More Retailers Join the Growing Trend of Urban Retailing

By David Merrefield
VP, Editorial Director

Exactly a month ago, we took a look in this space at a supermarket operator that opened a store in a newly developing area of downtown Baltimore. That was A&P, which entered the area with a SuperFresh model.

This week, with reference to the news feature on the front page, let’s take a look at several other food retailers who are doing much the same.

Food retailers, of course, have always been good at following the population. In the postwar era, food retailers combined the offerings of small, urban stores — butchers, produce outlets, grocery stores and the like — and rolled them up into departmentalized food stores, and planted them in the burgeoning suburbs. The supermarket was born.

Now, to some extent, the reverse is happening: Many people are leaving the suburbs in search of the simpler lifestyle afforded by apartment dwelling in a more densely populated area. Many supermarket operators have noticed that trend, and at the invitation of developers, or on their own initiative, are opening scaled-down versions of the suburban supermarket in gentrified urban areas. This is different from the previous trend of opening supermarkets in inner-city areas; Pathmark and a few other chains have spearheaded such efforts. More on that later.

The profitability of present-day neo-urban food stores is enhanced, since the incoming population has the wherewithal to buy high-margin product. That indemnifies retailers against the much higher cost of occupancy encountered in densely populated areas.

Here’s a quick survey of retailers who have followed this strategy:

• Ralphs is developing a 50,000-square-foot Fresh Fare at a new residential development in downtown Los Angeles. When the store opens this summer, it will become the first new supermarket in Los Angeles in 50 years. Strangely, it will be about a half-mile from the location of the first Ralphs store, which opened in 1873. Ralphs left downtown Los Angeles in 1956.

• H.G. Hill has opened a 5,000-square-foot store in downtown Nashville, Tenn., in a newly developed condominium building. The store was opened in advance of a huge population influx into the area, but there are nearby office buildings that support a lunch trade. The store itself may be a catalyst for further residential development. Harris-Teeter opened in a developing urban area of Charlotte, N.C., and is seen as a facilitator of continued population growth there.

• Similarly, Whole Foods has been notably successful in adapting its format to a variety of urban situations. Much the same is true of Wild Oats. In Portland, Maine, Whole Foods followed Wild Oats into the newly developing Bayside area. Wild Oats, which opened there in 2002, was credited with influencing a retail renaissance in the area. Now that the two companies are slated to merge, much more of this can be
expected.

• Finally, and returning us to previously cited companies, the much-anticipated merger of A&P and Pathmark is all but reality. See Page 1. Both companies have cultures that admit to urban development: A&P has long operated Food Emporium stores in New York City, including its boutique Bridgemarket model there, while Pathmark has a long history of opening units in understored inner-city areas. This could be a strong union.