British Firm To Bring Small Format Grocery Stores To Region

British Firm To Bring Small Format Grocery Stores To Region
Blanca Torres/Oakland Tribune
Article Launched: 02/17/2008

The British invasion of Bay Area grocery stores has begun: Fresh & Easy Neighborhood Stores announced recently the locations of 18 Bay Area new stores - including a pair in Solano County and a number elsewhere in the East Bay - that will open in 2009. The chain, owned by British retail giant Tesco, operates grocery stores in a small format, around 10,000 square feet, that focus on fresh and prepared foods at low prices.

The confirmed locations include Fairfield, Vallejo, Napa, Antioch, Concord, Danville, Mountain View, Oakland, Oakley, Sunnyvale, San Jose, Walnut Creek, Hayward and San Francisco.

"We're delighted to be here," said Tim Mason, chief executive of Fresh & Easy, at press conference held in Oakland. "(The Bay Area) is an area of growth that is receptive to change and it has great weather."

Tesco, one of the world's largest retailers, has been preparing its entry into United States for years and has planned to invest $2 billion in the expansion.

The company has opened 37 stores in Southern California, Nevada and Arizona since last fall. It expects to have 50 stores by the end of February and up to about 150 by early next year.

Worldwide, the company operates more than 3,200 stores in 12 countries and created the Fresh & Easy concept specifically for the American market.

"This new concept comes from a very experienced retailer," said Louis Bucklin, professor emeritus of marketing from the Haas School of Business at UC Berkeley. "(Tesco) needs to have an operation in the United States because they're not here, but developing a similar format to existing stores here does not seem to work."

Fresh and Easy stores measure up to about one-fifth the size of a typical grocery store, but despite the small dimensions, Mason said shoppers can buy all of their groceries there.

Mason said the chain carries products that don't contain added transfats, artificial flavors and contain as few preservatives as possible. It also carries a variety of organic produce and natural foods such as cage-free eggs and hormone-free meats.

About half of the store's products are proprietary brands.

For decades, grocery stores have steered more toward larger stores, big selections and numerous brand options.

"(The Fresh & Easy concept) is contrary to a lot of the conventional wisdom on which the grocery business has made all of its decisions for a long time," said Bob Reynolds, a grocery consultant with Reynolds Economics in Moraga.

While it may seem risky, the small model has some advantages.

"Fresh & Easy looks for neighborhood locations," said Jon Stansbury, a San Jose-based partner with Terranomics, a retail commercial real estate firm that took part in Tesco's deals in the Bay Area. "These are sites that are on the way home from work in the neighborhoods where people live.