WASHINGTON — A full-page ad in the Washington Post late last month welcomed the capital's newest residents, including President Obama and his family, offering congratulations and a new place to shop.
For Giant-Landover, and its veteran spokesman Barry Scher, welcoming the new members of the federal government to Washington is an annual practice. But when a new party moves into the White House, the effort typically requires a more thorough introduction as a new wave of staff, support and lobbyists moves into the area and the old move out. A regional chain like Giant may be new to many of them, Scher explained.
“It's a spur to action,” Scher told SN last week. “Every year I get a list of all the new members of Congress, send letters to all of them and tell them, ‘We're the hometown food chain.’ We give them a Bonus Card and say, ‘We hope you'll shop with us.’ We also tell them Giant is very involved in the legislative process and if there are any food, pharmacy or retail issues they would like help with please don't hesitate to contact me.”
Competition for shoppers old and new remains strong in Washington, which — thanks in part to the federal government — has weathered the nationwide recession relatively well, sources said. Led by an influx of Harris Teeter and Wegmans locations, supermarkets in particular have fared well in recent years.
“Washington is different than anywhere else in the country, because one-third of the economy is the federal government, and the federal government is not going to contract right now,” Sam Judd, vice president of investments for Edens & Avant, a Columbia, S.C.-based shopping center owner, told SN.
“Right now you have a lot of influx of people moving to the District and some are leaving,” Judd added. “It depends some on the ZIP code, but certain areas have not been hit nearly as bad with the housing slowdown as other areas of the country. Unemployment has picked up, but it's still below the national average. It's one of three national markets that had positive job growth in 2008. That helps.”
The housing slowdown and recession have tempered retail development in “greener” areas, such as Loudon County, Va., west of Washington, and toward Fredericksburg, Va., to the south, sources said. Those areas were teeming with new projects until about 18 months ago, when credit markets tightened and new growth slowed considerably.
But activity remains strong inside the Beltway and in the District itself, sources said. There, supermarkets can benefit from a wealthy population that nonetheless has taken to eating at home more. In the city, stores anchoring new mixed-use projects can benefit from dense populations and a relative lack of competition.
“Anywhere urban around the metro area has done great,” Judd said. “Grocers in general have done well in this downturn.”
Harris Teeter, the grocery chain owned by Charlotte, N.C.-based Ruddick Corp. that began creeping into the Washington market a decade ago, remains the most aggressive retailer for new sites in the region, sources said. Its willingness to tackle challenging development sites and its exploitation of a perceived void in upscale, service-based food shopping have been key to its success.
Harris Teeter had as many as 40 new projects planned for the Washington area at one time, one source told SN, although that plan may have been tempered somewhat due to the housing slowdown in outlying areas. Officials in King George County, Va., last week said the company will build a new $101 million distribution center there.
The chain's recent store projects include a renovation of a historic building in the Adams Morgan area of the District and a Capitol Hill store, both of which opened last spring. Last month, a Harris Teeter opened at The Lofts at Park Crest, a mixed-use project in Tysons Corner, Va.
“Harris Teeter has been very inventive in the layouts they are willing to do — they really have done some ingenious designs — and that got them into some markets they would not have otherwise,” said Sam Hodges, a principal with real estate services firm KLNB in Vienna, Va. “For the most part, the Washington market has been a very good market for Harris Teeter.”
Wegmans, a Rochester, N.Y.-based retailer, has opened several massive locations around metro Washington over the last five years, including one most recently in suburban Gainesville, Va., in November. Wegmans remains an aggressive suitor for sites it can fit into, Hodges added.
Though somewhat blind-sided by the newcomers when they arrived, Washington's established conventional supermarkets have been fighting back. Safeway has seen good results from its “lifestyle” remodel program, which has breathed life into many of its older stores, and has built a few new projects like its City Vista project at 5th and K streets in the District, which opened last fall. “It's doing fantastic,” said Judd. “There is a huge hole in the market for projects like this.”
Safeway has completed lifestyle remodels at around two-thirds of its stores in the Washington area, said Greg TenEyck, a company spokesman. It opened three new stores in 2008 including the City Vista location and plans to open a new store in McLean, Va. in March.
Giant-Landover, beset in recent years by financial problems at its parent company Ahold, is finally seeing new investment and a subsequent rebound in sales. Last year it began a new branding campaign — including a new logo and renovated stores — to support a new pricing campaign.
“Safeway and Giant are both trying to balance out having a nice, clean feel and fresh produce, while still being able to offer value,” Judd said. “I think they are doing a decent job of it.”
Food Lion in the meantime has remade its image, particularly in the wealthier demographic areas, behind conversions of more than 20 area Food Lion stores to the Bloom banner.
“From what I understand, Bloom has driven double-digit percentage sales [increases],” Judd said. “Consumers say it feels more upscale for them. I think this has been good for Food Lion because otherwise they were getting lost in the shuffle.”