Small Format Food Retailing Memo - Design Innovation: Supermarket Design Firm Wins Award For Design of Independent 'The Market' Specialty Grocery

Design Services Group (DSG), the supermarket design firm owned by supermarket chain Supervalu, Inc. has won the 2009 Outstanding Merit Award from the Association for Retail Environments (A.R.E.) design association for its design work on the independently-owned small-format specialty and natural foods store "The Market" (pictured above), which is located in Plymouth, Massachusetts USA.

DSG won the prestigious Outstanding Merit award at the just-ended 2009 A.R.E. Retail Design Awards event at GlobalShop, held in Las Vegas.

The award recognizes excellence in retail store design, craftsmanship and innovation. This is the second time DSG has been awarded an A.R.E. Retail Design Award: it won a grocery store category award in 2006 for its design of "Highland Park Market" in Windsor, Conn.

The 13,500 square foot "The Market" is the creation of specialty and natural foods retailing veteran Michael Szathmary, who is the store's managing director, and his associates. Szathmary's 40 year retailing career includes having founded and launched the Nature’s Heartland grocery store and Szathmary’s market/cafes in Needham and Brookline, Massachusetts. [Related post - January 20, 2008: Retail Memo: Designing the 'Perfect' Small-Format Grocery Store in a 'Near-Perfect' Place.]

The store's manager is food retailing veteran Mark Guinasso. Guinasso been in the grocery business for over 30 years, with previous management positions at Purity Supreme, Western Beef Supermarkets, Walter’s Meat Market and Nature’s Heartland, where he worked closely with Michael Szathmary.

The fresh produce department (above), named "Farmers Market," at the small-format "The Market" store keeps with the store's overall design theme of showcasing fresh foods in a rustic setting modeled after a 19th century farmers' market.

This is how the owners and management of "The Market" describe the store's format and retailing approach: "We’re The Market. And we want to change the way you shop — for the better, quicker, healthier and happier. With fresh, locally grown foods in season, expert help and our everyday value pricing on the everyday conventional groceries you need . . . every day.Our name says it all: simple, direct, not too fancy — full of good things waiting to be discovered. In fact, we want to make shopping an experience you actually enjoy.

It begins with healthy, high-quality food: like locally grown, seasonal produce. Freshly baked artisan breads. A delectable deli. Certified Angus beef and naturally raised chicken. And fish right off the boat. Fresh is best.

We also offer a constantly changing array of specialty items created in our own kitchen by our own chef and team — in case you’re too busy or tired to cook. Just heat and serve.

Plus, we have experienced people who know their stuff and are ready to help you. Whether it’s catering a party of fifty or just carrying your bags to your car. We’ve made the aisles more convenient, the displays a little tastier. You can pick up a bouquet by Martin’s Flowers just next to our bakery. And we’ve opened a doorway to Long Ridge Wine & Spirits next door. We’ve even selected great music for you to shop by."

You can learn more about the small-format grocery store at its Web site here.

The Deli department (above) at the independently-owned, small-format "The Market" features scores of deli items and ready-to-heat and ready-to-eat fresh, prepared foods.

DSG's Architecture and Engineering department designed the interior of "The Market" the store, working closely with Elkus Manfredi Architects, a Boston firm that designed the exterior shell.

With only 13,500 square feet to work with, DSG store planners had to carefully account for every bit of available space. They settled on an open layout with relatively low shelves to give shoppers a broad view of the entire store from nearly every vantage point, the design firm says. The small-format store has the look of a country store of decades best with a modernistic twist.

The store's design philosophy, according to DSG, is to showcase fresh foods in a rustic setting modeled after a 19th century farmer's market.

"The Market" looks like a modernistic barn by design. An open floor plan directs customers from one department to the next, from the full-service cheese, deli, meat and seafood departments to the bake shop, seasonal and locally grown produce department, the prepared-food section, salad bar, dairy, frozen foods, chef’s cove and floral department, and then to the aisles of groceries.

The 13,500 square foot store features basically all of the departments a large supermarket offers: dry grocery, fresh produce, meat-seafood, deli-prepared foods, bakery, wine, cheese and the like, each designed to fit into the small-format footprint and limited store interior space.

The store has high arched ceilings which make it appear much larger than its 13,500 square feet.

The small-format store is in the Pinehills development in Plymouth, Massachusetts. "The Market" opened in September, 2008.

As Natural~Specialty Foods Memo (NSFM) first declared in the summer of 2007, there's a small-format food and grocery store mini-revolution happening in the U.S. and in many other parts of the world. This includes chains like Aldi (Europe and U.S.), Lidle (Europe), Supervalu, Inc.'s Sav-A-Lot (U.S.), with there small-format, deep-discount grocery stores; Tesco (globally) with its mid-range small format stores like Tesco Express in Europe and Fresh & Easy in the Western U.S., along with Giant Eagle and its small-format Giant Eagle Express format; Safeway (its The Market format), Supervalue (Urban Fresh by Jewel), Wal-Mart (Marketside) and others in the USA (plus Waitrose and Sainsbury's in the UK) on the more upscale end, and numerous independents focusing on small-format stores, the original small-format grocers. Many other chains are playing in the small-format world as well, in the U.S. and internationally.

The current severe global economic recession has slowed down what in 2007 to mid-2008 was a very robust small-format revolution. But the fact is it has slowed down a ll new store development in the U.S. and globally considerably.

But despite the recession, small-format innovation continues.

And in the case of "The Market" in Plymouth, Massachusetts, it continues on an award winning pace.

[You can view "The Market" store's complete design project from DSG at the link below:
Download Project PDF (7790kb).]

[You can view a slide show of the store's interior here. There are links to photographs and information about other food stores designed by DSG at the site.

[Readers: You can follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www.twitter.com/nsfoodsmemo.]

Small-Format Food Retailing Memo: Tesco Fresh & Easy CEO 'Delirously Happy' About Chain's Performance to Date

The photograph above of Tesco Fresh & Easy Neighborhood Market CEO Tim Mason is from a profile piece, "Tesco's American dream is still in sight," published in yesterday's The Times (United Kingdom). The Times' caption to the photograph is: 'Not usually a man for taking the back seat, Tim Mason has led Tesco's drive into America and insists that he is 'deliriously happy' with the progress so far.'

Tesco Fresh & Easy Neighborhood Market USA CEO Tim Mason (pictured above) told The Times (United Kingdom) newspaper in a follow-up interview (yesterday) to the November 12 interview published in the paper in which the head of Tesco's Southern California-based small-format convenience grocery and fresh foods chain told the publication the grocer is postponing its launch into the Northern California market, that he's "deliriously happy" with Fresh & Easy's progress and performance to date.

This is the first time we can recall hearing the CEO of a U.S. supermarket chain (U.S or foreign-owned), and a struggling one at that, use such effusive language about the performance of the chain he runs in our nearly 30 years participating in and observing the U.S. food and grocery retailing industry.

The Blog Fresh & Easy Buzz, which covers Tesco's Fresh & Easy Neighborhood Market and the retail food and grocery industry, has a report on the interview with Tim Mason and an analysis of Tesco's Fresh & Easy small-format, convenience-oriented grocery and fresh foods chain.

You can read the story and analysis from Fresh & Easy Buzz at the link below:

Sunday, November 16, 2008: Tesco Fresh & Easy CEO Tim Mason Says He's 'Deliriously Happy' With the Chain's Progress Thus Far; We Prefer Andy Grove's 'Only the Paranoid Survive'

Fresh & Easy Buzz also has a story today about Sacramento, California's Oak Park Neighborhood Association, a group of residents who live in the city's Oak Park neighborhood and who appealed the design of the Fresh & Easy grocery market Tesco is proposing for that neighborhood to the Sacramento Design Review Board after the board approved the company's standard store design without comment.

Tesco has basically two designs for its Fresh & Easy stores that it uses in all of the markets, and new proposed markets, it is in. The first is the design it puts into vacant buildings, which the majority of the grocer's stores in Southern California, Nevada and Arizona are to date. The second design is its Fresh & Easy built from the ground up prototype design. These are new store construction projects rather than remodels of vacant buildings. The proposed Oak Park Neighborhood Fresh & Easy in Sacramento is a new, built from the ground up store.

