose a per-bag fee.

The state of California also passed a law last year which requires all supermarket chains and independents with stores over a certain square footage to place plastic grocery bag recycling bins in their stores and to sell reusable shopping totes in each store.

It's this climate which we believe is the reason there hasn't been any significant industry opposition to the proposed per-bag fee legislation thus far. In fact, numerous California grocers seem to be just fine with--and in some cases even supportive of--the proposed bag-fee law which will be voted on in committee on Monday.

Bay Area grocers voice support for per-bag fees at meeting

For example, at a meeting of grocery industry leaders and grocers held yesterday morning by the Palo Alto Chamber of Commerce in the San Francisco Bay Area city of Palo Alto, a number of grocers attending the gathering voiced their support of a single-use plastic carrier bag fee rather than seeing outright bans happen on a city-by-city piecemeal basis, which is occurring.

The city of Palo Alto is planning to implement a law on April 28 which will ban plastic grocery bags from being used in the city's 13 largest supermarkets and pharmacy's.

The grocers at yesterday's meeting said they oppose the Palo Alto plastic bag-ban. But not perhaps for the reasons you might think.

Although the grocers oppose the city ordinance, they said it isn't because they have a fondness for the single-use plastic bags. Rather, they argued since laws like the San Francisco bag ban have been implemented (some of the grocers at the meeting have stores in San Francisco as well as in Palo Alto) what they've seen is a surge in shoppers requesting paper bags, even though all of the stores are selling reusable shopping bags for as little as 99 cents each, and have even held free reusable bag giveaway events to encourage shoppers to bring their own bags to the stores.

Dave Bennett, President of local upscale supermarket chain Mollie Stone's, which has a store in San Francisco, along with a number of stores in the region, told the group since the plastic bag ban was enacted in San Francisco "our paper bag usage (in that store) has shot through the roof."

Dan Conway, the corporate director of state and local governmental affairs for supermarket chain Safeway Stores, Inc. which is headquartered in the Bay Area, said paper bags cost grocers about 10 times as much as the single-use plastic carrier bags. He didn't say if Safeway is opposing or supporting the plastic bag fee legislation set for a committee vote on Monday.

The consensus among the grocers at the Palo Alto Chamber of Commerce meeting yesterday was that they would go along with some sort of per-bag fee, including putting a surcharge on paper grocery bags as well as plastic carrier bags.

They further said they are in support of an aggressive campaign, which they would help support financially and materially, that would launch an educational program in the city, which is home to Stanford University and many high-tech companies, designed to encourage shoppers to use reusable bags, including holding frequent free reusable bag giveaway days in their stores.

The grocers, along with Tim James who is with the California Grocers Association trade organization and was at the meeting, also said they want all retailers to be included in any law which puts a fee on plastic and paper bags, not just supermarkets and pharmacies.

"Allowing consumers to use plastic bags at some stores, but not at others (types) sends a mixed message," James told the group at the meeting.

Another grocer, John Garcia of the local multi-store independent JJ&F Fine Foods, agreed with James. He said, "My personal feeling is you just make this big bang (a law imposing a fee on both plastic and paper carrier bags) and then there is no confusion. Everybody does the same thing, and it's done."

Safeway's Conway told the group instead of banning the plastic bags, the city council should create a per-bag fee scheme, perhaps indicating that Safeway will support the statewide plastic bag-fee scheme set to be voted on in the Natural Resource Committee on Monday?

"Adding a fee would literally solve the problem with single-use bags," Conway said. "You (the city of Palo Alto)would see the swiftest and most dramatic decline in single-use bags in the entire country, hands down," he added.

Other representatives of Bay Area supermarket chains and independents joined in the chorus saying they too would likely support a single-use plastic carrier bag fee like the one set to be voted on by the Natural Resource State Assembly committee on Monday.

A spokesman for upscale Bay Area-based grocery chain Andronico's Market, which has one store in Palo Alto and others located throughout the Bay Area, said he supported charging a fee for the now free plastic grocery bags.

"You (the city of Palo Alto) need to take it (plastic bag ordinance) to the next step," he said. "If we've been giving these (plastic grocery bags) away since the 1970's and not getting reuse out of them, it seems like the fee would be the most effective; you might even get national attention," he told the Palo Alto city officials who were present at the meeting.

