Tesco's Fresh & Easy Neighborhood Market today announced the opening dates for its first five stores in Northern California's Sacramento metropolitan region.
Fresh & Easy first announced its plans to enter the metro Sacramento market in early 2008, where it said it would open an initial 19 stores. (See here for details and a list of the numerous other planned stores we've uncovered in the region.)
It planned to start opening the first of those 19 stores beginning around late 2009 and no later than mid-2010. Those plans were postponed until now.
The grocer's announcement today confirms the opening dates for the first batch of stores in the Sacramento region we've had listed on our F&E Store Openings Q1 2012 link at the top of the blog.
Below are the locations and opening dates of the first five stores Fresh & Easy Neighborhood Market plans to open in the Sacramento metro-region:
>Sacramento
Watt Avenue & El Camino Avenue
Opens March 7, 2012
>Sacramento
Mack Road and Franklin Boulevard
Opens March 7, 2012
>Lincoln
Lincoln and Sterling Road
Opens March 14, 2012
>Elk Grove
Elk Grove Florin Road and Calvine Road
Opens March 14, 2012
>Folsom
East Natoma Street and Blue Ravine Road
Opens March 14, 2012
Northern California - one year on
The opening of the first stores in metropolitan Sacramento, Tesco's newest market region with its Fresh & Easy chain, comes one year after the grocery chain began opening its first stores in Northern California.
There are 18 Fresh & Easy stores now open in Northern California - 15 units in the San Francisco Bay Area; one store in Fairfield, which is on the outskirts of the Bay Area off Interstate-80; one Fresh & Easy grocery market in Vacaville, which is about midway between the Bay Area and the Sacramento region; and a store in Modesto, which is in the Northern Central Valley.
There are 182 Fresh & Easy stores in California (138), Nevada (20 units), and Arizona (24 units). Of the 138 stores in California (the grocer opened two units in the Golden State yesterday), 106 units are in Southern California, seven stores are in the Bakersfield and Fresno regions in the mid and southern Central Valley, and 18 units are in Northern California.
Region's 'Big Three' (and unionized) grocery chains
Fresh & Easy's launch into the Sacramento-area market comes at a time when the region's three leading grocers - West Sacramento-based Raley's, Modesto-based Save Mart/Lucky and Pleasanton, California-based Safeway Stores, Inc. are in negotiations with the United Food and Commercial Workers (UFCW) union over a new three-year labor contract.
The three supermarket chains are numbers one (Safeway), two (Save Mart) and three (Raley's) respectively in terms of market share in Northern California. In the metro-Sacramento market, Raley's is number one, followed by Save Mart and Safeway.
The old contract expired in October 2011, and the union locals and the "Big Three" Northern California grocery chains have been extending the dates since then. The negotiations continue.
Raley's and Save Mart/Lucky are family-owned, privately-held companies. Safeway Stores, Inc. is publicly-held.
The three chains negotiate with the union locals. Once a deal is made, the smaller unionized grocers in the region then generally accept whatever contract deal is cut and voted on and ratified by UFCW members.
There are about 52,000 unionized grocery clerks in Northern California, according to a spokesperson for Local 5. There are numerous other chains and independents in Northern California that are unionized and operating under the extended contracts.
Last week Raley's, which operates 131 stores in Northern California under the Raley's (superstores), Bel-Air Markets, Nob Hill Foods (supermarkets) and Food Source (discount warehouse) banners, broke out of the joint-talks with Save Mart/Lucky and Safeway, and is now negotiating independently with the union locals.
Raley's, which has been struggling financially and going through a reorganization since 2010, is asking the union for various concessions in the health and welfare benefit and pension areas.
Raley's CEO Michael Teel, who's family owns the privately-held chain, says the grocer needed to go out on its own in the negotiations because it wants a deal, with concessions, fast. Teel also says Raley's would not have had to close two stores recently, one in Modesto and the other in the Sacramento region, had the UFCW accepted its proposal. He also said additional store closures are possible if Raley's can't get the concessions its asking the union for.