With the exception of a few minor exterior graphic and signage differences, Tesco doesn't customize or localize the Fresh & Easy stores. The stores in Southern California, Nevada and Arizona essentially look the same outside and inside. There are some differences with the exteriors of the stores in remodeled vacant buildings based on what those buildings looked like on the outside before the remodeling. Those are accidental exterior differences though, not intentionally designed ones.

Based on the presentation by members of the Oak Park Neighborhood Association at the store design appeal hearing on October 15, 2008, the city's design review board incorporated a number of changes into the conditions of the store's design; changes Tesco must make when it builds the store in Sacramento's Oak park neighborhood.

According to the story in Fresh & Easy Buzz, despite the mandated changes, and the fact the grocer is postponing it launch into Northern California which includes Sacramento, Tesco and the developer have purchased the vacant lot where the proposed Fresh & Easy market is to be built for $1.1 million dollars. In other words it appears the grocery chain is going forward with the store. When construction will start is a whole different question.

The owner of the parcel was Kevin Johnson, the former NBA basketball all-star and native of Sacramento. Johnson retired from the NBA a few years ago and returned home to Sacramento, launching a career as a real estate investor and developer. He also founded a non-profit community-based development organization called HOPE. HOPE is headquartered in Sacramento's Oak Park neighborhood, the historically low-income neighborhood in the city where Kevin Johnson lived throughout his childhood, and where the Tesco Fresh & Easy Neighborhood Market grocery store is set to be built on land Johnson, who is now the mayor-elect of Sacramento, sold to the company for a cool million.

Read the story from Fresh & Easy Buzz at the link below:

Monday, November 17, 2008: Sacramento City Design Board Agrees With Oak Park Group on Design Changes For Proposed Fresh & Easy Store; Escrow Closed on $1.1 Million Parcel

Small-Format Food Retailing Memo: Schenectady, New York-Based Price Chopper Supermarket Chain Creating New Small-Format, Urban-Concept Grocery Store

The Schenectady, New York USA-based Price Chopper supermarket chain is designing a small-format, urban-concept food and grocery store it will use to serve primarily urban neighborhoods in the eastern U.S. and New England markets it operates in, Natural~Specialty Foods Memo has learned.

Neil Golub, the president and CEO of Price Chopper, which is owned by his family's Golub Corporation and is celebrating its 75th anniversary as a family-owned supermarket chain this year, says the supermarket chain's new urban-concept food and grocery store format will be a brand new small-format rather than just a smaller version of its Price Chopper banner supermarkets, which are located New York, Vermont, Connecticut, Pennsylvania, New Hampshire and Massachusetts. [You can read a history of the Price Chopper chain here, along with other information about its 75 years of food and grocery retailing history.]

Privately-held Price Chopper operates 116 supermarkets in the regions listed above. It's 2008 annual sales are estimated at $3.2 billion by the supermarket industry trade publication Supermarket News, which publishes an annual ranking of the the top 75 food and grocery retailers (all formats) in the U.S. Supermarket News ranks Price Chopper as the 38th-largest food and grocery retailer in the U.S. in terms of the grocery chain's 2008 annual gross sales.

The new small-format, urban-concept market will be about 15,000 square feet in size, according to Golub. The format's size is similar to small-format stores created in just the last couple years by Safeway ("The Market"), Wal-Mart (Marketside), Tesco (Fresh & Easy), Supervalu's Jewel Foods (Urban Fresh by Jewel) and others. Those small-format stores run from 10,000 -to- 16,000 square feet.

The urban store will have most of the departments -- produce, meat, grocery, deli/prepared foods, dairy, ect. -- the chain's larger Price Chopper Supermarkets have, Golub says. However, he adds the departments and product selections will be geared to the urban neighborhood consumer base and the size of the stores, making the ultimate look of the store much different than the grocer's standard-size supermarkets.

Golub also said its likely the new, small-format urban-concept grocery market will have a different name, other than Price Chopper, or that if Price Chopper is used in the name it will include and additional word or two in order to differentiate the format and store(s) from the Price Chopper banner supermarkets.

Price Chopper has just started designing the urban-concept format based on a location already chosen for the first store. That store will be in Saratoga Springs, New York, in the city's downtown core.

The Golub family's Price Chopper chain operates an old (built in 1957) 24,000 square foot Price Chopper banner supermarket not far from the new downtown Saratoga Springs location where it will build the first of its small-format urban food and grocery stores, once the company has completed the design.

The lease on the 24,000 square foot supermarket, which is located at 19 Railroad Place in the city, runs out in a little less than three years, according to Golub. The new urban market will open shortly before that lease expires. Price Chopper will then close the 19 Railroad Square supermarket.

Saratoga Springs, New York-based Bonacio Construction bought a 2.8 acre piece of property at Church Streets and Railroad Avenue in downtown Saratoga Springs earlier this month. The new, urban-concept small-format market will be located on that parcel, according to Golub Properties, which is the property arm of the Golub Corporation, which owns Price Chopper.

Sonny Bonacio, the owner of the construction company that's worked with Golub Properties and Price chopper before, will built the new urban, small-format grocery market at the location, which will be completely developed with other retail and perhaps housing as well.

Since Price Chopper is working on creating the new urban market format, and the old Price Chopper supermarket at 19 Railroad Avenue still has nearly three years left on the lease, its likely construction on the retailer's first small-format, urban grocery store at the location won't begin until 2010.

The store will be built at the end of the 2.8 acre downtown Saratoga Springs parcel over part of the parking lot that's now located in the space, Sonny Bonacio says.

Price Chopper's Neil Golub says the chain decided to close the 19 Railroad Place Price Chopper, which was built in 1957, last year. However, the company did not want to give up on serving downtown Saratoga Springs, so it decided to create a completely new urban-concept, small-format store it could built in the new, nearby location, plus use in other urban areas in the markets it does business in, according to Golub.

In fact, earlier this year word got out Price Chopper planned to close the old 19 Railroad place 24,000 square foot supermarket when its lease is up in about three years. A group of downtown Saratoga Springs residents who are customers of the store organized and petitioned Price Chopper not to close the supermarket because they said they would have to travel too far outside the neighborhood to buy groceries if it closed.

One of the urban neighborhood's residents, Caroline Stem, who collected 1,250 signatures on a petition to keep the store open, feared Boacio construction would buy the downtown Saratoga Springs property and then bring in a high-end grocery store that lower- and middle-income neighborhood residents wouldn't be able to afford, she says.

However, Bonacio and representatives from Price Chopper met with local neighborhood residents and explained to them in general the type of urban grocery store they plan on creating and building at the downtown location.

Price Chopper's Golub says the new small-format urban market format will be one that offers basic groceries as well as specialty items. He also says the prices in the small-format urban grocery store will be affordable, just as they are in its Price Chopper supermarkets. In other words, based on what Golub says thus far, it looks like the grocery chain's small-format concept will be a neighborhood-focused, 15,000 square foot store that offers everyday food and grocery products along with specialty items rather than an upscale or gourmet market.

"It (the downtown Saratoga Springs small-format grocery market) will be a grocery store that will serve the basic needs of the community," Golub says. "It's not meant to be something that's going to have things that are priced way up here that people won't want," he adds.

That appears to have pleased Caroline Stem and the other neighborhood residents who want a grocery store that serves all of their needs in the downtown core; a neighborhood food and grocery market.

Earlier this month Bonacio Construction, Price Chopper and the mayor of Saratoga Spring, New York invited the downtown neighborhood residents to an announcement of the new, small-format grocery store in downtown Saratoga Springs. All appeared to be pleased with the development, and what the store will and won't be, we're told by people who attended the announcement at city hall.

Of course our interest goes beyond that first, single store, although we are pleased the neighborhood is getting it. Our thoughts go to the fact Price Chopper is yet another U.S. food and grocery retailing company that's creating a small-format prototype store.

In this case Price Chopper's small-format market will focus on urban neighborhoods.

The small-format food and grocery store revolution in the U.S., and elsewhere in the world, continues on, adding New York-based Price Chopper, which in its 75 years of in business as a family-owned chain has been a major innovator, to those chains that have already joined the trend towards creating format-specific, small-format food and grocery stores.

And of course, independent grocers, America's original small-format, neighborhood-focused food and grocery retailers, continue to be strong in smaller store neighborhood retailing, as well as continuing to innovate in the small-format and neighborhood grocery market realm.

