Festival Foods Parties in Madison

Festival Foods operates on what management calls “the Boomerang Principle,” i.e., “Do things to make our customers come back.” It is a tricky task for any retailer to accomplish, but even more difficult when one is the new player in town.

In this case the town is the state capital of Madison, Wis., where Onalaska, Wis.-based Festival Foods has entered the market, going up against established competition including Copps (now a division of Kroger), Whole Foods, Hy-Vee, price leader Woodman’s Markets, the natural/organic-centric Willy Street Co-Ops and the hometown upscale Metcalfe’s, which just opened a branch in the city’s Dane County Regional Airport.

By creating a customized format store with unique departments and features, strong community involvement and a product assortment custom-tailored to its targeted shoppers, Festival has quickly endeared itself to Madisonites since its April opening.

“Our business here in Madison is really influenced by Millennials, young, working, single and childless couple professionals from larger cities that want to live downtown and don’t want to drive,” says Paul Anderson, store director of the Madison location. “A lot of people ride bikes down here and walk. It is really interesting.”

That is why, in addition to a two-level 199 space covered above ground parking garage, there are racks for about 200 bicycles, along with a caged kennel area called Pup Tent where pedestrians can safely leave their dogs while they shop.

Festival Foods is on the ground floor and mezzanine levels of the Galaxie—a new 14-story, 200-unit apartment complex built by Gebhardt Development that is an anchor of the newly white-hot Capitol East Corridor district along E. Washington Ave, along with the Constellation, its sister project across the street. Initially slated to open in July 2015, the store was delayed for almost a year due to construction and fire code approval issues. 

Before the East Towne and West Towne Malls were built in the 1970s, E. Washington Ave. was a core of Madison’s business district, lined with department stores, car dealerships and factories. As those businesses moved to the city’s outskirts or faded away the strip became somewhat desolate. A major housing shortage forced developers to look away from the more developed West side of town to the East. Now the area is in the midst of a building boom. Stately brick buildings have been reborn as brew pups, coffee shops and cafés, while empty lots and nondescript buildings are being torn down and replaced by apartment and office towers.        

“In Madison, apartment occupancy is at 98 percent, so we need more apartments, at least another 2,000 units,” Anderson says. “There is a tremendous demand for rentals.”

That growth is also bringing thousands more mouths to feed to downtown. Prior to Festival Foods’ opening, downtown area residents had to traverse crosstown to Whole Foods, Copps and Metcalfe’s at the western end of the city, or to Woodman’s, Hy-Vee and Copps at the eastern outskirts. In town, Fresh Madison targets the college crowd at the University of Wisconsin – Madison, while the nearby Willy Street Co-Op is a small establishment specializing in natural and organics. 

“I am seeing a lot of customers I knew from Copps, Hy-Vee and Metcalfe’s,” says Anderson, who once worked for Copps. “We took some customers from everybody. The comment we most often hear is, ‘it’s nice not to have to drive somewhere to shop.’”

When they walk or ride their bike up to the Madison Festival Foods, shoppers encounter a store unlike any of the company’s 23 others large suburban locations across the state.

“This store is 60 percent the size of our normal store,” Anderson says. “Our normal store size is 75,000 square feet; this one is 50,000.”

As a result, some larger SKUs have been cut. A massive display of family packs of Fiora bath tissue and paper towels greeted shoppers in the vestibule on one recent visit, but for the most part that was it as far as club packs.

“We have tailored everything to a smaller family size,” Anderson says. “We shrank center store and expanded perishables. It is more of that daily shop. And we are experiencing about half of our normal basket size, compared to the suburban stores.”

Basket size counts may be down, but dollar rings are up. 

“We sell a lot of deli, bakery, meat and product and tons of natural foods,” Anderson says. “We have a highly educated clientele that is health-conscious. We sell more poultry and seafood and less red meat. We have the highest distribution of organics in the company and we are really noticing the movement of the smaller package sizes throughout the store. The real big evidence of that is in bakery where we package half-pies, slices and whole pies. The halves and slices outdo the wholes by a long shot,” Anderson says.

Shopping patterns are also different.

Come noon, the deli, hot bar and salad bars become a beehive of activity as office and construction workers swarm down on them for lunch. 

“The deli really gets hit at lunch hour, and again from 5 to 7 p.m.” Anderson says. “Half of our business is done after 4 p.m., which supports the Millennials theory that they get off from work and then shop. They like convenience and things that are quick-to-fix.”

Open daily from 5 a.m. to Midnight, downtown Madison is the only Festival Foods that is not open 24 hours. “We didn’t make this one 24 hours because of the urban environment,” Anderson says. “Nothing good happens downtown between midnight and 5 a.m., so we decided to close for safety reasons.” 

Another difference is Madison’s unique architecture. Large, factory-style windows along E. Washington Ave. flood the store with natural light, while ash trees removed from nearby Tenney Park serve as support beams.

The second floor Mezzanine adds to the charm. In addition to housing store offices and an associate break room, there is also a free Community Room where groups—including the Tenney-Lapham Neighborhood Association, Big Brothers Big Sisters and the Girl Scouts—hold their meetings.

