Jan 062012

Despite community opposition, the San Leandro City Council is set to approve the development of the old-Albertson’s property downtown into yet another strip mall, euphemistically dubbed “Village Marketplace“.  The anchor of the mall, occupying slightly less than half the total space, is supposed to be a branch of the “Fresh & Easy” grocery stores – but it’s just as likely that it will actually be a Wal-Mart, San Leandro’s third.

Fresh & Easy is a chain of small grocery stores, mostly located in California.  It was started in 2007 by British supermarket giant Tesco as a daring attempt to break into the American grocery market.  They modeled it after their own successful grocery stores back in England, offering assorted dry goods, packaged fresh vegetables and meats while emphasizing  frozen and refrigerated prepared meals and private labels.  They save costs by only using self-checkouts and running bare-bone stores.

So far, Fresh & Easy is not doing well.  In the four years since it opened it has lost $1.1 billion, while sucking up $1.5 billion in capital.  Fresh & Easy now recognizes it failed by attempting to impose the UK model onto the US market and it’s starting to revamp its stores to make them more appealing to American tastes.  It’s putting homey touches on the clinical decor, adding bakeries and loose produce and introducing loyalty cards.   But all of this ads cost while providing uncertain results and Fresh & Easy is running out of time.  Tesco’s brand-new CEO has suggested that Fresh & Easy must break even by the the beginnings 0f 2013, analysts believe if it doesn’t, Tesco will cut their losses.  It won’t be the first time; in August Tesco pulled out of Japan, closing its 129 stores.

So what happens if Fresh & Easy closes?   The Financial Time suggests that Walmart may pick up its crumbs.  Indeed, Walmart has been posing to compete with Fresh & Easy for a while.  Currently, it is pushing its Neighborhood Store concept in the Bay Area, but it’s also starting a new chain of even smaller stores dubbed Wal-Mart Express.  This stores are set to copy and provide competition to the very profitable dollar stores that have popped out throughout the country.  Walmart plans to open hundreds of these stores in the coming years, acquiring existing retailers to speed up the process.  While Wamart’s fortunes have also been declining, it has the knowledge of the US market and the buying power to succeed where Tesco has failed.  Village Marketplace’s developer, David Irmer, has previously spoken on the difficulties of finding tenants for the development, so it’s unlikely that Walmart will have much in the way of competition if it decides to move to that space.

It’s also unlikely there would be anything City Hall could do.  Once the city sells the property to Irmer (for half of what it paid for it in 2009), it will be up to Irmer to decide who he rents it to.  In the past, the City was able to use the Transit Oriented Development plan to keep Grocery Outlet out of the location, but once it permits Fresh & Easy to operate a grocery store on that property, it will need to allow any other company to do the same.  This is exactly what happened when Wal-Mart decided to open a second San Leandro store at the former Target property on Hesperian Blvd.

I can only hope that City Council members will take the issue of whether this is how they want Downtown San Leandro to develop.


  3 Responses to “Is Wal-Mart coming to Downtown San Leandro?”

  1. This project is fast becoming urban legend. Lets look at the cronology.
    The person the city bought ir from wanted to sell/lease to grocery outlet. A group of SL Citizens led by someone whose name escapes me, Judy Dicbar, something like that circulates a petition against grocery outlet saying it is not upscale enough.
    At the same time the city is retrofinng the downtown garage and has a large SL employer who will be impacted by not having the parking available. The city to appease the group against grocery outlet and to cal the large employer buys the store at a price.
    Now that the garage is being finished the city makes a deal to put…. a grocery store on the lot costing the city 6 million. But we now have different citizens with different complaints, sweetheart deal, dont need/want Chipotle, Peets, Fresh and Easy.
    Maybe we should have left it asphalt

    • The person who had the petition against the grocery outlet was me and my name is Johanne Dictor and you have the facts wrong. Our big complaint was that a grocery store was not right for this location, pure and simple. I personally think the Fresh and Easy grocery store is a problem, too and I am not in favor of it at all. As Marga said that was not the concept for that space. I hope this article about Wal-Mart taking over Fresh and Easy is incorrect; it would be an absolute disaster if Wal Mart took over that space. I think David Irmer is a responsible developer but you never know what he would do if Wal Mart offered him a great price for this piece of property. I would hope that Irmer is more sincere than that but you never know. Irmer acts like he really cares about San Leandro but he is just another developer trying to make money. I will say he did a great job on the Tri-net building and the new building that was just built.

  2. Mike, it’s not different citizens. I was one of the people who spoke against Grocery Outlet – both on my behalf and SLCAN – and I’m just as loudly speaking against Fresh & Easy. My issue with both is exactly the same: grocery stores are inconsistent with transit oriented development as most people will drive to get groceries. Unless you’re the type that shops every day (and then you would be shopping at specialty stores/farmers markets not packaged-havens like F&E and GO), you need a car to comfortably carry your groceries home. And after you’ve bought groceries, you are not going to stop by other nearby stores while your ice cream melts and your fish rots in your car – you are going to go home. So a grocery store will not help make downtown a destination. Of course, a parking lot doesn’t either – but at least it provides the /possibility/ of one day building the site into something that will benefit the community.

    But the whole Village Marketplace deal smells so off to me. It seems that to arrive to the purchase price what the city did is look at the mixed-use development they wanted to put there, figure out how much they could possibly sell it for and how much it would cost to build it, and then subtract the latter from the former. That gave them somewhere north of $6M which is basically what they ended up paying for the site. I’m filing a CPRA request to see if they actually got the property appraised prior to purchasing, I somehow think not.

    But, almost immediately after they bought the site, they give it to Irmer to develop with no word as to the mixed-use development they had sold to the citizens before.

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