The D.C. Shuffle

Homeland Security attorney Johnna French is the go-to person when it comes to finding the latest dining hotspot in the booming restaurant scene in Washington, D.C. Her weekly blog, johnnaknowsgoodfood.com, is read by thousands. But what is her take on the supermarkets in the District?

“Harris Teeter has a pretty decent lunch spread, as far as their hot and cold bars,” she says. “If I am grocery shopping on the fly and need something to eat, Harris Teeter’s food is the freshest thing we can get in my neighborhood.”

French also gives high marks to Safeway.

“Safeway is pretty good, I will say that, as far as a basic grocery store. They have a good formula for every neighborhood where they have a store,” French says. “But in my neighborhood we are getting a Whole Foods and I can see myself swapping out Safeway for Whole Foods.”

Like many D.C. residents, French finds the new competition has caused the older players to raise their game. 

“The area supermarkets have greatly improved their selection,” she says. “The grocery stores have definitely improved and I think that is attributable to the presence of new competitors like Wegmans and Trader Joe’s.” 

Wegmans is not in D.C. proper… yet, but scores of other food retailers targeting all income levels are now calling Washington, D.C. home, including Whole Foods, Harris Teeter, MOM’s Organic Market, Yes! Organic Market, Streets Market and Café, Costco, Target, Walmart, Save-A-Lot and Aldi. These are all in addition to long-time stalwarts Giant Food and Safeway. 

Since 2000, 30 new supermarkets have set up shop in the 68.34-square-mile District of Columbia—one has since closed—and at least another six are on the drawing board, including two Harris Teeters and three Whole Foods. 

“I know a lot of supermarkets are vying for the space where Walter Reed Hospital used to be, and we are interested in that space as well,” says Jamie Miller, manager, public and community relations at Giant Food, the Landover, Md.-based division of Ahold USA. 

The competition is expected to even get hotter, as industry observers expect German deep-discount chain Lidl to open stores in the District when it enters the U.S. later this year. Additionally, city and other officials continue working to entice Rochester, N.Y.-based Wegmans to open a store in the Capital. For now, Wegmans operates stores in the surrounding Maryland and Virginia suburbs. French shops at Wegmans’ outpost in suburban Largo, Md. “I love Wegmans. It’s so huge. If they can put a Walmart in D.C., I think they can put anything in D.C.,” she says.

A Wegmans official declined to comment on the chain’s expansion plans.

Observers say supermarkets are being attracted to Washington, D.C. because of the city’s dramatic and ongoing transformation. Since 2000, the population has increased by more than 100,000. Tens of thousands of those are upscale, young, well-educated professionals, sparking a dramatic rebirth. Blocks that have lain fallow since the 1968 riots are sprouting apartment buildings, and boarded-up townhouses and brownstones have been lovingly restored.

“There has just been an amazing change in this community from 15-20 years ago, and you are seeing that throughout the city,” says Miller. “Southeast, which has really been an underserved part of D.C., is starting to be revitalized as well with the building of the stadium where the Washington Nationals play, right across the river.” 

“The Washington, D.C. market, above all others in the last 10 years, has really undergone a transformation unlike any other market in the country,” says Barry F. Scher, a principal at Policy Solutions, a Washington, D.C.-based consulting firm, and a retired 44-year Giant Food veteran.

“The District has become a very exciting place to live,” Scher says. “There are many neighborhoods where just three years ago I would not have walked through in the middle of the night. Now when you go through at midnight you see scores of young professionals walking around and in and out of the bars and restaurants.”

Scher points to the H Street corridor, which was looted during the riots and has only recently been transformed.

“There is a new trolley line that is going to start operations soon, and now 10 to 15 restaurants on every block. It has become the new place,” Scher says. “Giant has a store there, as does Harris Teeter. Five years ago if you said there would be two major grocery stores on the H Street, NE corridor, I would have said you are out of your mind.” 

H Street, like much of the district, is now populated with upscale, trendy, well-educated residents. 

“In December 2015, D.C’s population was 672,000 and two-thirds of the growth came from in-migration, and of that net in-migration, 55 percent were from outside the U.S.,” says Chad Shuskey, senior vice president, research and visual communication at the Washington, D.C. Economic Partnership, a nonprofit organization that works in public partnership with the city to market and position Washington, D.C. for retail and residential development and to attract new employers to move to the city.

“The number of housing permits issued in D.C. is twice the rate as in the previous decade, so from 2010 to 2014, the number of housing permits issued has already exceeded those from 2000 to 2009,” says Shuskey. 

“For 20 years we were the hole in the doughnut, and all of the growth was going on in the suburbs of Maryland and Virginia,” says Keith Sellars, president and CEO of Washington, D.C. Economic Partnership. “Now we are like the jelly in the doughnut. Grocery stores and other retailers have realized that they are oversaturated in the suburbs and with our population increasing by over 100,000 over the last 10 years they realize we are an underserved market.”

