Green Memo: Ireland Has Reduced the Use of Single-Use Plastic Carrier Bags By 94 Percent With Bag-Fee Law; Has Exceeded EU Recycling Targets

A spokesman for the government of Ireland tells Natural~Specialty Foods Memo (NSFM) its statistics show that since the Emerald Island put a per-bag fee on single-use plastic carrier bags in 2002, there has been a whopping 94% reduction in the use of the thin grocery and shopping bags in the country.

In 2002, Ireland passed a law which required supermarkets and other retail stores to charge shoppers a per-bag fee if they requested their purchases be packaged in a single-use plastic carrier bag rather than a paper or reusable carrier bag. Before the law was passed, single-use plastic carrier bags were given to shoppers for free in Ireland, as is still the case in many if not most country's of the world.

This data should be of particular interest to nation's like the UK, of which Ireland is a part, which are currently debating in Parliament as to if it should pass an outright ban on the single-use plastic carrier bags, and if so whether at all retail stores or just supermarkets, or if it should levy a per-bag fee scheme like the Irish have.

The data should also be of interest in California, where as we reported here on Friday April 11 and again on April 14, the California State Assembly Natural Resource Committee is considering two bills that would levy either a 25 cent or 15 cent fee per-single-use carrier bags in the state's larger supermarkets and drug stores.

And of course, the Irish example should be of interest everywhere in the world because nation's and local governments globally are in the process, and many already have done so, of voting on or proposing single-use plastic carrier bags laws of one sort or another.

The Irish example also should be noted by grocery retailers who either are completely against such bans or are debating whether to support state and local government bag fees over outright single-use plastic carrier bag bans.

National, state, provincial and municipal governments all over the world have proposed laws either banning the bags completely or adding a fee to them if requested by a shopper. Most experts believe it's just a matter of a couple years before most nation's have laws either charging for or banning the plastic bags.

Irish exceed EU packaged waste recycling targets by 14 percent

In addition to the dramatic reduction in the number of single-use plastic carrier bags, the Irish government and its citizens have also exceeded that European Union's (EU) target's for the recycling of packaged waste, such as food and grocery packaging and containers.

The government spokesperson told us the latest figures available show Ireland is recovering and recycling 64% of all its packaged waste, compared to a EU target of 50%.

This combination of the 94% reduction in the use of plastic carrier bags and the 64% packaged waste recovery and recycling rate makes Ireland arguably the biggest success story globally in both source-reduction and packaged waste recovery and recycling.

The government spokesperson told us Ireland doesn't plan on resting on it's laurels in either regard. It thinks it can decrease plastic carrier bag use to near 100% in the next couple years, as well as increasing the nation's packaged waste recycling rate even higher than the current 64%.

Other UK country's, along with states in the U.S. and elsewhere, should go to school on the Irish model as a way to increase both their recycling rates and use-reduction of the single-use carrier bags.

Grocery retailers should take note as well. Rather than fighting legislation to levy a per-bag fee on the single-use plastic grocery bags, they might want to take the advice of Ireland's grocers who agree in the main with the per-bag consumer surcharges, as well as with those grocers in Northern California's San Francisco Bay Area who we quoted in this piece last week.

We think the single-use plastic carrier bag industry might want to think about supporting some sort of per-bag fee scheme throughout the world as well, since more outright bans like those recently enacted in China, parts of Africa, in San Francisco and Oakland, California in the U.S. and other numerous other places throughout the globe, are coming fast and furiously.

Food & Politics Memo: U.S. Presidential Candidates and Grocery Stores, An NSFM Friday Fishwrap Redux

In our February 29 edition of our semi-regular Friday Fishwrap column we wrote a brief piece or item titled: "Election Year Memo: Presidential Candidates and Grocery Stores," in which we matched each candidate for U.S. President at the time up with which grocery stores they would shop at, and which supermarket chains potential voters for each candidate shop at. The piece is reprinted below in italics:

Election Year Memo: Presidential Candidates As Grocery Stores

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So, there you go. As a voter you now have an additional variable--grocery stores--which you can use in choosing which Presidential candidate you will support and vote for in the 2008 election. Consider it a public service offering form us to you. You can read the full February 29 Friday Fishwrap column here.