Retail Memo: Supervalu, Inc.-Owned Cub Foods Opening Second Store of its 'Neighborhood-Focused' Supermarket Format in Eagan, Minnesota USA

Neighborhood Food & Grocery Retailing USA

Supervalu, Inc.'s Stillwater, Minnesota USA-based Cub Foods supermarket chain opened its second smaller-format (for the retailer), neighborhood-oriented supermarket in Egan, Minnesota today.

The new 42,000 square foot Cub Foods neighborhood-focused supermarket is located at 1020 Diffley Road in the eastern part of the city. It's the food and grocery retail store anchor of the new Diffley Marketplace center just recently completed in Eagan, Minnesota, which has a population of about 64,000 residents.

Cub Foods, which originally was an independently-owned Minnesota supermarket company, was acquired by Supervalu, Inc. in 1980. There currently are 57 Cub Foods supermarkets operating in Minnesota's Minneapolis-St. Paul Twin Cities region.

At 42,000 square feet, the grocer's new neighborhood-oriented supermarket format, is considerably smaller than the average Cub Foods supermarket, which are 68,000 square feet.

The neighborhood-focused stores are still called Cub Foods. The retailer didn't create a separate name for the stores and it doesn't use "neighborhood market" in the name.

The smaller supermarket that opened today in Eagan, which is the second store of the design and the second supermarket in that particular Twin Cities region city, is specifically designed to be a neighborhood supermarket, according to the retailer. Both of Cub Foods' neighborhood-focused supermarkets are located in Eagan thus far.

The store uses warm colors and incorporates design elements from the local neighborhood into its look in order make the statement the store is the neighborhood residents' neighborhood supermarket, for example.

The neighborhood-oriented design also is more upscale than Cub Foods' standard 68,000 square foot supermarkets, which are full-scale superstores with a discount pricing emphasis.

"Customers will notice an original layout for the fresh produce section, offering an expanded and unique product assortment. The store will also feature a larger selection of frozen food items, a more substantial natural and organic foods section and a full-service floral department," a Cub Foods spokesperson told Natural~Specialty Foods Memo.

"Other amenities include a pharmacy, a large bakery and a full-service TCF Bank," the spokesperson added in describing some additional unique features of the retailer's neighborhood-focused supermarket format and new store, compared to its standard average 68,000 square foot Cub Foods superstores.

Scott Lichtenberg, the store director of the new Eagan East Cub Foods supermarket, tells Natural~Specialty Foods Memo, "The store has a strong focus on the fresh (in-store departments and product selection) side of the business, and our customers will notice many unique offerings. The store was designed and built to maintain the great Cub tradition of low prices and great values," along with being more upscale and neighborhood-oriented.

Although not a "small-format" grocery store (we define small format as between about 10,000 -to 25,000 square feet), the new Cub Foods format without a doubt is a "smaller-format" for the grocer. And at 42,000 square feet compared to 68,000 square feet (the average size of 55 of the chain's 57 supermarkets) it's a significant smaller footprint for the retailer -- 26,000 square feet less worth of significance to be precise.

Even more interesting is the specific focus on creating a "neighborhood" supermarket format, and doing so not only via the store's design but also using the neighborhood framework in choosing the store's departmental and category emphasis.

Small-format and neighborhood market trends

Cub Foods' focus in doing this fits well into two trends we've been writing about and have put a considerable editorial focus on since August, 2007. Those trends are the growing significance of small-format food and grocery stores as well as the trend towards neighborhood-oriented supermarkets.

Small-format stores, 10,000 -to 25,000 square feet, tend by their size and nature to be neighborhood-oriented food and grocery stores. Although that's not always the case, particularly with the hard discount formats like Aldi, Lidl, SuperValu's Sav-A-Lot and others that depending on the country they are located in (Aldi and Lidl are global, Sav-A-Lot is U.S. only) are often positioned to be a bit more regional than just "neighborhood" in terms of the customer base the retailers' want to attract. In other words, there is no rule small-format stores must be neighborhood-focused stores.

Neighborhood-oriented supermarkets however don't have to be small-format by our definition in terms of size. They are nearly always smaller than superstores though, per the Cub Foods comparison to its average store size -- 42,000 square feet compared to 68,000 square feet, for example.

Generally speaking, in the U.S. neighborhood-focused supermarkets (other than small-format) range from about 20,000 square feet to about 45,000 square feet. For example, Wal-Mart Stores, Inc.'s Wal-Mart Neighborhood Market supermarkets are in the 40,000 -to- 45,000 square foot range.

U.S. multi and single-store independent grocers, which are America's original neighborhood food and grocery store retailers and still hold majority distinction in that category in most states, are all over the place in terms of the sizes of their neighborhood supermarkets. The supermarkets range as small as 8,000 -to- 10,000 square feet to as big as 45,000 square feet. A good average seems to be about 15,000 -to 35,000 square feet for U.S. independents operating neighborhood and community-focused supermarkets.

Independent supermarkets need not be neighborhood-focused either. In the U.S. there are numerous multi and single-store upscale and discount format independents that are more regional in nature, for example. Gourmet, specialty and natural foods-focused stores are one example, as are large independent discount superstores as well as ethnic food markets.

A possible small-format future for Cub Foods?

Being a regional chain, we think its smart for Cub Foods to have created this neighborhood-focused, smaller -format banner or format because it allows the grocer to go into more locations in its market region, the Minneapolis-St. Paul region. With 55 of the average 68,000 square foot superstores in the market, finding more niche locations is key for such a food and grocery retailer.

We would suggest Cub look at adding "neighborhood supermarket" to the stores' title though. Perhaps: "Cub Neighborhood Supermarket." would be good, allowing the format to be differentiated from the discount store. along with using the name to reinforce the "neighborhood-focus" of the format and stores.

Urban Fresh by Cub

Additionally, since Cub Foods is owned by Supervalu, Inc., which is experimenting with its own small-format banner, "Urban Fresh by Jewel," at its Illinois-based Jewel supermarket chain, which operates supermarkets throughout Illinois and Indiana, it might be a good idea for the company to use this expertise to experiment with a small-format store with its Cub Foods chain. [Read this September 18, 2008 piece from Natural~Specialty Foods Memo for more information on "Urban Fresh by Jewel": Small-Format Food Retailing Memo: First 'Urban Fresh by Jewel' Small-Format Food and Grocery Market Opens Today in Chicago's Lincoln Park Neighborhood.]

Cub Foods' market area, Minneapolis-St. Paul Twin Cities, is an urban region anchored by two big cities, the Twin cities mentioned above. Both cities have vibrant urban cores, like Chicago where the first 15,000 square foot "Urban Fresh by Jewel" opened earlier this year.

Minneapolis-St Paul also also have other similarities to Chicago: All three are big Midwestern cities with a similar consumer culture, for example. Downtown Minneapolis and St. Paul, like downtown Chicago, also have a lack of food stores in the downtown core, as well as in a number of urban neighborhoods. These are all good criteria for a small-format store.

Cub Foods could even name the small-format store "Urban Fresh by Cub Foods." We would locate the first "Urban Fresh by Cub Foods" test store in downtown Minneapolis, which is a vibrant downtown in a vibrant city, has lots of upscale workers and residents, and increasingly is seeing more and residents moving downtown into new condominium projects. Since "Cub" means little (like a bear cub) a small-format store is a natural for the chain.

We even think Supervalu could adopt the basic "Urban Fresh by Jewel" format, which is an upscale format which features lots of fresh, prepared foods, specialty, natural and organic products, fresh produce and meat departments, wines and craft beers -- but also offers a good selection of basic food and grocery items at decent prices -- customizing and localizing the format a bit in design and merchandising for downtown Minneapolis. Localizing is always key.

It's food for thought.

After all, as we've been writing about since August, 2007, there's a small-format food and grocery retailing revolution going on both in the United States and globally. That size and format trend is ties to the neighborhood food retailing trend in the U.S.

It's our analysis the small-format and neighborhood-oriented food retailing "revolutions" will only gain steam because the current global financial crisis and recession are slowly forcing people to think smaller -- smaller homes, smaller cars, smaller bank accounts, smaller budgets and the like. This change to a smaller and more frugal lifestyle will result we believe in a growing popularity among consumers to shop at smaller grocery stores, assuming the pricing is as or near as good as it is larger stores and the product selection is of a limited assortment but still decent.

The majority of U.S. consumers will still shop at big stores like Wal-Mart Supercenters Costco and supermarket company superstores. But we think they will shift a significant portion of their spending to neighborhood-oriented markets because of the convenience, savings on gasoline and a desire for a more simple, easier shopping experience.

