Retail Memo - Alternative Formats Follow-Up: Toys 'R' Us Confirms Our Report About its New 'R Market' Grocery Sections in Toy Stores

Above is a photograph of one of the Toys "R" Us "R" Market store-within-a-store grocery and packaged goods sections located in the front of over 260 of the chain's U.S. toy superstores. The retailer has done a pretty good job of basing the item selection in the grocery sections on the Toys "R" Us overall format, striking a balance between essential items geared to mom and dad and items focused on the kids. The "R" Market sections contain about 1.300 SKUs, according to the retailer. [Photo courtesy of Toys "R" Us, Inc.]

On April 3, 2009, Natural~Specialty Foods Memo (NSFM) reported in this story [Retail Memo - Alternate Formats: Toys 'R' Us Testing Store-Within-Store 'R Market' Grocery Departments in Three Chicago-Area Toys 'R' Us Toy Stores] that the Toys "R' Us toy store chain was testing grocery and packaged goods product sections called "R" Market in some of its toy superstores.

On April 28, Toys "R" Us, Inc. confirmed Natural~Specialty Foods Memo's April 3 report, issuing a news release announcing the addition of the new "R" Market limited assortment grocery and consumer packaged goods sections in what are now over 260 of its 565 U. S. Toys "R" Us toy stores. The sections contain a mix of about 1,300 SKUs in the consumable and household packaged goods categories, along with a couple other related categories.

We got it about right in our April 3, 2009 report, which we published over three weeks before the retailer confirmed the "R" Market grocery store-within-a-store sections. Numerous supermarket industry trade publications and general business publications have ran stories since April 28, using the Toys "R" Us news release as their source.

The most significant added information by Toys "R" Us, Inc. is that the "R" Market grocery sections are now in 260-plus Toys "R" Us stores.

Here is what Toys "R" Us Chairman and CEO Jerry Storch said in the April 28 news release about the retailer's establishment of the "R Market" grocery sections, which are located in the front of the toy superstores:

"As part of our business strategy, we are continually focused on improving the shopping experience for customers in our stores. This includes looking for new ways to provide busy parents with the convenience of finding everything they need for their kids under one roof. The introduction of "R" Market offers customers a uniquely edited presentation of differentiated, kid-focused products from well-known manufacturers, as well as newer brands."

Read the full Toys "R" Us April 28, 2009 news release here. The statement offers a few other added tidbits of information about the "R" Market sections, making it well worth reading.

As we asked in our April 3, 2009 story: 'Will all retailers become grocers eventually'? At least in various limited but serious ways like Toys "R" Us is doing?

The way it's going, our intentional hyperbole in posing that thought question just might turn out to be closer to a statement of fact than one of provocation.

Retail Memo: Newest Texas 'Newflower Farmers Market,' Which Sprouted From Parent 'Sunflower Farmers Market,' Blooms in Dallas, Texas

What's a "Newflower?"

Well, for purposes of this piece, it's a seedling that sprouts from a Sunflower, in this case Boulder, Colorado-based Sunflower Farmers Market, the fast-growing, fighting tiger chain of natural foods grocery stores founded and run by Mike Gilliland, who's first crack at the natural foods retailing game was Wild Oats Markets, which he founded in Boulder and ran for many years, and which today exists only as a now near-fully integrated part of Austin, Texas-based Whole Foods Market, Inc., which acquired Wild Oats in 2007 and finally gained full control of it on March 6 of this year, when it reached a settlement agreement with the U.S. Federal Trade Commission (FTC) over the regulator's nearly two year antitrust legal challenge against the acquisition. [See a linked bibliography on FTC v. Whole Foods here: Retail Memo: David Wales, Who Headed Up the FTC's Nearly Two Year Legal Challenge Against Whole Foods' Acquisition of Wild Oats is Leaving the Agency.]

Sunflower Farmers Market opened its third and newest "Newflower Farmers Market," banner store in Dallas (pictured at top), deep in the heart of Whole Foods Market country in Texas on March 18, less than a month ago. Whole Foods was founded in the 1970's and is headquartered in Austin, Texas.

Sunflower Farmers Market opened its first Texas store in November 2008 in Plano. It's second "Newflower Farmers Market" store bloomed in February 2009 in Austin, Whole Foods Market's hometown.

Why "Newflower" and not "Sunflower" in Texas?

When Sunflower Farmers Market opened its first store in Plano, Texas in November 2008 it went by the Sunflower Farmers Market banner.

However, the name "Sunflower Market" for natural foods stores happens to be owned by the supermarket chain Supervalu, Inc. Supervalu used to operate a handful of natural foods markets in the Midwest named Sunflower Market. The chain closed the stores in 2008, ending what was a new format test for Supervalu. However, the company retained the ownership of the Sunflower brand as it pertains to retail natural foods stores. [See our January 25, 2008 piece here: Breaking Retail News: SuperValu, Inc. to Close Sunflower Market Stores.]

Boulder, Colorado-based Sunflower Farmers Market, which currently operates 23 stores has a license from Supervalu to use the "Sunflower" name in the states of Colorado, Arizona, New Mexico and Utah, where it operates 20 of its 23 stores.

But Sunflower Farmers Market doesn't have a license from Supervalu, Inc. to use the "Sunflower" name in Texas, as well as in numerous other U.S. states, hence why the natural foods grocer changed the name of its then one store in Texas to "Newflower," and why the newest two Texas stores, and the all the other stores in the Lone Star State it will open, are and will be named "Newflower."

There's been some speculation that the reason Sunflower Farmers Market is using the "Newflower" name for its Texas stores is because there is an independent heath foods store in Texas named Sunflower. That's true, there is such a store. But the reason for the Newflower rather than Sunflower Farmers Market banner in Texas is because of the Supervalu ownership of the Sunflower name in the state.

Newflower Market, Inc. (the business name Sunflower Farmers Market uses) has a license from Supervalu, Inc. for the name Sunflower for certain states, but not for Texas," Bennett Bertoli, vice president of real estate for Sunflower Farmers Market, told Natural~Specialty Foods Memo (NSFM).

Additionally, Supervalu, Inc. confirmed to us that is owns the Sunflower Market name and currently licenses it to Sunflower Farmers Market only in Colorado, Arizona, New Mexico and Utah at present.

Supervalu, Inc. has no plans to bring back its small-format Sunflower Market natural foods format or stores anytime in the near future. The stores were a test of a standalone natural foods retailing format for the supermarket chain, and Supervalu decided to close the stores and beef up the natural and organic foods item selections in its over 2,000 U.S. supermarkets, including creating a new natural and organic store brand, rather than go forward with opening more Sunflower stores and creating a natural foods store chain.

Although from a retail marketing standpoint being able to use the Sunflower Farmers Market name in Texas and in other new states the natural grocer enters is a plus, there is a certain delight in the fact it is using "Newflower" in its newest state and market -- Texas. After all, sunflowers are plants that shed lots of seeds. And for Sunflower Farmers Market, other than being able to use its flagship "Sunflower" banner in Texas, which it obviously wanted to do, "Newflower," which sprouted from the "Sunflower" banner, seems to us to be about the next best thing. And to take the metaphor to a further extreme, more Newflower Farmers Market stores will "bloom" in Texas over the next couple years.

Dallas Newflower Farmers Market blooms

The grand opening on March 18 of the Dallas "Newflower Farmers Marke"t store, which is located at 1800 North Henderson Avenue at Lewis Street in the city, was jam-packed. The Sunflower-Newflower format (the store formats are the same, just the names are different) focuses on offering natural and organic groceries and fresh foods at discount prices. In fact, it's slogan is "Serious Food...Silly Prices."