Natural~Specialty Foods Memo: Today's New York Times' Dining and Wine section has a piece by writer Kim Severson titled, "What's for Dinner? The Pollster Wants to Know," in which the writer discusses with various marketing researchers, political experts and pundits what types of foods voters for Barack Obama, Hillary Clinton and John McCain (Mike Huckabee dropped out of the race since we wrote our piece in Friday Fishwrap on February 29) would eat and which grocery stores they (might) shop at.

The latter aspect (grocery chains and stores) is very similar to our piece in the February 29 Friday Fishwrap column. The Times' story is fun and interesting---and we give them props for the excellent angle. We aren't suggesting the New York Times' writer read or got the idea for the piece in today's Dining and Wine section from reading Natural~Specialty Foods Memo, as we are merely a low-budget, little food and grocery industry blog.

We do know though that our February 29 Friday Fishwrap "Presidential Candidates and Grocery Stores" item got e-mailed around by lots of people because a few days after it was published we recieved a couple notes with forwards of the piece from one reader to another. Those who e-mailed us said the enjoyed the concept, analogy and item/piece and had passed it on.

The Times' piece takes a bit different take in the grocery store area than we did, saying for example Hillary Clinton voters would shop at Whole Foods Market while Barack Obama voters shop at farmer's markets.

We don't get that one. Hillary is positioning herself far too mainstream and centrist to cater to Whole Foods' shoppers. That's Obama's dead-on target market. He even had an "arugala moment" a few months back.

We agree Obama voters would shop farmers markets along with Whole Foods though. But Hillary is the Wal-Mart candidate. We stick with that. The Time's piece is fun and interesting--as we hoped our little item was--and has some good insight into political as well as consumer product marketing.

Instead of "you are what you eat." It looks like Natural~Specialty Foods Memo and the New York Times are suggesting "you vote what you eat" and "where you shop for groceries." Read today's New York Times' piece here.

Prepared Foods Memo: Planet Organic's Mrs. Green's Natural Market Planning Big Push in Fresh, Prepared Foods' Category

As we reported here, Canada's Planet Organic Health Corp. recently acquired two U.S. Natural foods' retail chains, 11 store Mrs. Green's Natural Market (acquired last year) based in Scarsdale, New York and 3-store (with a new store being built) New Leaf Community Markets (acquired this year), based in Santa Cruz in Northern California.

These two acquisitions marked Planet Organic's first move into the U.S.

We've said before the Canadian natural products' retailers move into the U.S. with these two acquisitions is further evidence of the argument we've been making since last year that contrary to the position of the U.S. Federal Trade Commission (FTC) and many U.S. natural foods' retailers, suppliers and observers that Whole Foods Market, Inc.'s acquisition of Wild Oats Markets, Inc. would stifle competition, we believe the opposite is true: that it's actually increasing competition and innovation by both natural foods' retailers and supermarket chains and independents in the USA.

As we reported in a previous piece, Planet Organic plans to add numerous new stores to its recently acquired Mrs. Green's (in the east) and New Leaf (in California) chains in the next couple years. Further, Canada's Planet Organic is on the lookout to acquire other small-to-medium-sized regional natural foods' retail chains in the U.S.

We've now learned Planet Organic is making a major investment at its Mrs. Greens operation in New York in the prepared foods' category.

Historically, when it was an independent operation, Mrs. Green's Natural Market supplied its 11 units with fresh, prepared foods out of a 3,000 square foot kitchen in the basement of one of its stores. This cramped commissary put a crimp on the volume of deli and other prepared foods' items the retailer could supply to it busy stores. It also meant the 40 chefs and others working in the 3,000 square foot basement kitchen were elbow-to-elbow for eight hours a day.

This situation no longer will be the case though. Planet Organic plans to build a new, state-of-the-art 30,000 square foot, above ground kitchen/commissary where not only will the retailer's chefs and others have plenty of space to create the fresh, prepared foods, but also will allow the natural foods' grocer to supply its stores better and with a larger variety of prepared foods items.

According to Harold Hochberger, Mrs. Green's founder and current Co-President under Planet Organic's ownership, the 3,000 square foot basement kitchen currently produces everything from fresh, organic pies and fruit smoothies, to complete vegetarian meals for distribution to and for sale in the stores.

