The failure of Vancouver’s seven-year effort to land a grocery store on city-owned downtown property illuminated just how competitive the grocery business is.
The modern supermarket stocks as many as 50,000 distinct items and operates on a profit margin of 1 percent. Opening a new store depends on finding the right spot –not too close to another store, yet in an area with plenty of potential customers.
Add the endless aisle of online grocery offerings and it’s a wonder brick-and-mortar stores open at all.
Yet they do. That’s because for many, grocery shopping is about more than stocking the pantry. Despite consumers’ desire for convenience, they also hunger for Instagram-worthy experiences and even a sense of connection.
“I disagree that brick-and-mortar retail stores are a dying industry,” said Forrest Hoffmaster, CEO of the Portland-based New Seasons Market. “What’s happened with food industry consolidation — you look at that stuff on the surface and draw conclusions around the whole industry moving toward digital and online. What we look at is the impact that has on communities in terms of how they stay connected to food and what it means to small- and mid-sized producers and farmers.”
New Seasons Market opened a 40,000-square-foot store in east Vancouver in 2011. Community leaders bandied its name hopefully as a possibility for the coveted downtown grocery store. Hoffmaster, CEO since January, said he can’t speak to what the company may have been considering, but it had no agreements with a developer for a store on the vacant city-owned Block 10, as it’s known.
The company’s growth lately has occurred outside the Portland-metro area. New Seasons opened a 25,000-square-foot store in Seattle’s Ballard neighborhood last year, bringing its total number of stores to 21. Another is in the works for Seattle’s Central District. The company recently opened a fifth store under its New Leaf banner in California.
New Seasons restructured its leadership earlier this year, placing Hoffmaster, formerly co-president, in the role of CEO. The other co-president, Kristi McFarland, became chief strategy officer.
“We announced a shift back toward our local communities and slowed down our growth,” Hoffmaster said. “Our decision was to pause and assess where we’re growing, deepen in the communities we were in, and manage complexities.”
Those complexities included absorbing the costs of a starting wage of $15 and offering paid parental leave, important for New Seasons as the first Certified B Corporation grocery store in the world. B Corps differ from traditional C corporations in that they balance profit with advancing social and environmental goals.
“We are affected by population growth, rent increases and health care increases. We are committed to providing our staff good benefits and meaningful wages,” Hoffmaster said.
Unlike Spokane-based Rosauers, which has a goal of opening a new store every three years — the next in Ridgefield later this year — New Seasons hasn’t established a growth target, Hoffmaster said.
“We don’t have anything announced right now,” Hoffmaster said. “We’re looking at our core markets, and making sure we are pursuing mindful growth.”
Self-service vs. connection
The origin of the supermarket dates back to the early 20th century, when stores began offering not just dry goods but produce and dairy, and letting customers fill their own carts instead of a shopkeeper doling out purchases. Perhaps the shift to online shopping is just an extension of that self-service model.
Nonetheless, Amazon’s purchase of Whole Foods in 2017 rocked the grocery sector.
“Everyone was back on their heels. There was fear and anxiety across the industry. For us, it caused us to ask big questions about where we want to go. We didn’t want to make assumptions on data; we didn’t have to chase flash. We made the decision to play to our strengths and our core values,” Hoffmaster said.
“We don’t have our head in the sand,” he added. New Seasons offers online shopping through Instacart, which Hoffmaster called “the right partner for the right time.”
“We definitely understand that we have to have good data and good engagement with our customers so we listen to what they want from us. We have to have the technology and good support practices so we’re not wasting dollars — the right-sized box and right offerings and right cost structure,” he said.
Almost half of U.S. consumers grocery shop online, while 59 percent are planning to do so in the future, according to a recent survey by KPMG, a network of professional service firms.
However, according to a recent study by TABS Analytics, a data company used by the grocery industry, 99 percent of adults say they regularly shop at a brick-and-mortar store for groceries, and that accounts for 95 percent of transactions.
Other estimates pin the online portion of the $641 billion U.S. grocery market at somewhere between 2 and 4.3 percent.
So even though a recent report from the Food Marketing Institute and Nielsen estimates that 70 percent of consumers will be grocery shopping online by 2024, accounting for perhaps $100 billion a year, that’s still only a slice of the total market.
Some customers will still want to sniff melons or quiz the butcher about the best cuts before buying. Some will still want to mingle among their neighbors. Food writer Bee Wilson put it this way in her recently published book, “The Way We Eat Now: How the Food Revolution Has Transformed Our Lives, Our Bodies and Our World”: “Shopping used to be one of the main everyday forms of human interaction, and we lose more than food when we stop talking to the person who sells our daily bread.”
The industry continues to puzzle over these rapidly changing and sometimes conflicting consumer preferences.
“Consumers want everything with the swipe of the finger,” said Jose Mendoza, an assistant professor of marketing at Sacred Heart University in Connecticut. “We are becoming less price-sensitive and more hungry for convenience.”
At the same time, consumers want to know about the source of their food, he said.
“I believe brick-and-mortar will become more of a showroom,” Mendoza said. “Shopping is like an escape for people — to spend time in an environment that has really nice lighting, bins of produce, with retailers working to make things pleasant,” Mendoza said.
“When you shop the store, you have to have a great experience,” he said, “or you’ll do it online.”
Grocery superfans
As Supermarket News recently noted, some grocery chains inspire “superfans.” Rosauers may just be among them. The nearest store is in Hood River, Ore. The chain has 21 stores in Washington, Montana, Idaho and Oregon, some under the Super 1 Foods and Huckleberry’s banners.
“Rosauers has built a reputation for offering a wide selection of quality products and offering extraordinary service to make shopping an enjoyable experience,” said Jeff Philips, a spokesman for Rosauers, noting that staff offer help getting groceries to your car. He said the Ridgefield store will have a large natural and organic section to include bulk foods and spices, as well as online shopping and curbside pickup.
New Seasons inspires an especially fervent following. Food & Wine named it one of the 10 best supermarkets in the United States. (Other chains with stores in Clark County that also made the list: Boise, Idaho-based Winco; Austin, Texas-based Whole Foods; Monrovia, Calif.-based Trader Joe’s.)
The brick-and-mortar grocery still has the power to capture attention and even adoration. Perhaps that’s why rumors are circulating about a possible project at Mill Plain Boulevard and Main Street, just a few blocks north of the spot where the city worked so hard to try to attract a grocery store. A development official said he has heard the speculation, too, but the city has not yet received any formal application.
