San Francisco's Retail Scene

[kenratboy]

Well, to play devils advocate - if I lived in Walnut Creek and wanted to do a lot of shopping at Westfield SF, it may be a huge PITA to hoof everything home on BART, or not be able to dump stuff in my car and keep shopping.

[BTinSF]

Originally Posted by kenratboy

Well, to play devils advocate - if I lived in Walnut Creek and wanted to do a lot of shopping at Westfield SF, it may be a huge PITA to hoof everything home on BART, or not be able to dump stuff in my car and keep shopping.

Having commuted daily to the East Bay, my answer would be that however bad "hoofing" home on BART might be, it's not as bad as the Bay Bridge (but that's just me).

[sf_eddo]

The mall sits on TOP of two different rail systems and every line in the world from AC Transit to SamTrans heads to the vicinity of the mall. I have no pity for those who complain about parking - stay in Walnut Creek or Serramonte.

People in the Bay Area just don't get that an urban mall, should, in fact, be urban.

[craeg]

Seriously. It's very amusing that people continue to be horrified that a new mall was opened without new parking. Very western.
Can you imagine the NYtimes running a story about how the manhattan mall was opened with no new parking?

[BTinSF]

Well, OK, this is Berkeley retail but it's only a few minutes away by BART.

I certainly hope Berkeley doesn't do anything crazy like build housing or provide a shopping experience 90% of the population find highly desirable:

BERKELEY
Neighbors say no to popular market
Trader Joe's project hits snag over traffic, low-priced alcohol
- Carolyn Jones, Chronicle Staff Writer
Monday, October 30, 2006


Most communities would be breaking out the Two-Buck Chuck and organic flaxseed chips at news that Trader Joe's is coming to town.

Not Berkeley.

In a city famous for its love of specialty gourmet food, irate neighbors are fighting a new Trader Joe's slated for University Avenue and Martin Luther King Jr. Way, now home to a Kragen outlet.

Residents are concerned about traffic, parking, the building blending in with the neighborhood, and the large volume of low-cost alcohol for sale just a few blocks from the UC campus, Berkeley High School and a number of homeless service agencies.

Not to mention the four stories of apartments that would be on top of Trader Joe's, making it one of the biggest housing developments in Berkeley.

Meanwhile, droves of Berkeleyans would love a Trader Joe's, if not necessarily so much housing at that spot.

The issue is headed for a showdown Nov. 9 at the zoning board, which is scheduled to vote on approving the $50 million project.

The Berkeley battle stands in contrast to last week's announcement that a new Trader Joe's is being warmly welcomed about 5 miles away in Oakland. Slated to replace a shuttered Albertsons on Lakeshore Avenue in the Grand Lake neighborhood, the Oakland Trader Joe's was sought in a campaign by local residents and Councilwoman Pat Kernighan.

If it's approved in Berkeley, Trader Joe's -- with its island decor and mix of basic food with organic and exotic imported foods -- would open in 2010. If it's not approved, the developers said, Trader Joe's likely will back out and the project will be resubmitted with more housing and less retail.

"Either way there will be a project there -- what we don't know is exactly what that will be," said Berkeley City Councilwoman Dona Spring, whose district includes the Trader Joe's site.

Developers Chris Hudson and Evan McDonald, proteges of Berkeley development mogul Patrick Kennedy, bought the 1-acre site in 2002 and have been haggling with the city and community ever since. The project began with 186 units of housing filling five full stories, 4,000 square feet of retail, 71 parking spots and almost no setbacks from adjacent houses. The proposal now has 146 units, four times as much retail as before, twice as many parking spots, landscaping around the perimeter and a stepped-back roof that goes from three stories to five.

"These are significant concessions we've made," said Hudson. "But the neighbors keep changing the bar. We're just looking at each other and scratching our heads because we've done everything they asked."

The neighbors most upset about the project live on Berkeley Way, a residential street parallel to University Avenue where the Trader Joe's parking lot entrance will be. A constant stream of cars and delivery trucks will dramatically change the character of their quiet street, they say.