The city does give the supermarkets a little extra incentive. Through the Supermarket Tax Exemption Act of 2000, the District waives certain taxes and fees for 10 years for supermarkets that locate in what is deemed a Priority Development Area. Those include exemptions on real property tax, business license fees, personal property tax and sales and use tax exemptions on building materials necessary for construction.     

Giant Culture

Scher says new supermarket operators targeted D.C. because of the perceived weakness of Giant, which, according to him and several observers, had badly stumbled when it was acquired by Ahold in the late 1990s. For decades, Giant Food controlled almost half of the market share in Washington, with Safeway being a distant second. Giant’s D.C. market share was so high that in the 1970s the Federal Trade Commission investigated the chain, seeking to break it up. “They released this hard-bound thin book that said in a nice way that Giant is vindicated. They simply build a better mousetrap,” he says.

At that time, Giant was controlled by Izzy Cohen, “an extremely sharp merchant,” according to Scher, and son of the company’s founder. “If Izzy wanted to do something it didn’t take mass meetings and months and months of research, we just did it. He had a core of 14 officers and it was like family. They all had that Giant culture ingrained in them.” 

“Izzy used to always say, ‘If a bird breaks its wing, the other birds will attack it.’ As much as I hate to say it, after Giant was bought by Ahold, Giant broke its wing,” Scher says, providing an opening for Harris Teeter, Food Lion and Wegmans to enter the market.

He recounts how at cocktail parties and other events people would come up to him and ask what went wrong at the company. “Over the years there have been so many changes in management at Giant it caused the public to say, ‘What happened to my Giant?’ That is the way they looked at it.”

Giant has been righting its ship, Scher says, but new competitors were already at the doorstep. “Giant has taken a number of programs to revitalize the company. They are doing quite well as far as price image. They have instituted a number of human resources programs to develop a cadre of people that are strong, support the company and work in the stores,” he says.

Miller says the chain has relaunched its famous “My Giant” ad campaign. “It hearkens back to the days in the ‘90s when we had the slogan ‘That’s My Giant.’ People were very adamant that it was their store. Our brand relaunch is ‘My Giant helps me save money. Saves time. Eat well,’” Miller says.

Giant has also stepped up the remodeling of its stores in the District. 

“As far as new construction, we’ve been more active in the District than any of our other marketing areas,” Miller says, citing the replacement O Street Market and Cathedral Commons stores as its two latest projects.

One problem with redeveloping in the city is that there is generally more community opposition than in the suburbs. Cathedral Commons, which replaced a 1950s vintage store, was held up for more than a decade by a small, but very vocal community group.

“We had to come back with several design concepts, but it was worth it,” Miller says, noting that the original store’s “Giant Food” neon sign was saved and put on the new building. “It is a mixed use project and they redeveloped the entire block,” he says.

Shopping Organically

Retailers also had to get used to the fact that D.C. residents shop differently than their suburban counterparts.

“In D.C., we shop more in the European style,” says Sellars. “People shop three or five days a week, versus shopping in the suburban style where you shop once a week or every two weeks. They buy what they need for that evening’s meal.”

That can be seen at the Whole Foods on P Street, where at 5:30 on a weeknight, the quick moving line for express registers 11–22 is some 20-deep, snaking half way down the salad bar aisle. 

Since most residents do not own cars, they also have more expendable income to spend on groceries and dining out, Sellars notes. 

Organic foods have become big business in D.C. Giant generally has two aisles in each of its stores devoted to its Nature’s Promise natural/organics products. “We have really expanded on our natural and organics to the extent that our offerings are comparable or even larger than Whole Foods,” Miller says.

Whole Foods has three more stores on the drawing board in D.C., and the hometown Yes! Organic Market has grown to six stores in the District, plus one in Hyattsville, Md.         

Last year Rockville, Md.-based MOM’s Organic Market entered Washington, D.C. with a 16,000-square-foot store on New York Avenue, NE. Now a desolate stretch of empty lots, junkyards and old warehouses, the area, dubbed the Hecht Warehouse District, will be the nexus of the next wave of development. MOM’s is literally getting in on the ground floor. Its store is on the first floor of the parking garage next to the landmark glass-block The Hecht Co. department store warehouse that is being converted into 330 apartments and 200,000 square feet of retail.

It is almost guaranteed that officials with the National Fertilizer Institute will not be MOM’s customers, since each aisle has a sign overhead against lawn care, proclaiming statistics such as “per acre the average lawn receives more fertilizers and pesticides than an acre of agriculture.”

Big box stores are also expanding into the District. Walmart has three stores, although in January it reneged on promises to build two additional stores in Ward 7 and Ward 8 in the poorer Southeast side of the city. 

Costco opened a store three years ago that is doing “amazingly well,” according to Sellars. 

“The Costco parking lot really gets filled up on weekends,” Sellars says. “One thing we’ve learned about Costco and Target and these other stores is that we are getting reverse leakage on taxes. D.C. used to have a leakage in over $1 billion in sales tax that all went to the suburbs. We don’t know what that number is today, but it is well below $1 billion because we have more retail stores here, and the population has increased. There is still leakage, but it is not as much.”

Costco’s success may attract other membership warehouses. 