The fresh, prepared foods produced in the basement kitchen account for about $3.5 million a year in sales for the 11-store natural foods chain, or about about 8% of total store sales, Hochberger says.

With the addition of the new, above-ground commissary which will be ten-times the size of the current basement kitchen, Mrs. Green's is looking forward to not only increasing the quantity and variety of prepared foods for its stores, but increasing that $3.5 million in annual prepared foods' category sales considerably.

Hochberger says prepared foods sales in the Mrs. Green's stores have been increasing by about 15% annually for the last few years. He and Planet Organic believe with the new commissary, which will cost at least $1 million to build and equip, sales growth will be even higher once the facility is operating. He says he expects the facility to open in about six months.

Planet Organic Health Corp. is currently launching an aggressive growth plan, on top of seven year's of already rapid growth, focusing on its home market of Canada and in the U.S.

Seven years ago, annual gross sales for the company were only $1.6 million. At present, the Canada-based natural products company has sales of about $100 million. That's a gain of $7 million a year in each of those seven years.

Planet Organic is a diversified, publicly-held natural products company. In addition to operating nine natural foods supermarkets in Canada under the Planet Organic Market banner (with more on the way) and the Mrs. Green's and New Leaf stores in the U.S., the company also operates 48 natural health stores in Canada under the Sanger's Health Centre banner and eight similar stores under the Healthy's and Planet Organic Living banners.

Planet Organic Health Corp. also owns Trophic Canada, which is that country's leading manufacturer and marketer of natural supplements.

Planet Organic's two acquisitions in the U.S.--one on the east coast and the other on the west coast, which are two of Whole Foods Market, Inc.'s strongest market regions--proves despite the arguments of the FTC and some suppliers, natural foods' retailers and industry observers, that retailers including Planet Organic and others like Sprouts Farmers Market and Sunflower Farmers Market, don't believe the combined Whole Foods/Wild Oats chain poses neither a barrier to entry in the natural foods' retailing category in the U.S. or offers too stiff of competition for them to grow and thrive.

After all, if they did believe such was the case, would all three of the natural foods' chains mentioned above be in such rapid expansion modes like they are?

Tesco PLC Reports Fiscal Year Sales and Profits

United Kingdom-based global retailer Tesco PLC, that nation's number one retailer and the third-largest in the world, released its annual sales and profit numbers today.

Tesco PLC, the international retailer that's also the parent company of Fresh & Easy Neighborhood Market USA, the small-format, convenience-style grocery chain we've written much about here at Natural~Specialty Foods Memo, had a strong sales and profit report for the fiscal year. Tesco reported those number today.

We're currently working on an analysis piece on Tesco and Fresh & Easy for publication tomorrow.

We suggest you go to the blog Fresh & Easy Buzz, which is full of news, analysis and commentary, both internationally on Tesco PLC and on Fresh & Easy in the U.S., on today's Tesco sales and profits report.

Click here to go to Fresh & Easy Buzz.

Retail Memo Special Feature: New Multi-Supercenter and Multi-Format Strategies Are Showing Wal-Mart to Be A More Agile Grocery Retailer in the U.S.

The new Supercenter in Austin, Texas (above) isn't your 'father's' Wal-Mart Supercenter

Mega-retailer Wal-Mart may have found a solution (or two) to all the community-based opposition in many parts of the U.S. to the retailer's building of its Supercenter stores.

Last month, the brawny big-box bruiser from Bentonville (Arkansas) decided to kill 47 new Supercenter store projects it had on the books for a variety of reasons, all having to do with either opposition to the stores from city and country governments or community-based groups in the cities and neighborhoods where the respective stores were to be built.

Don't feel sorry for Wal-Mart though. The world's and United States' largest retailer will still open at least that many (47) new Supercenters in the U.S. this year, plus a handful more.

The municipal government and community-based group oppostion is a serious impediment to Wal-Mart's Supercenter growth plan in the U.S. however. But it's not a new problem. It's been going for for years.

However, what is new is Wal-Mart's response to the oppostion, which historically has only been one-dimensional: To lobby city governments and community groups, trying to change their minds, or to fight the oppostion in court.

