In the year ahead, Richmond-area supermarkets will undergo a boom — new stores, expansions and remodeling projects. And while shoppers get more choices in the grocery aisles, retailers will find themselves in a rising battle to grab their share of the market.
For its constancy in our lives, grocery shopping seems like a mundane topic for conversation — until you mention it to a true food lover or a savvy coupon clipper.
Take, for instance, West End resident and self-described “foodie” Stephen McMaster, who likens himself, as grocery shoppers go, to an addict. And grocery stores? “They’re my pushers,” he says with a smirk.
Foodies or not, Richmond-area grocery shoppers soon will find themselves pushing carts into new, uncharted aisles.
Within the next two years, supermarkets around the region will launch an onslaught of changes. In an age when shoppers have more choices than time, the list of new developments is so extensive, it’s enough to make the Pillsbury doughboy’s head spin off.
The list includes no fewer than seven new grocery stores, at least three store expansions and a wave of remodeling projects.
The region’s big “gets” — in the opinion of many foodies — are the two major chains coming to Henrico County’s retail mecca, Short Pump. By 2009, Whole Foods Market plans to open a 35,000-square-foot store in West Broad Village, and Trader Joe’s is expected to arrive later this year with a 12,500-square-foot store in the adjacent Short Pump Station.
By November, Greensboro, N.C.-based grocer The Fresh Market expects to open its second store in the region on Huguenot Road, in space formerly occupied by a Barnes & Noble near Midlothian Turnpike.
In the next two-and-a-half years, Cincinnati-based The Kroger Co. plans to open three new stores — one anchoring the mixed-use Rutland Commons development in Atlee by year’s end, one at Broad Street and Lauderdale Road in Short Pump (while closing an older store nearby) in 2009, and in 2010, a 120,000-square-foot behemoth on the site of the former Cloverleaf Mall, which would become the chain’s largest East Coast store.
As development stretches into eastern Henrico, Ukrop’s also has plans to open a new store in October in the White Oak Village development. And beginning this summer, the local chain will remodel its stores in Short Pump and The Village shopping center.
If the shopping cart already seems too full, there’s more: Tom Leonard’s Farmer’s Market — almost close enough to throw an organic orange at the yet-to-arrive Trader Joe’s and Whole Foods — will nearly double its 15,000-square-foot space by December.
Meanwhile Ellwood Thompson’s Local Market in Carytown has its own renaissance in the works. By year’s end, it will knock down a wall to expand into what was previously a coin laundry. The move will get the small natural- and organic-food store another 2,100 square feet — on top of its current 13,000 square feet — and allow it to expand offerings in its prepared-foods and bakery sections, says CEO Ryan Youngman. He adds that the store’s parent company is eyeing a Washington, D.C., neighborhood where it may open a second store under the Ellwood Thompson’s name.
One of the biggest moves in the region’s supermarkets, however, may be Food Lion’s play to update its shopping experience.
In a bid to come more in line with the polished image of its top rivals, Food Lion, the region’s No. 2 food retailer (and gaining) behind Ukrop’s, has plans to reconfigure and remodel the majority of its 51 stores around Richmond — new displays, new lighting and a broader offering of natural and organic items, says spokeswoman Kimberly Blackburn. Billing itself as one of the lowest-priced supermarkets, the Brussels-based chain appears to be aiming for new customers by freshening up its atmosphere as well.
“They are going to be a major threat,” says Jeff Metzger, publisher of Food World, a trade magazine based in Columbia, Md.
While Richmond is still a growth market for food retailers, Metzger ventures that it won’t be long before grocery sellers saturate the market. For now he compares Richmond’s supermarket growth to a free-for-all prizefight. The local market, he says, “is in the sixth or seventh round of a 12-round fight.” Within several years, he says, not all of today’s food retailers may be left standing. “I don’t think they’ll all survive, but I would be hard-pressed to predict who will suffer defeat.”
