From the Suburbs to the City: How Grocery Retailers are Filling the Urban Grocery Gap

6/18/2015

by

Andrew Ferren,

Linh Lingenfelter  

| Goulston & Storrs PC

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As residential high-rises pop up all over the city of Boston, big-name grocery retailers are sproutingnearby to meet the increased demand.  The most recent example is the opening of a Roche Bros. supermarket in Downtown Crossing in late April of this year.  Occupying part of the old Filene’s Basement, Roche Bros. stands to benefit from the hundreds of new residents that Millennium Place has attracted, and the Millennium Tower will soon attract, to Downtown Boston.  Earlier this year, Whole Foods Market opened yet another location at the former Boston Herald site in the South End.  More supermarkets seem to be on the way, including a Star Market near North Station and aWegmans Food Markets in Fenway.

With more people choosing to live in the city, it is no surprise that grocery retailers have spotted the market opportunity.  Worth noting, however, are the ways in which these retailers have adapted their traditional suburban supermarkets to fit city living.  Grocery retailers face a variety of challenges, and opportunities, when operating in the city.  These include higher development and operating costs, constraints on physical space that affect parking and store layouts, and a consumer base that is more on-the-go, desirous of fresher foods, and dependent on public transportation.

Below are some of the ways grocery retailers have responded to these unique challenges and opportunities:

• Prepared / grab-and-go foods.  Capitalizing on not just the residents, but also the thousands of office workers in the Financial District, Roche Bros.’s street level floor in Downtown Boston is devoted primarily to ready-to-eat food prepared on-site covering breakfast, lunch and dinner, such as breakfast pastries, sandwiches, soups, salads and sushi.
• Smaller portions.  City grocery retailers are less likely to see minivans in parking lots being loaded up with a week or two’s worth of groceries for the whole family.  Recognizing that urban consumers are often walking, biking or taking public transportation to the store and purchasing for a household of only one or two people, city grocery retailers are offering smaller portion sizes for a variety of food items with the expectation that these consumers will shop more frequently.
• Delivery services.  Many of the large grocery retailers offer delivery services with a minimum order amount, which helps those needing to buy a heavier load and/or trying to fit a home-cooked meal into their busy schedules.
• Limited assortment stores.  Trader Joe’s has achieved tremendous success in this category.  Its limited and carefully picked offering of products enables it to have a smaller physical footprint in the city, keep its prices low and still provide consumers what they want.  Its small but very popular location on Boylston Street in the Back Bay occupies only 7,118 square feet.

As Boston continues to experience growth in jobs and population, the development of new grocery stores will likely follow suit, providing fresher, healthier and more affordable food options to those living and working in the city and its neighborhoods.