Dallas residents aware of the discount pricing focus of the stores, along with hearing about it via the pre-Dallas store opening press attention and advertising in the city, turned out in large numbers for the store's grand opening, many with reusable shopping bags in hand, looking for natural and organic food and grocery bargains.

Newflower didn't let the shoppers down. The natural grocer offered hot grand opening deals in every department of the store. Sunflower-Newflower puts a major emphasis on offering fresh produce at everyday low prices, and the Dallas store's produce department was packed with opening day shoppers grabbing up cart fulls of low-priced fruits and vegetables.

The store's grand opening began at 6:30am with a free breakfast served in the store's parking lot to opening day early birds courtesy of the natural grocer.

The Dallas "Newflower Farmers Marke"t store's doors were opened at 7am on March 18. And the first 200 shoppers to enter the store and make a purchase were given a nice surprise -- each was presented with a free reusable shopping bag filled with $50 worth of free groceries courtesy of the Newflower store team.

Day-long grand opening activities included lots of food sampling throughout the store, a free beef bbq and even free chair massages for the bargain hunting grand opening day shoppers.

Sunflower-Newflower founder and CEO Mike Gilliland, who attends every new store grand opening, was at the Dallas store event on March 18, spotted throughout the store, and often in the produce department, which some say is his favorite part of the stores.

Sunflower Farmers Market founder and CEO Mike Gilliland stationed in the Dallas "Newflower Farmers Market" store's produce department on grand opening day. The word is that the produce department is the grocer's favorite of all. In fact, a Dallas Newflower store employee says that on the March 18 grand opening day that the CEO, who also bagged customers grocery as part of the opening, kept running off from the store front end to spend more time in the produce department.

Never the shy entrepreneur and grocer, Gillian said at the grand opening: " We're thrilled to bring our grocery store concept to Dallas, especially with today’s hard economic times. Newflower is the most cost-effective grocery choice, by offering fresh produce and all-natural meats from local vendors at down-home prices. We make healthy cooking easy, with in-store recipe cards, nutritional programs and the lowest prices around."

The Sunflower-Newflower markets are a bit of what we call a hybrid natural foods store, reminiscent of what Gilliland did with the Henry's (Southern California) and Sun Harvest (Texas) banners when he was at Wild Oats and the banners were a part of the chain. By this we mean they aren't orthodox natural-organic foods stores. The stores feature more mainstream-type and specialty items, along with natural and organic products.

Whole Foods Market, Inc. sold off the 35 Henry's and Sun Harvest stores in Southern California and Texas to Los Angeles-based Smart & Final shortly after acquiring Wild Oats in 2007. Gilliland had left Wild Oats long before the Whole Foods acquisition.

The format

The Sunflower-Newflower stores are no frills markets in terms of their design; attractive but basic. This allows the natural grocer to have less overhead, which allows it to achieve cost savings, and in-turn offer natural and organic food and grocery items at generally everyday lower prices than Whole Foods market and most supermarket chains do.

In a sense, Gilliland and team are attempting a natural-organic foods retail natural-organic category killer format, while at the same time trying to make sure sure the markets are both destination as well as neighborhood-oriented markets. The format seems to be working so far in all three regards, from our observations and analysis.

The new Dallas "Newflower Farmers Market" store also has a number of "green" features, according to the retailer. These include: energy efficient light fixtures, the use of recycled and refurbished equipment, cases and fixtures whenever possible, and cash registers that use double sided receipts to reduce paper waste by 40%.

The front of the store also features a skylight-style awning designed to let natural light into the front of the store, as the photograph at the very top of this piece shows.

One of the fighting tigers

Natural~Specialty Foods Memo (NSFM) has termed Colorado-based Sunflower Farmers Market one of what we call the three fighting tiger natural grocery chains. The other two fighting tigers are Arizona-based Sprouts Farmers Market and Colorado-based Natural Grocers.

All three of the Western U.S.-based natural grocers are fast-growing, and all three fear not to take on Whole Foods Market head-to-head in various markets, hence the fighting tiger name. All three, for example, are taking on or plan to take on Whole Foods right in its very own backyard of Texas, as they are in Colorado, Arizona, Southern California (Sprouts only so far there), New Mexico and Utah.

All three of the fighting tigers are using a similar, no frills everyday low-price formula as well, although each does so in its own unique way. It's not an accident that Whole Foods is focusing much more on value and pricing these days in its stores. The competition from these three fast growing natural grocery chains, along with the bad economy, has and is forcing Whole Foods to become much more price competitive, both on everyday prices and in its promotions. And Whole Foods is doing so.

Competition good

This competition, along with the competition from supermarkets and discounters that are getting deeper and deeper into the natural and organic foods categories, is good for the industry overall because it will lead to a greater democratization of healthy, natural and organic foods.

The better the prices on the category items the more consumers can buy them, changing the industry from a niche (and some might say even elitist) enterprise to one aimed more at the masses. That's good for retailers and suppliers as well. More shoppers equals more sales. And more sales equals more efficiencies, which translates into higher profits.

That's a prescription both Dr. Natural and Dr. Organic would love to write.

Below are photographs from the grand opening of the new Dallas Newflower Farmers Market that sprouted in Dallas, Texas on March 18, 2009:

Shoppers check out and get "checked out" at the Dallas "Newflower Farmers Market" store on grand opening day, March 18, 2009.

The produce department is a central departmental feature in the Sunflower-Newflower stores. Although the stores average about 15,000 -to- 25,000 thousand square feet, the produce department in the stores is much larger than an average store of that size would have. This is by design. Sunflower-Newflower prices both conventional and organic fresh produce at low everyday prices. This serves not only as a way to draw shoppers to the store but helps grow market basket sizes in the stores as well. Notice the no frills, farmers' market-style design of the produce department above in the new Dallas Newflower store. Doing so provides cost savings which allows for the everyday low produce pricing practice. It obviously also fits in with the chain's overall theme and name.

Inside the Newflower Farmers Market store that opened in Dallas, Texas on March 19, 2009. Notice the basic, no frills product refrigerated cases and the painted cement floors. This is part of the chain's no frills store design which allows it to offer natural and organic products at lower everyday prices than many of its competitors. The focus is on the the product and its price rather than on the store's design. The balloon the happy little girl is holding were given out to children, along with other treats, all day at the store's March 19 grand opening event. The balloon is doing a great job of holding her attention so that mom can concentrate on her shopping.