Direct to Shopper
Tom Leonard’s Farmer’s Market in Short Pump is nestled in a minefield of big grocery retailers. Within a mile of the store, near the intersection of West Broad Street and Pouncey Tract Road, a shopper on the prowl might easily drive past the small barn-style market and instead find a Wal-Mart Supercenter, a Kroger or a Ukrop’s Super Market.
The store’s namesake, Tom Leonard, says he’s used to the competition — when he opened his 15,000-square-foot market in 2004, big supermarket retailers were already there. Having them so close by, he says, forces him to stay on his game. “They make my store better,” he says with a ring of diplomatic cheer.
Leonard’s main selling point, besides a retail atmosphere that seems part theme park with its mazelike layout and singing mechanical animals, is produce and meat — he claims to stock some of the freshest goods around by negotiating with farmers all over the country to have their fruits and vegetables trucked directly to his store. “There’s no middleman,” he says, comparing his store to larger retailers with extensive distribution networks.
During Virginia’s growing seasons, Leonard says, he and his staff make the rounds to nearby farms to select and buy produce themselves.
“I mean, we work hard at it,” he says, explaining that some goods hit his displays on the same day they leave the farm.
But before the year’s out, shoppers hauling groceries out of Leonard’s store won’t have too far to look to find two more competitors just across the bustle of West Broad Street — Whole Foods and Trader Joe’s.
Take a quick read of local food blogs or online forums, and you’re bound to find someone gushing about these national chains coming to town, like Patton’s army rushing in to save the day.
Leonard’s not worried. “Whole Foods is not a threat to me when there are two Ukrop’s down the street from me — they are by far one of the best-run supermarkets in the country,” he says of the local chain.
Don Caffery, who owns the tiny-by-comparison Good Foods Grocery, says the threat is real. Drawing on his familiarity with the industry, he notes that supermarkets near a newly opened Whole Foods and Trader Joe’s tend to lose out. “They drop 20 percent of their business and never get it back,” says Caffery, who has one store each in the Stony Point and Gayton Crossing shopping centers. “It’s a real paradigm shift.”
Caffery remembers 1993, when natural-foods retailer Fresh Fields, well ahead of its time, made a go in the West End and lasted less than a year. He says he saw many of his “loyal” customers go down the street to the bigger store. It taught him the lesson that smaller shops like his have to pursue customers with niche offerings. (His store’s selling points, he says, are bulk foods, natural supplements, and the grab-and-go deli.)
Complicating the picture for retailers is the fact that rising fuel costs continue to squeeze everyone from farmers and manufacturers right down to the shoppers putting the food on their dinner tables. On top of that, consider the weak U.S. dollar and the deepening subprime-lending crisis. Supermarket experts predict that even shoppers who normally pay more for specialty items will soon begin to think twice before piling goods into their carts.
Should Richmond’s perennial food retail leader, Ukrop’s Super Markets, be worried? The chain’s CEO, Robert S. “Bobby” Ukrop, says worry is a constant state in his business. “We’re always worried. Anybody who sells food is in competition with us,” he says.
Health Above Price?
A fact keeping grocers on their toes more than ever: Just how people eat, and where and when, has become an amorphous proposition these days in the United States.
For starters, says Todd Hultquist, a Washington, D.C.-based grocery-industry analyst and consultant, “People are eating out more than they ever have been.”
According to the Food Marketing Institute, a Washington, D.C.-based advocacy group for food retailers and wholesalers, this is reflected in the growing reliance on “food away from home.” Younger generations particularly show a greater likelihood to eat out — fast food accounts for almost half of the $1 trillion spent on food last year. And in the past three years, the average number of visits shoppers make to grocery stores has dropped.
But shopping data also shows notable differences among the generations — younger shoppers are more likely to be vegetarian and less likely to prepare a meal at home from scratch. Meanwhile, a greater awareness of environmental issues, food safety and how diet affects health has motivated consumers across the board to seek out natural and organic offerings.