Local independent grocer Steve Piazza, who owns the 3-store upscale Piazza's Fine Foods chain in the area, said he too would go along with a law that imposes a per-bag surcharge on the now free plastic bags, as well as on paper grocery sacks.

The city officials at the meeting, along with the grocers present as well as the local business leaders who are members of the city's Chamber of Commerce, said at the meeting they felt it was an historical morning. The grocers' commented it was the first time they could recall being able to sit down with city officials as a group and be able to give input and perhaps shape or change a policy that effects them directly.

Palo Alto is set to enact its single-use plastic carrier bag ban on April 28. The law will only ban supermarkets and pharmacies over a certain square footage from offering the free, single-use plastic carrier bags in their stores. That's why only 13 local supermarkets are affected by the ban. All other types of retailers, along with smaller grocery and convenience stores will still be able to use the single-use plastic carrier bags.

After the meeting, Phil Bobel, the city's environmental compliance manager who is responsible for making the ban happen on April 28, said he was willing to work with the grocers on the issue, and would consider recommending to his bosses in the city that the upcoming ban perhaps be postponed until September, so the city and grocers could work together on the issue.

Further, he said if the grocers' seriously supported and worked on gaining support in the next few months for a per-bag fee instead of the ban, he might consider suggesting his bosses take that matter to the city council for review before September.

After the meeting however, a number of city officials and others in the audience told us they believe the city will go forward with the single-use plastic carrier bag ban on April 24 because such a large majority of Palo Alto voters are in favor of it.

A number of these actors and observers told us it would be a good idea to impose an across the board per-bag fee for every type of retail store in the city; but not instead of the upcoming April 28 ban, but rather in addition to it.

The argument from many in the city is that these 13 largest supermarkets and pharmacies (especially the supermarkets) account for a much higher percentage of plastic carrier bag use because of the nature and volume of the businesses. As a result, they believe by starting with the largest supermarkets and pharmacies, then moving on perhaps later to other retail classes of trade, they will see an immediate decrease in litter for example, from the bigger-store plastic bag ban.

SoCal grocers not as vocal on the issue...yet

We haven't heard similar support for local or a statewide plastic carrier bag fee law from grocers in Southern California, although since numerous cities in that region have bag-ban laws set to be voted on by city councils soon, they may feel the same way as their Northern California cousins do.

Additionally, Safeway is a major supermarket industry player in Southern California (as in northern) where it operates the Vons' chain. Therefore, if California's leading grocery chain were to support the statewide bag-fee legislation in committee that would go along way to not only gaining similar support from other grocery chains but from the California Grocers Association as well.

Further, as mentioned early in this piece, Los Angeles County is working on passing a law that would impose a charge on all single-use carrier bags used by supermarkets in that highly populated Southern California county.

This means grocery chains like Vons, Ralphs and many others which have stores in Los Angeles County and in numerous other counties in the region, will be able to offer plastic bags in their stores outside Los Angeles County but not in those stores in the country. Piecemeal laws like this can cause havoc for retailers.

In addition, if many of the cities pass their own pending plastic grocery bag bans, that means the region's grocers will end up with a further piecemeal system--some stores in some counties and cities offering plastic bags, while those in the cities with the bans won't be able to.

Most of Southern California's supermarket chain and independent retail companies are likely to come to the same conclusion the grocers at yesterday morning's Palo Alto Chamber of Commerce meeting have we think: that a uniform, statewide single-use plastic carrier bag fee (of say 25 cents a bag) might be far better than either county-by-county or city-by-city outright bans or piecemeal bag fees.

Whole Foods Market to stop using plastic grocery bags on Earth Day

One major event that's going to put single-use plastic carrier bags in general, and the legislation to be voted on in committee on Monday specifically, in the spotlight in California is that on April 22, Earth Day, Austin, Texas-based Whole Foods Market, Inc. will voluntarily stop using single-use plastic carrier bags in all of its stores in the U.S., Canada and the United Kingdom.

Whole Foods' has numerous stores, and is building many more, in California. The supernatural grocer also garners lots of publicity in general in the California media, and will garner even more in the days leading up to the Earth Day self-imposed plastic bag ban.