"Trader Joe's is a nonunion store owned by a secretive German family that sells specialty food and low-cost alcohol," said Steve Wollmer, who lives 250 feet from the site. "Do we really need this in our neighborhood?"

Part of Trader Joe's popularity stems from its assortment of low-priced wine and spirits. It spawned the "Two-Buck Chuck" nickname when it sold Charles Shaw wine for $2 a bottle, though many of its other wine offerings fall into a higher price range. Wollmer fears that the availability of inexpensive wine will prove too tempting for the thousands of underage students and homeless people who live nearby.

A Trader Joe's spokeswoman would not release the company's alcohol sales figures, but a homeless advocate said the store's abundance of cheap wine is not an issue.

"I am convinced that the cost and distance of alcohol has nothing to do with people drinking. If a homeless person, or anyone, wants to drink, they'll know where to get it," said Boona Cheema, executive director of Building Opportunities for Self-Sufficiency in Berkeley. "I think it's great that Trader Joe's is coming to downtown."

Many in Berkeley agree with her, enticed by the prospect of affordable, high-quality groceries within walking distance of downtown, BART and the UC campus.

"For years, downtown residents and merchants have been wanting a supermarket downtown," said Michael Caplan, who worked on downtown development for the city and starts today as Berkeley's economic development director. "There are hundreds of new units downtown, and as it becomes more of a neighborhood, people want basic neighborhood amenities."

The nearest Trader Joe's are currently in Emeryville and El Cerrito. The Oakland outlet will open in early 2007.

Berkeley is hardly underserved by grocery stores, though no large markets can be found downtown, where Trader Joe's would go. Within its 10 square miles lie four Andronico's, Whole Foods, Safeway, Grocery Outlet, Berkeley Bowl and dozens of small specialty shops. A second Berkeley Bowl, which at 91,000 square feet will be Berkeley's biggest grocery store, is slated to open in West Berkeley by 2010.

Some in Berkeley say they welcome Trader Joe's, but it's the 146 units of housing they don't want. The units, most of which are one-bedroom apartments configured around a central courtyard, are too small to accommodate families, said Spring.

The developers say they feel they've made as many concessions as they can and still turn a profit.

"We think we have a great project here, and we're willing to invest in the long-term future of Berkeley," Hudson said. "But at some point, Berkeley's got to decide whether it wants to be Berkeley 1950 or Berkeley 2050."

E-mail Carolyn Jones at [email protected].

Page B - 1
URL: http://sfgate.com/cgi-bin/article.cg...AGMTM2HDE1.DTL

I think Trader Joe's in SF may be the only place in town I've never seen a homeless person. The library is full of them. Maybe we should tear it down.

[San Frangelino]

Wollmer fears that the availability of inexpensive wine will prove too tempting for the thousands of underage students and homeless people who live nearby.

Some in Berkeley say they welcome Trader Joe's, but it's the 146 units of housing they don't want. The units, most of which are one-bedroom apartments configured around a central courtyard, are too small to accommodate families, said Spring.

There is very much a Helen Lovejoy "ring" to the opposition in this article.

[dimondpark]

speaking of Trader Joe's, as the article states, Oakland's new one is slated to open next year at the now defunct Albertson's on Lakeshore Av, and not a moment too soon. Although I must admit, having no tenant has really done wonders for the area's horrible parking situation. LOL

[rs913]

Well, OK, this is Berkeley retail but it's only a few minutes away by BART.

I certainly hope Berkeley doesn't do anything crazy like build housing or provide a shopping experience 90% of the population find highly desirable:

I'm starting to wonder why Berkeley residents are so extreme in their opposition to projects like this. There's no concessions on their part, no negotiation, and the most absurd excuses offered as justification. Do they see themselves as the guardians of Berkeley's "reputation"? Or are they afraid new business might attract yuppies and make the place vulnerable to a massive gentrification wave?

[munkyman]

Originally Posted by rs913

I'm starting to wonder why Berkeley residents are so extreme in their opposition to projects like this. There's no concessions on their part, no negotiation, and the most absurd excuses offered as justification. Do they see themselves as the guardians of Berkeley's "reputation"? Or are they afraid new business might attract yuppies and make the place vulnerable to a massive gentrification wave?

