June 17, 2015 |
With a couple of developers proposing some version of a smaller footprint grocery store for downtown Kent (as part of the sale of the former County Courthouse building) there’s been a lot of talk around town about what grocery would fit best in the Kent market.
Not surprisingly there’s been a lot of emphasis on affordable, high quality products with as much locally grown, organic fruits, vegetables, meats, and cheeses as possible. And some prepared dinners would be great too.
I don’t think those particular customer preferences are unique to Kent shoppers as that category of grocery stores seems to be the fastest growing segment of the market.
There’s been some great press on the recent opening of smaller footprint Heinen’s in downtown Cleveland and according to the article below from Crain’s Business Magazine there’s more coming.
Grocery is a notoriously slim margin business where just a few percentage points in sales volume can be the difference between profitability and closure. The article suggests that the grocery market is getting a little crowded but based on the feedback the City is getting from the Courthouse block redevelopment, there’s plenty of interest and room for a “right-sized” grocery in downtown Kent.
Plenty of grocers are setting up shop in Northeast Ohio
June 07, 2015 UPDATED 7 DAYS AGO
By STAN BULLARD
Grocery retailers from Meijer Inc. to Whole Foods Market are starting to set the table for more competition for consumers’ dollars in Northeast Ohio.
The busiest retail sector — far surpassing apparel and electronics retailing — promises to get far busier as Grand Rapids, Mich.-based Meijer has acknowledged interest but has not consummated deals to add its hypermarket stores in Avon, Bainbridge Township, Stow and North Canton.
Meantime, Phoenix-based Fresh Thyme Farmers Market has surfaced as a potential tenant for Golden Gate Shopping Center in Mayfield Heights after opening two stores downstate in the past year.
The competition will be intense as Northeast Ohio is losing mouths to feed, not gaining them.
The most recent population estimate by the U.S. Census Bureau shows that Cuyahoga, Geauga, Lake, Lorain, Medina, Portage and Summit counties combined lost almost 45,000 people in the last five years.
Although the Meijer stores are bound for outer-ring suburbs where home construction has gained some population from neighboring counties due to slow growth in housing development, convenience only goes so far in keeping stores afloat.
More organic specialty stores also are poised to expand. Whole Foods Market is completing construction of its first store in the west suburbs in Rocky River, in addition to stores it already operates in University Heights and Woodmere Village.
In addition, a real estate developer shows a Lucky’s — a fast-growing organic and natural foods chain — going into a proposed Cleveland shopping center at Clifton Avenue and West 117th Street. The Niwot, Colo.-based grocer declined to confirm the location but said it is interested in setting up shop in the region.
Fresh Thyme, which announced its second store in Dayton last year, surfaced as a potential tenant when Golden Gate Shopping Center co-owner Hornig Real Estate of New York requested, but did not receive, approval for a sign for Fresh Thyme at the property. Daren Hornig, a principal, declined to comment on whether Fresh Thyme is a prospect for the center but said his plan for it calls for a high-end grocer.
Fresh Thyme’s corporate office and ad agencies did not respond to three emails and two phone calls by Crain’s deadline last week. Fresh Thyme also has two stores open in Cincinnati, one that opened last year and another planned to open this year.
If Fresh Thyme commits to Northeast Ohio, its format the size of OfficeMax stores could produce multiple opportunities. Keith Hamulak, a CBRE Group Inc. vice president and retail specialist, said a store of such size could find many more opportunities to set up shop in empty space in existing shopping centers. By contrast, the 200,000-square-foot Meijer stores require as much ground as a small farm to open a store — and that is scarce in populated Northeast Ohio markets.
In such a situation, new entrants must take away market share from existing operators, said David Livingston, managing partner of Milwaukee-based grocery site consultancy DJL LLC. In this case, it’s either Giant Eagle, which dominates the region with multiple stores, or Marc’s. He said Marc’s penchant for low prices makes it less a target than Giant Eagle.
Meijer has long operated in Ohio but eschewed the state’s northeast corner. Giant Eagle had tried entering the Toledo market, where both Meijer and Kroger operate, but shut its two stores there last year. However, Livingston said Meijer might have a tough time taking on Giant Eagle in Northeast Ohio.
“Giant Eagle actually runs pretty good stores,” Livingston said. “It’s not like they are an easy company to compete with. What is the compelling reason to shop at Meijer? It does not have anything that Giant Eagle does not.”
On that basis, Meijer marching on Northeast Ohio makes geographic sense — it surrounds Northeast Ohio, with its closest store in Sandusky. However, Livingston said, “It does not make sense strategically.”
He believes Warrensville Heights-based Heinen’s Fine Foods will be clear of the fray as an upscale operator. Meijer did not respond to two emails and phone calls about its rationale for pushing into the region.
Meantime, Heinen’s and several local operators stand to also get competition from the expansion of Whole Foods or advent of Fresh Thyme.
Jim Rego, the operator of Rego Brothers Lake Road Market in Rocky River, is skeptical about what Whole Foods will bring that’s new to the western suburb.
“We’ve got what they’ve got,” Rego said, noting that he has long offered organic foods and specialty foods. “We had quinoa for years. Now everyone has it.”
He noted there are subtleties to the market, such as being busier during the holiday season and summer than the winter months. The reason: the high population of snow birds who exit ritzy nearby neighborhoods for the winter.
In a sign of how competitive the region is, consider Greensboro, N.C.-based Earth Fare, which operates stores in Fairlawn and Fairview Park but shut its Solon store last year after only a year of operations. Conversely, the Trader Joe’s in Eton Collection in Woodmere Village is heading for a freestanding store at the west end of the center to expand from an inline store.
Hungry for more
Part of the buzz over grocers comes from the lack of energy in other retail sectors as consumers stay price-conscious in the wake of the Great Recession.
Rich Moore, a Solon-based real estate analyst for RBC Capital Markets, said at the recent International Conference of Shopping Centers trade show in Las Vegas, realty developers who have centers with grocery stores or such shopping centers in the planning phase are excited about the movement as new grocery concepts hunt space or old ones retool.
“As the economy picks up,” Moore said, momentum will go back to discretionary items.
Livingston added, “The grocery business is always good. If not, you just have a bad operator.”
Rego notes he occupies a secluded location near Lake Erie and believes his clientele is loyal enough to return. “We’re ready,” Rego said.
“Bring it on.”