Consumers in the Sacramento, Calif., area will have to wait a bit
longer for the debut of Fresh & Easy Neighborhood
Markets.
Twelve months after the British-owned chain announced plans for
roughly 20 stores in the Sacramento region as part of a major push
into Northern California, area shoppers saw the original early 2009
opening date come and go, according to a report in the
Sacramento Bee.
There has been little visible progress at many of the sites, the
newspaper reported. The company has yet to pull a building permit
for a proposed store on Sunrise Boulevard in Rancho Cordova.
Another building, a former Tower Records and Books store, on Watt
Avenue, is still empty.
A handful of sites -- including a former Ralph's on Bradshaw Road
near Rancho Cordova and another location on Northgate Boulevard --
show signs of remodeling or near completion, the newspaper
reported. The company continues to close deals for sites and is
making its rent payments, real estate brokers and property managers
said.
The company did not disclose any opening dates.
Fresh & Easy is the first major U.S. venture for the United
Kingdom's giant Tesco PLC, the world's third-largest retailer. The
chain opened its first store in November 2007 in Southern
California. It now has more than 110 locations, including sites in
Nevada and Arizona.
Tesco doesn't report financial details for Fresh & Easy, but
analysts say the chain's rollout has been bumpy. Chief Executive
Tim Mason conceded in an interview with the Times of London last
month that the company misread some aspects of the bargain-oriented
U.S. market and is rethinking its pricing strategy.
Fresh & Easy stores are roughly 10,000 square feet -- a quarter
the size of a full-size supermarket -- and offer a limited
selection of groceries and a wide range of prepared foods. Garrick
Brown, research director for commercial real estate broker Colliers
International, told the newspaper the model hasn't clicked outside
of young, urban areas.
"They were under the assumption that they'd do well in suburban
areas. But they were exactly wrong," he said.
Tesco ties the slowdown in its Northern California expansion to the
U.S. recession.
But Jim Prevor, a grocery-industry expert based in Florida, told
the Sacramento Bee the delay also is tied to Tesco's troubles at
home in the United Kingdom. There, the company is dealing with a
terrible economy and is battling serious new competition from
discounters.
If Tesco's U.K. fortunes improve, it has the deep pockets to keep
tweaking the Fresh & Easy model until it finds something that
can succeed in the U.S. market, Prevor said.
But if it continues to struggle at home, Tesco may look to
retreat.
"In six months you might see a partnership with an American
retailer," Prevor predicted. "Or they might just put a lock on the
door and say, 'This was a mistake. It didn't work out.' "
Fresh & Easy spokesman Brendan Wonnacott told the newspaper the
company is "absolutely committed" to opening the Northern
California stores.
"The main thing is to get the infrastructure in place," he said,
chiefly a regional distribution center. The chain's existing stores
in the Southwest are served by a 700,000-square-foot warehouse and
commissary in Riverside.
Fresh & Easy did not reveal the location of its Northern
California warehouse, but real estate brokers and grocery insiders
have said since late 2007 that it will be in the Stockton area.



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