Below is a selection of related, past stories and posts from NSFM:

~March 12, 2009: Retail Memo: Whole Foods Market is Selling Brand 'Wild Oats'- We Offer Three Retailers We Suggest Could Benefit From Buying the Brand

~December 6, 2008: Retail Memo: Fast-Growing and Scrappy Sunflower Farmers Market Ventures Deep in the Heart of (Whole Foods Country) Texas

~October 27, 2008: Retail Memo: Sprouts Farmers Market Store Number Eight 'Sprouts' in Texas; Deep in the Heart of Whole Foods Market Country

~October 21, 2008: Retail Memo: Natural Grocers Joining Sunflower Farmers Market in Opening First Stores in Whole Foods Market's Home City of Austin, Texas USA

~October 21, 2008: Retail Memo: H-E-B Set to Open 127,900 Square Foot Hybrid Mega-Store in Houston, Texas Suburb; Miles and Aisles of Organic and Premium Delights

~August 15, 2008: Retail Memo: 'Business Week' Discovers Sunflower Farmers Market, Just As Many Shoppers Are Doing Daily

~June 19, 2008: Retail Memo: Two Food Retailing Chains (Among the Growing Legions) Who Fear Not the Whole Foods Market, Inc.-Wild Oats Juggernaut

~July 8, 2008: Retail Memo: Former Raley's CEO Michael Teel and Partner Developing New Prepared Foods, Natural-Specialty Foods Chain in Sacramento, California

~May 18, 2008: Small Format Food Retailing Special Report: Raising (the stakes in) Arizona: Wal-Mart On-Track to Open First Marketside Stores in Arizona This Summer

~May 13, 2008: Small Format Food Retailing Special Report: Sprout's Farmers Market Gets $22 Million in New Financing; Will 'Sprout' 100 New Stores Over Next 5 Years

~April 29, 2008: Independent Grocer Memo: Utah's 75 Year Old Harmons Combats the Big Chains With Low-Prices; Gets Ready For Whole Foods' By Going Upscale & Natural

~February 24, 2008: Retail Memo: The Whole Foods Mrkt., Inc. as Monopolist Fallacy: How Sprouts Farmers Mrkts. and Others Are Growing Into the Heart of Whole Foods Country

~December 20, 2007: Retail Memo: Natural-Born Category Killers

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

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.]

Retail Memo - Alternate Formats: Toys 'R' Us Testing Store-Within-Store 'R Market' Grocery Departments in Three Chicago-Area Toys 'R' Us Toy Stores

Will All Retailers Become "Grocers"?

The Toys "R" Us toy store chain has never been just for kids. After all, it's mom and dad who have the cash. Plus, we all know mom and dad also love shopping at the toy stores nearly as much as the kids do. After all, doing so can be the retail version of the fountain of youth, at least until checkout time.

But if what the New Jersey, USA-based retailer appears to be up to from a merchandising standpoint in at least three stores in the metropolitan Chicago, Illinois market is a harbinger of things to come for the chain's hundreds of other Toys "R" Us branded retail stores in the U.S. (and perhaps internationally), mom and dad might just have a far more practical reason for shopping at the toy superstores on a much more frequent basis. [The retailer operates a total of 846 Toys "R" Us toy superstores (about 600) and Babies "R" Us stores in the U.S. Additionally, it operates 700 stores internationally, in 32 countries, along with having four online stores.]

What's the mega-toy store chain up to?

Toys "R" Us has remerchandised three of its Toys "R" Us flagship toy stores in the Chicago area to include a selection of shelf-stable food, grocery, beverage, snack and household packaged goods items.

The packaged goods items are being merchandised in a store-within-a-store department setup in the toy superstores, which has been named "R Market."

The grocery store-within-the-toy store is clearly set-off with colorful green signage featuring the "R Market" name, according to a Natural~Specialty Foods Memo (NSFM) correspondent who visited one of the stores this week.

The perimeter of the "R Market" department features primarily household-oriented packaged items like bath tissue, paper towels, laundry detergent, cleaning supplies and similar related goods. It's the draw, the lure, into the store-within-the-toy store.

Inside the "grocery store" gondolas are stocked with a limited assortment of shelf-stable packaged goods and beverages representing numerous categories. Among the items include beverages such as juice, bottled water and various types of drinks; breakfast cereals, cereal and nutritional bars, cookies, crackers, various types of snack foods, and an assortment of other packaged foods.

There's also a full aisle dedicated to baby foods and drinks, a fitting tie-in for the Toys "R" Us core offering, which are toys and related products for kids of all ages.

The retailer has carried baby-related packaged goods items like disposable diapers, wipes and the like for some time in its stores. But a full-section of baby consumables is unique to the three Chicago-area test stores.

The grocery department also features a wall of candy. The wall of treats has a header at top that reads "Candyland," according to the NSFM correspondent. That signage is a tie-in to the popular "Candyland" board game, which is one of the chain's all time top-sellers.

The Toys "R" Us consumables and packaged goods store-within-the-store carries a mix of well-known national brand products, along with an assortment of lessor-known brands. There's also some natural, organic, specialty and healthy food, grocery and beverage items on the shelves.

Big brands include General Mills (cereals, snack bars), Kellogg (cereals), Gerber (baby), Proctor & Gamble (laundry detergents, bath tissue, paper towels, disposable diapers and related household items), Nestle (packaged goods and beverages) and some others.

Proctor & Gamble items like Pampers, Bounty Paper Towels and Charmin Bath Tissue are featured at discount prices on pallet-style displays on the floor inside the store-within-the-store area.

Among the natural, organic, specialty and healthy food and beverage items include: Barbara's Bakery (cereals, snacks), Kashi (cereals and related items), Dr. Sears' brand organic snack food items, Nestle nutrition items, Apple & Eve's Fruitables fruit drinks, and Clorox's and Seventh Generation's "green" household cleaning items.

Our correspondent also reports that there is some cross-merchandising in the "R Market" store-within-a-store department, featuring related consumable items and toy items, which is a logical and smart merchandising move.

Additionally, there's some cross-merchandising tie-ins with baby food and baby products in the aisle dedicated to baby and toddler consumables.

Further, a number of healthy, natural and organic snack and beverage items targeted to kids were also displayed on endcap-type displays in the department.

Toys "R" Us is keeping hush about the three store test, not publicly commenting on what it is up to, or if it's more than just a test. We call it a test because we spoke this week with a representative of one of the companies supplying grocery products to the toy store chain, who told us from what he has been told the "R Market" department and remerchandising scheme is just that for now -- a test.

It appears Toys "R" Us is attempting strategically a few things with its limited assortment, store-within-a-store "R Market" consumer packaged goods sections.

First, based on the item selection, the retailer has selected consumable and other packaged goods products that (1) primarily complement its core target demographic: toys and related goods; and (2) it's mixing that core shopper demographic-focused limited assortment with a selection of basic household items targeted to adult shoppers who are likely to pick up a few things on impulse (cleaning products, bath tissue, ect.) while taking their children toy shopping. The retailer has seen this to be the case in the past with items like disposable diapers.

And of course, the focus on kid-related breakfast cereals, juices, snacks and other consumables fits both of the criteria described above. Kids will ask mom to buy the juice boxes, candy and snack items, for example, along with mom grabbing some needed household items, especially if the price is right.

This is our analysis. As we said, Toys "R" Us isn't commenting publicly at present on the development.

With nearly 600 flagship Toys "R" Us stores and about 250 Babies "R" Us stores, the retailer could feasibly move lots of volume of consumable and other packaged goods items nationally were it to install the "R Market" departments in all of its 846 U.S. units. (We would think the focus would be more limited in the Babies "R" Us stores, concentrating on baby and toddler foods and the like.)

We also suspect the current economic recession has much to do with the development or test of the consumables/packaged goods departments in the three Chicago-area Toys "R" Us stores. After all, consumers aren't buying much in the way of durable items like toys at present.

In fact, Toys "R" Us just introduced what it calls $1, $2 and $3 value toy sections in the front of all of its flagship stores as a way to add value and create sales in the down economy. [You can read more about those new departments here.]

A very popular and long running advertising campaign jingle from Toys "R" Us features a person singing: "I don't want to grow up... I want to be a Toys R" Us kid."

It appears, based on the three store test, that if the retailer decides to put the limited assortment, petite grocery departments in all of its toy superstores, adults will have another reason to be even more frequent "Toys "R" Us kids," along with their children, picking up toilet paper, breakfast cereal, laundry detergent, and healthy snacks and drinks, along with toys and board games, at the toy superstores.

