Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Tuesday, September 15, 2015

Supermarkets: innovation and equity planning

Innovation at sister companies of Giant Supermarkets.  A few years ago I wrote a piece, "Urban retail #4: how to prevent the coming failure of the DC region's Giant Supermarket chain," opining that Giant Supermarkets," the DC-MD-Northern Virginia supermarket firm that once dominated the market with more than 50% market share (and in 1999 still had 45% of the local market), was on the decline by comparison to a revitalized Safeway, the entry of Harris-Teeter (now owned by Kroger, the nation's largest supermarket chain), Whole Foods, and the increased number of stores Walmart is opening within the Beltway, including their entry to DC.

Since then, they've opened three new stores in DC and they are getting better, but generally aren't as attractive as the best of the new Safeway stores, although the O Street Marketplace store has a nice cafe area and the Cathedral Heights store on Wisconsin Avenue NW has beer taps for growlers and regularly scheduled wine tastings.

In the meantime, the parent company has announced merger plans ("Deal Unites Major Supermarket Players," Wall Street Journal) with Delhaize, owner of Food Lion (Mid-Atlantic and the South) and Hannaford (New England), which is probably why the Stop & Shop division is buying a bunch, but not a huge number of stores from A&P.

But last year the company also bought a single store company in Rhode Island ("Stop & Shop parent to buy Eastside Marketplace," Providence Journal), known for their creativity, as the centerpiece of a innovation initiative incorporated as Fresh Formats LLC.
Screen shot from Everything Fresh
I can't imagine Giant Supermarket advertising that they have "kickass" prices, the way that their sister company, Everything Fresh, is doing.

While Giant is still not particularly innovative in the DC market, although they do a good job with lower pricing, although with that comes a cost of a more limited product selection, it happens that in Philadelphia and Boston, the parent company has introduced small format urban groceries--around 10,000 s.f. is the largest--that appear to be doing what Whole Foods has announced that they will be doing with their 365 concept--which I figure is more about selling more prepared foods to younger demographics who aren't cooking.

In Philadelphia the stores are called Everything Fresh and the new format for Boston, which just opened in the Allston neighborhood, is called bfresh ("Stop & Shop parent carts out new concept," Boston Herald).  Based on images of the newest store, I'm impressed.

The bfresh store has a bulk foods section, quite an array of produce, breads baked fresh in a wood oven and of course, plenty of prepared foods.

It's the kind of format that Tesco should have created when they unsuccessfully launched the Fresh & Easy company in the Western US.

2.  When looking up a story about a new supermarket opening in Newark, NJ, I came across a story in the Newark Star-Ledger ("Why does a lawsuit usually follow a new supermarket") about how supermarket companies sue localities when they grant planning permissions to new supermarkets.  It's out of the Nimby Wars playbook (Forbes Magazine).  In general, the plaintiffs don't have a good case, but as the article points out, each month companies keep competitors from opening, they make a little more money.

3.  A&P is shutting down, and while the company isn't even 1/160 of its reach at its peak, the closure of stores hurts poorer communities, because other supermarket companies are less interested in such locations.

This is an issue in Wilmington, Delaware ("Delaware's food deserts grow," Wilmington News-Journal), although interestingly new research indicates that food deserts--places without grocery stores--aren't necessarily worse off nutritionally ("Food deserts may play little role in obesity, Rand study says," Los Angeles Times).

I have made that point for awhile, because the definition of a food desert in terms of geography doesn't jibe with how the supermarket industry organizes its store footprints on a 3 mile to 5 mile retail trade area radius and because people take the steps they need to buy food.

Nevertheless, access to fresh foods is an issue that should be monitored and addressed by local planning departments in equity and retail planning (cf. "City supermarkets: few and far between," Reading Eagle), and localities should be prepared to act when companies go out of business, compromising community access to groceries.