All of Whole Foods' California stores (and most of those throughout the U.S.) are planning major events on Earth Day, including celebrating the retailer's voluntary plastic bag ban. Whole Foods stores will be giving away free reusable shopping tote bags, selling others at discount and holding major in-store promotions celebrating the earth, environmentalism and sustainability.

No other grocery chains in California have yet to announce that they, like Whole Foods, plan to stop using the single-use plastic carrier bags in their stores.

We expect Earth Day (April 22) and the days leading up to the event and after, to be a watershed moment in terms of the single-use plastic carrier bag issue internationally, nationally in the U.S., and particularly in California if the Natural Resource Committee passes the plastic bag-fee legislation on Monday and sends it to the full California Assembly for a binding vote. Even if passed by the full State Assembly, such a bill would still have to be signed by the governor in order to become law.

Further, if the bill is killed in committee on Monday, that will increase and intensify the local county and city bag-ban legislation efforts in California, which is the focus at the local level rather then per-bag fee legislation.

This story is just beginning. We will be following closely, starting with bringing you the results of the Natural Resources Committee vote on Monday.

The issue is a global one. Single-use plastic carrier bag bans are happening all over the world. Earlier this year the world's largest country, China, banned every retail store in the nation from using the bags. Other Asian countries and numerous African nations are doing the same.

Additionally, the United Kingdom's Parliament is currently debating the enactment of either an outright bag ban or a per-bag charge in that nation. Prime Minister Gordon Brown has already said he is in favor of passing either an outright ban or a per-bag fee scheme before the end of this year.

Ireland has already passed a nationwide law which puts a charge on every single-use plastic bag used by every retailer in that country. The law has been in effect for about two years. The country's government says plastic bag use has been reduced by nearly 90% since the law was passed.

The European Union is discussing a nationwide ban or bag-fee scheme as well. In addition, there is legislation pending in Australia on either a ban of per-bag fee, as there is elsewhere in the world. It's a global issue--and it's heating up.

If the California 25-cent per bag fee legislation does pass, it will have global influence. Not only is California the largest state in the U.S., but it has the world's fifth-largest gross domestic product, which makes its economy even bigger than those of a number of European nations.

The state also is a trend setter in the grocery industry. If the Golden State's grocers and grocery trade associations do support the bag fee legislation, that could open the door for grocers all over the U.S.--and elsewhere like the UK--to do the same. Stay tuned. We will be.

Special Report: Inside Tesco's Hemet, CA Fresh & Easy

Observation & Analysis: Tesco's First Fresh & Easy Neighborhood Market in Hemet, CA is Basic and Utilitarian, With A Touch of 'Simple Upscale'

The "Kitchen Table," a full-service food sampling station in the Hemet, California Fresh & Easy Neighborhood Market. (photo: Financial Times.)

Tesco's Fresh & Easy Neighborhood Market in the Southern California city of Hemet, which we reported last week was already open, is a rather basic and utilitarian store in terms of its design and merchandising. Here's a look inside below.

The Fresh & Easy grocery market in Hemet is located in a renovated building rather than being a new store built from the ground-up. Tesco is both renovating empty retail store buildings and constructing stores from the ground-up in California, Nevada and Arizona for its Fresh & Easy grocery markets. Most of the five stores, which start opening tomorrow (five in Southern California) and next week (five in Las Vegas, Nevada), are in renovated buildings.

The outside of the Hemet store is attractive design-wise, sporting cream-colored and green paint, and the colorful green Fresh & Easy logo. It's a basic retail box however, owing to its former use as a conventional retail store. There's ample parking out front and around the store and some decent landscaping--but nothing we would call upscale. Perhaps "simple upscale" is a good term for the store design outside and in. It's a shade more upscale than a conventional grocery store or convenience store, but nothing on the order of a Whole Foods store, or even a Trader Joe's or a Safeway Lifestyle store.

Inside, the Hemet Fresh & Easy is a combination of conventional neighborhood grocery store and Trader Joe's-like. The store's lighting however is somewhat out of the 1950's: It's old school fluorescent bar-type light fixtures with tube lights rather than the softer-type of lighting most supermarkets in the U.S. use today.

The flooring is basic and the walls are painted in cream and green colors to capture their branding message. The store's shelving is out of the "limited assortment" or warehouse grocery retailing school. Grocery products are merchandised in cut-cases on metal "warehouse style" shelves in the core of the store. No Metro Rack shelving or sleek black metal shelving for this Fresh & Easy market.