Retail Memo: Whole Foods Market's April Fools Day Web Page Offers Mirth, Pokes Fun At Itself, But Also Good PR Move For Natural Grocer's Image

The April Fools Day spirit has struck the Whole Foods Market Web site today.

The natural grocery chain, which gets its share of ribbing with nick names like "Whole Paycheck," has turned the front page of its Web Site into a humorous self-look at itself in the spirit of April Foods Day, which is today, April 1, 2009.

The Web site home page is full of mirth. You can view the site here.

For example, the mock advertisement pictured at the top of this story leads off the Whole Foods Market April Fools Day Web site home page. As you can see, the natural grocer is offering four varieties of Organic Air under its "365 Everyday Value" store brand. It's not just air packaged in an attractive clear bottle with a spritzer top mind you -- but organic air at that. We don't see the USDA Organic certified seal on the product though, which bothers us a bit.

Good humor is that which comes closest to reality in many cases. That's why we wouldn't be surprised if Whole Foods Market were to put up a display of its "new" organic air item in its stores that sales would probably be fairly decent -- at least for a while.

And since "air" is a 365 day a year essential, offering the organic air under the "365 Everyday" store brand is pure brand marketing genius, of course.

Below its "365 Everyday" store brand organic air advertisement, Whole Foods then gets into the news of the day -- April Fools Day news at Whole Foods.

First up is a brief item about "today's featured local grower at Whole Foods. Here it is: "Featured Local Grower Peter Parker of Tulsa, OK raises Huntsman spiders, often mistaken for deadly Brazilian Wandering Spiders. Whole Foods Market is proud to offer one free spider with every 50-lb. purchase of organic bananas."

A rare spider was recently found in bananas at a Whole Foods Market store. This is a great way to "hang a lantern" on a problem. Poke fun at yourself, using April Fools Day to do so. PR grade=A+

In the spirit of its green retailing philosophy, Whole Foods Market then announces its latest strategic move in the paper v. plastic and reusable carrier bag controversy. That breaking April Fools Day news is this: "An Even Better Bag: Continuing our quest to keep plastic bags out of landfills, we introduce our reusable pet waste bags. Pick up after your pooch with our eco-chic Better Doggie Bag, designed by Cookie Fleck and Whole Foods Market."

Whole Foods pokes fun at its own image in the above "news" item. The grocer eliminated single-use plastic carrier bags from all its stores in April, 2008, on Earth Day. It's also been teased for selling numerous varieties of designer chic reusable carrier tote bags. The item shows Whole Foods can make fun of and laugh at itself. Consumers love this. PR grade=A+.

Whole Foods Market also tosses in some new store breaking news on its April Fools Day homepage. You have to click here to read this breaking news. But we will give you a hint: The store is "green" because it doesn't need refrigerated or frozen food cases to keep perishable products fresh.

The natural grocery chain also incorporates the April Fools Day theme into some of its regular Web site features.

For example, below are today's featured items in Whole Foods' regular "What's Cooking" at the stores feature:

~Deep-Fried Pork Eclairs
~Chianti-Gorgonzola Popsicles
~Indian Amazonian Guatemalan Honduran Balinese Rice
~Toast

The natural grocer's "Whole Story" Blog also gets the April Fools Day treatment.

Below are the five April Fools Day posts in today's "Whole Story" Blog:

Whole Story Blog

~When milk goes bad: 12 daring recipes
~No such thing as too much salt
~Experts find: eating food curbs hunger
~"Whole Deal" splits into 500 tiny deals
~Money-saving tip: bathtub wine

We actually think Whole Foods' could be on to something with the money-saving tip: bathtub wine post. After all, it taps into a number of hot-button consumer issues.

First, consumers are attempting to save money with every purchase in this severe recession, including wine. That hits the frugal hot button.

Another popular trend right now is "do it yourself" (DIY). Stomping grapes in the bathtub fits the DIY bill extremely well. Ties in with frugality in the recession as well.

Making bathtub wine at home is extremely sustainable production. You can't get much more natural-sustainable than bare feet, after all.

Combine all these factors with making sure the grapes used are organic and locally-produced, and Whole Foods just might want to make this do it yourself wine production idea a regular feature in its stores. We suspect it also might tap into the small but significant foot fetish consumer segment out there among America's natural products consumer base.

Whole Foods concludes its April Fools Day 2009 special feature page with... what else, a featured video. The title of the featured video: Change a flat tire the organic way with our step-by-step tutorial.

Some thoughts - and breaking news

Kudos to Whole Foods Market for stepping outside the box and offering up a bit of merchandising mirth for April Fools Day. Double kudos for poking fun at itself and some of its practices in the feature as well.

Consumers certainly need as much humor as we can get at present. And showing it has a sense of humor, including of the self-deprecating variety, is a good image booster for Whole Foods Market, which often comes across as...well, stuffy and a bit elitist.

Cheers to the creative minds who came up with the items featured in today's April Fools Day Whole Foods Market Web site extravaganza.

But all kidding aside...we have a funny feeling that the organic air item would probably be a pretty solid seller if it were to be marketed in the Whole Foods stores.

In fact, we were going to hold this back for a separate, breaking news story in the Blog, but we'll reported it here and now because of the ironic tie-in.

So here it is: According to our sources, Safeway Stores, Inc. is preparing to introduce what CEO Steve Burd is calling another revolutionary new product line under its popular, $500 million a year grossing "O' Organics" organic food and grocery product line.

Safeway has kept the new line, which Burd says will show Safeway to be the leading retail private label organics brand marketer in the U.S., under wraps in a secret campaign borrowed from the CIA.

However, Natural~Specialty Foods Memo has learned about the new "O' Organics" brand line from the Safeway Stores, Inc. buyer who came up with the new product line, and was so excited about it he said he just had to tell somebody.

The Safeway Stores' buyer, who spoke to us on the condition we not mention his name, said Safeway's research shows that consumers will perceive the new "O' Organics" product as "a breath of fresh air" in new product development. That new product line: Safeway "O' Organics" organic fresh air, packaged in clear bottles with a spritzer top. April Fools!!!

[You can follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www.twitter.com/nsfoodsmemo. And that's no April Fools.]

Retail Memo: Hybird Natural-Specialty Foods Grocer 'Wholesome Choice' Set to Open New Store Tomorrow In Anaheim Hills, Orange County, Southern CA

Hybrid specialty-international-natural and fresh foods grocer "Wholesome Choice" is set to open its second unit in the Southern California city of Anaheim Hills in Orange County tomorrow, according to our sources.

The new market is located in a former Albertsons supermarket at the corner of Imperial Highway and La Palma in Anaheim Hills.

The flagship "Wholesome Choice" store is in Irvine, California, which is also in Orange County. That store opened in 2003.

The independently-owned grocer hasn't officially announced the new store's opening. However, our sources say it will be a soft opening tomorrow, March 27, will a grand opening to follow later.

The "Wholesome Choice" format is an interesting one. Below (in italics) is how the independent grocer describes its format and merchandising philosophy:

"Since 2003, Wholesome Choice Market has been providing the best the world has to offer. With a variety of products as diverse as the cultures that shop at our store, you can trust Wholesome Choice to carry your favorite American brands, plus an impressive line of Asian, Mediterranean, Russian, Eastern European, and even have South African foods. We even have the natural and organic foods you've come to expect, along with delicious market-fresh produce that arrives daily.

The Wholesome Choice difference begins with our hearthstone bakery, located at the front of the store. The special breads we bake can't be found at the supermarket, but you'll see them rising in our ovens throughout the day here! We also feature an international food court, feeding our community with the foods they love - both foreign and domestic! We cater to all cultures, so everyone feels welcome here at Wholesome Choice. You'll find lots of locals eating in our dining area rather than taking their food home, so feel free to come and sit, eat and talk. Then shop around for the extraordinary, which can be found on every aisle of the store."

