One supermarket chain plans to pull out of the Los Angeles retail scene, a couple of others may be coming in, and a major online outfit has just started selling groceries, including fruits and vegetables, in the region.
Fresh & Easy Neighborhood Market, part of England-based Tesco, announced plans early this year to exit the U.S.
The El Segundo, Calif.-based chain of 200 markets in California, Nevada and Arizona debuted to much fanfare in November 2007 but failed to catch on.
The parent company sank billions of dollars into its Fresh & Easy experiment and had been predicting that the company would finally turn a profit this year.
Meantime, Aldi Inc., Batavia, Ill., reportedly is planning a $55-million regional headquarters and distribution center in the Moreno Valley east of Los Angeles and is expected to expand into the area.
Riverside County would be a fitting location for the 1,200-store chain because of low rents and a large concentration of its target customer base of low-income consumers, analysts say.
There also are reports that organic and natural food retailer Wild Oats Markets Inc., which closed in 2007, could be making a comeback, possibly with the help of billionaire Ron Burkle’s Yucaipa Cos., a Los Angeles private equity firm.
The company’s website says it is “re-introducing the Wild Oats brand,” with products due to arrive on store shelves this year.
Burkle was the company’s major shareholder when Wild Oats was sold to Whole Foods Co.
The Los Angeles Times reported in mid-July that Gelson’s Markets, an upscale chain of 16 locations based in Encino, Calif., may be sold by Arden Group Inc., its Compton, Calif.-based parent, because of “intense competition” in the market.
In a recent regulatory filing, Arden Group said Gelson’s is in direct competition with numerous local outlets of regional and national supermarket chains that “are generally larger than Gelson’s stores which, in some cases, enables them to offer more products, and their greater resources allow them to conduct more comprehensive advertising campaigns.”
Arden said it has retained a financial adviser, but had no comment on its future course of action.
Giant online retailer Amazon.com Inc. expanded its AmazonFresh service, which it established in Seattle in 2007, to parts of Los Angeles in June.
The company offers same-day delivery of a half million items, including fresh produce.
Four of the company’s key executives came from Webvan, an online grocery business that Reuters reported lost more than $800 million in three years before closing in 2001.
At least in theory, the executives will add their expertise as to what not to do and likely will prevent AmazonFresh from expanding too rapidly, Reuters said.
Compton, Calif.-based Ralphs Grocery Co. is promoting shorter lines and faster checkout in its advertising, as it parent, Cincinnati-based The Kroger Co., says it expects to install infrared sensors that count customers in all of the more than 2,400 Kroger supermarkets.
Alternative formats on the rise
Of the four major supermarket chains in the Los Angeles market — Ralphs, Vons, Albertsons and Stater Bros. — all but Stater Bros. will be down by more than a half dozen stores this year compared to last year, said Dick Spezzano, president of Spezzano Consulting Services, Monrovia, Calif.
“The real change here in Los Angeles is that these chains have less store count and have less share of the total dollar,” he said.
“The alternative formats have really started to pick up steam.”
For example, Wal-Mart neighborhood markets are in expansion mode in the region.
Target has introduced its PFresh program into just about all of its Southern California stores, and Monrovia-based Trader Joe’s continues to do a “marvelous job,” though expansion has slowed as it saturates the market, Spezzano said.
The Phoenix-based Sprouts chain, which emphasizes low prices and large produce displays, also could expand its California locations significantly in the next few years, he said.
Meanwhile, independent ethnic chains like Anaheim, Calif.-based Gonzalez Northgate Market and Los Angeles-based Super King continue to grow. In all, there are more than 20 ethnic supermarket chains in the area, he said.
Expansion isn’t limited to supermarkets.
Deerfield, Ill.-based Walgreens drug stores on Dec. 1 opened a flagship store at Sunset and Vine in Hollywood, marking its 8,000th location.
Besides an enhanced pharmacy and various health and wellness products and services, the store features a juice and smoothie bar featuring fresh fruits and vegetables and hundreds of fresh food items including produce and high-quality, on-the-go meal options such as wraps, sandwiches and salads made fresh daily, the company said.
Spezzano also expects the Dollar General chain, which also is adding fresh offerings to its product line, to grow its presence in Los Angeles.