Does a swell of independent grocery openings in DC hint at a new trend?
- At least six independent grocers have opened in the Washington, D.C., area since 2015, and additional openings are expected to follow, according to the Washington Post. The paper noted this surge of neighborhood grocery stores counters the national supermarket trend, which have seen small mom-and-pop locations disappear.
- Retail Wire suggests that consumer desire for convenience, more intimate product understanding and closer personal relationships with grocery retailers — especially among urban dwellers — is fueling the rise of these corner markets. Many of these stores also differentiate from high-end, boutique-style grocers with reasonably priced staples.
- In recent years, big box grocery stores have developed smaller, "flexible" formats that better cater to urban shoppers, but many have struggled to make significant inroads.
As millennial shoppers — arguably grocery's most coveted demographic — have migrated to cities, so have major supermarket chains. Unfortunately, many grocers are finding that succeeding in urban markets is much more challenging than in their typical suburban landscapes. Finding real estate in cities is the biggest challenge as developers that can build vertically and drive more revenue usually beat out groceries, which typically reach two stories at most.
To remedy this, many retailers partner with apartment complexes to roll out anchored grocery stores in mixed-use housing developments. Target, for example, recently announced plans to open more than one hundred "flexible format" stores that are only 15% to 20% of their typical size in urban markets. Whole Foods also plans to open new discount 365 stores, which are geared toward younger demographics in growing cities. After Amazon's bid for Whole Foods, it's unclear if this expansion strategy will continue, or if the 365 chain will remain.
Traditional Whole Foods formats also have done well in urban markets, as they have a premium, health-focused product assortment that many wealthy city dwellers are looking for. Still, it's difficult for many shoppers to accept the grocer's "Whole Paycheck" prices, which gives independent stores an opportunity to steal market share.
By their nature, independent markets deliver on shopper desire for authenticity, local sourcing and an engaging shopping experience. These mom-and-pop stores may not have the bells and whistles of groceries equipped with in-store restaurants, wine bars and produce butchers, but they give shoppers a connection with their retailer that's very difficult for corporate conglomerates to emulate. They're often nestled in urban neighborhoods, buying up retail spaces that are too small for major supermarkets' flexible formats to operate in. Savvy independent stores capitalize on these assets and double-down on pricing to compete with rival chains, as well as offer product assortments that meet the needs of their surrounding micro-community.
It will be interesting to see if this swell of independent grocers will continue in D.C., and if similar expansion patterns will appear in other urban locations across the country. If there is a broad uptick of local grocery launches, major supermarket chains will need to strategize new ways to deliver more authentic store experiences and lower prices — a challenge that's already tough in suburban markets.
- Retail Wire Is an urban revival a sign of hope for indie grocers?
- The Washington Post Across D.C., a resurgence of the small neighborhood grocery store
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