Safeway recently opened its new “small footprint” store. It is called “The Market by Vons” and is in Long Beach.
Although this store is 15,000 square feet, it is a remodel of an existing Vons and thus was constrained by the available footprint. We are told that if Vons were building from scratch, the company would prefer a 20,000 square-foot store.
In any case, this is an old Vons in a very affluent area. In fact, it was in this store that Vons developed its famous Wine Steward Program.
In the Wine Steward Program, the management at Vons had expanded the wine section substantially, adding very high end labels. Vons also hired and trained full time staff to specifically help people in the wine department. The staff was available to help customers select wine as well as to assist with party planning.
It was common to have wine tastings sponsored by both vintners and local restaurants in the store, with the Vons “wine stewards” getting the owners of wineries and trendy restaurants involved.
The program was a wild success. It was replicated to around 50 high demographic stores and frequently resulted in a doubling of wine sales. To this day, good Vons and Pavilions have exceptionally large wine selections, which can be traced back to the program that started in this store.
Although everyone seems to have talked themselves into believing that this store is designed to be a “Tesco killer,” the facts indicate something else.
For better or worse, Tesco has been looking to build a broad appealing superette that accommodates the needs of shoppers from inner city slums to the most upscale neighborhoods.
Almost every flaw in Fresh & Easy can be traced back to a perceived need on the part of Fresh & Easy’s designers to handle immense volumes. In other words, Tesco knew consumers would consider a made-to-order sandwich fresher than one made in a commissary the day before. But Tesco whispered to the investment bankers that it was going to sell $200,000 a week in a 10,000 square foot box, which means it really wanted to sell $300,000 a week and blow away expectations.
You simply couldn’t accommodate that volume with economical pricing if you have to be asking every consumer if he wants the deli mustard or the yellow mustard on his sandwich.
That is why there are no butchers, nobody baking bread; it is why the produce is all in efficient little packages.
The whole concept is broad appeal, high volume.
Now, as we have discussed extensively, we think these are both very big problems for Tesco. In a large market such as the US, niche markets that focus on individual customer segments are the route to success. And when we look at US population densities and the quantity of US retail space, we see no possibility of Fresh & Easy obtaining the high per-square-foot sales that would require all this hyper-efficiency.
If you read local media reports on Safeway’s new store, such as Jerry Hirsch’s piece in the Los Angeles Times entitled, Safeway Tries Downsizing to Better Fit Local Needs, and Nancy Luna of the Orange County Register, who wrote, Von’s Opens Fresh & Easy Copycat Market in Long Beach and Von’s to Fresh & Easy: We’re Not Copying You, the essence of the Safeway store is very different from what Tesco is trying to do.
The LA Times describes the store this way:
At The Market by Vons, which replaced a tiny and run-down traditional Vons in the Belmont Shore section of Long Beach, the message is upscale simplicity.
Shoppers walk through a wood floor entry with an immediate view of stacked produce, a fresh bakery, a prepared-food counter, a selection of 1,000 wines and a Starbucks kiosk.
With its ample displays of fresh flowers and spotlight lighting on the food, Nicole Stanton likened the format to a small Whole Foods Market.
”It is very clever and refreshing,” said Stanton, who said she planned to shop there several times a week.
About 50% of the offerings are fresh produce, meats, cheese and prepared foods. The rest are items shoppers are most likely to be looking for, said Rojon Hasker, president of corporate lifestyle for the company. The store carries about 15% of the items a large supermarket might offer.
”We want to provide the things you need most on a daily basis,” Hasker said. “People shouldn’t expect to come here to find 17 choices of ketchup,” she said.
The Orange County Register said this:
Last week, Safeway quietly opened The Market in Belmont Shore, which claims to offer a “clutter-free” and “refreshingly simple” market for shoppers on the go. The 15,000-square-foot store offers a slimmed down version of groceries and a large variety of ready to eat meals.
It’s essentially a mini version of a Vons lifestyle store with only six aisles dedicated to basic shelf goods such as salad dressings, detergent, sodas and chips. Dowling said he expects the store to cater to shoppers who do “fill in” shopping a few times a week.
Whichever way you slice it, The Market appears to be a sleeker version of a Fresh & Easy. Critics have compared Tesco’s markets to a government surplus store.
The Market, on the other hand, boasts an open-hearth fire pit for baking artisan breads, a huge wine section, a Starbucks cafe, fresh-cut meats and a sandwich shop.
Some shoppers have likened it to a mini-Whole Foods Market.
Yes, this is more branded than private label and yes, it is a little larger store with warmer tones. But the key distinction is that this is an upscale high-service store with a butcher, service deli, wood-burning fire-pit bakery oven, a Starbucks, bulk produce, etc.
We’ll get out and see the store, ourselves, but we are already starting to get some feedback from our readers. Because high-service stores are always fun, we are sure the store will get lots of praise. After all, who doesn’t like someone there to slice one’s bread to the precise thickness one prefers?
Very likely, in areas that can support certain demographics, the concept will work. But it can’t “answer” the Tesco challenge.
Of course a certain route to business disaster is to try to follow your competitor’s business plan. Mindful of real estate issues in California, Safeway is interested in making some small format concepts work. It is starting with an upscale, high service concept, whether that is the limit of its small store ambition remains to be seen.