The warehouse-style shelves are similar to those Trader Joe's uses but we think Tesco might want to go with something a bit more upscale in its other stores, especially those located in higher income neighborhoods. Slightly higher-quality shelving also will allow for stocking more specialty and natural foods items, which often require single or double facings due to slightly slower movement than basic grocery items, which can warrant full cut-case treatment.

We peg the store's retail square-footage at about 10,000-13,000 square-feet. It falls right into the store size Tesco announced and all of us who have been writing about the grocer repeated. It looks like there's plenty of back-room space as well. Our take is that the store was much larger, but in its renovation process Tesco shrunk the retail square-footage so the store could fit their target size. Nothing wrong with that, merely an observation.

The Hemet Fresh & Easy does have one feature, called the Kitchen Table, which we're comfortable calling upscale. The Kitchen Table is a kiosk-type area where a store employee is available to heat up and sample prepared foods items for store shoppers. The Kitchen Table, pictured at the top of this story, is a warm and attractive area; essentially a permanent, fully-staffed in-store demo station. We like it.

One store operations feature we question is that all of the checkout stands have self-service scanners which require shoppers to scan their own items, although clerks were there helping and bagging the items for store customers. Whether each checkout stand was staffed just for the store opening we don't know. We asked two store clerks and neither one could tell us if eventually customers would be made to scan and bag their own groceries all the time.

However, one clerk did tell us the plan is to have customers scan their own groceries as a matter of policy. And down the road, rather than having a clerk at each checkout stand to help, as was the case when we were in the store, he said there would likely be two or three clerks up front to assist if needed, depending on how busy the store was.

We're betting Tesco will abandon the self-scanning checkout system--or at least make it optional. American shoppers often like the option of scanning their groceries themselves--but hate it being mandatory. It's been tried all over in the U.S. and only works at a select few deep- discount-type stores where people don't mind the self-service because they're shopping the store exclusively on price.

Fresh & Easy brand grab-and-go prepared chicken salad, and its resusable tote bag, which the grocer says it will replace for free--forever

The Hemet store's product selection is a combination of Tesco's private label grocery, perishable and prepared foods items, under the Fresh & Easy brand, and national brand grocery and other products. There was a relatively small selection of specialty, ethnic and natural foods vis-a-vis a Trader Joes, for example. Most of the fresh produce items are in small containers (like at Trader Joe's) or in plastic bags. There's also a decent selection of fresh meats.

Fresh & Easy private label prepared foods are extensive in the store. The prepared foods offerings range from basic items like grab-and-go chicken and tuna salad, to pizza and more upscale offerings, like heat-and-eat entrees and complete dinner meals. Upscale offerings include items like mixed salad greens with balsamic dressing, prepared Japanese noodles and specialty dinner entrees. These prepared foods are all made at Tesco's huge 820,000 square-foot distribution center in nearby Riverside and delivered daily to the store.

From a pricing standpoint, Tesco is clearly trying to draw primary shoppers for basics like Milk, bread, eggs and the like. Retails on these basic items are on par with supermarkets (including discounters) in the area. Many of these staples, such as sugar, butter and more, are branded under the Fresh & Easy label. The store also carries a decent selection of nation brand basic grocery items. Brands such as Tide, Skippy (peanut butter), Best Foods and numerous others share space with the Fresh & Easy branded basic grocery and perishable items.

The store was well-staffed, as one would expect since it's their first (and currently only) Fresh & Easy open. It's clear Tesco understood there's no better impression at retail than a first impression. Store operations also were going smoothly. We didn't detect any major problems or glitches while there.

Five other Fresh & Easy stores open tomorrow in Southern California. We will be interested in comparing and contrasting the design and look of those five new stores with the Hemet grocery market.

The Hemet store was rather busy during the times we were there. It has its "official" grand opening tomorrow, along with the five other Southern California stores. Shoppers we talked to were overall positive about the store, saying it's a welcome addition to the neighborhood in this desert city of about 50,000 people. It's not an underserved community in terms of retail food stores. There are numerous large supermarkets, smaller independent grocers and convenience stores in the city. It will be interesting to observe how Tesco's first Fresh & Easy grocery market does in Hemet, and if it takes market share from both supermarkets and traditional convenience stores.