Until now, that is.

The Modesto Supercenter Strategy

In the Central Valley city of Modesto in Northern California, Wal-Mart is gutting an old 105,000 square foot long-empty big-box retail building, which most recently was divided in half and housed a store belonging to the now gone local discount warehouse grocery chain SavMax in one half of the building and a Rite-Aid drug store in the other half.

Wal-Mart is turning the 105,000 square foot building into a scaled-down version of its Supercenter format store. The Modesto Supercenter, which is located at 3848 McHenry Blvd. a popular shopping street in the city of about 210,000, will have all the departments--fresh produce, meat, perishables, dry grocery and the like--that its larger Supercenters have, which average about 185,000 square feet and run as big as 225,000 square feet.

The only difference between the more petite Modesto Supercenter and nearly all of the retailer's other, larger Supercenters, is that those departments will be scaled down and the store's overall product selection will be a bit less expansive than in the traditional Supercenters.

To compare the size difference of this new Supercenter in Modesto to Wal-Mart's other stores of the same format, lets compare it to the retailer's Wal-Mart discount store format stores, one of which the retailer has in Modesto. That store, like all the Wal-Mart disount format stores', carries only a limited assortment of grocery products in a few aisles plus some basic frozen and perishable foods. However, it's still 115,000 square feet without the supermarket inside, which is 10,000 square feet larger than the new full food and grocery Supercenter set to open early next year on Modesto's McHenry Avenue.

The Modesto Supercenter scheduled to open early next year isn't first smaller-size Supercenter Wal-Mart has opened, nor the first it's located in an old big-box building it's gutted and completely remodeled. Last year, the retailer opened a Supercenter in Sanger, California that's just a bit larger than the Modesto store. Sanger is a suburb of Fresno and is about 100 miles south of Modesto in the southern Central Valley.

The main reason Wal-Mart is doing this Supercenter scaling-down in California, and especially in the Central Valley, is becuase the state as a whole, and the region particularly, has been one of the most difficult places in the U.S. for the mega-retailer to get approval to build it's 185,000 -to- 225,000 square foot new, from the ground-up Supercenters.

For example, Wal-Mart planned to build a roughly 200,000 square foot Supercenter in a shopping center in Modesto in 2001. However, after a couple years of rangling with the city planning commission and city council, as well as opposition from numerous small business groups, it abandoned those plans.

In 2004, Wal-Mart proposed building a brand new 225,000 Supercenter in Turlock, which is a city of about 75,000 residents located just 10 miles from Modesto. The Turlock City Council not only rejected Wal-Mart's proposal--even though the retailer already had a Wal-Mart discount store in the city and promised to keep it open along with the new Supercenter--it ended up passing a big-box ordinance which prohibited any retailer from opening a store of at least 100,000 square feet that devoted at least 5% of its floor space to grocery items.

The Supercenter ban was specifically designed to prevent Wal-Mart from locating a Supercenter in the city. However, through its language it left the door open for big box retailers like Costco Wholesale and even Wal-Mart's Sam's Club

Wal-Mart filed a law suit against the city of Turlock in February 2004, one month after the city council passed the ban legislation. The case was in the courts for two years. In 2006 the court ruled in favor of the city and Wal-Mart announced it would no longer try to build a Supercenter in the city.

Big box bans like Turlock's are common in California. Two other cities in the area, Oakdale which is next door to Modesto, and Patterson, which is about 25 minutes away from Modesto, have both passed laws similar to Turlock's, designed specifically to keep Wal-Mart Supercenters out of their respective cities.

Wal-Mart pulled the plug on a Supercenter in another nearby city in 2006, when the city of Ripon, just a few miles from Modesto, fought against the retailer's proposal to locate a Supercenter in the community. At the time the issue of contention was over where the Supercenter would be located in Ripon. Wal-Mart announced it would not build on the site but would look for a more suitable location in the city. That was two years ago and the retailer is yet to announce a site in Ripon.

Last year Wal-Mart did get approval to build a 225,000 square foot Supercenter in Ceres, which is right next door to Modesto. However, the community of about 45,000 was far from the retailer's first or second choice in the region. But since the city is aggressively seeking retail and streamlines the permit process, Wal-Mart went forward with the proposal. The Cerers Supercenter is currently being built--not without community protest of sorts--and is scheduled to open later this year.

