Niche retailers continue to survive amid influx of chains

09/26/2012 11:35:00 AM
Vicky Boyd

Scott Salisbury S&L ProduceVicky BoydScott Salisbury, a partner in S&L Produce, said he believed terminal markets are on the upswing once again.SAN FRANCISCO — The Northern California retail sector continues to evolve, with newcomers, such as Dollar General Markets, Walmart Neighborhood Markets, Sprouts and Fresh & Easy, beginning to make inroads.

These chains will undoubtedly put pressure on smaller retailers, said Pete Carcione, owner of Carcione’s Fresh Produce Co. Inc., Golden Gate Terminal Produce Market, South San Francisco. But he said he believed the independents in the San Francisco Bay Area will survive, thanks in part to the area’s terminal markets.

“The key is they’re on the market every day looking at (produce), touching it, tasting it before they buy it. That’s a big advantage over someone … who buys for 300 stores,” he said.

“I’m sure it will be some pressure put on them, but these little stores are doing fine as long as we have a good competitive wholesale market. It’s healthy for the little stores to be able to look at many different growers and many different areas before they buy.”

For several years, Scott Salisbury, a partner in S&L Produce in the San Francisco Wholesale Produce Market, said it felt like the terminal markets were declining after the big chains, which used to buy on the market, started buying directly from grower-packer-shippers.

But that downward slide has changed direction, Salisbury said.

“Now – especially in San Francisco – you have so many independent markets and ethnic-oriented markets and the trend tends to be much more to fresh, quality and locally grown. And the market seems to have adapted to it.”

The situation may not be the same for independent retailers who are inland and don’t have access to terminal markets.

As a large produce distributor, Sacramento, Calif.-based General Produce has felt the effects of large retailers moving into Northern California over the years, said Mark Derby, director of procurement and general manager of General Produce’s Mount Shasta facility.

Many of those retailers have their own distribution networks, unlike independents that rely on companies such as General Produce, he said.

”Up here in the north part of the state, the marginal operators just get more marginalized,” Derby said. “Competition is fierce. There are less and less independents than there were a decade ago.”

It may be a different story for grower-packer-shippers, said Ed Odron, owner of Ed Odron Produce Marketing Consulting, Stockton, Calif.

“Whether they’re selling in San Francisco or to Winco, the produce is still moving through the stores,” he said.

Five or 10 years ago, he said the major retailers each had a piece of the market. As more chains moved into Northern California and without large population growth, each piece of the pie has shrunk.

“It’s becoming more and more difficult for those supermarkets to maintain their margins,” he said.

But independents — particularly those that fill a niche, such as ethnic grocers serving Hispanic and Asian populations — seem somewhat isolated from the fray and appear to be holding their own, he said.

“You walk into those stores, stuff’s piled up and they seem to be doing a lot of business,” Odron said. “I don’t know if Fresh & Easy, Winco and Walmart are affecting the independents as much.”

Others that offer specialty items, such as Berkeley Bowl, or are known for service, such as Woodland, Calif.-based Nugget Markets, also are doing well.

“I think like everything else, the good survive,” Odron said. “I think the key issue is you have to continue to give your customers some basic quality, customer service and price.”



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