Breaking News: First Fresh & Easy Market Opens A Week Early

The Fresh & Easy Neighborhood Market in Hemet, California is open for business a week before it's official grand opening date of November 8.

The sign at the Fresh & Easy in Hemet, California says "We're Open." The store is open a week before it's official grand opening date. (Photo by RL for Curbed LA blog.)

The first Fresh & Easy Neighborhood Market is open in Hemet, California, a week before the first six stores in Southern California are scheduled to open next Thursday on November, 8. Hemet is located in Southern California's desert region. (View location map here.)

Yesterday we reported here the Curbed LA blog wrote that a reader and worker at Tesco's Southern California operations told the publication the Hemet store was open and conducting a "soft opening" prior to the official grand opening on November 8.

We obtained the phone number to the Hemet store and, after calling late yesterday afternoon and in the evening and not getting an answer, called this morning and were greeted by a human voice on the other end of the line. That voice belonged to an employee of the Hemet Fresh & Easy grocery market, who confirmed for us that it indeed is open.

The store employee wouldn't tell us much more however, as he said--and we understood--he wasn't supposed to talk too much about the fact the store was open a week before it's supposed to be. The store associate did tell us the market was pretty busy despite the fact it isn't supposed to be open. The worker also said it was a good idea to open "early" so store staff could get the "kinks out" and be ready for the grand opening on November 8.

A sneak peek picture of Fresh & Easy's advertising circular. The picture was taken by LR (using a camera phone) and first published in today's edition of the Curbed LA blog.

Meanwhile, in today's Curbed LA blog, writer J. Williams has a report from a reader, RL, who visited the Hemet Fresh & Easy store today, and took the three pictures published above adn below.

RL, wasn't all that impressed with the Fresh & Easy format or the Hemet store though. He told J. Williams of Curbed LA "the best way I can think to describe the store is that it is a cross between a Trader Joe's and an old school supermarket of the 50's and 60's based on its size. Honestly, I was not that impressed, RL told J. Williams. "I don't think they really have much over TJ's, but it is great they are entering markets TJ's has thus far ignored." Trader Joe's doesn't have a store in Hemet--yet.

RL also said there were numerous employees in the Hemet Fresh & Easy, "which I assume is because they are expecting lots of curious customers" at the "soft opening," he told Curbed LA.

Curbed LA's J Williams conducted a Q&A with reader and new Fresh & Easy shopper RL, which you can read here. Among other things, RL said the produce selection wasn't extensive. It's similar to Trader Joe's in that the fruits and vegetables are a mix of bulk produce, with others sealed in bags and some in small containers, he said. RL says all of the Hemet store's checkout lines have the option of being self-serve, featuring scanners shoppers can use themselves. "But check this out," a pleased RL tells J. Williams: "They (store clerks) still bagged the items for me as I was registering them with the (self-service) scanner."

Fresh & Easy brand prepared Chicken Salad and the retailer's reusable shopping tote bag from the Hemet store. (Photo by RL, first published in today's Curbed LA blog.)

RL said he generally liked the prepared foods offerings but added what he saw in the Hemet store was fairly basic "American" fair rather than anything upscale or authentically ethnic. Of course, this is one store, and a "soft opening," and we expect Fresh & Easy will offer additional, more upscale and ethnic prepared foods along with these more basic items as more stores open and time goes on.

According to RL, the store's overall prices were reasonable, and he especially liked the 99 cent chocolate milk he purchased to have with his lunch of chicken salad and tortilla chips.

We're headed to Southern California next week to check out some or all of the six Fresh & Easy stores scheduled to open on November 8. We plan on dropping into the Hemet store a day or two prior to the 8th to check it out for ourselves. The store employee we talked to on the phone today told us they are planning some pre-grand opening events as well as the official events and promotions scheduled for November 8. We will report what we find and observe here. We're also hearing rumbles from our sources that a couple other Southern California Fresh & Easy stores may already be open, and will report on this as we obtain further information.

Tesco Offers Pre-Grand Opening Fresh & Easy Tease

Tesco officially opens its first six Fresh & Easy Neighborhood Markets in the U.S., in Southern California, next Thursday, November 8. Of course, as you know from reading the piece above, the Hemet, California store is open ("soft opening) and operating ahead of schedule.