4.  However, the Wakefern business cooperative, operating as ShopRite and PriceRite stores, is making a greater push in re/entering urban markets, with the assistance of their Philadelphia-based affiliate Brown's Supermarkets, and its UpLift Solutions retail consultancy firm.  Besides the stores in Philly, other members have opened stores in Baltimore and are just about to in Newark as mentioned above.

Image of apples at Daily Table from WBUR.

5.  Another firm recently created to target less well off consumers and those looking to save extranormally, at least in Boston, is Daily Table, a store specializing in "expired date products" which are still fine to eat and less attractive produce, all at a lower price ("New twist on the supermarket for low-income families," CBS News; "New Nonprofit Grocery Store In Dorchester Sells Surplus And Aging Food At A Steep Discount, WBUR-FM/NPR).

The company was started by an ex-president of Trader Joe's.  Apparently these types of stores are called salvage grocery stores ("Salvage Grocery Stores: The Next Big Thing In Food Isn't Even New," Modern Farmer) and aren't new (in fact I remember one back in the early 1990s behind the Hecht's warehouse in Ivy City).  The article lists such a store in Richmond I didn't know about, Fresh to Frozen.

Some complain that the store creates competition for food banks according to Business Insider ("Boston's Store For Expired Food Is Looking Like A Better And Better Idea").

Image from Al Jazeera.

6.  A couple years ago, in association with the Philabundance food bank based in Philadelphia, a nonprofit grocery was created in Chester, Pennsylvania called Fare & Square.  It's been in operation for a couple years now.

According to an article from NextCity, "Nation’s First Non-Profit Supermarket Is Picking Up Steam," the store needs to double its volume to break even.

From an "action planning" model standpoint, if Fare & Square gets their systems and structures down, I'd think that the brand and identity and program could be "franchised" to other nonprofits as a form of social enterprise and a way to seed retail in other underserved areas.

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At 9:49 AM, Anonymous charlie said...

Also see the Lidl (cousin of Aldi/Trader Joes) coming into the US.

The 365 Stores I suspect will be a combination of prepared foods, a large expansion of frozen foods, and a pub.

Glad you are calling the shots straight on food desert, which is just a quasi marxist redistribution argument. We have a mechanism for redistribution called taxes, works very well if applied.

At 10:28 AM, Blogger Richard Layman said...

I'll write about Lidl again when they open their first store...

and since I've written about this a lot, I didn't talk about co-ops, and remention the Mariposa Co-op in Philly. (I've driven past it but never had the time to stop.)

Aldi won the Supermarket News store of the year for 2015. I think Aldi is great for certain things, but again, I find their non-basic food items to be wanting.

... and I did really really like the Lidl in the Essen train station. (Apparently, Aldi is based in Essen, but I didn't manage to check one out there, which in hindsight was a mistake. I did walk by one in Wilhelmsburg.)

At 11:24 AM, Anonymous charlie said...

Sorry, Lidl is more a storm on the horizon. If you see what is happening in the British grocery industry after they came in you can see why people are afraid.

(the thesis is supermarkets have been vastly overrated since the mid 90s and Lidl is going to cut their hearts out)

Not entirely convinced this is the case. We do have Walmart and Target already here. But it is change.

At 12:00 PM, Blogger Richard Layman said...

Lidl and Aldi significantly undercut Walmart on price, at least with weekly specials and own brand goods.

I haven't ever been in a WinCo (based in Boise, expanding out west) but they are supposed to be the best seemingly traditional chain at low price.

The thing in the UK is that the market is small and they have something like 4 big traditional chains. There probably isn't enough market for all of them, plus Aldi/Lidl.

So just like what happened in the US, with consolidation in most markets leaving one or two major regional companies, with some room for a few independents and gourmet stores, likely at least one of those companies is history.

It could be Tesco, since they got complacent and spent time pursuing outside of UK "opportunities" like Fresh and Easy, and/or the focus on the big outside the city stores, which are more real estate plays, and let their fundamentals slide.