This partly explains why shoppers who are increasingly concerned with their health and eco-consciousness are turning to retailers like Whole Foods and Ellwood Thompson’s. According to food-retail experts, many of the offerings in such stores rate as specialty items with higher prices.
Hultquist notes that even in a waning economy, natural-foods stores like Whole Foods continue to thrive — a suggestion that many shoppers place the quality of grocery items or their health concerns above pricing issues.
Ryan Youngman, CEO of Ellwood Thompson’s Local Market, says some of these trends in awareness also motivate consumers to look closer to home.
The growing emphasis on food miles — how far a bite of food travels from the farm to the fork — is what motivated Ellwood Thompson’s to change its name last year, trading the word “natural” for “local.”
The store, which first opened in 1989, sees itself as a standard-bearer of “intentional eating,” Youngman says.
The store has steadily honed its inventory so that today it sells no products containing high-fructose corn syrup, parabens, or artificial colors, flavorings or
preservatives.
“It captures the shopper that is looking for a deeper commitment to food quality, to sustainability, to organics in general, and understanding how your food is processed and how it gets to you,” Youngman says.
It’s also part of the impetus behind the farmers’ market that the store will open on Wednesday evenings in its parking lot, beginning in May.
Ellwood Thompson’s director of marketing, Lesley Johnson, says the store hopes the market will engage local farmers, bolster the community and, of course, drive more traffic to the store.
Youngman adds, “What we need to say is that we’re about Richmond, and we wanted to connect with our principles.”
Ellwood Thompson’s double-digit sales growth annually over the past 10 years has paved the way for plans later this year to open a coffee house just across its parking lot; it also has an agreement to lease baking space and equipment from the cattycorner Williams Bakery, which will only be using the storefront to showcase its goods made off-site.
Despite differences in focus between Ellwood Thompson’s and Ukrop’s — one’s a small, single-store natural grocer, the other’s a full-scale chain — Youngman says a commitment to community is what both have in common.
Youngman, a third-generation grocer who moved here from Seattle a year ago, says, “I think that’s why Ukrop’s has really succeeded. They’ve been able to capture the spirit of Richmond, and they’ve been the place to shop for years.”
Like Ukrop’s, which last year donated $400,000 to more than 2,000 charitable causes through its Golden Gift program alone, Ellwood Thompson’s has cultivated a tradition of giving back through its “5 Percent Days,” in which 5 percent of its sales are given to local causes on one Saturday every three months.
But even this community focus does not differentiate the local guys from the major chains, including Food Lion, which put $1 million into a pediatric-care unit at Virginia Commonwealth University, and Kroger, which also has channeled donations to VCU. (See “Who Gives?” on Page 111.)
When it comes to shoppers’ choices, says Youngman, whose career included a few years working at Whole Foods, the deeper difference is where the money in the register ends up. “Keeping your dollars in your local neighborhood is so utterly important,” he says, adding, “All those dollars that get absorbed into Short Pump go elsewhere in the economy.”
For national chains like Whole Foods, the pull of Wall Street also introduces an agenda and culture that is sometimes less than wholesome. Last year, the Federal Trade Commission disclosed in an unsuccessful antitrust lawsuit against Whole Foods that for about seven years, CEO John Mackey used a fake identity on a Web forum to bash natural-foods retailer Wild Oats, a top competitor that Whole Foods later acquired. On his company’s Web site, Mackey later characterized his Yahoo! postings as little more than having fun with online business discussions under a pseudonym.
Despite the bit of dicey P.R., the company continues to thrive. Perhaps that’s because, as Hultquist notes, shoppers are developing broader palates and want to do more than cross off a grocery list.
“People don’t go into Whole Foods to save money,” Hultquist says, adding, “The majority of shoppers may not make it a regular stop, but they’ll go there because it’s an experience.”