It's called property values. If you allow no more housing in your town, the value of every house there increases drastically, b/c demand far outstrips supply. It's similar to the situation in San Francisco. You have people (NIMBY's) who want nothing more than to keep everyone else out of their neighborhoods and cities. They masquerade as "environmentalists," and everyone knows how positively Californian's treat environmentalists and their cause. But in reality they just don't want you or anyone else in their neighborhood. We are truly a provincial metro.

The Bay Area really is the most welcoming and progressive area of the country - but only for those who are already lucky enough to live here. To the rest of you, sorry, move to Tracy (which people do).

[munkyman]

Originally Posted by munkyman

It's called property values. If you allow no more housing in your town, the value of every house there increases drastically, b/c demand far outstrips supply. It's similar to the situation in San Francisco. You have people (NIMBY's) who want nothing more than to keep everyone else out of their neighborhoods and cities. They masquerade as "environmentalists," and everyone knows how positively Californian's treat environmentalists and their cause. But in reality they just don't want you or anyone else in their neighborhood. We are truly a provincial metro.

The Bay Area really is the most welcoming and progressive area of the country - but only for those who are already lucky enough to live here. To the rest of you, sorry, move to Tracy (which people do).

I thought this was a great little opinion article that sort of summed up the Bay Area's opposition to housing. The link is http://neveryetmelted.com/?cat=48

Geez, look at me bashing on my own state, I'm turning into Richard Mlynarik. Yikes.

26 Aug 2006
California’s Rich Against Everybody Else
California, Left Think, Regulation, Real Estate

The spectacular scenery, a typically booming economy, and a climate which permits you to grow lemons and avocados in your backyard makes Californians seem rather spoiled to the rest of us. Californians typically express their appreciation for all their good fortune by the cultivation as a local art form of cloaking an unlimited sense of entitlement in the rhetoric of idealism.

How do you keep the other fellow (who actually owns the land) from doing anything with it that might deprive you of the pleasure of looking at it undeveloped? You just come up with an appropriate worthy cause: protecting some purportedly endangered amphibian, rodent or weed; avoiding sprawl; maintaining open space; and voila! You get to keep out the riff raff, and be spiritually enlightened too.

Today’s Wall Street Journal describes the plight of the Mexican immigrant worker in Monterey County renting out a room in the 1000 sq. ft. house that cost him half a million dollars, and still spending 70% of his income on his mortgage payment.

Meanwhile, Reuters describes the accelerating middle class exodus from idyllic coastal California to the baking hot interior Central Valley (renowned for its 110 degree temperatures) in search of affordable housing.

OAKLAND, California - Father Mark Wiesner has grown accustomed to wishing parishioners bon voyage as they flee the San Francisco area’s high housing costs for California’s Central Valley, where developers are increasingly transforming farms and ranches into a new suburbia.

“So many young couples I marry have to go to Modesto or Tracy to start their married lives,” said Wiesner, a Catholic priest in Oakland on the San Francisco Bay. “They simply can’t afford to stay here in the Bay area and to buy a single-family dwelling.”

Tracy and Modesto are 50 and 80 miles east of Oakland respectively. Both have seen blistering growth in recent years amid a middle-class exodus from California’s famed coastal urban centers in search of affordable housing.

Analysts say the middle-class flight will press on even if coastal home prices sag amid a national housing slowdown. Home prices near the state’s coastline would need to collapse to make buying a home there possible for many households.

Barring a collapse, ever more Californians will call the state’s Central Valley home because homes there are relatively affordable. July’s median home price in San Francisco was $771,000, compared with $438,000 in San Joaquin County roughly 60 miles to the east, according to real estate information service DataQuick Information Systems.

Southern California is seeing a similar exodus to Riverside and San Bernardino counties, known as the region’s Inland Empire, from Los Angeles, Orange and San Diego counties.