Actually, odd enough to say, if Aldi and Lidl developed good spread, I think a lot of their business could come from Walmart.

Walmart's selection isn't all that. They have a limited assortment and own brands too, they just don't promote it that way.

But yes, as Aldi and Lidl expand, they'll take more business from the traditional companies, especially the ones that don't have enough good own brand products and differentiators to make people come back.

At 5:52 AM, Blogger Sebastian Urbas said...


I am from Germany and I want to clarify a few things. Lidl isn't the cousin of Aldi. The owner family of the Schwarz Group (Lidl + Kaufland) has no family relationship with the owner family of Aldi.
The HQ of Aldi-Süd is in Mülheim an der Ruhr. In Essen is the HQ of Aldi-Nord. It's very important to differentiate between both companies. Stores from Aldi-Nord are by far not as good as the ones from Aldi-Süd. Aldi-Nord is not very successfull. Sales per store at Aldi-Süd are about €8.4m compared to about €5.1m at Aldi-Nord. The average size of the stores is nearly identical. There are no Aldi-Süd stores in Essen. You have to travel further west or south to find stores from Aldi-Süd.
It's astonishing that Trader Joe's is doing well, because the owner Aldi-Nord is a nightmare. I am pretty sure that the management of Trader Joe's operate almost completely independently from the management of Aldi-Nord.
The Lidl stores in the U.S. will be very different from the typical Lidl stores in Europe. In Europe Aldi and Lidl stores are nearly identical in size. The size of an average Aldi store in the U.S. is about 17,000-18,000 sq ft or about 10,000-11,000 sq ft pure sales area. But the Lidl stores in the U.S. will have a size of about 36,000 sq ft. That probably means a pure sales area of about 25,000 sq ft.
The Lidl stores in the U.S. will have a more upscale appearance. I guess Lidl will introduce something like a hybrid version of a discount grocery store and a traditional grocery store.
I am not sure, but I guess Aldi in the U.S. has still the reputation for beeing mostly a store for people with lower incomes. That is maybe also the reason why Aldi in the U.S. is by far not as successfull as it is in Europe. Maybe Lidl tries to eliminate this shortcoming. I guess Lidl wants to compete mostly against traditional grocery stores. In Germany Lidl offers the exact same shelf prices than Aldi. But in contrast to Aldi they also offer weekly sales, so Lidl in Germany is actually cheaper than Aldi. It will be interesting whether Lidl in the U.S. is able to offer the same prices like Aldi.

Sorry for my bad english.

At 7:10 AM, Blogger Richard Layman said...

1. Your English is fine. thanks for writing.

2. Yes, I should have corrected charlie's comment that Lidl and Aldi are connected. They aren't.

3. I didn't get into any Aldi stores on my brief visit in Germany unfortunately. But I guess I wouldn't have known which is which, e.g., looking at the map it makes sense now that Aldi Nord is in Essen, and that I would have visited an Aldi Nord store in Wilhelmsburg in Hamburg, had I the time to stop in.

4. But yes, Aldi is seen as a deep discount store in the US. It's true that their sales aren't particularly high compared to traditional grocery stores. HOWEVER, considering that their volume is based on very small store formats and very few employees, sales productivity and sales revenue is relative.

I do shop there because of the prices, e.g. a couple weeks ago they had portobello mushrooms at 79 cents/half pound.

But I don't get most "processed" items there, as by and large we've not been satisfied with the quality.

Just basic stuff (cream cheese, products for baking, produce, canned beans and olives, etc.). But it saves a lot of money.

5. WRT Trader Joes, yes it is run completely independently. The relationship is always described as TJ's is owned by the family that owns Aldi Nord as an investment. They distinguish ownership by the family vs. by the Aldi Nord company.

6. By where I was staying in Hamburg, there was a Penny (the Lidl I shopped at was at the Essen train station) and I was reasonably impressed.

At 10:13 AM, Blogger Richard Layman said...


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