Wal-Mart v. Fresh and Easy and other W-M news

Wal-Mart continues to attract coverage for its Marketside concept, and commentary why the stakes are high both in its attempt and the Fresh & Easy U.S. roll out. Here is a sampling:

Wal-Mart may try smaller store in county From Sign on San Diego:

Food industry analysts say Wal-Mart's Marketside concept is a response to rival Tesco's entry into the United States with its Fresh & Easy grocery stores. Last month, the British retailer opened its seventh store in San Diego County and announced plans for five more.

Bill Bishop, chairman of the firm Willard Bishop, which advises supermarkets, said Wal-Mart can't afford not to take Tesco on.

“In many people's minds, Tesco is the best retailer in the world, not the biggest but the best,” Bishop said. “They are in 14 different countries and have demonstrated that they play with a very hot hand – Wal-Mart would be asleep at the switch not to challenge them.”

Tesco's Fresh & Easy plans three more inland stores

From the Press Enterprise:

Even as British grocer Tesco's Fresh & Easy Neighborhood Market continues to add merchandise and open new stores -- including three Inland debuts in the next month -- a U.K.-based equity analyst says the fledgling chain remains far behind its initial sales and expansion projections.

The retailer so far has opened 82 stores in three states, and last week opened its 10th Inland market in Murrieta. Also last week, senior research analyst Mike J. Dennis of Piper Jaffray Ltd. issued the firm's second downbeat evaluation this year regarding the small-format concept's progress in the U.S.

Among his conclusions, Dennis said weekly unit sales per store on national-brand goods are as much as 50 times lower than its main supermarket competitors. Also, he said Fresh & Easy is likely to have 168 stores open by February 2009, falling short of its projected 203, possibly due in part to construction delays at its Stockton distribution and kitchen facilities.

Small box retailers From FT

For retailers, the attraction of smaller stores is better sales densities, up to two or three times higher than a typical superstore, as well as better gross margins. But the challenge with rapid turnover is to keep the shelves constantly restocked; customers have little tolerance of missing items. Meanwhile, rents are higher and there is a smaller top line to absorb overheads. It took Tesco five years to get the hang of running its smaller "Express" format in the UK.

That explains Wal-Mart's caution. The US's largest retailer has opened just 140 of its Neighbourhood Market stores - a quarter of the size of its typical 200,000 sq ft format - in a decade. That is a snail's pace for the expansionist group, which opened on average 240 new stores in each of the past five years. It is only now experimenting with a 15,000 sq ft convenience format. But, if food retailers are to keep pace with shifting consumer tastes, they must master the art of miniaturisation.

Wal-Mart keeping close eye on Tesco's U.S. stores : From Reuters

Wal-Mart has remained tight-lipped about its plans for Marketside. In June, Eduardo Castro-Wright, head of Wal-Mart's U.S. division, said the Marketside stores would feature a smaller assortment than a traditional grocery store and focus on fresh goods.

He said Wal-Mart shoppers might shop at the company's large supercenters once a month and go to its grocery-based Neighborhood Markets once a week, but would use Marketside for quick trips to buy perishables.

Tesco rivals testings smaller formats

TK: Wal-Mart's heart may not be with the smaller format - particularly with the potential growth for supercenters in California still significant - but Fresh & Easy will keep them working the model. May the better retailer win. Fresh & Easy said yesterday it is having no troubles filling its labor needs, with 14,000 applications received in August, or about 72 for every position available.