This is already happening with Aldi and Supervalu's Sav-A-Lot stores in the U.S., as well as in the case Trader Joe's specialty markets, which draw shoppers from as much as 40-50 miles away in many cases. Numerous competitive neighborhood-oriented supermarkets also have been reporting increased sales this year, particularly when gasoline was at an over $4 a gallon. It is about 40% less than that right now. But it will go back up.

Further, in the U.S. there is a trend towards people moving from the suburbs to big cities in many parts of the country. This trend and the resulting increased population in these cities -- Los Angeles, San Francisco, Chicago, Seattle, Minneapolis to name just five -- is and will create more demand for stores located in the urban centers that offer a good selection of both basic groceries and more upscale product selections, including specialty, natural, organic and premium, prepared foods.

Cub Foods also is doing a neighborhood-oriented thing with the opening of its second neighborhood-focused supermarket in the Twin Cities region city of Egan. The retailer is donate a half-ton (1,000 pounds) of non-perishable food items to Second Harvest Heartland Food Bank that serves residents of Eagan, Minnesota.

Small-Format Food Retailing Memo: Hard Times at Tesco's Fresh & Easy; Will Two Proposed Changes Help? Meanwhile the Grocer Opens its 100th Store

Tesco's small-format Fresh & Easy Neighborhood Market USA grocery and fresh foods chain is postponing its plans to begin opening stores in Northern California in early 2009.

Read a report and analysis from the Fresh & Easy Buzz Blog on the development at the link below:

>Fresh & Easy Buzz, Wednesday, November 12, 2008: Analysis: Hard Times at Fresh & Easy - Northern California Expansion to Be Postponed or Shelved Do to Economy; But its Only a Symptom Not the Cause

Additionally, Fresh & Easy Buzz reports Tesco's Fresh & Easy is considering making two major changes -- flip flopping the grocery shelving in all of its stores and redesigning the packaging of its fresh & easy private label packaged goods products -- as a way to increase both store sales and sales of its store brand products in the various grocery products categories.

Read the story from Fresh & Easy Buzz at the link below:

Fresh & Easy Buzz, Wedneday, November 12, 2008: Breaking News: Tesco's Fresh & Easy Considering Two Major Changes, One Physical the Other Design Oriented, to Increase Sales in its 100 Stores

Lastly, Fresh & Easy Buzz has a piece from yesterday about Tesco opening its 100th small-format, convenience-oriented Fresh & Easy market in the Southern California city of Fullerton. It's been about one year since the first Fresh & Easy store officially opened in Hemet, in Southern California.

In its story yesterday, Fresh & Easy Buzz suggested Tesco might postpone the opening of its planned Northern California stores, along with opening the stores later in the year than it has previously said it would.

Read the piece from Fresh & Easy Buzz at the link below:

>Fresh & Easy Buzz, Tuesday, November 11, 2008: Southern California Market Report: Tesco Hits A Numerical Milestone Tomorrow Morning As Store Number 100 Opens its Doors in Fullerton, California

Speaking of it being nearly one year since the first Fresh & Easy Neighborhood Market store opened, that first Fresh & Easy store in Hemet, California was actually scheduled to open on November 8, 2007 its official opening day. However, as Natural~Specialty Foods Memo was one of the first publications to report, Tesco actually opened the store a week earlier in a stealth, soft opening to test the first of its small-format markets out prior to its official grand opening. on November 8, 2007.

You can read our piece about that stealth opening at the link below:

>Natural~Specialty Foods Memo, November 2, 2007: 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.

Small-Format Food Retailing Memo: The Small-Format, Neighborhood-Oriented Food and Grocery Retailing Trend Continues to Emerge and Grow in the U.S.

Giant Eagle, Inc's (supermarket chain) first Giant Eagle Express small-format, neighborhood-oriented food and grocery store in Harmonville, Pennsylvania is about 15,000 square feet. (Photo credit: Pittsburgh Post Gazzette.)

Neighborhood Food Retailing USA

We've been writing extensively about what we termed the "small-format food retailing revolution" in the United States, and what we call the "international small-format food retailing revolution," since we started Natural~Specialty Foods Memo in August, 2007.

In conjunction with our small-format focus, we've written extensively about what we have called a return to neighborhood food retailing in the U.S., which goes hand-in-hand with the re-emergence of smaller-format food and grocery stores in the country.

We've received lots of correspondence from the mainstream press about our small-format food and grocery store and neighborhood food retailing reporting, coverage and analysis, including from reporters from the New York Times, Los Angeles Times (and other U.S. papers), business publications and daily papers from Canada, Mexico, Europe and Asia, and other mainstream publications, along with Blogs.

It has been interesting to receive this correspondence.

What we've also started to notice is that the mainstream press has discovered what we've been writing extensively about for 15 months -- that small-format food and grocery retailing and neighborhood food retailing is indeed a growing trend in the United States.

For example, on October 3, the Pittsburgh Post Gazette ran this story, "Tight economy has shoppers, grocers looking to neighborhood stores." The piece, by staff writer Teresa F. Lindeman discusses many of the issues we've been writing about since last August in terms of the external and economic factors involved in the small-format grocery store trend in the U.S.

It also talks about Tesco's Fresh & Easy Neighborhood Market, Wal-Mart's Marketside, Giant Eagle's Giant Eagle Express and SuperValu, Inc's Urban Fresh by Jewel" all small format chains, all which we've written about extensively.

And today, the Associated Press, which is syndicated to nearly every newspaper in the U.S., ran this feature story, Like shoppers' budgets, grocery stores shrink, which so far has been picked up and published by a number of American newspapers.

The AP piece also features a discussion of many of the issues we've been writing about, and suggested last summer would be occurring now, for the last 15 months regarding small-format food retailing in the U.S. and the greater focus on neighborhood markets.

Our analysis of the growing small-format food retailing trend in the U.S. isn't one that says smaller format, neighborhood grocery stores, which have never gone away completely in the U.S., are going to replace larger supermarkets and mega discount stores like Wal-Mart Supercenters, Costco club stores or Super Target combination food, grocery and general merchandise stores.

Rather our analysis is that the growing small-format trend, which is a unique event because major chains like Wal-Mart, SuperValu, Safeway, Tesco and others are driving it in the U.S., is a new layer of an old concept -- the independent neighborhood grocery store -- which is an American original.

Mega stores aren't going to go away. However, in our analysis fewer of such stores will be built and more smaller, neighborhood-oriented food stores will be built over the next decade.

We already are seeing evidence of this emerging. For example:

>Wal-Mart recently said it will built fewer of its combination food, grocery and general merchandise Supercenters (which average 180,000 square feet) next year and in 2010 than its original plans call for.

Wal-Mart also is building numerous smaller Supercenters and of course opened its first four small-format food stores, Marketside, in the Phoenix, Arizona Metropolitan region on October 4.

>Target Stores has recently decreased the size of some of its new Super target grocery and general merchandise mega-stores, and in some cases even shrank the stores significantly and decided not to add the grocery side in a few cases.

>Costco is looking at building smaller club stores in urban areas like the store it has in San Francisco's South of Market neighborhood. This even includes the possibility of building smaller, multi-story Costco stores in large cities.

>Supernatural foods retailer Whole Foods Market, Inc. has decided to downsize a number of the new stores it has in development. The retailer also is questioning whether or not it will even continue to build and open any additional stores in the 60,000 -to- 80,000 square foot range, something it has done a lot of in the last five years, in the future.

Our analysis is that just as cars, houses, bank accounts, retirement fund portfolios and other key aspects of American life are getting smaller, and will continue to do so for most Americans for the next few years, so too in many cases will food and grocery stores trend towards getting smaller.

But although size does matter, it's not just smaller square footage that's important in this analysis. What is equally important is that the reason the small-format trend is here to stay for a significant number of years is that it's neighborhood-driven. In other words, small-format food stores aren't just growing in quantity and popularity because they are small. They are doing so because they are designed to serve as neighborhood markets -- just like the independents have done and continue to do in the U.S. -- although to a far-lessor degree today than in the past because of the emergence of the big box chain store.

This means a few things.

First, it offers a new opportunity for the big chains to create small-format operations in conjunction with their larger store operations. Doing this can provide some real cost savings for retailers like Wal-Mart, Tesco, Safeway and the others.

Second, it's our analysis the small-format food retailing trend provides a renewed opportunity for independent grocers to thrive in the U.S. Independents are the original small-format neighborhood grocers and still do it the best.