Bay Area and SoCal also tough for Supercenters

Its not just the Central Valley that opposes Wal-Mart Supercenters so strongly. In fact, the nine county San Francisco Bay Area, which is about 90 minutes from Modesto, opposes the mega-stores as much or even more than the Valley's municipalites and communty groups.

Wal-Mart has only a couple Supercenters in the 7-million population strong Bay Area. Those stores are out in the fringes of the region where opposition and the need for tax dollars of any kind are far more desired than in the major Bay Area cities and suburbs. As a result, opposition to the Supercenters is less intense.

Try as it might, Wal-Mart has failed to build numerous new Supercenters its proposed in many of the most desirable Bay Area cities; cities where it wants to be with that format.

Wal-Mart hasn't had much better luck in the Southern California region, where more than half of California's residents live. It has some Supercenters in the region, but nowhere near the number it wants--or has tried to get approval for.

In fact, it's in Southern California where Wal-Mart has come up with phase two of its plan to open more Supercenters in the Golden State, albeit somewhat smaller than average like the Modesto and Sanger stores, and of a somewhat hybrid nature

The retailer just announced plans to add an additional 25,000 -to- 50,000 square feet on to a number of its Wal-Mart discount stores in Orange County, therby turning them into hybrid Supercenters.

According to John Mendez of Wal-Mart, the stores--like the Modesto Supercenter--will have all the same departments and sell the same food and grocery products that a standard, larger Supercenter does. The departments will just be scaled-back and have a more limited overall product assortment.

Wal-Mart's discount stores sell perishable items like milk, juice and eggs, have some frozen foods, and contain aisles where a limited assortment of grocery products is offered.

The expanded discount stores would still retain all the non-foods departments they currently have but would add a smaller-version of a full-fledged Wal-Mart Supercenter supermarket inside.

Wal-Mart becoming more agil

These two developments, along with Wal-Mart's new, small format (about 15,000 -to- 20,000 square feet) Marketside grocery markets which will make their debut this summer in the Phoenix, Arizona Metropolitan region, are showing that a mega-retailer can also be a nimble one when it comes to format adjustments and creations.

By choosing a Supercenter strategy which includes remodeling existing, smaller buildings like in Modesto and Sanger, and adding on square footage to Wal-Mart discount stores like the retailer plans to do in Orange County, Wal-Mart is showing a new adaptability after years of sticking with the single Supercenter mind set and format.

As a result, the retailer will be able to garner much more of the grocery dollar market share in states like California where the opportunity is there but the jumbo sized singular Supercenter format has proven a barrier to entry.

Additionally, the small-format Marketside stores will give Wal-mart an urban strategy for city's like San Francisco, Oakland, San Jose and Sacramento in Northern California, and Los Angeles and San Diego in Southern California, if it chooses that strategy.

For example, it's impossible for Wal-Mart to get approval, even if it found the space, to built a Supercenter in politically-charged San Francisco. However, it's likely it could get approval--with a bit of a fight still--to buildl a 15,000 -to- 20,000 square foot Marketside store, or two or four in the highly dense city.

The same is the case in urban Los Angeles and San Diego. In terms of the Modesto model of locating a Supercenter in a smaller, existing building, doing so makes it difficult for a city to stop Wal-Mart because the application and permiting process is much different than when building a new store from the ground up. Essentially, a city like Modesto can't prevent Wal-Mart from putting whatever type of store it desires in an existing building like the 105,000 square foot former combined supermarket and drug store location on McHenry Avenue, as long as it files the proper paperwork and meets existing city laws.

The same is the case for the square footage additions the retailer plans to do with some of its Orange County Wal-Mart discount stores. Should the respective cities in Orange County try to hold up or prevent Wal-Mart from adding the additional square footage to those stores, the retailer would easily win in court, since such additions are done by retailers of all types regularly, and preventing Wal-Mart alone from doing it would likely be ruled descriminatory.