The grocer has combined a selection of basic groceries with natural-organic, international and domestic specialty foods, fresh foods (produce, meat-seafood and bakery) and prepared foods under one roof.

The stores also include beer,wine and spirits departments along with fresh floral sections, making them a full-service supermarket with an international specialty and natural foods flair.

Below we take you on a brief departmental tour of the Irvine 'Wholesome Choice" market. The new Anaheim Hills store will be the same basic format with a few additions and differences, we are told.

Fresh Produce

Fresh produce is a big part of "Wholesome Choice," including organics and locally-produced fresh fruits and vegetables.

Produce department specialists also offer shopper information in-store on where the produce comes from (imported, local), as well as offering nutritional information and preparation tips.

The grocer's merchandising approach in the Irvine store to fresh produce is farmers' market style. The fresh fruits and vegetables are stacked high in bulk form in dry bins and in the refrigerated produce cases. Full case displays are also attractively used throughout the produce department, creating an abundant look and feel.

The place of origin -- domestic, local, imported -- are labeled with colorful signs. The nature of the produce, conventional or organic, also is indicated on the signs.

The store also encourages shoppers to taste many varieties of the fresh produce it sells, particularly the more exotic varieties and locally-grown items.

The fresh produce pricing is competitive.

Meat & Seafood

The meat and seafood department offers the same conventional-specialty-natural and organic hybrid theme that's apparent throughout the Irvine "Wholesome Choice" market, and will be the same in the new Anaheim Hills store.

The department offers conventional cuts of meat, although all of the meats sold are antibiotic-free, 100% vegetarian fed, and have no added hormones, along with specialty items and cuts. For example, the poultry selection includes Rosie Organic Chicken and Empire Kosher poultry.

The meat department also offers a full selection of Halal meats for observant Jews and Muslims, as well as for others who just prefer Halal certified meat products.

A full selection of beef, pork, lamb and other meat cuts are offered in the department, both conventional and organic.

Butchers also will prepare custom cuts by order for customers.

The department also offers a complete selection of fresh fish and seafood, along with a refrigerated case featuring a selection of hot and cold smoked fish products.

Fresh Bakery

The in-store bakery is mostly a made-from-scratch operation. It features varieties of breads from around the world baked daily in hearth ovens. Among the fresh-baked breads are several organic varieties, artisan loaves, French and Mediterranean breads, Russian, Eastern European, Greek and Persian varieties.

The bakery department also offers an extensive selection of fresh-baked pastries and cakes from around the world, along with other sweet treats.

There's also a full aisle of packaged breads and bakery products, ranging from basic brands to specialty and natural-organic brands and varieties.

Grocery

"Wholesome Choice" integrates its extensive selection of basic groceries, domestic and international specialty and ethnic foods, natural and organic items by category throughout the core of the store grocery section. There's no segregation by product type (organic, conventional) or origin (domestic, international).

Below is how the grocer describes its product selection and merchandising philosophy and practice:

"Imagine a variety of little specialty grocers rolled into one big store: your neighborhood American market, a Mexican Mercado, a Mediterranean open-air bizarre, an Asian greengrocer, and a Spanish Boqueria: now you get the idea behind the selection at Wholesome Choice. Every aisle is packed with grocery items grouped by category, not culture. From Organic cereals to wasabi paste, tamarind fruit snacks to German vanilla sugar, it's here. Dried herbs, packaged products and canned goods from all countries, for all types of cuisine. We've got the brands you're sure to know, others you're sure to discover.

Wine, Beer, Spirits

"Wholesome Choice" carries over its eclectic international foods merchandising philosophy and hybrid natural-specialty products focus into its wine, beer and spirits department. The store offers a massive selection of wines, beers and spirits from throughout the world, as well as numerous organic and locally-produced wines and craft beers.

Wines and spirits are merchandised on utilitarian yet attractive warehouse-style racks. There's a large refrigerated case for the beers. Some wines are refrigerated as well. Lots of cross-merchandising tie-ins are created with items such as snacks, cheeses and the like in and around the department. There are also end-caps featuring various wine, beer and spirits items.

Bright yellow signs above the shelving (and refrigerated case) designate each section -- wines, beers, spirits.

Floral

"Wholesome Choice" offers an extensive selection of fresh flowers and green plants in its floral department. These varieties range from the basics to the more exotic. The department also does lots of seasonal floral merchandising, even offering trees and shrubs on a seasonal in-and-out basis. Organic flower varieties are included in the offering.

The floral department also is staffed with specialists who make custom floral arrangements for customers, along with doing special events like weddings, charity functions and the like. It's full-service in that regard.

Deli-Prepared Foods Court

Closing out (last but not least though) our departmental tour of the "Wholesome Choice" market in Irvine, California is the Deli-Food Court. The store's prepared foods department offers an impressive variety of ready-to-eat foods. These include: fresh in-store prepared pizzas; a cold and hot deli; soups and salads; an international grill; and Chinese, Thai, Indian, Persian and Mediterranean foods offerings, all prepared fresh in the store. You can learn more about the food court offerings here.

'Wholesome Choice': Natural~Specialty Foods Memo Analysis

Having toured the "Wholesome Choice" market in Irvine, California, it's our analysis that the grocer is on to something with its specialty-international-ethnic-conventional-natural-fresh foods hybrid format. It's a somewhat similar format to Stew Leonards (although the store isn't as big) on the east coast of the U.S. and Harry's Farmers Market in Atlanta, Georgia, which is now owned by Whole Foods Market, Inc.

The format is sort of a Whole Foods Market without the ingredient restrictions, times an international food court, plus an ethnic and specialty food and grocery emporium.

"Wholesome Choice" waited nearly seven years to open a second store, the new market set to open tomorrow in Anaheim Hills, which proves it's a prudent operator. It's used that time to fine tune its Irvine store.

The only danger we can see with the format is in trying to be all things to all categories. But in our analysis "Wholesome Choice" has avoided that happening thus far by using good product selection and merchandising criteria and skills.

Some years ago, way before its acquisition by Whole Foods Market, Inc., Wild Oats Markets, Inc. repositioned its Henry's Farmers Market banner stores in Southern California into a hybrid format similar to what "Wholesome Choice" is doing. But Wild Oats never got it right, in our analysis. Perhaps it takes an independent, hands on daily, to be successful at what can be a difficult format.

Wild Oats later changed the format a bit more closer to orthodox natural-organic but still left elements of that hybrid nature intact.

Henry's (and the Sun Harvest stores in Texas) are now owned by Los Angeles, California-based Smart & Final, which bought the chain of 36 stores from Whole Foods shortly after the 2007 acquisition of Wild Oats by the Austin, Texas-based natural grocery chain.

Smart & Final-owned Henry's, which operates largely as a separate division from Smart & Final's retail operations, has improved the look of most of the Henry's stores since taking them over in 2007, in our analysis. The stores are still a natural-specialty foods hybrid of sorts but not in the way Wild Oats took them years ago, which included selling mainstream grocery brands next to natural and organic products on the shelves. It will be interesting to see what direction Smart & Final takes the Henry's Farmers Market stores from here.

Meanwhile, although a single-store retailer up until now, and soon to be just a two-store retailer when its second unit opens, we think "Wholesome Choice" has an opportunity to extend its format into additional store locations successfully if it chooses.

