Midwest retail expansions favor specialty, high end

08/14/2013 04:57:00 PM
Pamela Riemenschneider

Dan GalbraithJohn Jefferson, right, Supervalu's newly-named vice president of produce merchandising, talks with Chris Lambert, a Fresh Express representative, about the company's salad mixes at the Supervalu Northern Division Sales for All Seasons Expo held in St. Paul Aug. 12-14. The Midwest retail scene is broadening its customer base, especially in the specialty segment, and traditional grocery has its sights on Wisconsin.

Austin, Texas-based Whole Foods Market Inc. has announced plans for at least seven new locations ranging from Little Rock to Lake Forest, Ill., and a fast-growing southeastern chain — The Fresh Market — has its eye on the Midwest’s biggest cities including Chicago and Kansas City.

All this is happening thanks to some weakness in existing players, said Pewaukee, Wis.-based retail analyst David Livingston.

Both Eden Prairie, Minn.-based Supervalu Inc. and Milwaukee-based Roundy’s Supermarkets Inc. have had some financial difficulties in core Wisconsin markets over the past few years, Livingston said. And that’s opened up the market for expansion.

“Meijer is the next big thing coming in Wisconsin,” he said. “It’s been a real hotbed of new store development over the past five years. Roundy’s hasn’t been able to compete as well.”

Grand Rapids, Mich.-based Meijer Inc. also is growing at home, opening its first-ever Detroit store in July.

West Des Moines, Iowa-based Hy-Vee Inc. also has its sights set on Wisconsin. The company opened its second Madison store in May. Wisconsin is doing well for the company, said chief executive officer Randy Edeker, at the opening ceremony.

“Everyone asked me today, ‘Why Wisconsin? Why Madison?’” Edeker said, in a news release. “It’s because we do phenomenal here.”

Greensboro, N.C.-based specialty grocer The Fresh Market chose Chicago suburb Lincolnshire, Ill., as its first expansion into the Midwest, opening a store in June. The company also plans to open another store in the Kansas City suburb Overland Park on Sept. 4.

This follows the trend of national retailers looking for profitable locations, and finding many untapped markets in the Midwest, Livingston said.

“You’re seeing Whole Foods and Trader Joe’s come into smaller markets with higher incomes, well-educated with college campuses,” he said. “It’s the same story with The Fresh Market.”

Livingston said he sees this one- and two-off store expansion continuing to be popular as retailers expand their presence in the region.

 

Chicago’s premium scene

Chicago also is seeing a surge in high-end and specialty retail, like The Fresh Market, Roundy’s Mariano’s banner and a higher-end suburban expansion of Pete’s Fresh Market.


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