Aaron Brooks, who will oversee the opening of the Short Pump Whole Foods, says on the contrary that the store offers 365 private-label items — staple goods priced at or below market value — in addition to its spectrum of specialty items. And he emphasizes the store’s keen focus on selling produce and meats that have been farmed and harvested responsibly.
“We hope we can kind of become that one-stop shop for people,” he says.
On the flip side, Randy Kelley, vice president of real estate for The Fresh Market, says his store’s emphasis on high-quality perishable goods — breads, cheeses, meat and produce — naturally guarantees that its customers won’t find all of their grocery needs there. “We think we bring something unique to the table with the perishable nature of our business, but the reality is, we’re not full-service, so we rely on other grocery stores to serve our customers.”
This synergy between retailers is a fact of life in today’s grocery business, notes Metzger, who says that the majority of people today are “cross-shoppers.” Most consumers settle on a primary store, he says, but may rely on retailers like Whole Foods or Trader Joe’s for specialty items. Bargains in the aisles may also pull customers to a store for only a basket full of goods.
“It’s much more competitive and much more diverse,” Metzger says. “And there are many more holes in the dam that you’ve got to plug up to compete effectively.”
Exception to the Rule
When it comes to supermarkets, Richmond’s regional family-owned chain, Ukrop’s Super Markets, is regarded nationwide as a phenomenon. Against all other supermarkets in the area, Ukrop’s has commanded more than a third of the grocery market for a decade or better, according to Food World’s annual industry reports, and in 2003, the chain hit a peak, taking a 40.91 percent share of the supermarket business in Richmond — an unheard-of number for the industry. Food World considers the Richmond market to include the city of Richmond as well as the counties of Charles City, Chesterfield, Dinwiddie, Goochland, Hanover, Henrico, New Kent and Powhatan.
Of course, industry experts and supermarket executives pay attention to a broader measurement that lumps supermarkets in a category with any retailer who sells grocery items or food. Think Wal-Mart, Wawa, Sheetz, CVS, Rite Aid, Walgreens and even 7-Eleven.
Even in this expanded group, Ukrop’s has perennially led the pack.
While Bobby Ukrop admits he’s always concerned about new competition, he says his company’s key objective is to keep a finger on his customers’ pulse. But it’s also possible to see the chain making direct countermoves against even the smallest players in the food-retail game.
On a recent day in mid-March, Ukrop escorted a reporter on a tour of five of his stores around Richmond. Along the way, he pointed to the chain’s “evolution” of implementing certain tried-and-true features that a loyal Ukrop’s customer likely takes for granted these days: well-stocked salad bars and prepared-foods sections; eat-in cafés that have two levels (a novelty in most any grocery store); and, of course, small armies of workers who are astutely trained to treat each customer like royalty.
It’s his company’s golden-rule philosophy and selection of prepared foods — made and distributed by the company’s 19-year-old central kitchen off of Midlothian Turnpike — that Ukrop says distinguishes his supermarket from his competitors.
In the grocery business, says Metzger, “the regional chain is very much a minority.” He notes that most national chains are “slaves to Wall Street. They’ve looked less at customers from a pure customer-service point of view and tried to create a model where one or two shoes fit all.” He adds, “Bobby Ukrop would be an exception to that. He really does care.”
Impeccably dressed and alert, Ukrop enters each store with his game in high gear. His approachable nature and his local celebrity make him an easy target for shoppers, usually middle-aged women, it seems, who greet him with a sing-song “Heeey, Bobby!”
Ukrop appears ready to drop what he’s doing in an instant to acknowledge or help any customer within spitting distance; in one store, he kindly excused himself from escorting a guest on a tour to price-check a pound cake for a customer. Having opened and run the second Ukrop’s store in 1972, he is still a store manager at heart. He stops to pick up trash along the aisle, to ask a customer if they’re finding what they need or to sweep spilled goldfish crackers from the middle of the floor with his loafer-
shod foot.