We're told the new unit in Anahiem Hills will feature some additional touches that the current Irvine market doesn't have, but will keep the same basic format and focus, which in our analysis is a good idea.

We think taking a basic format blueprint and then "localizing" it to the particular community and neighborhood a store is in is the best approach. But we do mean real "localization" rather than just lip service. For "Wholesome Choice" that won't require much "localization" since the two cities are close by and share many characteristics. But they also have qualitative differences, which is why "localizing" a unit to its neighborhood within its basic blueprint is so important for grocers to do. "Wholesome Choice" has a good eye and ear for local merchandising based on our observation.

"Wholesome Choice" adds an additional element to the already competitive, multi-format Orange County, Southern California, food and grocery retailing mix. We think that based on how the independent grocer has performed with its Irvine market, "Wholesome Choice" should do well with its new store in Anaheim Hills, despite the current recession.

Of course, like all retailers regardless of format, our basic rule applies. That rule is that in the current economy, all grocers must focus on the value-proposition in their own unique and individual ways, whatever the format.

Retail Memo - UK: Sainsbury's CEO and Tesco Marketing Chief Offer Differing Analysis of Food Retailing and Shopper Behavior at Retail Week Conference

News & Analysis

The British trade publication Retail Week is holding its annual retailing conference this week in the United Kingdom.

Today, executives from two of the UK's top supermarket chains, number one Tesco and number three Sainsbury's, addressed the UK retaling conference focusing on what each chain views as the state of food and grocery retailing and food shopper behavior in the nation at present in these recessionary times.

Representing Sainsbury's and speaking at the conference was its CEO, Justin King. And representing Tesco was Carolyn Bradley, the supermarket chain's director of marketing for the UK.

Interestingly, Sainsbury's CEO King and Tesco's Ms. Bradley painted an almost complete opposite picture of how their respective chain's are currently viewing consumers and food retailing in the UK, which like the U.S. and most elsewhere in the world is in the midst of a severe recession.

For example, Tesco UK marketing chief Bradley said the nation's leading supermarket chain believes consumers are trading down. Therefore Tesco has and continues to adjust its merchandising, marketing and promotions in a more discount price, value-based direction, she said in her speech.

According to a story in Retail Week today, she said UK consumers' trading down behavior is "manifesting itself through them changing lots of little things: consumers doing without a latte, finding cheaper ways to treat themselves and trading off larger purchases such as sofa or a holiday."

But in contrast, in his speech, Sainsbury's CEO Justin King said he doesn't see a significant consumer trade-down in the UK. Rather, he argued in his speech that the middle, where Sainsbury's is positioned in the market, continues to hold.

Below (in italics) is a summary of what CEO King said in his talk, from a report in Retail Week today:

"King said assertions that consumers are downtrading, that people revert to selfish behaviour and that the middle ground erodes in a recession is not what the supermarket is experiencing.

Sainsbury's is seeing that its customers are largely sticking with the company, but changing what they buy, cooking more and transferring spend from eating out to buying things like family ready-meals, King said.

Despite the warnings of many, Sainsbury's is not feeling the middle ground being squeezed, he added.

He said: "Being in the centre is a good place and you are uniquely positioned to work with customers as they make changes."

He added that the £10 million Sainsbury's has banked for Comic Relief so far this year proved that consumers were not becoming less altruistic.

King said that while his customers genuinely fear for their jobs, those that still have jobs also have household budgets that are under less pressure than they have been for a very long time.

Sainsbury's has conducted research into how different sectors within retail have been affected by previous downturns, and food has traditionally been the most resilient.

He also demonstrated the consistent messaging - "having the "same DNA", as he described it - in Sainsbury's adverts over the years, and over previous downturns.

He said that Sainsbury's focus on cooking and ingredients in its adverts is as relevant today as ever, with more people rediscovering cooking as a way to mitigate the food inflation that has been experienced.

King is keen to provide leadership to his staff and customers with a "glass half-full attitude".

He said that even if 1 million consumers lose their jobs this year, as economists predict, that will still leave 97 per cent of the workforce in employment, and Sainsbury's must continue to serve them.

At the same time, he believes that everything Sainsbury's is doing, with its focus on value, switching to own-label and more home cooking, will be even more relevant to those who are unfortunate enough to lose their jobs this year."

Now, read below (in italics) the Retail Week summary of Tesco's Ms. Bradley from her speech at the conference:

"Bradley said Tesco has been tracking consumers changing confidence, and where as price and fuel inflation were the main concerns last year, this has given way to job security as the biggest issue.

Unlike Sainsbury's chief executive Justin King, who spoke at the conference earlier in the day, Bradley said that she believed consumers are trading down.

She said that this is manifesting itself through them changing lots of little things: consumers doing without a latte, finding cheaper ways to treat themselves and trading off larger purchases such as sofa or a holiday.

Unlike King, Bradley also sees that consumers' concern for ethical matters giving way to price. She says that mums' main concerns right now are providing for their family, and not letting them suffer even when budgets have to be cut.

She defended Tesco's decision to launch its Discounter range, and said that it was done after Tesco had identified a substantial gap in the market between generic branded value products, and big brand merchandise.

She used the example of one customer who had been able to cut her weekly shopping bill in half by moving to the Discounter products.

She said price is where retailers need to start, and so Tesco has focused on reducing the cost of reducing everyday items, and giving customers more price choice for each item they buy.

Finally, she said that it was important to allow customers to retain a sense of fun and treats. Tesco has seen an increased take up of its Clubcard Deals, where customers can exchange Clubcard points for vouchers for days out and other leisure activities.

She said: "It is a way that they can still afford to go out to [places like] Café Rouge. These little luxuries offer huge value to customers."

She also pointed to deals on Finest meals, and entertainment promotions, as other ways the supermarket is allowing its customers to treat themselves."

Reading the summaries of the speeches given at the conference by the Sainsbury's CEO and Tesco's UK marketing chief, one could easily come to the conclusion they aren't talking about the same country or market, if we hadn't told you in advance that they are.

What makes the stark differences in Tesco and Sainsbury's analysis of the UK food and grocery retail marketplace all the more interesting is that historically both supermarket chains have a very similar customer base -- the middle. Neither are discounters like Wal-Mart-owned Asda. Nor are Tesco and Sainsbury's upscale supermarket chains like Waitrose or Marks & Spencer. They are historically mid-range operators.

For example, both competing supermarket chains offer an extensive selection of natural, organic, specialty and premium foods on store shelves alongside conventional manufacturers' and store brands. These natural, organic, specialty and premium products include the retailers' own brands, as well as premium prepared food items, organic produce and meats.

However, because of the recession, Tesco has made a strategic decision to go more discount; to put a much more aggressive focus on price than it has ever done. This decision is largely because the UK's leading supermarket chain (it has a nearly 31% sales market share) has been losing market share points (about 2.5 points in the last 18 months) to Asda and to the small-format, hard-discount German chains Aldi-UK and Lidl.

Sainsbury's on the other hand has resisted getting into the discount game full-force, although it to has been sharpening its pricing, promotions and value offerings, as CEO King said in his speech. But unlike Tesco, it hasn't strategically made a strong price- discount move.

This got us to thinking: Could it be that the main reason the viewpoints of the two executives representing Britain's leading supermarket chains are so differing is because each of the respective chain's has staked out a very different recession strategy and therefore used their speeches at the conference more to defend what each supermarket chain is doing strategically instead of actually attempting to diagnose what British grocery shoppers are really doing in terms of their behavior in these tough economic times?