Third, we see the small-format, neighborhood food retailing trend providing a new opportunity for traditional convenience store operators.

These chains and independents sit right between convenient retailing and neighborhood food retailing, straddling that definitional fence. As such, they can create new formats, as many are currently doing, that are hybrid grocery and convenience stores.

This offers the c-store chains particularly a new way to broaden their offerings away from the traditional c-store staples of alcoholic beverages, cigarettes, gasoline and "gut buster-quality" ready-to-eat foods, all of which are declining categories, into a more diversified product category mix. Not closing their traditional c-stores but diversifying with a new format. Pennsylvania-based Wawa is a good model of a very successful hybrid convenience store/grocery store retailer.

There is still a long way to go in the small-format trend in the U.S. We are just seeing the beginning of it at present. Our analysis is that the neighborhood retailing aspect of the small-format trend will get even stronger and we will see various different formats, as we are beginning to see at present, emerge to serve neighborhood residents' food shopping needs.

We will be covering and analyzing the small-format and neighborhood food retailing trend, as we have been for the last 15 months, extensively. We may even have a couple more new terms to coin.

Small-Format Food Retailing Memo: Wal-Mart Studying Second Small-Format Grocery Store Concept; Inside Marketside One Week Before the First Stores Open

The Blog Fresh & Easy Buzz, which covers and writes about Tesco's Fresh & Easy Neighborhood Market, small-format food and grocery retailing, and related topics and issues, has two stories today about Wal-Mart, Inc. and small-format food retailing.

The first piece reports on and details comments Wal-Mart, Inc. CEO Lee Scott made earlier this month at the 15th Annual Goldman Sachs Global Retailing Conference in New York City about a second (besides its small-format Marketside) small-format grocery store concept the retailer is studying.

You can read that story at the link here: "Special Report: Wal-Mart, Inc. Studying Second Small-Format Food and Grocery Store Concept; the 'Bodega' or Modern Version of the Corner Grocery Store."

The second piece from Fresh & Easy Buzz provides new information about Wal-Mart's Marketside grocery and fresh foods stores -- the first four of which will open on October 4 in Chandler, Gilbert, Mesa and Tempe, Arizona, in the Phoenix, Arizona Metropolitan market region -- offering a look inside Marketside prior to the stores opening in a week.

You can read that story here: "Wal-Mart Offers its Own 'Peek' Inside it's Small-Format Marketside As Part of A One-Week Countdown to the Stores' Oct. 4 Openings in Arizona."

The four Marketside stores (which we coined as "Small-Marts" in August, 2007) which are about 15,000 -to- 20,000 square feet will open in just one week.

The combination grocery, fresh and specialty foods stores -- which will feature basic groceries, natural, organic and specialty products, fresh baked goods, fresh produce and meats, craft beers, wines and spirits, and in-store prepared foods -- will herald a new era for Wal-Mart, one in which the world's largest retailer joins the prepared and natural/specialty foods categories in a major way.

The Marketside development also places Wal-Mart square in the center of the small-format food and grocery retailing revolution we've been talking about in Natural~Specialty Foods Memo since we first published the Blog in August, 2007, over a year ago.

The small-format food and grocery retailing revolution -- and small-format competition -- has just started. Stay tuned.

Small-Format Food Retailing Memo: Wal-Mart to Open Small-Format, 'Small-Mart' Marketside Stores in Arizona on October 4

From the Natural~Specialty Foods Memo Editor's Desk: Wal-Mart will open its four small-format grceory and fresh foods Marketside stores in Chandler, Gilbert Mesa and Tempe, Arizona in the Phoenix Metropolitan market on October 4, according to its marketside.com website and a report in the blog Fresh & Easy Buzz.

As our readers know, we've covered Wal-Mart's Marketside format ('Small-Mart's being a term we coined for the stores) development extensively, beginning in September of 2007.

The Arizona stores are the first for Marketside units for Wal-Mart. Wal-Mart thus far plans to open two Marketside stores in Southern California, one in San Diego and another in the nearby city of Oceanside, according to our sources. Wal-Mart has not publicly announced the two California locations.

Additionally, we've reported Wal-Mart has plans to open more Marketside stores in Arizona -- besides the first four opening in 11 days -- as well as doing the same in Southern California, along with opening some of the small-format grocery and fresh foods markets in Northern California, particularly in the San Francisco Bay Area. Also, Wal-Mart has looked at opening a Marketside store in the Reno area, in Northern Nevada.


Below is the report from Fresh & Easy Buzz. Natural~Specialty Foods Memo is working on an analysis piece regarding the Marketside stores opening on October 4. We hope to have it published soon.

From Fresh & Easy Buzz: Wednesday, September 24, 2008

Breaking News: Wal-Mart to Open its Four Marketside Food and Grocery Markets in the Phoeniz, AZ Metropolitan Region on October 4

As we've been reporting on Fresh & Easy Buzz for months, Wal-Mart, Inc. has planned an early Fall, 2008 opening of its small-format, combination grocery and in-store fresh, prepared foods Marketside stores in the Phoenix, Arizona Metropolitan region.

Wal-Mart has now announced and confirmed on its http://www.marketside.com/ website the specific date the four Marketside grocery markets will open in the Phoenix Metropolitan region cities of Gilbert, Mesa, Chandler and Tempe.

All four Marketside stores are set to Open on Saturday, October 4, just 11 days from today, according to the announcement on the Marketside website. [Click here to see the announcement (look in the right corner) on the website. Click here for maps showing the location of each store in the four Arizona cities.

Click here to read the rest of the story from Fresh & Easy Buzz.

[Editor's Note -- the photos: The photograph at the top is of the Wal-Mart Marketside store in Mesa, Arizona. The picture was taken in late August, 2008. The second photograph shows what the inside of a Marketside store looks like (at least a small portion of it). Additionally, the aprons the three clerks in the picture are wearing are the Marketside store employee uniforms. The photo is from the Marketside.com website.]

Small-Format Food Retailing Memo: Two Dozen Florida USA Shoppers Who've Been Waiting Two Years For An Aldi Store to Open Get Their Day On Thursday

For the two dozen shoppers who've been waiting for two years -- and regularly calling a newspaper reporter for update on the estimated date of arrival -- for small-format, no frills deep discount grocery chain Aldi USA to open its first store in the Tampa Bay region in Florida, the wait ends on Thursday.

Aldi, which operates about 850 stores throughout the Midwest, Mid-Atlantic region and parts of the eastern USA, opens its first store in Florida, in Clearwater, this Thursday. An additional eight Aldi markets also will open on the same dayin the region.

The timing seems right in the minds of a number of the area's shoppers, according to a piece in today's St. Petersburg Times newspaper.

The writer of the story, St. Petersburg Times' staff writer Mark Albright, says a Florida consumer named Johana Szokie "is one of two dozen ardent Aldi fans who have called me for two years to learn when their favorite little grocer finally makes landfall in the Tampa Bay area" in Florida, of which Clearwater is a part.

Those are two dozen very dedicated shoppers. The type any grocery chain would be proud to have.

And in the case of Ms. Szokie, she doesn't even live in Clearwater. However, she tells reporter Mark Albright she will be driving to the Aldi store when it opens in the city on Thursday morning.

Aldi USA, which is the Illinois-based U.S. division of German small-format deep discount grocery chain Aldi International, has big plans in Florida, which is one of the top five food and grocery sales markets in the U.S.

The company expects to open from 25 -to- 50 of the no frills, little deep discount markets in Florida by 2010, with many more coming after that.

Aldi also has built a distribution center in Florida to serve its stores in the region. A grocery chain doesn't do that unless it has big (or big-little in the case of Aldi stores) development plans in terms of having a high store count in a given market.

The St. Petersburg Times story offers a nice local angle on the Aldi stores set to open in parts of Florida on Thursday.

In addition to the excited shoppers, Florida's major supermarket chain's like Publix and Winn-Dixie are watching Aldi closely on their respective home turf.

In fact, you can bet both chains, along with nearly every other supermarket chain in the state, will have "undercover representatives" attending Thursday's Aldi store grand openings, along with those dozen excited shoppers and many others.

