Specialty Food Magazine

SUMMER 2015

Specialty Food Magazine is the leading publication for retailers, manufacturers and foodservice professionals in the specialty food trade. It provides news, trends and business-building insights that help readers keep their businesses competitive.

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tions. The store even offers online ordering and grocery delivery within two hours. Smaller still, Minneapolis-based Simpls promises the expe- rience, variety, freshness, and quality of a farmers market, but jam-packed into a 1,000-square-foot convenience store format. The retailer carries products from specialty manufacturers such as B. T. McElrath Chocolatier and Joia Life All Natural Sodas, and also serves local specialties, healthy grab-and-go meals, and kom- bucha on tap. Even more oriented toward speed and convenience, The Cube in Norman, Oklahoma, is a prototype drive-through store that sells everything from freshly made breakfast burritos, craft beer, and lattes to dog food, diapers, and toothpaste. The Cube allows cus- tomers to place an order and pick up everything they need without ever leaving their cars. While it deliberately employs modern architecture to move away from the standard concept of a c-store, Rosenblum muses it can come across more like a fast-food restaurant than a conve- nience store. Still, this new crop of retailers believes they're filling a growing niche. "I think stores that fill the gap between bodega and super- market will continue to grow in popularity," says Hopcroft. "The experience of going to a traditional grocery store, especially just for a few items, is so bad [that] the opportunity for stores like ours, especially in residential urban areas, is huge." The Appeal for Large Retailers Shifting consumer preferences have led mid-size and large chain gro- cery stores and big-box retailers to offer new retail concepts to stay relevant with today's shoppers. Companies like Walmart and Kroger have already opened smaller concept stores, some of which cater to urban markets, while others fill a void in rural food deserts. While Walmart's Neighborhood Markets have been around since 1998, the company recently rolled out more than 200 new, smaller-footprint stores. Walmart Stores president and CEO Doug McMillon said at a recent investor presentation that the company expects to continue expanding in the convenience market. "Time is the new currency," he said. "Our shoppers want convenience, and we recognize that shopping in one of our supercenters isn't always convenient. Hence, we will continue to build out Neighborhood Markets and Walmart- to-Go." Sendik 's Food Markets, with 12 locations in the Milwaukee area, recently announced plans to expand its Fresh2Go convenience store model, which allots more space for fresh produce and prepared foods like sandwiches and salads. In the United Kingdom, grocery giant Tesco has embraced two different types of smaller-format stores, with Tesco Metro catering GROCERY GIANTS GO SMALL Large grocery chains are increasingly entering the convenience business, a move that Craig Rosenblum, partner at retail consulting firm Willard Bishop, calls a strategic play to enter new markets where a smaller format would be more suitable. As shoppers are increasingly turned off by traditional grocery stores and supercenters both in the United States and the United Kingdom, executives at those stores are admitting, with new concept stores, that smaller might actually be better. H-E-B. In an effort to stay competitive with Walmart's Neighborhood Markets, Texas-based grocer H-E-B is said to be exploring the option of opening small-format stores. At 12,000 square feet, the proposed stores will be more like a mini market than a typical convenience store, but remain far short of a typical 80,000-square- foot H-E-B store. The chain is conferring with Canadian retailer Sobeys on best practices, as that merchant has seen success with smaller convenience stores. Kroger. The Ohio-based retailer has opened several Turkey Hill Minit Markets in the Columbus area in an attempt to find its place in the convenience sector. At around 7,500 square feet in size, the convenience stores are just a fraction of Kroger's usual 67,000-square-foot grocery stores. Turkey Hill offers both typical convenience-store fare like hot dogs and pizza by the slice, as well as grocery staples, good-for-you options, and even a gas station and car wash at some locations. Tesco. U.K. grocery giant Tesco is experiencing a boom in its Tesco Metro and Tesco Express convenience stores abroad, though its Fresh and Easy small-format stores struggled initially in the U.S. While 50 of its 167 stores are closing, the chain plans to make a comeback stateside with new concept stores that will fall between 3,000 and 5,000 square feet and offer fresh convenience with produce, made-to-order sandwiches, and a beverage bar. Fresh and Easy is working with ADMI, the San Francisco design firm that designed the Apple stores. 28 ❘ SPECIALTY FOOD MAGAZINE specialtyfood.com

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