However,with less than a week to go before the official grand opening of its first six stores in Los Angeles, Anaheim, West Covina, Upland, Arcadia and Hemet, the retailer is giving potential customers (and the media ) who can't drop into the Hemet store, a preview of its Fresh & Easy store operations, including some retail prices for selected prepared foods and grocery items.

Tesco says it will offer competitive, everyday low prices in its Fresh & Easy Markets by keeping things simple and cost-effective, despite the store's offerings of upscale, prepared foods and specialty and natural groceries, fresh produce, meats and basic groceries.

Additionally, as you can see from the items in its advertising circular from the story above, the retailer is appealing to everyday shoppers by featuring staple grocery items like Tide laundry detergent, Bounty paper towels, Colgate toothpaste, Gatorade and other basic items in its promotional circular. There's also a nod to Southern California's Hispanic shoppers, with a 99 cent feature price for Tapatio Hot Sauce, which is a staple for many Latino consumers. (At 99 cents it's a good price as well.)

To keep prices low, the grocer says it's taking an operational approach which includes labor-saving processes like using display-ready packaging for stocking its shelves, eliminating the need (and labor intensiveness) of putting products on the shelves one item at a time. All the grocery products delivered to its stores from the retailer's Riverside, California distribution Center will be in these "case-ready" ready-to-stock cartons. Tesco says all of these cartons will either be recycled or reused.

Further, all Fresh & Easy grocery markets will receive deliveries of fresh meats, produce, prepared meals and other perishables daily. Fresh products will be delivered to the stores in reusable containers. The retailer says these daily deliveries will allow for cost-cutting because there will be little or no product spoilage at store level, and inventory will be kept to "just in time" standards.

Another significant cost-cutting measure, which will allow for competitive, every day low prices, according to Tesco, is that all of the Fresh & Easy stores are being built in a way that should allow for about a 30% reduction in energy use compared to a typical-sized grocery store in the U.S.

To demonstrate what it says are its competitive, everyday low prices, Tesco released some everyday retails for a selected number of products today. Below are a few examples:

Fresh, Prepared Foods:

~Fresh & Easy brand heat & serve Mac & Cheese entree. 17oz. $2.99

~Fresh & Easy Mashed Potatoes with Cheddar Cheese and Bacon,17oz, $2.99

~Fresh & Easy Cooked, Sliced Breast of Chicken, 16oz, $4.99

~Fresh & Easy Chicken Teriyaki Bowl, 10oz, $1.99

~Fresh & Easy Field Greens Salad with Balsamic Dressing, 9oz, $1.99

Basic and Organic Grocery and Perishable Items

~Fresh & Easy Milk, gallon, $1.98

~Fresh & Easy Cage-Free Brown Eggs, 1 dozen, $1.98

~Fresh & Easy Organic Breakfast Blend Coffee, 12oz, $4.99

~Fresh & Easy Diced Tomatoes, 14.5oz can, 61 cents

As you can see, Tesco is putting a major focus on its private label Fresh & Easy brand, which is a variation on their long-time Tesco private label brands in the UK and throughout the world. Fresh & Easy stores also will carry a selection of national brand groceries, specialty, natural and organic groceries and perishables. The retailer says all of its Fresh & Easy brand food products are free of trans-fats, artificial colors and flavors, and only use preservatives "when absolutely necessary."

In addition to the six Fresh & Easy Neighborhood Markets opening in Southern California on November 8, five stores will open in the Las Vegas, Nevada metropolitan region on November 14. On November 28 a third store is set to open in Southern California's Orange County, in the city of Laguna Hills. Fresh & Easy stores will open in Arizona--as well as more in Southern California, including in San Diego, and in Nevada--before the end of the year.

We've also reported here that Tesco has secured its first location for a Fresh & Easy store in Northern California in San Jose. The retailer also is looking throughout Northern and Central California for store locations, including Bakersfield in the Central Valley, where it has a specific location picked out.

Tesco plans to have at least 100 Fresh & Easy Neighborhood Markets operating in California, Arizona and Nevada by the end of 2008.