“Having been in the house market in Los Angeles, I can tell you a house with little bit of privacy and space to call your own is pretty hard to come by,” said economist Christopher Thornberg of the consulting firm Beacon Economics. “For many people getting out to that Inland Empire is the only way to really have a backyard for the kids.”

[J Church]

Before folks abandon the topic of the Westfield and parking, it bears mention that there's parking at most BART and Caltrain stations--BART stations average 1,000 spots apiece. The extent of the "hoofing" would be a few hundred feet, probably less than if you parked by the mall.

[BTinSF]

If I drive to the store or mall, I have to "hoof" stuff about 1/4 mile from the basement parking garage of my building to my apartment anyway. Many San Franciscans with no indoor parking have to "hoof" farther than that from the parking space they can find on the street (if they can find one). It may be an issue for suburbanites, but not, I think, for most city dwellers.

[BTinSF]

When I was going to school in North Carolina, there were two banks in town going head to head: Wachovia and North Carolina National (NCNB). NCNB became Nationsbank became Bank of America. So apparently the old rivalry will now be back here on the left coast:

Big bank branching out here
Wachovia hopes to amass market share after Golden West buy
San Francisco Business Times - November 3, 2006
by Mark Calvey
Najib Joe Hakim

Bay Area residents may have a front row seat to an epic battle among the nation's largest banks as Wachovia tries to capture part of the California market long dominated by Bank of America and Wells Fargo.

Wachovia, the No. 4 bank nationally by assets, is already making it clear that it has high aspirations in California.

"We are the underdog. We have fewer branches, we have fewer employees and we have fewer customers in California," said Pete Jones, executive vice president and western banking group executive for Wachovia. "But the advantage of being the underdog is that every time you turn around, there's somewhere you can take a little bite of business so you're no longer the underdog."

But is there room for another major bank in California?

"Very much so," Jones quickly replies. "When you think of all the potential here. When you walk down the street and see all the activity, you can see there's plenty of room for all of us here."

Indeed, some observers believe Wachovia's California ambitions will inspire other major players, like Chase (No. 3 by assets nationally) and HSBC to expand rapidly in the state.

Wachovia's push into California banking began in September 2005 when it purchased the parent of 19-branch Western Financial Bank, based in the affluent Orange County community of Irvine.

The company further pursued its western ambitions when it closed last month on the purchase of Oakland-based Golden West Financial Corp., parent of World Savings.

Wachovia's blue-and-green signs will begin dotting the Bay Area landscape when it converts Bay Area World Savings branches in next year's fourth quarter. The Charlotte, N.C., bank will reflag its Western Financial branches in Southern California next February.

World Savings branches back East, where World Savings overlaps Wachovia's banking territory, will become Wachovia offices in early 2008. The deliberate pace of the conversion reflects lessons hard learned by Wachovia predecessor First Union, which had a merger integration process with Corestates of Philadelphia that even the bank's then-CEO likened to World War II.

First Union merged with Wachovia in 2001, taking the Winston-Salem bank's name but keeping First Union's Charlotte headquarters and CEO.

Wachovia is likely to target the people now banking with Wells and BofA, although no bank's customers are off limits.

"We've competed very successfully against them on the East Coast and in Texas," Jones said of California's two largest banks.

Wachovia's imminent arrival in California hasn't gone unnoticed by California's largest banks. Wells Fargo's annual gathering of Bay Area store managers last month was peppered with references to Wachovia, rallying the troops against the latest incursion.

Also preparing for an intensifying competitive battle in one of its most important markets is Bank of America, whose headquarters is just a few blocks from Wachovia's in downtown Charlotte. BofA has launched several initiatives, like free online banking and, more recently, online trading for customers with $25,000 in deposits with the bank. BofA's chief financial officer told Wall Street last month that the bank is mulling a dramatic move in mortgages to boost market share. It would not be surprising to see BofA up the ante again with other measures to solidify its position as California's largest bank.

Calling the same plays
All three banks appear to be reading from the same play book.

Wachovia's Jones discussing the importance of customer service echoes similar remarks by Wells Fargo CEO Dick Kovacevich and BofA CEO Ken Lewis.

"We're successful when people think we're a big bank that acts like a small bank," Jones said. "We have the product capabilities and the sophistication to take care of just about every need a retail customer to the largest company would have."

Wachovia, like Wells (No. 5 nationally), BofA (No. 2 nationally) and other rivals, are eager to meet all of a customer's banking needs, with a heavy focus on cross-selling existing customers.

Jones said the bank's focus on customer service rests upon keeping the sales pitches in check.

"You don't want to sell somebody something. You want to listen to their needs, their goals, literally their dreams and match products that will help people attain them," Jones said.

Analysts are impressed with Wachovia's service culture.

"Wachovia smothers you with service," said Dick Bove, a banking analyst with Punk Ziegel & Co. and a Wachovia customer in Florida. "When you go to Wachovia to handle a transaction, you might get a call the next day from Gallup wanting to know about your experience at the bank. I don't think other banks are doing that."

Hearing Jones talk about his views on how customers should be greeted when visiting the bank suggests Bove isn't exaggerating.

"We want people to think they've come home at the end of the work day and their family's there to greet them," Jones said. "That may sound a little corny, but it's important to us."

Bove recently issued a report saying that Wall Street is underestimating the power of Bank of America's coast-to-coast franchise. But Bove says Wells Fargo might be more vulnerable on the customer service front.

"Wells is in a questionable position," he said, citing the bank's customer satisfaction scores by independent third parties.

But the San Francisco bank might point to its success in cross-selling additional products to its retail customers as one sign of customer satisfaction. In the third quarter, the bank hit a record 5.1 products sold per retail customer, on the way to its internal goal of eight that insiders like to call the "great eight."

While the jury is still out on who will win and retain California customers, there's no doubt that all bankers will be fighting for turf.

Even the Bay Area's community bankers are gearing up for battle.

"We have a marketing program in place that we'll kick off when Wachovia arrives," said Brian Garrett, president and CEO of the Community Bank of the Bay in Oakland. "We have SWAT teams in place to help us compete against Wachovia and others."

Bankers anticipate that one of the first orders of business for Wachovia will be to dramatically cut the high rates paid on World Savings certificates of deposit, a move unlikely to be warmly received by World's depositor base.

Some bankers anticipate the Wachovia-World integration will rival the Wells Fargo-First Interstate Bank integration in 1996 that displeased so many customers that the combined bank eventually merged with Norwest Corp. of Minneapolis to become today's Wells Fargo.

Putting down roots
Wachovia is also expected to take steps to significantly boost its local profile when the conversion begins in Northern California late next year.

As it's done in other markets Wachovia has entered, early advertising is likely to help people learn how to pronounce the bank's name (hard "k," accent on the second syllable).

The company plans to be a significant player in philanthropic endeavors to support education, the arts and the United Way among others.

One program Jones is especially proud of supporting in Dallas is Destination Graduation, which helps Hispanic youth in selected high schools stay in school. The program grew out of concern that in some schools, only 45 percent to 50 percent of Hispanic ninth-graders were still in school by graduation day.

"We want people to think we're not only a good bank but a good corporate citizen," said Jones, who will move to Lafayette from Dallas after his son graduates from high school in May. He will work in Wachovia's western headquarters, which is Golden West's former headquarters in downtown Oakland.

Wachovia, like BofA and Wells, operates with regional executives, or market presidents, that are the face of the bank in various markets. Wachovia is expected to name a regional executive for the Bay Area in late 2007 or early 2008.

Given Wachovia's acquisitive nature, some expect the bank will make fill-in acquisitions to boost its California banking franchise.

Greater Bay of East Palo Alto, with a collection of community banks that ring the Bay Area, is a likely candidate to find a suitor in Wachovia. Greater Bay, which operates San Francisco's Golden Gate Bank, Mt. Diablo National Bank in the East Bay and Mid-Peninsula Bank in Palo Alto among others, is the subject of persistent takeover speculation.

Wachovia CEO Ken Thompson has told Wall Street that the bank won't pursue a major merger for the next couple years as it digests Golden West. But a Greater Bay acquisition isn't likely to concern Wall Street, given the bank's relatively small size.