Read the St. Petersburg Times' story, "Wait's nearly over for Aldi fans," here

Resources:

To read past stories about Aldi in Natural~Specialty Foods Memo just click the links below:

>Aldi

>Aldi USA

>Aldi International

Small-Format Food Retailing Memo: This Independent Combines C-Store Convenience With Fresh Foods, Groceries and A Secret Weapon -- Lots of Beer

Small-Format Food Retailing Special Report

Another independent, entrepreneurial retailer has decided the small-format hybrid convenience-grocery format might just be the future of food and grocery retailing. And like all good independents, Navid Tony Hoomanrad, who recently opened his Hyde Park Market neighborhood-oriented grocery and convenience-style store at 4429 Duval Street in Austin, Texas has added his own niche element to the format.

Hyde Park Market features a combination of traditional convenience store items, along with fresh produce (including organics), upscale Boars Head brand deli items, a refrigerated case devoted to quality ready-to-eat prepared foods items like Green Cart brand sandwiches, a selection of basic, specialty and organic grocery products, non-foods including a selection of hardware items, and Tony Hoomanrad's secret merchandising weapon -- beer -- and lots of it.

The independent grocer's strategy for his Hyde Park Market was to create a neighborhood store that was neither a traditional convenience store or a typical neighborhood grocery store. His goal: Offer in a small-format what he calls a "one-stop shop for fresh foods and grocery products that rivals anything found in a much larger supermarket. On a limited assortment scale of course.

He also believed offering an incredible variety of beer brands and styles could serve as a unique point of differentiation for his store, along with giving it a reputation for offering something special from day one. It also helps that Austin is a major beer drinking town.

Grocer Hoomanrad says he met with each of his eight beer distributors, ultimately deciding to order every domestic and imported beer brand, variety and packaging option -- single beers, 6-packs, barrels, you name it -- each one of them offered.

The result: currently Hyde Park Market is offering 525 different types of beer -- from Budweiser and Miller to craft beers and imports. In fact, although the store has only been open for a short time, it's believed to offer the second-most varieties of beer for sale than any other store, of any other size, in the city of Austin.

And remember, Austin just happens to be home to two of the biggest and best upscale food retailers (headquartered in Texas), both major beer category players, in the United States: Whole Foods Market, Inc. and upscale HEB Central Market.

No minor beer sellers these two retailers are, especially at their respective flagship stores in Austin. According to a local beer distributor who's in a position to know, Whole Foods' top beer selling store in Austin has about 450 varieties of beer, while Central Market clocks-in at about 360 or so.

The distributor says the only-recently opened Hyde Park Market isn't the number on beer variety retailer in Austin...yet. But it's close. That honor goes to a specialty beverage retailer named Specs, which offers about 550 varieties of beer, he says.

But grocer Hoomanrad is only 25 varieties behind Specs, which has been around for much longer, for the honor of the retailer offering the most varieties of beer in beer-drinking Austin, Texas.

And since the beer distributor says Tony Hoomanrad asks his beer sales reps each time they're in the store if they've got in anything new that his store isn't carrying -- and usually orders whatever beer it is if they do -- we wouldn't be surprised if Hyde Park Market, one of the latest entrants into small-format hybrid grocery and convenience store retailing, very soon becomes the number one beer variety seller in all of Austin -- along with offering lots of fresh foods, groceries (including specialty and natural) and other grocery store products, along with a mix of traditional c-store items (including a fueling station outside), all blended into a hybrid formula in a small-format store.

Small-Format Food Retailing Memo: Giant Food Stores To Open its First Small-Format, Hybrid Convenience-Grocery Store: 'Giant To Go'

Carlisle, Pennsylvania-based Giant Food Stores (also known as Giant-Carlisle) is planning to join the small-format food and grocery retailing revolution in the U.S. with its first small-format, convenience-oriented grocery market, Natural~Specialty Foods Memo has learned.

Giant Food Stores, which is owned by the the Dutch supermarket company Royal Ahold just as its sister company, Landover, Maryland-based Giant Food is (the chains are operated separately though), plans to build its first Giant To Go combination convenience and grocery store, which will be 4,442 square feet, at a new retail development called Richmond square at the northwest corner of Fruitville Pike Road and route 722 in Landcaster, Pennsylvania.

The small-format hybrid convenience and grocery store will be the first of its kind for Giant Food Stores, which operates about 140 supermarkets under the Giant Food Stores, Martin's Food Markets and Foodsource banners in Pennsylvania, Maryland, Virginia and West Virgina. Royal Ahold owns chains that operate about 700 supermarkets in the U.S.

At 4,422 square feet, the Giant To Go market actually is in part what we define as a micro small-format food and grocery store (under 5,000 square feet), although because it will be part traditional c-store (which at 4,422 would be as large or larger than an average one) and part grocery store, we will call it small-format.

The c-store cum grocery store will feature fresh produce and meats, a deli which will include grab-and-go ready-to-eat and some ready-to-heat prepared foods, an in-store fresh bakery and an assortment of basic shelf-stable food and grocery items, along with some of the food and non-food products typically associated with traditional c-store merchandising.

The 4,422 square foot hybrid convenience and grocery store also will have an 8-pump gasoline fueling station outside.

A Giant Food Stores' spokesperson said the Giant To Go store is a prototype for the chain. If it's successful the company is likely to build more of the stores in its market regions.

Construction of the Giant to Go small-format combination convenience and grocery store at the Richmond Square retail development -- which is a "village -style" designed 30,000 square foot retail and residential mixed-use development featuring stores and offices on the ground level and apartments on top -- hasn't started yet.

However, the Giant Food Stores' spokesperson told Natural~Specialty Foods Memo plans call for construction to start soon, with a target opening date for the store by the end of the first quarter of 2009.

Other retail tenants in the new Richmond Square center will include a bank, two restaurants (Asian and Italian), a dry cleaners and a couple others, along with the office buildings, according to its developer.

The Richmond center is a part of a larger development at the location. That development includes single family homes as well as additional retail and office space.

Giant Food Stores' new Giant To Go combination convenience store-grocery store format fits into what we classify as the "hybrid grocery-convenience store format."

It's a cousin to but different than small-format grocers like Tesco's Fresh & Easy, Safeway's "The Market," Aldi, Sav-A-Lot, Wal-Mart's Marketside, Trader Joe's and Giant Eagle's Giant Eagle Express, for example. It's closet to Giant Eagle Express, which unlike the others listed above adopts some elements of traditional c-store merchandising in its concept. All of the formats listed above are convenience-oriented though, which is an element they too borrow from c-store retailing.

Giant To Go also is different than what we've termed the small-format "eco-convenience" or Econvenience hybrid convenience-grocery stores. These stores which we've written about --such as Green Spot and Conscious Convenience -- combine elements of c-store retailing and grocery retailing but also take major elements from natural products retailing, having a "green" or environmental focus to the stores.

Wawa food stores is a good example of a store we think Giant Foods' Giant To Go is likely to emulate in many ways. As we've written about, Wawa is a hybrid convenience and grocery market which puts a major merchandising emphasis on fresh foods -- produce and prepared foods particularly -- along with selling basic groceries and specialty items. The stores also have fueling stations and sell some traditional c-store items as well. Interestingly, Wawa is based in Pennsylvania just like Giant Foods Stores is.

Another example is Parker's Convenience Stores, which we wrote about earlier this week.

We simply call these chains -- Wawa, Parker's and a few others -- hybrid, upscale convenience and grocery markets or stores. This is where we think Giant to Go will fit in the small-format, convenience-oriented food and grocery retailing revolution happening in the U.S. and elsewhere globally.

Giant Food Stores has developed numerous upscale design and merchandising features for its Martin's Food Markets banner (and its newer Giant banner supermarkets), including attractive upscale-looking departments like produce, deli/prepared foods and bakery, along with top-quality natural-specialty foods, fresh meat, produce and prepared foods merchandiing programs. As a result, it can export this expertise to Giant to Go in whatever doses it thinks are appropriate.

Dutch Royal Ahold-owned Giant Food Stores of Carlisle, Pennsylvania is now joining the other participants in this revolution with its new Giant to Go format. It seems "GIANTS" are even going small (format). Stay tuned, as there will be many more new entrants to the party.

Small-Format Food Retailing Memo: First 'Urban Fresh by Jewel' Small-Format Food and Grocery Market Opens Today in Chicago's Lincoln Park Neighborhood

Small-Format Food Retailing Special Report

The Jewel-Osco supermarket chain, which is owned by Supervalu, Inc., the second-largest U.S.-based food and grocery retail and wholesale company, opened the first store (the interior of which is pictured above) of its small-format Urban Fresh by Jewel start up chain today at 1910 N. Clybourn Avenue in the Lincoln Park neighborhood in Chicago, Illinios USA.