Tesco Fresh & Easy Roundup: What Others Are Saying

Tesco's Fresh & Easy Neighborhood Markets' format and impending store openings are garnering lots of media attention. Below we bring you a few stories we found informative and interesting on the eve of the Fresh & Easy store launch:

A Second American Revolution? Maybe:

In a piece titled, Big-Headed Tesco May Start A Retail Revolution, Sarah Mahony of Marketing Daily interviews retail consultant Herb Sorenson, global scientific director of shopper insights for the firm TNS North America, about Tesco's coming to America, its Fresh & Easy format, and what impact it and the retailer may have in the U.S. Read the article here.

Tesco Raises $2 billion for U.S. Fresh & Easy Markets:

Tesco has raised $2 billion in a bond issue in the United States just a week before it launches its first U.S. retail venture--the Fresh & Easy Neighborhood Markets convenience-oriented food retailing chain. Tesco said it raised the large sum as a way to broaden its investor base in the U.S., according the the London Times.

The bond issue is Tesco's first ever in dollars rather than the British Pound. The retailer told the Times it would use the $2 billion for general purposes, including it's aggressive store building program for the Fresh & Easy chain in the U.S. Tesco has thus far said it will spend $250 million per year to develop the Fresh & Easy chain. The company has said it wants to build a $6 billion dollar-plus franchise in the U.S. with Fresh & Easy. Read more here.

(Note: As we reported here billionaire Warren Buffet is one American investor who is bullish on Tesco and Fresh & Easy. Over the last two years Buffet has been buying Tesco stock, and currently holds shares worth about $1 billion.)

Corporate Giving: Tesco Donates to Charities For Each Store Opened:

Today's Whittier News reports that Tesco will donate $1,000 to a charity chosen by store employees each time a new Fresh & Easy Neighborhood Market is opened. The first charity selected to receive a $1,000 donation is Foothill Unity Center in Arcadia, California. The Arcadia store is one of the first six set to open on November 8. Read more about the donation and the program here.

Southern California Grocers Not Standing Still For Fresh & Easy Stores

Tesco may be opening as many as 75-80 Fresh & Easy grocery markets throughout Southern California over the next two years, but that's not stopping food retailers in this highly competitive, multi-format market from going forward with building new stores and wringing every last merchandising effort out of their existing units.

Today's Los Angeles Times has a feature article that describes how food retailers like Whole Foods, Safeway (its Vons and Pavilions banner stores), Ralph's Supermarkets and Sprouts, a natural foods retailer, are building new, big upscale stores featuring lots of natural, organic, specialty and gourmet foods, in Southern California.

Chief among these grocers is Whole Foods, which will open it's largest store (at almost 80,000 square-feet) in the Western U.S. next week in Pasadena. The huge, two story store is packed with natural and organic groceries and non-foods, has three restaurants in-store, and more special lifestyle features than nearly any other store Whole Foods has built to date.

Phoenix, Arizona based Sprouts, which currently has only two stores in Southern California, plans on opening a number of new stores in the region in the next two years, in addition to its new store, which will open soon in the Orange County city of Irvine.

Grocery industry giants Safeway Stores and Ralph's (owned by Kroger Co.) have their own upscale format stores that feature fresh prepared foods, natural, organic and specialty foods, expanded perishables departments, and features like in-store cafes, upscale bakeries, wine departments and other amenities. Safeway's upscale banner is called Pavilions and Ralph's version is named Fresh Fare. You can read more here.

Fresh & Easy Central California Update:

On Saturday, October 27, we reported here that Tesco was in negotiations with a shopping center owner in Bakersfield, California to locate a Fresh & Easy Neighborhood Market in his center in this Central Valley city. Bakersfield would be the first city in California's agricultural-rich Central Valley to get a Fresh & Easy grocery market.

As we reported, the only hitch was that the shopping center wasn't zoned for retail food stores for some reason. That's changed as of yesterday, however, reports today's Bakersfield Californian newspaper. The city's Planning Commission has approved a petition from the shopping center's owner to change the center's zoning to allow retail food stores, paving the way for Tesco to locate a Fresh & Easy store there. Read more here. The Bakersfield City Council has to give final approval on the zoning change but they generally go with the Planning Commission's vote.

Bakersfield is far from an upscale city. It's a working class urban region, surrounded by rural communities. It's economy is primarily based on agriculture and services. If Tesco locates one or more Fresh & Easy markets there, it will further demonstrate the grocer's stated plans to build and operate stores in what it has called "food deserts," regions where other upscale-type grocers won't locate stores.