OAKLAND — The location seems great. It's visible from the freeway, easy to get to, and there's plenty of parking — not to mention a large community full of potential customers.
But Fresh & Easy, the U.S.-based division of British grocer Tesco, has decided against opening a grocery store at the Jack London Gateway shopping center in West Oakland, disappointing residents who long for a grocery store in the neighborhood, and sending the shopping center's landlords back to the drawing board.
"I've been reading in the paper that their stores aren't doing as well as they could," said Janet Patterson of the West Oakland Marketplace Advancement Co., a partner of JLG Associates, the shopping center's ownership. "But we're still talking; we're still trying to negotiate with them. I still have my flags halfway up. I don't want to say I'm giving up."
Oakland will still get a Fresh & Easy at 73rd and Bancroft avenues, but the 27,000-square-foot space in the Gateway shopping center on Market Street remains a hard-to-fill storefront for the immediate future. The first grocer to open there in 2000 failed to win the community's support, and the store eventually closed. The spot was vacant for months before a group led by the Kim family, merchants who had a thriving market on 14th Street in downtown Oakland, took over in 2004.
The Kims expanded the selections, added rows and rows of fresh produce, meats and fish, and installed a cafeteria-style Korean restaurant inside the store. But the Kims met with some resistance from West Oakland residents who were put off by the large selection of foreign foods at the expense of some of their favorite American brands, and business suffered somewhat.
Then, in early March 2007, employees showed up for work and found the place locked up tight.
According to Korean media, a member of the store's ownership group — who had been part of a money-lending pool that helped small-business owners — ran off with millions of embezzled dollars.
Lorie Alemania, president of Portfolio Property Investors — which, along with the East Bay Asian Local Development Corporation represents the third partner in JLG Associates — said Fresh & Easy's decision was disappointing, but not wholly unexpected, given its announcement this month that the company would not open any new stores for three months.
Just three months earlier the company released a list of 18 planned Bay Area locations; East Oakland made the list, but West Oakland did not.
Alemania is hopeful the partners will be able to find another tenant that will fit in with the community.
In the meantime, the shopping center has new signs, and construction has begun on new senior housing and 14,000 square feet of additional retail space on the east end of the lot.
"The center looks good, looks active," Alemania said. "We've got people looking again."
Fresh & Easy spokesman Brendan Wonnacott confirmed that the Jack London Gateway site is not viable for the company, and said the company "regrets it is not able to move forward there." He also said the company continues to look in Oakland, including West Oakland, for future expansion opportunities.
Wonnacott would not discuss the reasons for dropping the Gateway lease, other than to say it had nothing to do with the economics or crime in the neighborhood, saying that the rapidly expanding chain has opened stores in Compton in Los Angeles County and the Bayview/Hunters Point district in San Francisco. The Gateway site is almost twice the size of a typical Fresh & Easy store, which typically is about 14,000 square feet.
The company had planned to sublease part of the space to another retailer, which may have been part of the problem. Carletta Starks, an aide to Oakland City Council woman Nancy Nadel (Downtown-West Oakland), said the shopping center is part of a redevelopment zone and specific conditions apply to any lease there. For example, Starks said, there are tight controls on subleasing, and the lease also requires a living-wage agreement, something objected to by Fresh & Easy, saying it already paid competitive wages.
Starks said she is hopeful the grocer will be able to find another suitable location in West Oakland. While many other supermarket chains have closed stores in urban areas, and favor the megastore-sized model, Fresh & Easy's smaller, neighborhood markets are often situated within a mile or two of one another.
Fresh & Easy has opened 61 stores since November in Southern California, Nevada and Las Vegas, on top of hundreds more it opened last year, Wonnacott said.
Now, it's stepping back to assess the success of those stores and get customer feedback. Fresh & Easy will not begin any construction on stores until early July, although construction continues on several. Work will begin on 19 stores in Sacramento and 18 in the Bay Area, including Walnut Creek, Concord, Antioch, Hayward and Danville, once it establishes a distribution center, Wonnacott said.
Reach Cecily Burt at 510 208-6441 or firstname.lastname@example.org.