Shoppers can buy food downstairs in the deli and enjoy it the Mezzanine’s restaurant-booth and living room style seating. On Tuesdays, Wednesdays and Thursdays, the Mezzanine Deli Deal promotion offers $2 off any beverage purchased in the Mezzanine’s Bar with the purchase of one-pound or more of salad or hot bar items from downstairs.      

Suds & Dogs

Open from 11 a.m. to 10 p.m. daily, the Bar has a Dog & Suds promotion two days a week, where a Chicago-style hot dog and beer can be had for $7. In addition to the indoor seating, an outdoor patio overlooks E. Washington. “Our guests can eat out here when the weather is nice,” Anderson says. “It is getting a lot of use, and as the neighborhood fills up it should be even better.”

A large selection of alcoholic beverages is merchandised on the main floor in four aisles partially set off from the grocery side of the store by a three-quarters length wall. Highlights include an extensive amount of local wines and craft beers, a Growler Fill Station where shoppers can have jugs filled with one of six on-tap beers by store associates, a 10-percent discount on the purchase of six bottles of wine, and a wall display of little airplane sampler bottles of liquors, where consumers saves 10 percent if they buy 10 bottles. “We do that in all of our stores and it does pretty well,” Anderson says.

In the front of the store is the Kin-Kin Coffee Shop, a leased operation known for roasting its own coffee, and its outside walk-up window.

Shoppers enter the store through the parking garage entrance on the side and are greeted with produce; the bakery, dairy and meat departments are off to the right. The produce selection is extensive, but dairy and meat offerings are admittedly less than Madison’s suburban stores. 

Grocery aisles fill the center of the store, including 72 doors of frozen foods, 15 of which are filled with pizza. By comparison, Copps has 23 doors devoted to pizza, while Metcalfe’s has 21.   

HBC and general merchandise also receive less shelf space than in the suburbs, although they still account for four percent of total store sales. Like all Festival Foods, Madison does not have a pharmacy. “Walgreens is very, very strong here. They have a distribution center here and a ton of stores,” Anderson says.    

Shake the Lake

Festival Foods has quickly become a known entity in Madison. One of the ways it did this was by sponsoring Shake the Lake—Madison’s annual July 4th fireworks celebration.  

“One of our values is community involvement and we’ve done a really, really good job establishing relationships in this community already,” Anderson says.

Those relationships are going to assist Festival Foods in future growth efforts.

“We’re looking to build another four stores in this market in the next three or four years,” Anderson says. “We have some very aggressive growth plans and in the next 10 years we expect to be in the 60-store range statewide,” Anderson adds.

​Tree-mendous Architecture

Oftentimes when retailers enter a new market they cannot see the forest for the trees when it comes to carving out a unique niche among the competition. Festival Foods cut through that logjam for its Madison, Wis. store by using diseased trees from a nearby city park as support pillars, with white pine from the northern part of the state for trusses. The 12 timber columns not only hold up the store’s roof but also serve as a unique architectural element, bringing a rustic, yet calming and less commercial feel to the shopping experience.

“The support columns are from ash trees that were being killed by the Emerald Ash Borer and were recycled from Tenney Park, six blocks down Johnson Street,” says Paul Anderson, store director of the Madison Festival Foods store. 

Festival officials teamed with WholeTrees Architecture & Structure, a Madison, Wis.-based architectural firm that specializes in custom applications of timber in the construction process. 

“Festival came to us because they were entering a new market and wanted the most kind of attraction, awe and wonder story they could get for a very reasonable cost,” says Amelia Baxter, CEO of WholeTrees. The company’s mission, Baxter says, is to utilize waste trees from both rural and urban forests for structural purposes in place of steel. It uses only trees that are removed as part of routine forest thinning as well as diseased or invasive trees.

“These columns were from trees infected with ash borers and now they are holding up more weight than natural timber has ever been engineered to before,” Baxter says, noting that the trees are supporting brick a two-story building. 

WholeTrees cut the trees, stripped the bark and treated them with borate—a natural preservative, fire retardant and insecticide. The borers, Baxter notes, only live in the cambium layer of the tree, just inside the bark. “The client chose to have us bring in those trees ‘green,’ not fully seasoned, in order to speed the construction process along. So they are still ‘checking’ (cracking) which is the natural response of timber when it dries. But that does not diminish the structural capacity.”

Priced similar to steel, whole tree trunks offer several benefits over the more modern building method, including the “awe factor” and “green cred” in terms of tax rebates and publicity for using environmentally friendly materials, Baxter says. It also holds up better in a fire, she adds.

“When steel reaches a certain degree Fahrenheit it melts, but a round timber chars slowly into its center and maintains its structural capacity,” Baxter explains. “So we were able to get a variance from the city to use it in Type 2 construction where wood is normally not allowed in column form. Milled stick lumber burns, but round, heavy timber columns, which have been used for thousands of years in building, perform brilliantly.”

Check out some photos from GHQ executive editor Richard Turcsik's visit to Festival Foods: