Supermarketing update

1.  Giant Supermarkets opening new stores in DC.  In DC, Giant's new store in Shaw is more urban than their other stores, including the new store on H Street, in that it has an extensive prepared foods section, more upscale items (in general, Giant has gone through a severe SKU rationalization program, cutting the range of items and specialty items carried at the individual store), and an eat-in cafe area.

Image from Popville.

I suggested that they could do something like this in a post a couple years ago ("Urban retail #4: how to prevent the coming failure of the DC region's Giant Supermarket chain").

I was shocked to see that for the most part, the store on H Street exhibited few urban-oriented changes ("360 Apartment building + Giant Supermarket vs. a BP gas station, which would you choose?"), although it is a step forward compared to Giant stores in Brentwood or Columbia Heights, which opened about 8-10 years ago.

But the new Shaw store is a step forward.  It will be interesting to see if they take further pro-urban steps with their upcoming store on Wisconsin Avenue in Cathedral Heights.

2.  A supermarket for Downtown Baltimore.  The company Fresh & Greens, which took over a bunch of stores in Maryland (and one in DC) when the A&P Superfresh division closed its stores, is now closing those stores.  One closing which will have significant impact is the store in Downtown Baltimore, the only supermarket store present there (full-line grocery stores are present outside of the core, a couple miles away).

I opined in email that maybe Eddie's, a local company with a store in Charles Village and Roland Park, Maryland's upscale Graul's chain, or even Shoprite could be enticed to taking over the location--Shoprite is moving into urban markets more and has recently acquired the Fresh Grocer banner, which is active in Philadelphia specifically.  A Carroll County Shoprite affilate has opened a couple stores in Baltimore already ("ShopRite opens at former Superfresh site in Parkville," Baltimore Sun).

3.  Market District Express by Giant-Eagle.  But now I wonder if Giant-Eagle, a Pittsburgh supermarket company, could be enticed into Downtown Baltimore.  The company is one of the strongest independently owned supermarket chains and has a segmented approach to the market (like the United Supermarkets company, mentioned in the piece on Giant, above), with their standard store, an upscale store called Market District, and a chain of convenience stores with two brands, featuring Giant-Eagle and Market District branded products along with gasoline.

Giant-Eagle is proposing a more urban sized store of about 30,000 s.f., called Market District Express, in Cleveland ("Giant Eagle plans small-format store," Cleveland Plain Dealer).  They have another store in Greater Pittsburgh about half the size ("Giant Eagle opens its first Market District Express," Pittsburgh Post-Gazette).  It strikes me as a great concept for urban centers.

(Note that there is a historic preservation controversy surrounding the Cleveland project.)

G-E has two stores in Frederick, Maryland, so outward wouldn't be a stretch.  Note that Wegman's, a company that opens behemoth stores, is already active in the region, and Giant-Eagle's Market District division is comparable to Wegman's.  However, Wegman's doesn't have much expertise in operating small footprint stores, unlike Giant-Eagle.

4.  Supermarkets need to sell more prepared foods to compete with restaurants for the millennial consumers.  Given that younger adults aren't cooking experts, many supermarkets are starting to see the need to carry more prepared items, to compete with restaurants.

Companies like Whole Foods and Harris-Teeter have responded, while many traditional supermarket chains have not.  The Ukrops chain of Richmond Virginia--since sold and consolidated into the Martin's brand--was a pioneer in prepared foods.

5.  Dominicks closure in Chicago and the city's response.  Safeway bought the Dominicks chain about 15 years ago and then proceeded to run it into the ground, destroying billions of dollars in value.  Now they are disbanding the company.  Some of the stores, 15 in total, have been acquired by competitors, leaving 57 stores that were shut down in late December.

Interestingly, the City of Chicago has created a task force to focus on the vacant stores, to try to get them back as supermarkets.  See "Chicago forming task force to market Dominick's stores left vacant" from the Chicago Tribune.  According to the article, the committee will include representatives from the labor unions, city agencies, City Council, and supermarket and retail experts.

It's an interesting step for a city to take. 

6.  Safeway's presence in the DC-Baltimore region.  There is a lot of speculation that the company will sell their stores here, and focus on their West Coast divisions, given their recent sale of their stores in Canada, what has happened in Chicago, and speculation that they will get out of the Texas market as well (similar to their foray in Chicago, they've wrecked the stores they bought in Texas).

If this is to happen, likely they would sell to a private equity firm, because the big companies are already engage.  Although it might be possible that a company like Giant-Eagle could be enticed, although they'd lose brand equity in having to run the stores under a different name, because Giant Supermarkets of Landover is a leading company already active in the market.

Unlike in other markets, Safeway is actively managing their real estate here--many of their store sites have or are being redeveloped more intensely as mixed use.  The ability to generate extranormal profits from real estate development is seen as a big enticement for a private equity firm.

7.  Selling past fresh date merchandise in Boston as cheaper food to lower income customers. The Boston Globe reports ("Putting expired foods to healthy use: Ex-Trader Joe’s head aims to fight poor nutrition, waste by creating meals for low-income customers") that the former head of Trader Joe's is looking to create a store for low income consumers that sells past-date merchandise. From the article:

“The number-one leading problem is affordable nutrition,” said Rauch, who worked for 31 years at the California-based Trader Joe’s grocery chain until he retired in 2008. “For the 50 million Americans who are food insecure, their solution is not a full stomach. It’s a healthy meal.”

The store would sell takeout items such as soups, salads, stews, casseroles, and wraps that are low in fat and high in nutrients, according to Rauch. The space would also feature a teaching kitchen where people can learn to cook quick, healthy meals. In addition, the shop would sell packaged chopped vegetables and offer milk at or past its sell-by date for as low as $1 a gallon — a price that makes it competitive with soda. ...

The Dorchester site would serve as a test model for the Urban Food Initiative, which he wants to replicate across the country. Rauch said he selected Dorchester because it is one of several Boston neighborhoods underserved by grocery chains and has welcomed innovative food ideas such as community gardens and farmers markets.

8.  Special supermarkets for low-income customers in Europe.  There is a form of food store mostly in Florida, California, and the Southwest, that sell only those products eligible for purchase by funds from the federal WIC program ("WIC-Only Stores and Competitive Pricing in the WIC Program," Center on Budget and Policy Priorities).

NPR reports ("Social Supermarkets A 'Win-Win-Win' For Europe's Poor") about a hybrid for profit-non profit in the UK that sells food at discounted prices, but is open only to lower income consumers.  From the piece:

Enter "social supermarkets," a European model that offers discounted food exclusively to those in poverty. The stores have grown in popularity across the continent, and this week, the U.K. opened its first. Dubbed Community Shop, the store is located in an impoverished former mining town in South Yorkshire.

Part discount grocer, part social service agency, the supermarkets are for members only. Membership is free, but it is limited to those who can prove they receive some form of welfare benefits. Members can save up to 70 percent on food that has been rejected by grocers because it might be mislabeled, have damaged packaging or be nearing an expiration date. That food is still edible, though, so instead of getting thrown away, it's donated with a waiver of liability.

Also see "UK's first 'social supermarket' opens to help fight food poverty" from the Guardian  and "Social supermarkets: Typology within the spectrum of social enterprises," by Holweg et al.

The difference between this model and the one to be launched in Boston is the integration in a formal way of social programming and infrastructure via the public sector.

I do intend to write about more hybrid social-capital market ventures ("social enterprises") going forward.

I think there is a lot of potential--years ago I suggested such a model for community health clinics ("Disruptive innovation once again")--for linking social programming with market approaches in certain situations, to provide for more option for transformation and dynamism in programming.

That piece was about community health clinics using retail principles, but what about combining a community health clinic with a pharmacy in a low income area?

9.  Walmart in DC.  While I have made the personal choice to not shop at Walmart because of how they treat labor ("Piling on City Council for Walmart") I did go in one of the stores that they recently opened in DC to check it out.  Some reports were that the stores weren't all that.  I thought the store was fine, about the same as a Target or other discount store in terms of its layout and merchandising.  It seemed put well enough together.

I did check out a bunch of grocery items.  We don't buy a lot of processed food items, which is where a discount store can show big price advantages.  I was surprised to see how limited their array of choices is in certain categories--for example, we buy turkey sausage not beef or pork sausage, and Walmart's choices were pretty paltry.  But some of their prices--like for red potatoes were really cheap.

The difference I guess is what is called "every day low pricing," and for some of the items they have lower prices.  But if you shop specials, except for red potatoes, you can still find better pricing on many items at Giant and Safeway.

That being said, having lower cost food buying options for residents is something that cities should aim to accomplish.

10.  Modern public markets as eatertainment and another way to provide food buying options in cities.  I push the idea that modern public markets could be brought back as a way to sell food in the city in underserved areas, while also providing support for business development.

I don't think we've really seen this happen yet in a poor neighborhood.  But it is happening in upscale areas. 

Baltimore's Belvedere Square redeveloped in large part as a privately owned "public market" more than 10 years ago.  And in New York City, Chelsea Market and now the Gotham West Market ("Gotham West Market, a New Food Hall, Opens on the West Side," New York Times), are using the same model.  Other variants are DC's Union Market (an upscaling of a market formerly focused on low income customers) and Manhattan's Eataly.


11.  And more cities are pushing forward mobile food sales to provide more options in low income areas.  I came across one such effort in Memphis that has some great branding.  See "Green Machine Brings Food to Neediest Areas" from the Memphis Daily News.

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Note that Supermarket News now identifies urban markets as a hot trend in the industry.  (I was writing about this 10 years ago.)