An official of one of the Northern California UFCW locals told us recently that the concessions Raley's wants as currently stated "won't fly with our membership." As a result, the union and the chain have yet to reach an agreement that the union can take to its members for a vote, he says.
The contract extensions with all three chains run out before the end of this month.
Non-union grocers on the move
Meanwhile, Tesco's Fresh & Easy is just one of many non-union food and grocery retailers opening stores at a fast pace in Northern California in general and in the Sacramento region specifically. Others include Whole Foods Market, Sprouts Farmers Market and Sunflower Farmers Market. All three have new stores set to open in metro Sacramento this year.
Over the last year Tesco has been repositioning Fresh & Easy to be more of a specialty grocery store. All three of the chains mentioned above, and Fresh Market mentioned below, plus Trader Joe's, which has stores in the Sacramento region, are direct competition in that niche.
Safeway and Raley's, which both put a major focus on fresh foods and specialty as well as on the basics, are also direct competition for Fresh & Easy, including in the fresh-prepared foods category. Both chains offer extensive ready-to-eat and ready-to-heat fresh foods, as do Whole Foods, Sprouts and Sunflower. Save Mart/Lucky does as well, but to a lessor degree than the others.
Costco, which has customer demographics that cut across all income levels, is also a major food and grocery retailing force in the Sacramento metro-market, as are a number of smaller chains and independents, such as Woodland-based (about 12 miles from Sacramento) Nugget Markets, which has a number of stores in the region.
Additionally, as we previously reported, Walmart Stores, Inc. is locking up numerous locations for its smaller-format (26,000-to-45,000 square-foot) Neighborhood Market supermarkets in the Sacramento region, along with proposing a few new supercenters, and adding fresh food and groceries (hybrid supercenters) to some existing discount format stores.
Discount chain Target, which is non-union like all the others mentioned above, has been and continues to add its "P-Fresh" fresh food and grocery markets inside many of its existing target discount format stores in the region.
Another non-union grocery chain, North Carolina-based The Fresh Market, also has plans to start opening stores in Northern California - the Bay Area and Sacramento region is its focus - this year, as we've previously reported in Fresh & Easy Buzz.
Bottom line: Not only are all these non-union grocers, which are adding stores rapidly, added competition for the Sacramento region's "Big Three" unionized supermarket chain's - Raley's, Save Mart/Lucky and Safeway - they also will make Tesco's launch of Fresh & Easy in the region less than a month from today much more difficult and competitive (and expensive) than it would have been had the retailer started opening its stores back in 2009-2010 as it originally planned to so.
Why: The level of competition was much less then that it is now - and it's going to get even more competitive in the metro-Sacramento market over the next year and beyond, particularly as Walmart starts opening its smaller format Walmart Neighborhood Market supermarkets in the region, many of which - for example a Walmart Neighborhood Market is slated for Lincoln, California - are located not far from future Fresh & Easy locations in the Sacramento metropolitan region, along with in other parts of Northern California.
Suggested Reading
August 29, 2011: Meaningful Move or Too Little Too Late? Fresh & Easy Neighborhood Market Planning Early 2012 Metro Sacramento Market Launch
August 31, 2011: Tesco Says Sayonara to Japan, Good Morning to Sacramento
January 18, 2012: Fast-Growing The Fresh Market Chain On Track to Launch in California This Year
January 8, 2012: Tesco to Close Up to 12 Fresh & Easy Stores
January 9, 2012: Exclusive: Tesco's Fresh & Easy Closing 12 Stores; We Have the Locations
December 5, 2011: Dollar General Jump-Starts California Launch: Taking Over 5 Centro Mart Supermarkets For Early 2012 Openings
July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store
February 1, 2012: Tesco's Fresh & Easy By the Numbers ... In Case You Want to Keep Score at Home or in the Office