Bove joins a chorus of analysts who believe Golden West wasn't the right ticket into the Golden State.

"The timing is wrong to buy a thrift at the top of the housing market," Bove said. "A thrift has the wrong customer base."

Tom Brown with Second Curve Capital in New York also was dubious of the Wachovia-World deal.

"Wachovia's acquisition of Golden West will prove to be a value destroyer," Brown wrote in his initial reports on the merger. "In integrating Golden West, Wachovia will inevitably destroy the very business model that made Golden West so great to begin with.

"Wachovia aims to build multi-product relationships with customers, the same way that Bank of America and Wells Fargo do," Brown said. "It is exactly this model that Golden West has so successfully competed against in the past.

"I'm still a big fan of Ken Thompson, but I believe he has made a costly mistake," Brown said.

For his part, Wachovia's Jones isn't letting the naysayers impede his mission. He's been traveling throughout California in recent weeks meeting with the bank's new employees as well as community and business leaders.

So far, Jones says he's been pleased with the reception he's received.

"People in California are willing to give you a chance," he said.

Source: http://www.bizjournals.com/sanfranci...ml?t=printable

[FourOneFive]

i'm curious to see how Wachovia will hold onto World Savings' current customers. Most of World Savings' customers had their mortgages and CDs with World Savings, but had their regular checking and savings accounts with BofA or Wells. I personally think its going to be a disastrous merger for Wachovia in the long run.

[rs913]

Here's some unfortunate news for those who follow downtown Walnut Creek. I wonder why this store couldn't survive? Maybe, despite what the article says, Bristol Farms could swoop in?


Walnut Creek Andronico's set to close Dec. 22
By Pia Sarkar
San Francisco Chronicle - October 21, 2006

Andronico's said Friday that it will shutter its supermarket in Walnut Creek, confirming suspicions that the location would be the next to go after the recent closure of its Danville store.

Unlike the Danville store, however, which was bought by Lunardi's Market last month, the Walnut Creek store does not yet have a new owner and 91 employees will lose their jobs.

Phil Tucker, special projects coordinator for Local 1179 of the United Food and Commercial Workers, said the union first found out about the closure Friday afternoon, even though there had been rumblings of the possibility for several weeks.

Although Andronico's provided workers with 60 days' notice as required by the union contract, Tucker said he was expecting more of a heads-up. "I'm surprised we didn't have more notice of their intent to close," he said.

Employees will continue to receive wages and benefits until Dec. 22, the anticipated store closure date.

In a meeting Friday with Bill Andronico, grandson of the supermarket chain's founder as well as its president and chief executive officer, the union was told that the company would try to reassign approximately 25 of the 91 workers to the eight remaining Andronico's stores in the Bay Area while the rest would receive assistance with job placement.

The local grocery chain is also negotiating to find a tenant for the Walnut Creek store, although Tucker said it would not be another supermarket.

Andronico said it is necessary to close the Walnut Creek store as well as the one in Danville to make the company more financially sound, as advised by his bank, with which he has discussed this for more than two years.

He assured that there would be no more store closures after the one in Walnut Creek and noted the financial health of the remaining stores as evidence of the company's commitment.

"The core stores are very strong and all contributing to company profitability," Andronico said. "That should go a long way."

Nonetheless, the elimination of the Walnut Creek store strikes another blow to grocery workers, who already lost jobs this summer when Albertson's shuttered 37 stores in Northern California. Tucker said that even though many of the 1,500 or so displaced workers were reassigned after those closures, a number of them have since been laid off from their jobs or have cut back their hours from full-time to part-time work.

[sf_eddo]

COMPLETE rumor that I haven't been able to verify yet - Westfield's gonna sell the Metreon.

[fflint]

That would be an odd move, seeing as they just recently bought it.

[rs913]

So has anyone been to Union Square since Thanksgiving? It's interesting to note that (based on my extremely unscientific observations yesterday) holiday-season weekend foot traffic in the area seems just as heavy as it was last year before the Westfield opened, suggesting that the mall hasn't hurt businesses on the surrounding streets as some feared.