The small-format market is fairly upscale in design. It features an assortment of basic, specialty, natural and organic grocery products, along with fresh meats and produce (including specialty and organic varieties), ready-to-eat and ready-to-heat prepared meals, side dishes and snacks, and gourmet sandwiches and baked goods, along with wine and beer, with an emphasis on specialty wines and craft beers.

The overall focus of the store, even though it carries everyday grocery brands and items, is towards the upscale and specialty, including an emphasis on natural and organic. But the store also is merchandised for shoppers to pick up everyday items offered at about the same price a larger supermarket offers them for.

Urban Fresh by Jewel joins the company of Tesco's Fresh & Easy, Safeway's "The Market," (its one the market by Vons store in Long Beach, California thus far) Giant Eagle's Giant Eagle Express and Wal-Mart's soon to open Marketside, which all have in common that they are small-format, convenience-oriented grocery markets offering a limited assortment of basic groceries, fresh foods like meats and produce, specialty-natural items and fresh, prepared foods.

According to a Natural~Specialty Foods Memo correspondent who visited the Urban Fresh by Jewel store today on its opening day, it's very similar in design and merchandising style to Safeway's "The Market" format.

At 16,000 square feet, Urban Fresh by Jewel also is about the same size as the the market by Vons, which is about 15,000 -to- 18,000 square feet.

Urban Fresh by Jewel also is similar in look and merchandising to Canada's small-format Urban Fresh markets, which are owned an operated by the Canada-based grocery chain Sobeys.

The Canadian Urban Fresh stores have been around for sometime, and it appears Supervalu's Jewell-Osco chain liked the name so much it borrowed it for its small-format start-up chain, which the retailer says it plans to use in a urban-oriented retailing strategy in Illinois and Indiana, where the chain is based and operates about 183 supermarkets.

Food and grocery items at the Urban Fresh by Jewel Chicago store are grouped into pods to make for quick pickings of salads and deli items, for example, according to Miguel Alba, a spokesman for Jewell-Osco. This is the very same merchandising format Safeway rolled out in its the market by Vons store in Long Beach, California, which opened in May of this year.

Safeway plans to open its "The Market" small-format stores on a selective basis throughout the U.S. whenever and wherever it makes sense, CEO Steve Burd told Natural~Specialty Foods Memo early this year.

Safeway Stores, Inc. owns the Dominicks chain based in Illinois, so it's possible we will see a the market by Dominicks doing small-format food retailing battle with Urban Fresh by Jewel, which would be interesting since both chain's formats are so similar in store design and merchandising, including both using the the pod-style displays.

Safeway Stores, Inc. plans to use "the market" as the first part of the name of all of its small-format grocery stores, adding the name of the particular banner it uses in a given market as the ending. Vons is Safeway's banner in Southern California and Southern Nevada, for example. It's Dominicks in Illinios, Safeway in other parts of the U.S., and so on.

Additionally Jewel-Osco's Chicago small-format market has 10 checkout lanes, six of which are self-service. Spokesman Alba says this is designed to appeal to the younger, high-income residents in the Lincoln Park neighborhood, who he said the chain thinks will like the option of having a mix of full-service and self-service checkout lanes. Since four of the ten lanes are still full-service, he says he believes the store is offering both options to shoppers. They can use either full-serve or self-checkout depending on their needs at the time.

Safeway's small-format "The Market" format also uses a mix of full-serve and self-serve checkout lanes.

Tesco's Fresh & Easy Neighborhood Market, the small-format start up chain which now has 82 stores in Southern California, Nevada and Arizona, offers only self-service checkout lanes in its stores, although store clerks will assist customers with checkout and bagging if asked by a shopper to do so.

Trader Joe's on the other hand, the pioneer small-format specialty grocer in the U.S., has stuck to having only full-service checkout lanes in its stores. Clerks bag a shoppers order as well as scan it out in TJ's markets.

Among the upscale, natural, specialty and organic products in the first Urban Fresh by Jewel small-format market are: whole bean gourmet, organic and fair trade coffee beans displayed along with in-store grinders for shoppers to use; specialty, natural and organic food and grocery items across all shelf-stable and perishable categories; gourmet prepared foods items like Lobster and Shrimp Rockefeller and Hazelnut and Currant-Baked Apples (alongside more everyday items like meatloaf and cheescake); and regular and craft beers, along with basic and premium wines (about 400 varieties total, according to Jewel-Osco).

But there's also a limited selection of everyday grocery brands and items, as we mentioned earlier. There's Campbell's canned and packaged soups in the soup section, Kellogs Corn Flakes and Lucky Charms in the cereal aisle, and Wish Bone salad dressing along with numerous gourmet and organic salad dressing brands in the dressings section, for example.

The store does flip-flop a number of things as part of its emphasis on specialty, natural and organic, while at the same time offering basic food and grocery items to the extent any retailer can do so in 16,000 square feet.

For example, instead of national brand candy like Hershey Bars and Snickers at the front checkout stands, which is prime real estate, the store merchandises premium and organic confections like Lindt chocolate bars, New Tree brand Organic candies and Newman's Own organic confection items there, along with Altiods and other specialty and organic mints and related items.

The new Jewel-Osco small-format store sits on the site where there once was another small-format store which was owned and operated by Supervalu, Inc. That store was one of the company's five Sunflower Markets, which was a format it created to experiment with going after the natural foods shopper in a smaller-format store with lower prices than established natural products retailers like Whole Foods Market, Inc.

Supervalu opened five of the stores, which by design were run rather independently by the Sunflower folks hired to do so by the grocery company. In 2007, SuperValu announced its was closing the stores (which it did early this year) and ending what it called its test market of the Sunflower Market natural foods retailing format. [This Sunflower Market isn't to be confused with Sunflower Farmers Market (SFM), which used to happen so much SuperValu-owned Sunflower Market put a link to SFM, which is alive, thriving and growing fast, on its website.

Many people have asked for the last year or so if and what would replace the Sunflower Market natural foods store format, if anything, for Supervalu. They now have their answer. It's likely one or more of the other four closed Sunflower Market natural foods stores will likely end-up as an Urban Fresh by Jewel combination basic grocery, specialty-natural and fresh, prepared foods markets. The five Sunflower Market stores were in Illinios and Indina, in primarily urban locations.

Resources: Learn More:

>The online review site yelp.com already has two reviews about the Chicago Urban Fresh by Jewel store, which just opened today. There likely will be more. You can view the reviews here.

Small-Format Food Retailing Memo: 'USA Today' to Open 'USA Today's' Travel Zone Convenience-Oriented Micro Small-Format Stores in Airports in America

Have you heard the joke going around that the newspaper business is SO bad in America (and it really is having serious problems) that USA Today, the newspaper with the largest circulation in the U.S., has decided to go into the convenience store business?

Well, it's not really a joke that's going around.

In fact, it's not a joke at all. We just made it up for an opening paragraph.

Gannet Company, which owns USA Today (the newspaper), today opened its first USA Today's Travel Zone micro small-format retail store inside the Detroit USA Metropolitan Wayne County Airport.

A second micro-small-format USA Today's Travel Zone store is to open before the end of the year in New York's LaGuardia Airport, along with not one but two stores opening in the Indianapolis, Indiana USA Airport in November of this year, according to Christy Hartsell, who is the director of brand licensing for USA Today. Additional stores are planned in other airports as well.

Hartsell says the airport stores will feature a wide variety of products, including beverages, snacks, candy, sundries, reading materials (lots of display space for USA Today the newspaper we expect), travel-related items and other related goods. The stores also will feature prepared foods items in the form of ready-to-eat grab-and-go-style snacks.

Here's how Ms. Hartsell describes the strategy behind the USA Today's Tavel Zone stores:

"USA Today is synonymous with travel and convenience. Therefore, "USA Today Travel Zone stores create a new opportunity for travelers to get the news and information they need when away from home."

Makes sense. USA Today (the newspaper) is synonymous with travel because it is everywhere travelers go. And it's synonymous with convenience because its editorial style is to feature shorter stories than most newspapers do, along with designing the paper and its website for quicker reading.

USA Today (the newspaper) won't actually operate the stores. Rather, Under a license agreement, HDS Retail, the world’s largest travel retailer with more than 4,000 stores in 18 countries, will operate the stores, says Ms. Hartsell.