“We don’t have a BJ’s yet, but we have been talking to them,” Sellars says. “They have been looking at the sales [figures] from Costco.”

According to French, Washington, D.C. residents love to go to the supermarket to pick up things—even a mate.     

“Safeway has a store in Georgetown that is called the ‘Social Safeway’ because for a long time it was literally where people would go and link up. It was the Tinder of grocery stores. People would go and meet at the grocery store—it was like a happy hour spot,” French says.      

Organic Avenue

In the first half of the 20th century, Washington, D.C.’s 14th Street, NW was known as Automobile Row because of its dozens of car dealerships. A better moniker today might be Organic Avenue, as four of the city’s leading organic-themed grocers are housed on or near the busy thoroughfare. 

Washington’s first Trader Joe’s calls 14th Street home, and it is a constant beehive of activity. At 5:30 p.m. on a bitter cold mid-January Tuesday night the store is jammed packed. Shoppers with carriages and hand-held baskets go up and down each aisle buying supplies to create that night’s dinner. At the back of the store, a circle of shoppers has surrounded Ryan, Trader Joe’s sommelier, who has set up a stand and is sampling five varieties of house brand wines, under new, more upscale and pricier labels than the chain’s famous “Two Buck Chuck” Charles Shaw label, retailing for $2.99 a bottle. Shoppers sip the wines from thimble-sized cups, paired with cubes of a rosemary cheddar from the neighboring cheese case.

A few blocks up on the opposite side of 14th Street, NW, the hometown Yes! Organic Market has a store of about 6,000 square-feet and sells strictly organic products, including frozen foods, meats, produce and wine. That department was apparently just moved as paper signs taped to the produce shelves at the front of the store proclaim, “All wines are now located at the opposite corner of the front of the store, if this makes any sense at all.” 

The more upscale looking Streets Market and Café is five blocks up 14th Street, NW. On the same side as Trader Joe’s, Streets stocks a mixture of organic and conventional products in five tightly packed aisles crammed into an unusually-shaped store in the base of the Capitol View on 14th luxury apartment building. Along the back wall, seven freezer doors are stocked with organic brands like Amy’s and Udi’s Gluten-Free, along with Stouffer’s frozen entrées and Pepperidge Farm and New York Toast brands of garlic bread. Ice cream can be found in five doors along a sidewall; one is devoted almost exclusive to Moochi Japanese ice cream.

Grocery prices are generally higher than at other area grocers—a 30-ounce jar of Hellmann’s mayonnaise is $7.99—but the store generally gets high marks from local shoppers, according to web reviews.

On P Street, a half-block in from 14th, is the District’s first Whole Foods, a busy store that has been such a smash success that two others have followed it with more in the works.

Market District

Decades before the Giant Food Shopping Center opened its first store at the corner of George Avenue and Park Road in Northwest quadrant on Feb. 6, 1936, Washington, D.C. residents were already shopping for all of their grocery needs under one roof at the city’s famed markets—elaborate, cavernous halls housing stalls from independent vendors selling produce, meat, fish, eggs, dairy and dry grocery items.

Four of them still remain in one form or another and three of them—Eastern Market, O Street Market and Dean & Deluca in Georgetown—have been designated by law to always be a market.

Local residents praise the freshness and variety of the markets’ offerings.

“Every Saturday we start our grocery shopping  at Eastern Market,” says Johnna French, an attorney and author of a blog on the Washington D.C. restaurant scene. “Their selection is just a little broader and more creative. I discovered turkey chops there, which are cut like pork chops. You spend the same amount of money going there as the grocery stores, but your ingredients are a whole lot fresher and in-season because the local farmers sell there,” she says.

With its one-time Penn Central rail access, Union Market, just to the east of Union Station, has been the historic food hub of Washington for 84 years. 

“Union Market is expensive and we only go over there if we are looking for something special, like Red Apron Butchery, which has unique artisanal meats you are not going to find at a Safeway,” says French. 

Although parts of the 45-acre parcel are extremely rundown, a massive new building houses a variety of upscale shops including food stalls, a butcher, seafood shop, wine shop and several dining options. An eight-screen movie theater and two apartment buildings are expected to breathe new live into the area.

But the market that underwent the most extreme makeover is the O Street Market, which two years ago was reborn as a Giant Food store, after laying vacant for a decade. 

“Our O Street Market store is like no other store we’ve ever opened,” says Jamie Miller, manager, public and community relations at Giant Food, a division of Ahold USA based in Landover, Md. 

Giant, which used to operate a small store across the parking lot from O Street Market, teamed with developer Roadside Development to incorporate a new 60,000-square-foot store into the old market. The cavernous wooden cathedral ceiling was reconstructed and the historic brickwork repointed. The 15,000-square-foot former market area—in the back of the store—now houses Giant’s produce department, along with deli, service meat and seafood and a Consumption Bar where shoppers can purchase glasses of wine and beer to enjoy while shopping. The bar has a two per customer limit.

“This store is unique from an architectural standpoint,” Miller says. “I don’t think we’ll have another opportunity to do something like this.”