Localizing and shrinking new Supercenters

Another strategy Wal-Mart is employing is to design its Supercenter to fit in with a local communities geographic location, setting, culture and history. For example, the brand new Wal-Mart Supercenter in Austin, Texas pictured at the top of this piece, sure looks a bit different than the typical Wal-Mart square, big box Supercenter, doesn't it? It's designed to fit into the more hip, upscale style that is Austin.

The retailer has designed similar "local" Supercenters in Colorado that fit in with the regions rugged mountains and woods, using different roofing and siding on the buildings, in addition to numerous other local touches. One Supercenter in Colorado even has a complete bicycle shop in the store, and Wal-Mart built and paid for bike paths and bike racks on land around the store because the communtiy is a major bicycling area.

These localization design strategies also include shrinking the Supercenters a bit if need be. Wal Mart has built a couple of the mega-stores so far that are in the 130,000 sqaure foot range rather than the average 185,000 size

Marketshare is key regardless of format

Last year, Wal-Mart overtook Kroger Co. as the number one grocery sales market share leader in the U.S. It's a close race between the two retailers though.

What Wal-Mart seems to have finally figured out with its new format flexibility as detailed in this piece, is that grocery marketshare is king, and it doesn't have to just come from a 185,000 -to- 225,000 square foot Supercenter.

In addition to putting the scaled-down Supercenters in the old bg-box buildings like the retailer is doing in Modesto and Sanger, adding the additional square footage for groceries onto the existing discount Wal-Marts in Orange County, and introducing the new, small-format Marketside grocery stores this summer in Arizona, Wal-Mart also is building more of its average 45,000 sqaure foot Neighborhood Market supermarkets this year and next than it has in many years.

This new, muti Supercenter and multi grocery store format strategy should give Wal-Mart additional market share, allowing it to increase its lead over Kroger. The main reason this should be the case is because these strategies will allow it to increase its grocery sales square footage in places like California where it currently has a minimal food and grocery retailing presence because of the inability to open any where near the number of traditional, new Supercenters it has wanted to for over a decade.

The mega-retailer plans to use it hybrid Modesto Supercenter strategy and the Orange County add-on discount store strategy in other parts of the U.S. in which gaining approval for new, built from the ground up Supercenters is a problem.

The Modesto Supercenter strategy also will be used in places like urban areas, where space is of a premium and the idea of acquiring an empty big box building and turning it into a Superstore is a good option.

Further, expect to see Wal-Mart add additional square feet on to other discount stores in other parts of the U.S. this year and beyond. Food and grocery sales are what's allowing the retailer to post strong sales and profit gains like its recently released quarterly profits.

Wal-Mart wants to be able to sell more food and grocery products in all categories in all of its stores--as well as in more places in the USA. As a result, the strategies detailed in this piece will be implemented, along with the buolding of new Supercenters, wherever the brawny big box retailer from Bentonville thinks they make sense.

Retail Format Innovation Memo: The United Kingdom's 'Best' Cybercafe Just Might Be Inside Whole Foods Market, Inc.'s Huge London Flagship Store

Austin, Texas-based supernatural grocery chain Whole Foods Market, Inc. decided to go where few American grocery chains go--overseas, and specifically to the United Kingdom--about a year ago.

Why do we say, "where few U.S. grocery chains go?"

Because it's true. American-based supermarket chains tend to be domestic rather than global enterprises, which is generally the opposite of most other large U.S. corporations, in business sectors ranging from oil and high tech, to automobiles, pharmaceuticals and agribusiness.

For example, the three-largest supermarket chains in the U.S.: Kroger Co. (about $69 billion in annual sales), SuperValu, Inc. (about 44 billion in gross sales per year) and Safeway Stores, Inc. (annual sales of about $42 billion) have no stores outside North America. In fact, Safeway is the only one of the three chains with stores in Canada. Kroger and SuperValu do all there business in the Continental U.S.

The same is the case with nearly every other American supermarket chain. Crossing the Atlantic or Pacific oceans to open stores or acquire foreign-based food retailing companies isn't the industries cup of tea.

Of course, Wal-Mart is a different animal. The world's largest retailer is just that: a global retailer. It owns the Asda chain in the UK, which is that nation's second-largest retailer after Tesco, and has operations in Asia, including Japan, India and China, and in Mexico, as well as Canada. Wal-Mart also is preparing to enter the retailing market in Russia and elsewhere globally.

Wal-Mart however isn't a supermarket retail company. Rather, it's a broadline retailer which sells everything from food and groceries, to books, electronics, garden supplies, clothes, furniture and more.

Austin, Texas-based Whole Foods Market, which also has stores in Canada, decided to break that general U.S. food and grocery retailing parochialism last year however when it opened it's huge, three-story flagship food emporium on Kensington High Street in London, England in the UK.

The store is nearly 75,000 square feet, huge by UK standards, and features an extensive selection of natural, organic and specialty fresh foods and groceries, along with natural and organic health and wellness products, a mega-natural body care department, a fresh produce department itself as big as many London supermarkets, numerous in-store restaurants, and more.

Part of that "more" is an in-store feature that's been getting raves among London's high-tech community as well as just plain folks in the cosmopolitan city which is rivaling New York City as the world's financial capital these days.

On the third-floor of the Kensington High Street Whole Foods mega-market sits a fully-equipped cyber or internet cafe. Cyber cafe's aren't a new development in London--they're located over the city. However, the Whole Foods-London flagship natural foods market's cybercafe is attractive, spacious and rapidly becoming the most popular of the many located in the urbane city.

The open-style, third-floor Whole Foods Market cyber cafe has seating for about 25 people. There are comfortable tables in the open-style cafe as well. Electrical power outlets are in abundance--and the use of the high-speed Wi-Fi internet network is completely free of charge, which isn't the case in many of London's cyber cafes.

The other thing Londoners' are loving about the cyber cafe is that unlike many located in the city, Whole Foods' third floor, in-store operation doesn't put any restriction on how much time a person spends in it using the free Wi-Fi connection. No hassles, not even dirty looks if you spend a full eight hour work day using the internet cafe's free connections and workspaces.

There's not even a restriction that cybercafe users have to purchase anything to eat or drink in order to use the facilities. However, the Whole Foods store offers such a variety of prepared foods and beverages, that one seldom sees a third-floor cyber cafe patron without food or drink of some kind while surfing the net on their laptop computers.

The store has a gourmet pizza station, sushi restaurant, a wine and cheese bar, meat and veggie grilling station, a gourmet sandwich shop, offers fresh coffees and baked goods in the cafe/pastry shop, prepares fresh-squeezed fruit juices and makes smoothies at a separate bar, and has in-store prepared foods ranging from American classics, to British foods, Indian, Thai, Japanese, Chinese and other ethnic cuisines And, this list is just for starters.

Cyber cafe patrons can purchase whatever foods they desire and take them up to the third-floor cafe. All that's missing is being able to wear ones pajamas when using the internet cafe's free high-speed Wi-Fi connections and attractive space.

The Kensington High Street flagship Whole Foods had a bit of a rocky start in the months following its opening about a year ago. However, it's gradually been winning over the stomachs and pocketbooks of Londoners, who marvel at the massive selection of food, grocery and related products the store offers. Both customer count and store sales have been climbing dramatically over the last six months, according to nearly all of the UK analysts we've talked with or who's reports of the store we've read.

In fact, business has improved so much in the last six or so months Whole Foods Market, Inc. recently hired two commercial retail real estate firms in the UK to search for additional sights in London and throughout the UK for the retailer to open more Whole Foods Market supernatural grocery stores. [Read our piece on that search here.]

the inclusion of the spacious third-floor cybercafe in the store is turning out to be a very smart and savvy move by Whole Foods. Even though it isn't a money maker, after all the Wi-Fi connection is free and cafe users aren't even required to purchase anything to use the connection and the space, it's becoming a gathering place, used regularly by everyone from local entrepreneurs and business people to students, as well as people visiting London from elsewhere on business.

We think the popular, and rapidly becoming famous, Whole Foods cyber cafe in its London flagship store is a perfect example of what grocery retailers need to do in order to create brand in a new market--and even in existing ones.

In-store features like the internet cafe also create a "sense of place" in a supermarket, which results in encouraging shoppers to linger and buy more when in the store and to return more often and become primary shoppers of that store.

Not every feature a grocer puts in its stores will be a money maker. However, features such as the Whole Foods-London third-story cyber cafe will make a grocer more money throughout the store. Not a bad trade off.