She says USA Today wanted to create an extension of its brand and therefore decided the micro small-format convenience-oriented stores located in airports would make a good fit based on the USA Today brand image.

What we think

We certainly see numerous synergies between USA Today (the paper) and the stores, particularly with having them in airport locations.

Additionally, we think the stores offer numerous cross-marketing and merchandising opportunities with the newspaper -- both its online and print additions.

USA Today (the newspaper) has long associated itself with travel. The paper version is available all over America's airports, is left for free in front of the doors in most medium-range to higher-end hotels, and offers lots of content about travel and weather conditions for its readers, including business travelers.

The online edition is full of travel related content as well, along with being involved with numerous travel-related content providers and travel companies.

We think the combination of offering consumables, reading material and sundries, along with other goods, in the stores also is interesting. While numerous airport stores do this already, they don't have the potential tie-ins with a newspaper like USA Today (the store) has the potential to exploit via USA Today (the newspaper).

For example, ads for the micro small-format airport stores can be placed regularly in USA Today (both the paper and online editions), along with coupons for discounts (and introductory free) beverages and related items.

Promotions can be conducted as well using the paper as a marketing venue, especially the online version. For example, how about buy a beverage and snack at the store, get a free copy of USA Today (the paper) promotion to start. Ads and coupons placed in both the print and online editions.

The potential for good marketers is near endless really.

Of course, the success or failure of the stores will depend on executing the retailing fundamentals: location, merchandising and price, along with a few other key variables.

USA Today does have an experienced retail operations partner in HDS Retail North America.

We think it's an interesting development though. It also shows the differentiation and growing fragmentation of retailing in the U.S., particularly when it comes to consumables, even if just a few categories within the larger definition. In other words, consumables are increasingly -- in one form or another -- becoming an overall category that nearly every retail format is taking a bite out of, so to speak.

Be it Target selling perishable and shelf-stable food and grocery products in its discount stores, Cost Plus World market selling wines and craft beers (and specialty foods) in its import format stores along with furniture, or Home Depot selling beverages and some snack items in its big box home stores and Office Max doing the same in its office supply big boxes, there's a whole lot of consumables retailing going on -- and not just in food and grocery stores.

NSFM Editor's note: Please note we've coined a new term: micro small-format retailing. We checked extensively and haven't found it used by any other publications or others to date. If you've seen it used, send us a copy of the publication.

And, stay tuned, we've found some other examples of what we are calling micro small-format retailing, including food and grocery.

Our definition: Since small-format food food and grocery retailing generally is defined as stores from about 5,000 (very small-format) -to- 25,000 (high end) square feet. We define micro small-format in food and grocery retailing as about 5,000 square feet and below.

In other types of retail formats, such as drug stores, its all relative. For example, a 5,000 -to- 15,000 square foot drug store is considered average size today. Therefore a micro small-format drug store would be one less than say about 5,000 square feet in our analysis.

The USA Today travel-oriented airport convenience stores are considerably smaller than 5,000 square feet, by the way.

Small-Format Food Retailing Memo: A Professional Chef Turned Grocer Creates A 'Sub-Urban' Small-Format Fresh Foods and Grocery Store in Maryland USA

Small-Format Food Retailing Special Report

The U.S. economy may be going to hell in a handbasket (or perhaps shopping cart), with banking failure after banking failure, fast-rising unemployment, soaring food and gasoline prices and other assorted economic maladies, but even such tough times aren't stopping entrepreneurs from opening small-format food and grocery stores.

A case in point: Andre Cavallaro, the former executive chef at the popular Addies restaurant in Rockville, Maryland USA, recently opened a small-format food store, Sub*Urban Trading Company, in nearby Kensington, Maryland.

The food store, which is designed to look like a modern version of the old general store, takes a "green" positioning stance, offering organic fresh meats and produce, along with natural, organic and specialty food and grocery items, with a major emphasis on "locally-produced" products.

natural and specialty grocery items include oils, condiments, marinades, salad dressings and items in numerous other categories. Natural and specialty perishable items are sold in themarkets as well.

Here's what Katie R. from Kensington, Maryland recently had to say about the store in a review on the yelp.com review website:

"The best word I can think of to describe sub*urban trading co. is 'yum'. Then I guess I would use amazingly fresh, organic, and friendly.

But whether I am biting into a warm rustic blackberry tart made with the ripest blackberries for breakfast or a slice of wild mushroom and goat cheese tart for lunch, all I can think of is yum.

How lucky Kensington is to have this new gourmet carryout owned and run by the friendly and knowledge pair, Andre and Alison Cavallaro.

Not only are there fresh pastry items everyday, but produce, dairy, meat, fish, baking items, and a few choice cookbooks. The fresh meats look so inviting - some marinated with fresh herbs; some small portions cooked to go. Many items are supplied by local farmers so it is worth the drive."

Utilizing his experience as a chef, Cavallaro is making fresh, prepared foods a major part of the market, which opened in August. Each day the store features ready-to-eat in-store fresh, prepared food items -- four different selections for lunch and one offering each evening for dinner. All are chef-quality prepared meals made by Cavallaro.

A Natural~Specialty Foods Memo reader who recently talked with Cavallaro tells us the four main statements the small-format food store makes are -- environmentally-friendly, organic, fresh and local.

All paper products used at the store are recycled, all plastic products used in the foodservice operation are corn-based and biodegradable, and all of the fresh produce and meats sold in the store are organic and, when possible, locally sourced.

A central feature of the market are its fresh, prepared foods to go, sales of which our reader says seem to be picking up since the store opened a little over a month ago. Cavallaro hopes to become a destination venue, where shoppers will stop in after work and pick up dinner to take home from his daily rotating menu, along with visiting regularly for take-home or take back to the office lunches.

The market is designed to be a neighborhood store; a store locals will shop daily if possible in the European tradition. Although we doubt if the owner would mind customers from outside the neighborhood.

In fact, our reader says Cavallaro had a strong following when he was executive chef at the restaurant in Rockville, Maryland, saying she expects numerous take-out prepared foods customers will stop in from there and elsewhere once they learn about the small-format combination natural, specialty and fresh, prepared foods market.

For example, Heather C from Rockville, Maryland, another reviewer on yelp.com offers positive comments about the store's fresh, prepared foods, along with other aspects of the market:

"I absolutely LOVE LOVE LOVE this place!!!!!

I've been in a couple times since they've opened and have been so pleased with the atmosphere, the ambiance, the employees/owners, and obviously the products they sell.

The former chef of Addie's, Andre Cavallaro, and his mother Alison Cavallaro, run this "green" and organic minded market. They focus on all organic, sustainable, and local products. On top of all that, all of their bags, to go containers, cups, "plastic" silverware are made from either corn or recycled products and are all biodegradable!!!

I read Libby's response, and often times I shop at Safeway and organic eggs cost $4.99 and to tell you the truth, don't even know where they come from. So I'm happy to buy my eggs at Sub Urban.

I've been telling everyone I know about this place and highly recommend it to whoever reads this!! Check it out, you won't regret those awesome peach turnovers baked fresh every morning or those kick a** savory tarts!!! (I had the beet and goat cheese one the other day....OMG!)

As we often write about, small-format stores offer much opportunity in terms of geography -- they can be located in urban, suburban or rural area -- and format. Such stores can be more upscale natural-organic-specialty like Sub*Urban Trading Company, no frills, deep disconters like Aldi or Supervalu, Inc.'s Sav-A-Lot, or in-between markets like Tesco's Fresh & Easy Neighborhood Market, Wal-Mart's soon to open Marketside and the hundreds of independently-owned small-format food and grocery stores operated by individuals, family's and partnerships throughout the U.S.

Small-format food stores, because of their smaller size and lower cost to get started, also offer an opportunity to independent and entrepreneurs that otherwise would be unable to open a traditional size supermarket because of the expense of doing so. They also are the perfect fit for natural and specialty foods stores offering a specific focus like fresh, prepared foods.

We're seeing a revolution in the U.S., as we frequently write, in small-format food and grocery stores across all formats -- from hard discount -to- upscale organic, prepared foods and gourmet (or a combination of all those) -- despite the poor economy.

The good news is that if these stores can make it now, they can make it nearly anytime. Additionally, if they do make it now, the stores will be well positioned to thrive once the U.S. economy turns around. This is particularly true for natural and specialty foods'-oriented small-format food and grocery markets.