Marsh to open 1st new Downtown Indianapolis grocery in 30 years

Spurred by a surge in apartment-building and strong demographics Downtown, Marsh will open the doors Thursday to the first new grocery in the city's heart in nearly 30 years.

"We think the growth is there, and we think we are going to put the right store in there to cater to what customers want," said Marsh President and CEO Tom O'Boyle. "This will be as awesome a store as we have in the chain."

Home-grown Marsh is opening the store and updating many of its other 79 stores in Indiana and Ohio as it faces increased competition from out-of-state grocers such as Kroger, Giant Eagle and Whole Foods — both in the suburbs and Downtown.

Britt Beemer, of Summerville, S.C.-based America's Research Group, said the initiatives by Marsh are smart moves in a competitive market.

"It looks like we're going to have a grocery war," he said.

The 43,000-square-foot high-ceiling, open-concept Marsh will greet customers on the bottom floor of the posh $85 million Axis apartment-retail complex at Michigan Street and Senate Avenue.

The grocery will feature all of the items you'd expect to see at a Marsh, plus a wide selection of fresh, natural and organic foods the company believes are craved by the millennials flocking to Downtown. And to cater to busy urban customers, the Marsh will have an expanded lineup of grab-and-go selections, a coffee/tea bar, Noble Roman's pizza and a mezzanine seating area.

The idea, O'Boyle said, is "fresh, fresh, fresh."

New competition

Fishers-based Marsh hasn't opened a new location since Florida-based Sun Capital bought the chain in 2006.

The company, though, has made efforts to boost the bottom line and stay competitive. Many of these efforts have involved cutting costs. In January, Marsh announced plans to shutter eight underperforming grocery stores, including five in the metro area.

Marsh also is investing, though. The company will remodel, rebrand or restock the remaining 79 stores it owns in Ohio and Indiana.

Although it's the only local chain, Marsh faces increased competition in the Indy market.

• Ohio-based Kroger is spending $45 million to update metro-area stores this year.

• Pittsburgh-based Giant Eagle will enter the market in 2015 with a Carmel location.

• Texas-based Whole Foods plans to build a 40,000-square-foot grocery in Flaherty & Collins' 28-story, $81 million residential tower at the former Market Square Arena site in 2017.

"The competition certainly helps you stay focused," O'Boyle said. "And I fully expect when Giant Eagle makes their emergence, they will be surprised by the passion we have for our mission."

New demand

Marsh officials moved carefully before committing to the new Downtown site.

O'Boyle said the company examined the demographics up to 10 miles away from the store but focused most intently on those living within a mile.

That number is growing. Empty-nesters and millennials are driving demand toward urban living. After increasing by only 1,072 people from 2000 to 2011, Downtown is in the midst of an unprecedented surge.

According to Indianapolis Downtown Inc., 21 residential projects with 3,541 units are underway or in planning. In 2011 and 2012, 1,571 new residential rental units were built Downtown, boosting the current total to 4,738 units.

"We really did our homework on the neighborhood," O'Boyle said. "We've seen a rejuvenation in residential development, and we want to be in the middle of it."

Bill French, a principal at Cassidy Turley real estate services firm, said the developers have "created almost a new city within Downtown," and the "tremendous number of new housing units" has increased demand for grocery stores. Marsh and Whole Foods, he said, aren't taking a risk by opening the first groceries Downtown in decades. They simply are being prudent.

"They looked at a trend," he said. "Quite frankly, with all of the additional units coming Downtown, the market was going to be underserved."

Indianapolis has come a long way since 1986, when Danny O'Malia did take a risk in building the first grocery store Downtown in decades.

He opened it as former Mayor William Hudnut sought to revitalize the city's heart. But five years later, by accounts published in The Indianapolis Star, the O'Malia's at Lockerbie Square still was struggling to turn a profit.

By 2001, Marsh had bought the store. Now it's one of the most profitable in the company's portfolio. Marsh has no plans to close the store.

Don Owens, 44, Indianapolis, has been waiting for the new Marsh supermarket to open since he saw the building begin to rise from the ground last year just across the street from his Downtown office. He plans to stock up many days before heading home to the Southeastside.

"I definitely think there is demand for grocery shopping Downtown, for sure."

Food deserts

Advocates for the poor say the supermarket will do little to address the city's wide food deserts — areas where low-income residents lack access to grocery stores and healthy foods.

Nic Mink, a fellow with the Center for Urban Ecology at Butler University who has studied the city's food ecosystem the past two years, said the store will do nothing to address the worst food deserts — 30th to 57th streets along Meridian Street and east along 30th Street and 38th Street to I-465.

The reality, he knows, is that large grocery chains are going to build stores where they will be profitable.

"It doesn't seem to me that the business model of large retailers like Marsh and Kroger works to provide easy access to healthy food for our lowest income citizens."

French, the Cassidy Turley executive, said that's not likely to change.

"I guarantee you some good red-blooded American citizen would be opening a grocery in those locations," he said, "but the challenge is you have a declining population base until redevelopment starts to occur ... it's really a challenge."

For now, he said, Indianapolis will have to be satisfied with the emerging grocery options Downtown.

"We've had a tremendous population explosion Downtown," he said. "When we bring on the new Marsh, we more than double the amount of square footage in the marketplace. When we bring on the Whole Foods, I think we'll hit that equilibrium; at that point, I think we'll have enough groceries to satisfy the demand."

Call Star reporter Chris Sikich at (317) 444-6036. Follow him on Twitter: @ChrisSikich.

Grand opening

Marsh will open at 6 a.m. Thursday at the new Axis development at Michigan Street and Senate Avenue. The store will have a grand-opening event at 8:30 a.m. and a ribbon-cutting at 9 a.m.