I'd be curious if there's any official data on that, though...

[kenratboy]

rs913 - it seems a lot of the shops in the area cater to either the small-shop experience or very hi-end goods. Ya ain't gonna handle a million dollars worth of watches at the lame Tourneau in Westfield like you will in Shreve or Shapur.

Also, I think a lot of people from other areas go to downtown SF to shop AWAY from malls, and Westfield is just adding a niche, not taking away from ones already there.

[BTinSF]

Konichiwa!

Japanese retailer attempts Bay Area translation
San Francisco Business Times - December 15, 2006
by Sarah Duxbury
Najib Joe Hakim
Masayoshi Naito of Daiso USA Holdings.
View Larger

Konichiwa, Daiso: The Japanese mega retailer is opening its first California store in 12,000 square feet at Serramonte Center.

A hybrid of a dollar store and IKEA, Daiso sells private-label housewares -- most for just $1.50. A huge hit in Japan, where it operates 2,500 stores in a country the size of California, the $3.5 billion retailer is beginning an American expansion.

The first Bay Area store opens in Daly City on Saturday, and Daiso has a 70,000 square foot warehouse in Hayward. It will soon open stores at Eastridge Mall in San Jose and at NewPark Mall in Newark, with plans to operate up to 20 Bay Area stores. They will range from 6,000 square feet to 15,000 square feet.

Daiso made a splash when it opened its first U.S. store near Seattle in October 2005. It will have four stores open there by year's end, and a fifth will open early in 2007.

Most of Daiso's U.S. stores will be company-owned, at least at first. Once it establishes its name here, the company will consider franchising.

Growth abroad
There are 400 Daiso stores outside Japan, mostly in Southeast Asia and the Middle East. Saturation at home has forced the retailer to look abroad to grow.

Daiso packages some 100,000 products, and none will sell for more than $15, a spokesman for the retailer said. The Serramonte store, being fairly large, will sell close to 30,000 items.

Despite cheap prices, Daiso doesn't want to be confused with tchotchky dollar stores and their poor-quality merchandise. Daiso has made a concerted effort to elevate its quality by contracting directly with factories -- something its size allows it to do, much like Wal-Mart, with whom it expects to compete.

"Price and quality are very important for the Japanese market, and customers (there) accept our merchandise," Masayoshi Naito, president of Daiso USA Holdings, said through an interpreter. "We feel that (Japan) is the most challenging place to be successful, and we'd like to bring that kind of merchandise to American customers ... who we think would enjoy shopping our products."

Success in the U.S. market is not assured. Daiso is well-known to Japanese and to many Asian Americans, but the broader mass audience that it hopes to reach has never heard of it. Further, Daiso's packaging is almost exclusively in Japanese. The company is translating it into English, but that will take time.

Focus on Asian areas
A recognition of these hurdles has shaped Daiso's U.S. expansion strategy. Early on, it will focus on communities with large Asian populations, like the Bay Area and Seattle, to whom its brand is already familiar. And starting on the West Coast gives Daiso proximity to its Japanese distribution base.

Those considerations led it to Serramonte, where well over half of all shoppers at the mall are Asian, according to Cherie Napier, marketing manager for Serramonte Center. The mall also pulls shoppers from San Francisco, since its Target, along with another Target across Interstate 280 in Colma, are the closest Target stores to the city.

Daiso also suits Serramonte's current needs and longer-term merchandising plans.

The store will fill a standalone location that formerly housed a Good Guys. It has been vacant for nearly a year as mall owners Capital & Counties considered options for the site. Eventually, Capital & Counties plans to build a lifestyle center outside the mall proper. For now, it looks forward to the traffic it expects Daiso to bring.

"Our shopper is a price-conscious shopper. We had no home goods retailer at all, and that's really a niche we needed to fill," Napier said. "We think it's going to be a home run."

[email protected] / (415) 288-4963

Source: http://www.bizjournals.com/sanfranci...ml?t=printable