Market chain picks 19 area sites

Sacramento's turbulent grocery scene is about to get another good shaking.

Fresh & Easy Neighborhood Markets plans to announce today that it has locked up 19 store sites from Vacaville to Folsom and from Lincoln to Galt.

The 19 stores will open next year, with an unspecified number added later. Some will be newly built, while others will move into vacated retail spots.

Backed by billions of dollars from Britain's Tesco PLC, the world's third-largest retailer, Fresh & Easy's start in the Sacramento region will give locals a new food shopping option in what is already one of the nation's most competitive grocery markets, experts say.

While traditional chains such as Raley's, Safeway and Save Mart Supermarkets still have about a year to tweak their strategies, "any new competitor is bad news for an established chain," said Robert Reynolds, a Moraga-based grocery industry consultant who is familiar with Sacramento. "New players always siphon away some dollars from existing businesses."

The Fresh & Easy concept depends heavily on private-label goods and prepared grab-and-go food offered in stores roughly the size of a Trader Joe's. Tesco is pouring $2 billion to design and build hundreds of 10,000-square-foot stores in California, Nevada, Arizona and the Midwest.

Tesco has said it is committed to placing stores in underserved urban areas with little or no access to healthy foods purchases – including one at 34th and Broadway in Sacramento's Oak Park neighborhood.

"Our goal is to serve every neighborhood," said Fresh & Easy spokesman Brendan Wonnacott. "As we move forward, we'll be looking at sites all over Sacramento."

Fresh & Easy combines elements of a traditional grocery store and a convenience store. At about one-fifth the size of a typical supermarket, the sparsely decorated stores emphasize fresh items, prepared take-home food and private-label goods. They also carry a limited selection of national-brand merchandise among their 3,500 items.

Supermarkets generally carry 30,000 products or more.

Most perishables that Fresh & Easy sells come in small plain packages: $4.99 for a 32-ounce green bean casserole, $3.72 for 15 ounces of fruit salad, $3.99 for a 17-ounce serving of Thai chicken and shrimp.

Fresh & Easy doesn't take American Express, checks or manufacturers' coupons. Forget Safeway-style loyalty cards.

Union labor is out, too. That's a sore point with grocery labor unions, which have protested in front of stores in Southern California. But Fresh & Easy says the practice allows it to trim costs and pass the savings on to shoppers.

Another cost-cutting feature: Every checkout line is set up for self-service.

In December, Goldman Sachs analyst John Heinbockel told Supermarket News, an industry publication, that prices at two Fresh & Easy stores he sampled in Southern California ran 13 percent to 15 percent less than those at major grocery chains.

Since its November debut in Southern California, the company has opened stores in Las Vegas and Phoenix, for a total of 55. Last month it announced 18 locations in the Bay Area that will open next year.

Experts say Tesco must expand quickly to maximize its investment in an 88-acre Riverside distribution center.

"These are unique stores, offering a unique environment with a unique approach to selling food," said George Whalin, a retail consultant based in San Marcos who has visited the stores. "But they are so different that it could take a while for customers to embrace them."

Indeed, Fresh & Easy has hit some bumps.

Early news accounts of excited customers waiting in long lines at store openings have given way to articles about distribution challenges and empty shelves. Others have criticized the stores' bland avocado green decor and Spartan furnishings.

Company spokesman Wonnacott said the interiors reflect Fresh & Easy's underlying theme.

"Simplicity. Our stores are simple to shop, the shelves are low and simple, the supply chain is simple," he said. "These all reflect our commitment to keeping costs low."

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