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.

Thursday, December 07, 2017

Brief revisiting of small store grocery format stories: big companies continue to say "no"

For years I have been arguing that center cities, but by extension town centers and conurbations "in the suburbs" too, can be the location of successful smaller format grocery stores.

For example, see "Urban grocery shopping" (2006) and this 2008 op-ed, "Urban Safeway misses mark," from the Washington Business Journal.

I was quite heartened that Ahold Delhaize, the parent company of the DC-area Giant chain, which in my opinion had lost its edge ("Urban retail #4: how to prevent the coming failure of the DC region's Giant Supermarket chain," 2012) but now seems to be more on the ball, not only in pricing, but in upping its game on private label, had opened two different small store formats, Everything Fresh in Philadelphia, and bfresh in Boston.

And I was about to write a "revisiting stories" piece versus the 2012 Giant piece.

Good thing I didn't because a few weeks ago, the company announced they are junking their small store effort, merging it from a separate initiative into their Stop and Shop division ("Supermarket chain said to be dropping small Bfresh stores planned for Philly ," Philadelphia Inquirer; "Stop & Shop to rebrand bfresh chain, close 1 store," Boston Globe).

Separately, this week, Kroger announced that they won't be expanding their Main & Vine one-off "small format" store, which is based in Gig Harbor, a Seattle suburb ("Main & Vine in Gig Harbor closing in January," Tacoma News-Tribune).

The reality is that most large chains aren't set up to think too carefully about differentiated formats.  Kroger is a great example that I wrote about recently ("Problem solvers vs. possibility thinkers (and Kroger)"). 

Kroger has gobs of best practice initiatives spread out across their various divisions, stuff new to me that I keep finding out about, such as the Kroger Signature store, which like Kroger Fresh Fare, is about providing a high grade experience, but not quite to the level of a Wegman's, Market District, or Central Market. And recently, they announced they'll be adding a restaurant to a store ("Here's your first look at Kroger's new restaurant concept, Kitchen 1883," WCPO-TV), something that chains like Hy-Vee and Wegman's have been doing for awhile.

But imo, they aren't very good at systematically capturing and harvesting this best practice and building it in as standard operating procedure and transforming their operations, even though they are good at adding nonfood items to stores (Fred Meyer, Marketplace format) or having upper scale but not super duper supermarkets.

And so it makes sense that they aren't willing to commit to the creation and maintenance of a separate urban initiative.  I guess the company's failure to not buy the Marsh's downtown store in Indianapolis earlier this year that was an example of a differentiated center city store is another confirmation of this.

The one major exception is Giant-Eagle's Market District Express.  The only significant exception to this trend seems to be Market District, Giant-Eagle's upscale store group, which has opened up some significantly smaller stores, in various Ohio area markets ("Giant Eagle Market District Express opens in Bexley," Columbus Business First).  G-E also has a somewhat upscale convenience store chain, called GetGo, that better leverages its relationship to G-E than does Kroger's convenience store divisions to its supermarket divisions.

A potential exception.  Shoprite, the banner of the Wakefern supermarket business cooperative acquired the right to market the "Fresh Grocer" banner when the company running it joined the group ("Fresh Grocer Joins Wakefern Co-op," Supermarket News). 

Fresh Grocer is a small format urban grocery store in the Philadelphia area.  But it doesn't seem to have been used in a new location outside of the Philadelphia market since the acquisition of the brand, although one member of the cooperative, in addition to the original operators, have adopted the format for some of their new stores going forward (but they aren't small).

FWIW, About 10 years ago, Fresh Grocer was considering entering the DC market.

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At 9:26 AM, Blogger Richard Layman said...

I forgot that HyVee is experimenting with small format stores, aiming to open "convenience store/gas stations" about 10,000 S.f. with a focus on grocery.

At 3:16 PM, Anonymous Charlie said...

Wawa, as you know, if entering the DC market.

I don’t doubt Wall Street is driving some of this. Kroger (I think) is selling some of it gas stations. Easier to track and monitor a grocery store vs. a grocery store+quickmark. Different metrics for both.

Im shocked Amazon doesn’t do this; rather pick up packages at a 7-11 type store than a WFM.

At 4:17 PM, Blogger Richard Layman said...

Yes, Kroger is considering selling their C stores that are separate from the various chains.

My piece on Kroger discussed that, as an illustration of how they have a bunch of disconnected best practices, and their running of very average c stores was an example of not applying best practice systematically across the company. (They've owned c stores since the 1980s. Turkey Hill c stores + ice cream etc. is Kroger.)

wrt Amazon, I don't think they want a lot of brick and mortar on the balance sheet. At least, were I them, I wouldn't. If they're ok with it, why not just buy B&N and rename it, plus come up with the equivalent of small pick up points in the right zip codes, sized like the old B. Dalton's/Waldenbooks stores?

FWIW, the 7-11 in my neighborhood now has an Amazon locker pick up station. I have a photo somewhere. (Me, I keep thinking about why don't people just re-install milk chutes in their houses. I'd be happy to do so.)

Yep, I will check out the Wawa when it opens. Generally, Wawa is one of the best convenience store chains.

That being said there are small groups or one offs that take c stores to a level far behind Wawa/Sheetz, e.g., the Parker's store in the historic district in Savannah, which sadly, is a one off for them. I think they have 30+ stores otherwise. Anyone of us would kill to have that kind of "corner store" available in our neighborhood.

It's really the model for what a grocery chain could do. Maybe it's more towards what GetGo does.

speaking of kroger and lots of "stranded" best practice throughout the company, Columbus Dispatch has an article about an upscale one off called Fresh Eats MKT. Some photos.

It's about the size of one of those HyVee stores, and bigger than Everything Fresh and bfresh. Since it is gas station focused, probably not focused on the "urban market."

It even has a pharmacy.

... when I think of Eastern Market and delivery, I wonder about jointly doing delivery with the specialty pharmacy in the Penn Medical building around the corner...

At 8:49 AM, Blogger Richard Layman said...

Speaking of retail and store closings, two very interesting developments.

Starbucks not allowed to "abandon" Teavana stores in malls owned by Simon Corp.

They successfully made the argument that Starbucks itself is a going concern and therefore triggering provisions re failing businesses weren't relevant, distinguishing between companies that are shutting stores to ward off bankruptcy.

And Whole Foods isn't being allowed to shut down a 365 by Whole Foods small store at a shopping center in Bellevue, WA.

I guess companies are going to need to tweak the lease provisions ...

At 9:37 AM, Blogger Richard Layman said...

unrelated, you might find this piece interesting, on the Vancouver housing market:

One of the professors quoted makes the point that by definition new market rate housing sells at the highest prices (not news to us) but also discusses the intensification of high income households, which he calls "capital deepening." It's a nice turn of phrase.

From the article:

As for solutions, it won't be easy at this late juncture. Dr. Ley says the government's
ongoing position that rampant market rate development will address the crisis has worsened
the situation.

"The wide-open supply argument has been thoroughly tested and it's been found wanting,"
he says. "The problem has simply been aggravated. I think now, finally, people are
recognizing that supply is not a problem solver, but in fact a problem generator because it is
pricing up land all the time."

Separately there is an article in the Friday WSJ real estate section on developers building new luxury projects in "one over neighborhoods" that are still impoverished, and marketing them as up and coming. Of course, this is an old technique, and the way that neighborhood change is forged.


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