While many Richmonders think of Ukrop’s as a monolithic presence, its CEO still regards it as a small family business. “We’re a minnow,” says Bobby Ukrop. “We’re a little minnow in retailing.”
That mindset explains his continual re-evaluation of every little detail in the store’s battle against anyone who sells food, not just grocery stores.
“McDonald’s or Panera are just as competitive” to Ukrop’s, says Jeff Ukrop, the CEO’s son and possible heir apparent, a zone manager who oversees seven of the chain’s stores.
It is possible to identify Ukrop’s competition by the store’s emphasis on certain features: Its growing organic- and natural-food sections suggest a move against the likes of Ellwood Thompson’s and Whole Foods; its recently installed grab-and-go sections near the door appear poised as an answer to convenience shops like Sheetz or Wawa; and the service kiosks in some Ukrop’s (a touchscreen allows you to order a meal to be prepared as you shop) are again Wawa-like.
In some cases, Ukrop’s has made a bigger push to draw attention to practices the chain has done for years, such as working with local farmers. Look around one of the Ukrop’s stores today and you’ll see signage calling attention to “Local Route” offerings — produce and other products that have come to the store from within a day’s drive.
Like Leonard’s store, Ukrop says, his chain stocks some fruits and vegetables that are as fresh as possible. “We find that we’re selling a product that was picked yesterday or picked today, in some cases”
Bobby Ukrop says the store is constantly studying customers’ likes and dislikes; Ukrop’s frequently holds focus groups with its customers, and on his guided tour in March, Ukrop made a swing by a few stores’ suggestion boards to see what customers had to say and how store managers responded.
Jeff Ukrop says he thinks the company once had a habit of embracing some new features without enough scrutiny. It’s easy to jump on a fad, he says, but hard to reverse it, even after it has gone out of vogue.
“Sometimes, we’d rather be a fast follower than a leader,” Bobby Ukrop says. Case in point, the newest Ukrop’s store opening in October at Rutland Commons in Atlee will be built with as many “green” and energy-conserving elements as they can manage; it’s a somewhat new idea for local grocery stores but not for the region.
For all Ukrop’s does to adapt to the fickle tastes and habits of consumers, there are a couple of constants that likely will never change, much to the consternation or befuddlement of many shoppers.
Asked if his chain would ever abandon its policies of staying closed on Sunday and prohibiting the sale of alcohol, Ukrop simply gives a dismissive shake of his head.
Hultquist notes one industrywide estimate that supermarkets do approximately 20 percent of their business on Sunday — the biggest day in the business. But Metzger points out that loyal Ukrop’s customers have already factored that in, which is why Ukrop’s does its biggest volume
on Saturday.
Bobby Ukrop explains: “It’s not an economic matter. It’s a matter of principle.”
It’s Personal
Talk to many Richmonders who buy their household’s groceries, and you’ll quickly learn that the concept of loyalty is like shifting sand.
On a recent Saturday afternoon, Henrico County resident Stephen McMaster sat at a Panera Bread café across Staples Mill Road from a Ukrop’s and ticked off a list of reasons he rarely shops there.
For starters, there is a Kroger within walking distance of his West End apartment, and he says he’s more inclined to get his produce from Tom Leonard’s market.
But he also finds Ukrop’s assertiveness in certain community matters off-putting — he specifically notes a campaign by Bobby Ukrop and his brother Jim Ukrop, the company’s chairman, to have shock jock Howard Stern’s syndicated show removed from a Richmond radio station years ago. “Their job is to sell us groceries,” McMaster notes, “not to tell us who we can listen to.”
(Bobby Ukrop notes that as a resident of Richmond, he is simply exercising the same freedom of speech afforded to others in the interest of supporting his community.)
It’s likely that people have such strong opinions about what their grocers should and should not do because, as Hultquist notes, food shopping can be intensely personal.
For some busy moms and dads running a household, the notions of customer-service or hometown loyalty often rank as a secondary concern. Jenny Schutt, a married mother of a 9-month-old and a 5-year-old, says she chooses to shop at Food Lion because “it’s close to the house.” And she contends her dollars go further there.