We aren't making a value judgement on what either of the executives said in their speeches. Rather we're attempting to account for the major differences in how each of them says their supermarket chains view the current state of the British grocery shopper and UK food retailing.
Were Tesco and Sainsbury's radically different formats and food retailers, such an attempt at understanding these differences would be a moot point. But they aren't -- in fact the two chains have far more merchandising, positioning and and operational similarities than they do differences.

Lastly, the explanation could be simple. It's always difficult to attempt to describe consumer behavior in any global way. Perhaps what's happened is Sainsbury's has retained more mid-range shoppers than Tesco has. Therefore, Sainsbury's has yet to see a loss in sales of the same volume as Tesco has because of this possible scenario. So, based on this observation, CEO Justin King's "the center continues to hold" position makes more sense.

And if this scenario is true, that in the case of Tesco it has lost more customers to the discounters like Asda and Aldi, as the market share data tends to suggest, and it needs to win back these shoppers, then it makes sense the retailer tends to see the trading down consumer behavior much more so than Sainsbury's does.

From a macro perspective though, all data in the UK suggests shoppers are trading down when it comes to food and grocery shopping. The Tesco scenario. This is why Aldi and Lidl are the biggest percentage gainers in market share. There's also an abundance of other evidence that the trading down behavior has been going on in the UK for at least a year -- and increasing as the economy worsens.

If Sainsbury's isn't seeing it, that's good news for the chain and its shareholders. But if instead of not seeing it, Sainsbury's is missing it, then that will be bad news for the chain and its shareholders.

But fortunately we have a scorecard to track it. Sainsbury's will soon release its financial results. And new UK market share numbers will also be released soon.

By the same token, is what Tesco seeing, and doing about it, a clear picture of UK shopper behavior? Since Tesco is set to release it financials soon as well, along with the upcoming market share numbers coming out as mentioned above, we will be able to make some analysis of Tesco's approach, as voiced by UK marketing chief Bradley in her talk at the Retail Week conference, soon.

Local Foods Memo - Farmers' Markets: Farmers' Market Season is Fast-Approaching

Customers line the vendor stalls at the popular farmers' market in the small city of Sonora in Northern California's Gold Country foothills region. It's a social market as well as a farmers' market. [Photo courtesy of ianandwendy.com.]

Farmers market season is fast approaching in the U.S., as well as elsewhere in North America and the world.

The end of March and first of April marks the opening (although some have already opened) of thousands of farmers markets throughout the U.S., where local farmers and other food purveyors sell their fresh produce and artisan foods directly to consumers.

The farmers' market season is part of spring, that time of renewal in all things lifestyle.

The farmers' market movement in the U.S. has been growing super-fast over the last decade, and even picking up more steam in just the last few years, as new open-air markets open in cities, suburbs and small towns throughout America. There are thousands of farmers markets operating in the U.S. today.

What makes farmers' markets a unique format for fresh produce and artisan-specialty-natural foods retailing are essentially five key elements:

>In most cases the vendors grow all of the produce they sell at the markets. In states like California and a number of others, "state certified" farmers' markets exist in which all of the sellers must also be the growers. Non-growers-sellers can sell at non-certified farmers' markets but consumers like the certified markets because it ensures they are buying directly from the farmer.

>Most of the fresh produce sold at farmers' markets in the U.S. is "locally grown," coming from a distance of generally no more than about 100 miles from the market location.

>Organic fruits and vegetables abound. Since many of the growers-sellers at farmers markets are on the cutting edge of farming, the fresh produce they offer is in many cases organically-grown. Much of it also is biodynamic. For many farmers who sell at the markets doing so is more about saving money by not buying chemical fertilizer, pesticides and fungicides than it is a marketing tool. It's also about being conservationists of their land.

>Price is generally good. The prices on both conventional and organic fresh produce at local farmers markets are generally as good or better than supermarket prices. Even in the cases when the prices are a bit higher, the value often is better because the produce tends to be fresher and of higher quality. There's also the added benefit of supporting local farmers.

>Farmers' markets are a social event. Farmers' markets allow consumers to get closer to the food they eat. As mentioned, most of the sellers at farmers' markets also are the growers. This allows for interaction between the farmers-vendors and consumers. Farmers' markets also provide a forum, centered around food, in which residents of a community can interact, visit and network. It's community at its best.

Since farmers' market season is fast-approaching, Natural~Specialty Foods Memo (NSFM) decided to search the web and choose a selection of stories and articles about farmers' markets in the U.S. (and one in the UK at the bottom of the list) for our readers. (We will have more about Canadian and UK farmers' markets in upcoming posts.)

Below are links to the articles we've selected. All of the stories are from March 17, 2009:

~Tampabay.com: Tampa farmers markets a boon for frugal food shoppers
~Seal Beach Daily: The beauty of buying local: fresh and fun at the new Seal Beach farmers market
~Valley Courier: Local flavor
~Vernon Morning star: Eating close to home
~California Farm Bureau magazine: Considering organics? Farmers offer advice on how to get started. And: Growth in organic food sales continues, at slower pace
~Boston Globe: Economy of scales
~Christian Science Monitor: Refugee job hopes wax and wane at farmers market
~Minneapolis City Pages: Great news from Chef Shack!
~Hobby Farms.com: Top 10 Ways to Support Agriculture
~WXII12.com: New Farmers Market To Open In Downtown Winston-Salem
~MPNNow.com: Farmers, families like veggie coupons
~Rural Northwest.com: Growing the Farmers' Market
~The Post-Standard: Farmers markets seminars coming up
~Richmond TimesFarmers market in western Henrico opens April 25
~United Kingdom: Liz Hurley to take up stall at Stroud Farmers' Market

Enjoy.

Natural~Specialty Foods Memo (NSFM) will be visiting a variety of farmers markets in the U.S., Canada and the United Kingdom in the upcoming spring and summer months, bringing first-person reports about local foods' selling and buying, along with photographs, to the Blog. Stay tuned.

Blogging-Grocers' Memo: Grocers That 'Blog,' 'Twitter,' 'Facebook' ... and More

Safeway 2.0: Safeway Stores, Inc. recently became the latest major (as in third-largest U.S. supermarket chain) grocery chain to add a Blog to its Website, Safeway.com.

Safeway Stores bills its relatively new Blog as "The Official Safeway Blog." The Safeway Web site-based Blog is written by Kate, who is a full-time Safeway employee. Below is how Kate describes the Safeway Blog and herself:

About the Blog
Welcome to the official Safeway blog. What's this blog all about? In a nutshell, it's about family, food, value and fun. Of course, what makes this blog really exciting is YOU — so join the conversation!

About the Author:
Hi, my name is Kate. I am mom to three wonderful daughters Gabriella, Madeleine, and Mae and wife to a great guy, Max. I work full time at Safeway and a large part of my job is getting to hear from a lot of women out there about everything that's important to them. Welcome to my blog.

Safeway Stores, Inc. added Kate's Blog when it did a redesign of its Safeway.com Web site in the late fall of last year.

In the Blog, Kate writes about a wide variety of topics: nutrition, meal ideas, local foods, natural and organic products, what's happening in the stores, promotions, and the like. She also encourages readers to comment on the posts.

For example, below is Kate's post from today, March 4, 2009:

Local Mandarins
03-04-2009 08:10 AM
By Kate

My favorite fruit of winter is the mandarins, we go through a five pound bag a week! Super sweet, easy to peel, and the girls love them. The brand we have in our store is from California, which I appreciate as I know they didn't travel huge distances to get to my store which means they’re always fresh (haven’t had a “dried out” one yet) and taste great! We try and support our local businesses in whatever we do –the local “pizza place”, the barber – vs. the chains. We feel it’s particularly important now as we’ve seen so many businesses close on our “main street”. What do you buy that’s local?