Food & Grocery Legislation Memo: California Assembly Natural Resource Committee to Consider Second Plastic Bag Bill Along With Original Today

On Friday we wrote this piece about the 25-cent per single-use plastic carrier legislation that the California State Assembly Natural Resources Committee is debating and voting on in a hearing today at the California State Capital in Sacramento.

We've learned in addition to the 25-cent per plastic grocery bag legislation authored by Assemblyman Mike Davis, D-Los Angeles, which would impose a 25-cent per-bag fee on consumers at large supermarkets and drug stores in the state starting July 1, 2009 if passed by the full Assembly and State Senate and then signed by the Governor, the Natural Resource Committee also will consider a second bill in committee today.

That bill, authored by Assemblyman Lloyd Levine, D-Sherman Oaks, would levy a 15-cent per single-use plastic carrier bag fee on shoppers as a way to discourage supermarkets and large drug stores from offering the plastic bags, as well as discouraging consumers from asking for them.

However, the 15-cent per-bag fee would only go into effect if California supermarkets and drug stores failed to meet two plastic bag-use reduction benchmarks which are a key part of the bill.

Assemblyman Levine's bill, which the Natural Resource Committee is considering along with the direct 25-cent per-bag bill, would require the state's large supermarkets and drug stores (those already in the state's mandatory in-store plastic bag recycling program) to cut their current plastic bag use by 35% by the end of 2010, and by 70% by the end of 2012. If the retailers don't meet these goals, then the 15-cent per plastic bag consumer fee would automatically kick-in and the stores would have to levy the per-bag fee to shoppers who ask for the plastic bags.

Both bills if passed would use the money collected from the per-bag consumer fees to combat plastic bag litter and further reduce consumer use of the single-use plastic carrier bags in the state, according to the language in each of the bills.

Assemblyman Davis' 25-cent per plastic bag fee bill however would allow supermarket and drug store retailers required to charge the fee to consumers to keep 3% of the total per-bag fee to be used to help recover the in-store costs that will be required to collect the fee on each plastic grocery or shopping bag requested by consumers.

Assemblyman Levine's benchmark recycling bill, with the 15-cent per-bag fee kicking-in only if the above described goals aren't met, would use all of the money collected from the per-bag consumer fees for plastic bag litter cleanup in the state, along with being used to promote recycling. There's no 3% provision for the retailers' like in the Davis bill.

Last year California enacted a law which requires all large supermarkets to place plastic bag recycling bins in their stores and to arrange with a recycling company to have the bags picked up at the stores on a regular basis. The law also required the stores to offer reusable shopping bags for sale.

According to the California Grocer's Association and the environmental group Californians Against Waste, which was heavily involved in helping to implement the in-store plastic bag recycling law, the number of plastic bags in the state being recycled since the law was enacted last year has doubled, which is a strong sign since the recycling has has been in effect for less than a year.

However, before the law went into effect the plastic bag recycling rate in the state was only 2%. So, even though it's doubled, most of those supporting one or the other of the two bag-fee bills say they're needed since even at a doubling of the recycling rate from 2% -to- 4% that means 96% of the single-use thin plastic carrier bags are still not being recycled in California.

The state government estimates about 19 billion of the single-use plastic carrier bags are used in California each year. Since only 4% are recycled, that means the majority either go into landfills, litter the state's towns and roadsides or are washed into lakes, streams and the ocean.

According to research conducted by Assemblyman Levine's Sacramento office, the plastic bags generate about 147,000 tons of trash a year in the state's dumps and landfills. Levine was the author of the mandatory in-store plastic bag recycling bill which went was implemented last year.

The Assembly Natural Resource Committee is expected to choose between the two bills by the end of the day. However, as political deliberation goes, its possible they could table the vote for a later date.

Both bills allow the supermarkets to continue offering shoppers free paper grocery bags to package their purchases in. Additionally, nearly every supermarket and many drug stores of all sizes in the state are currently selling various varieties (ranging from 99-cents each to higher) of reusable shopping tote bags in their stores.

We will keep our readers posted on the outcome of today's Assembly Natural Resource Committee hearing on the two single-use plastic carrier bag bills.