Grocers find smaller is often better
Customers inspect tomatoes at an Aldi store in Sydney, Australia, on Thursday, June 25, 2015. Aldi, a German grocer that recently announced plans to add hundreds of U.S. stores, is one of several chains with small stores gaining popularity among shoppers. (Brendon Thorne/Bloomberg)
The days of the corner grocer are coming back.
As Americans increasingly move to urban centers, they seem more willing to shop multiple times a week and less willing to travel.
New midsize grocery stores (those from about 40,000 to 60,000 square feet, like most Safeway, Albertsons and Thriftway stores), won't fit in very many commercial spaces in urban centers.
That means smaller grocery stores like Trader Joe's, New Seasons Market and Aldi are moving in. Their relatively small footprints make them more nimble, said Craig Sweitzer, founder and principal of Portland-based Urban Works Real Estate.
Smaller stores have more options in urban centers, he said, because they can move into strip malls and other retail spaces rather than being confined to former grocery store buildings.
"I think the new standard is closer to 20,000-30,000 square feet," he said. "And I think, as time goes on, we'll have even smaller stores like Green Zebra Grocery."
Win-win
Grocers with traditionally larger stores seem to be catching on. Walmart was one of the first retailers to roll out a smaller version of its big-box stores with its Neighborhood Markets, and Target soon followed with its Express stores. Now, Whole Foods is opening up 365 stores aimed at health-conscious Millennials on a budget.
Sweitzer, who said he has helped New Seasons find locations for its stores, highlighted the local grocer as one whose size allowed them to be especially nimble. While most national grocers have a high stall-to-square-foot ratio requirement for parking spaces, New Seasons' is fairly low. This allows it to move into spaces that other grocers might be forced to ignore.
And small stores have been a boon to the Portland grocer: Sweitzer says their smaller stores are more profitable than their larger ones, because the small stores are located in urban centers, which brings in more shoppers.
Those who walk, bike or take public transit to the grocery store are more likely to visit stores more often than those who drive cars, according to a 2012 study by the Oregon Transportation Research and Education Consortium.
And this is fine with Peter Koehler, director of business development for Green Zebra Grocery. The Portland company opened its first location, a 5,600-square-foot grocery and convenience store, in North Portland in 2013.
"More and more, people are opting to shop for one or two days at a time or even by the meal, instead of huge stock-up trips," Koehler said. "We're seeing our customers a few times a week."
And while their basket sizes are smaller, their frequent trips add up.
Koehler tallies this as a win for both retailers and shoppers: Retailers get more business and consumers have the chance to stock up regularly on fresh food.
The paradox of choice
Phil Lempert, a Santa Monica, California-based food industry analyst, says shoppers – especially Millennials – would rather see a better-curated selection.
"People want to shop in stores that are comfortable #1," he wrote in an email to The Oregonian. "The larger stores are just filled with SKUs [items] that don't matter."
Less room for merchandise, Koehler says, is not necessarily a bad thing. Too many choices – say, 10 types of ketchup – can be overwhelming for shoppers.
In his 2004 book, "The Paradox of Choice - Why More Is Less," psychologist Barry Schwartz argues that eliminating consumer choices can reduce anxiety for shoppers.
So instead of 10 types of ketchup, shoppers at Green Zebra Grocery (and other limited assortment stores like Trader Joe's, Aldi and Grocery Outlet) might just find three.
Koehler said Green Zebra receives lots of customer feedback, and selection is never an issue.
"People appreciate [the limited selection]," he said. "We've established trust with them. When we choose the three types of ketchup on the shelves, they know we've put thought and care into the selections."
As Americans increasingly move to urban centers, they seem more willing to shop multiple times a week and less willing to travel.
New midsize grocery stores (those from about 40,000 to 60,000 square feet, like most Safeway, Albertsons and Thriftway stores), won't fit in very many commercial spaces in urban centers.
That means smaller grocery stores like Trader Joe's, New Seasons Market and Aldi are moving in. Their relatively small footprints make them more nimble, said Craig Sweitzer, founder and principal of Portland-based Urban Works Real Estate.
Smaller stores have more options in urban centers, he said, because they can move into strip malls and other retail spaces rather than being confined to former grocery store buildings.
"I think the new standard is closer to 20,000-30,000 square feet," he said. "And I think, as time goes on, we'll have even smaller stores like Green Zebra Grocery."
Win-win
Grocers with traditionally larger stores seem to be catching on. Walmart was one of the first retailers to roll out a smaller version of its big-box stores with its Neighborhood Markets, and Target soon followed with its Express stores. Now, Whole Foods is opening up 365 stores aimed at health-conscious Millennials on a budget.
Sweitzer, who said he has helped New Seasons find locations for its stores, highlighted the local grocer as one whose size allowed them to be especially nimble. While most national grocers have a high stall-to-square-foot ratio requirement for parking spaces, New Seasons' is fairly low. This allows it to move into spaces that other grocers might be forced to ignore.
And small stores have been a boon to the Portland grocer: Sweitzer says their smaller stores are more profitable than their larger ones, because the small stores are located in urban centers, which brings in more shoppers.
Those who walk, bike or take public transit to the grocery store are more likely to visit stores more often than those who drive cars, according to a 2012 study by the Oregon Transportation Research and Education Consortium.
And this is fine with Peter Koehler, director of business development for Green Zebra Grocery. The Portland company opened its first location, a 5,600-square-foot grocery and convenience store, in North Portland in 2013.
"More and more, people are opting to shop for one or two days at a time or even by the meal, instead of huge stock-up trips," Koehler said. "We're seeing our customers a few times a week."
And while their basket sizes are smaller, their frequent trips add up.
Koehler tallies this as a win for both retailers and shoppers: Retailers get more business and consumers have the chance to stock up regularly on fresh food.
The paradox of choice
Phil Lempert, a Santa Monica, California-based food industry analyst, says shoppers – especially Millennials – would rather see a better-curated selection.
"People want to shop in stores that are comfortable #1," he wrote in an email to The Oregonian. "The larger stores are just filled with SKUs [items] that don't matter."
Less room for merchandise, Koehler says, is not necessarily a bad thing. Too many choices – say, 10 types of ketchup – can be overwhelming for shoppers.
In his 2004 book, "The Paradox of Choice - Why More Is Less," psychologist Barry Schwartz argues that eliminating consumer choices can reduce anxiety for shoppers.
So instead of 10 types of ketchup, shoppers at Green Zebra Grocery (and other limited assortment stores like Trader Joe's, Aldi and Grocery Outlet) might just find three.
Koehler said Green Zebra receives lots of customer feedback, and selection is never an issue.
"People appreciate [the limited selection]," he said. "We've established trust with them. When we choose the three types of ketchup on the shelves, they know we've put thought and care into the selections."
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