[View the Safeway Web site Blog here.]

Safeway Stores, Inc. isn't using the Twitter micro-blogging, social networking site as of yet, something grocery chains like Whole Foods Market, Trader Joe's, Tesco's Fresh & Easy, Oregon's New Season's Market and a number of others have started to do. Are you listening Kate? We think it would be a great tie-in with her Blog.

The New Seasons Market Blog - and Peanut Butter: Speaking of Portland, Oregon-based New Seasons Market, the nine-store natural foods chain also is a "Blogging-Grocer." And the independent natural grocery chain recently used its Blog to update consumers and customers on the peanut product recall, which appears to be far from close to being over.

The February 19 Blog post is titled: "What's the Story With Our Bulk Peanut Butter Recall?"

In the post, New Seasons' president Lisa Sedlar says the natural grocer has thus far removed over 135 different FDA-recalled peanut-related products from store shelves. She says it's been the most massive product recall she has experienced in her 20-plus years in the natural products industry.

[You can read her post on the peanut product recall and issue in the New Season's Market Blog here.]

New Seasons Market also has a feed on the popular social networking site Twitter. You can view it here. Below are New Seasons' two most recent "Tweets" (Twitter talk for posts) on its Twitter feed:

@rebeccashapiro Of course. Plenty of GF cereals to munch an along with alternative milks like hemp & hazelnut.about 5 hours ago from TweetDeck in reply to rebeccashapiro
Free cereal & milk tasting this weekend.

Cereal: It's the budget crunch that goes great with milk! http://budurl.com/freecerealabout 6 hours ago from TweetDeck.

[Read about another way New Seasons Market has used its Blog: December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter Speaks Out Again Today on the Whole Foods Market, Inc. Subpoena of His Company's Data.]

New Seasons' also uses Facebook. There's a link to its Facebook site on the Blog.

The "Whole Leader" of the "Blogging-Grocer" Pack in the U.S.: Whole Foods Market, Inc. is the pioneer in the food retailing industry in using Blogs as a part of the its social networking communications and marketing outreach strategy.

The first Blog on the Whole Foods Market Web site was (and is) "The CEO's Blog, written and published by CEO John Mackey. He started the Blog in 2005. CEO Mackey hasn't been posting much on his Blog of late though. His last post was in early November, 2008.

CEO Mackey also no longer posts anything on his "The CEO's Blog" about the FTC. v. Whole Foods Market, Inc. ongoing antitrust case. He stopped posting about the legal case last year after just one post (See the May 21, 2008 post here) about his return to Blogging. He did so so as to not interfere with the ongoing litigation.

Last year Whole Foods kicked-up its Blogging activity a few notches when it redesigned its Web site and added its very active "Whole Story" Blog. The natural grocer uses the Blog regularly, posting culinary suggestions and recipes, items about new products at Whole Foods, nutrition information, stories on sustainability, local foods and other similar issues, and a "Whole Lot More."

Whole Foods also has been using the Blog to inform consumers about the FDA peanut product recall, including listing all of the items its pulled from its shelves in Blog posts.

Whole Foods also includes food-related videos and podcasts on its Web site in conjunction with its "Whole Story" Blog.

Additionally, Whole Foods now has a series of interactive forums on its Web site, in which consumers can discuss food-related topics and issues with each other, as well as with Whole Foods Market's Bloggers.

Lastly, Whole Foods ties its Web site Blogging in with three social networking sites: Twitter, Facebook and Flikr (for photographs). The links to each are here: Whole Foods Market photos on Flickr, Whole Foods Market on Facebook, Whole Foods Market updates on Twitter.

A number of Whole Foods regional divisions, such as Los Angeles and Columbus, Ohio, also have Twitter sites of there own, which offer a local angle.

Whole Foods Market is taking Blogging and the use of social networking sites very seriously. In fact, its the only grocery chain of any format we are aware of that currently has a senior staff member, Paige Brady, who's full-time job is social networking. She's Whole Foods' "Blogger-in-Chief."

At this point in time, based on our research, Whole Foods is the top "Blogging-Grocer" in the U.S.

[Suggested Reading: June 7, 2008: Retail Memo: Whole Foods Market, Inc. Launches New and Improved Company Blog; Leadership 2.0 and Increased Transparency on the Move in Food Retailing ... May 22, 2008: Retail Memo: Whole Foods Market CEO John Mackey is 'Back to Blogging'; As Well as Being 'Back in Town.' ... May 25, 2008: nday, May 25, 2008 Retail Memo: More On John Mackey's Return to Blogging...United Kingdom's Waitrose Chief Exec Mark Price Goes His Own Way in His 'The Grocer's Blog'.]

The UK's "Grocery-Blogger-in-Chief": The May 25, 2008 post linked above mentions Mark Price, the CEO (official title: managing director) of the upscale Waitrose supermarket chain in the United Kingdom. If by our own account Whole Foods Market is the leading "Blogging- Grocer" in the U.S., Waitrose gets that honor in the UK.

In addition to Waitrose chief Mark Price's Blog, there's also a Blog by the grocery chain's nutritionist, and another by a local British hog farmer who supplies premium pork to Waitrose.

We really like the personal touch Waitrose uses in its Blogging. It creates interest in the personalities behind the grocery chain.

[You can check out the latest Blog posts from the Waitrose folks here.]

[Three past stories from NSFM about the Waitrose "Blogging-Grocers": Retail Memo: Waitrose's 'Chubby Grocer' Mark Price 'Weighs-In' on His Rival; Marks & Spencer CEO and 'The King of Pants' Sir Stuart Rose... Leadership 2.0 Memo: More Food and Grocery Industry Leaders Need to Adopt Digital, Interactive Communications Strategies in This Digital Age... Retail Memo: More On John Mackey's Return to Blogging...United Kingdom's Waitrose Chief Exec Mark Price Goes His Own Way in His 'The Grocer's Blog'.]

A Very Independent "Blogging-Grocer": Jim Hiller, the owner and CEO of Michigan's eight-store Hiller's Markets, goes his own way in his grocer's Blog, taking positions and offering his opinions in the Blog on a variety of issues.

His chief issue of late has been urging folks to buy American automobiles, which shouldn't be a surprise since Hiller's stores are located in the Detroit, Michigan region, home to America's struggling "Big Three" automobile companies.

But Hiller also writes about a wide-variety of other issues in his Blog -- like oysters -- which he wrote about in a post on February 16.

But today's post in his Blog, "Jim's Blog: A Message From the Helm," on the Hiller's Market Website is about cars. It's titled: "A New Ride," and is well worth reading. [Click here to read the post.]

We like that independent grocer Jim Hiller shows who he is in his Blog. After all, one of the keys to the success of independent grocers in the U.S. is showing a personality. Jim Hiller does that in spades, as does Hiller's Market in its merchandising and operations.

[Suggested Reading: December 23, 2008: Independent Grocer Memo: Eight-Store Michigan USA Independent Hiller's Markets Demonstrates Why Independents Survive and Thrive in the U.S.]

[Blogging-Grocers Memo is a regular feature of Natural~Specialty Foods Memo (NSFM). If you spot a grocer Blogging about something of interest (or even not of interest), feel free to send us a note and a link at: nsfoodsmemo@yahoo.com. Comments on grocers and Blogging are welcome on this post. Just click the "comments" link below and offer your opinion.]

[Follow Natural~Specialty Foods Memo (NSFM) around on Twitter at: www.twitter.com/nsfoodsmemo]