She turns to Kroger and Ukrop’s only for special items, even though she thinks the stores provide better service than her main store. When her son was diagnosed with a wheat allergy, Ukrop’s was the only store carrying the special bread he could eat.
And though she says that she finds the prices at big-box retailer Wal-Mart comparable to those at Food Lion, she says there’s too much hassle to deal with there. “There’s just too many people to shop for food in there.”
In wooing customers, retailers are stuck in a triangle of deciding factors — price, quality and selection, and the shopping experience.
Hultquist says food retailers look to hook price-conscious customers a couple of ways: “everyday low prices” (think Wal-Mart), loyalty programs (for instance, Ukrop’s Valued Customer card) or double coupons (for instance, Kroger).
How stores compare on pricing is the defining factor for many shoppers, and often the cost of a bag of groceries can vary depending on a given consumer’s savvy or brand preferences. Nevertheless, all retailers seem to make claims of lower pricing from one aisle to the next.
To put their pricing to the test, Ukrop’s advertises (in its stores and elsewhere) its “pricing challenge” which invites shoppers to compare their grocery receipts from one chain to the next. How it works: Ukrop’s will pay a shopper $10 to shop for 20 items (excluding fruit, vegetables and meat) using their Ukrop’s Valued Customer card; within a week, the shopper must purchase the same items at a competing retailer. If the customer can find the items cheaper at a competing store, Ukrop’s will give the shopper double the difference (in addition to the $10). In January, Ukrop says, nine shoppers took the challenge and his store came out on top.
Selection and shopping experience are what make McMaster wish out loud for the Rochester, N.Y.-based Wegman’s grocery chain, which he describes gleefully as “Ukrop’s on steroids,” to settle down in Richmond.
Wishful thinking like this gives an explanation to rumors among Richmond foodies that Wegman’s was looking at Central Virginia. The spoiler, however, says spokeswoman Jo Natale, is that Wegman’s isn’t coming to town — however, it will be opening a store in Fredericksburg by early 2009.
Kris Lindsey, who moved last year to Petersburg from Chicago, says her first encounters with Richmond’s grocery stores sent her into shock.
“My first shock was the Sunday closure of Ukrop’s,” she says. Her chief complaint, though, is that she’s not satisfied with the selection of produce at most stores in the region.
Coming from a city with a multitude of ethnic markets, she’s accustomed to cross-shopping and divides up her list — meat at the Belmont Butchery, fish at the Yellow Umbrella, bulk items at Costco and other staples from Ukrop’s.
Lee Robinson, a 31-year-old city firefighter and married father of two children, passes a Ukrop’s on his way to Kroger, where he’s drawn for a number of reasons — namely, the store layout, its cleanliness and the prices of certain items. He’s a fan of Ukrop’s bakery, though.
In a business that pits prices, quality, convenience, customer service and other factors against one another, it may be harder for a hometown favorite like Ukrop’s to stay on top — especially when customer loyalty, Ukrop’s bread and butter, is something that Metzger says is quickly eroding.
As Richmond magazine went to press in April, Metzger and his staff at Food World were just getting started on their 2008 survey of grocery-store data in the Richmond market. Come June, they’ll report the year-to-year results from April 2007 through March 31.
Metzger can’t make any predictions, but he expects to see interesting movement between Ukrop’s and its competition, namely Food Lion. Given Food Lion’s steadily increasing market share in the Richmond region, it’s not a stretch to venture that soon, if not this year, the retailer could eclipse the local chain.
Some shoppers are indifferent, but loyal Ukrop’s customers, the kind the chain has spent decades cultivating, may be sad to see the home team slide to second place.
“I think they are making adjustments,” Metzger says of Ukrop’s, “but the sheer numbers are going to impact them.” And in a later conversation, he adds: “It’s going to be close.”
