The Twin Cities area remains a highly competitive market for grocery retailers. But for the most part, the changes and expansion the region has seen over the past decade or so seem to have leveled off, says John Dean, a Minneapolis-based supermarket consultant.
Cub Foods, a division of Minneapolis-based Supervalu Inc., continues to hold onto the largest market share, he said.
Other players include Rainbow Foods, a division of Milwaukie-based Roundy’s Supermarkets Inc.; Target, Minneapolis; Lunds and Byerly’s, Minneapolis; Jerry’s Foods, Edina, Minn.; Wal-Mart Inc., Bentonville, Ark.; Trader Joe’s, Monrovia, Calif.; Kowalski Markets, Woodbury, Minn.; and Costco Wholesale, Issaquah, Wash.
Target has expanded its grocery offerings in recent years with its PFresh stores and Super Target locations, but Dean said that expansion has been completed in the Twin Cities area.
Neither Cub nor Rainbow is in expansion mode, he said. But Wal-Mart continues to add stores “aggressively,” and Trader Joe’s is growing too.
In addition, food co-ops have gained a foothold in urban areas and “seem to be doing fairly well,” Dean said. “The more aggressive co-ops are continuing to look for opportunities to expand.”
Although business at retail stores has been strong, intense price pressure is impacting margins, said Don Roper, vice president of sales and marketing for Wescott Agri Products Inc., Elgin, Minn.
“It seems like sales are there, but margins are compressed,” he said.
Even high-end stores such as Lunds, Byerly’s and Kowalski’s seem to be feeling the pinch.
However, the Special Supplemental Nutrition Program for Women, Infants, and Children — better known as the WIC Program — has boosted produce sales, said Phillip Brooks, chief executive officer for H. Brooks & Co. LLC, New Brighton, Minn.
Some retailers have experienced sales increases of up to 18% over last year, said Kevin Hannigan, executive vice president at J&J Distributing Co., St. Paul.
Some of the retail accounts at Wadena, Minn.-based Russ Davis Wholesale Inc. are experiencing an increase in business, others remain stable and still others are in “challenged positions,” said Jeff Nagel, sales manager, East.
Overall, business in the Twin Cities has improved over the past six months, he said, but he’s not sure why.
The company has an experienced retail merchandiser support staff that has proved effective at relationship building and has the tools to address retailers’ priorities in areas ranging from developing policies and procedures to training employees and implementing resets, Nagel said.
Twin Cities’ retailers have long been trying to find their way, discover their capabilities and differentiate themselves to grow their business, Brooks said.
A more recent change has been the addition of new players, which has made produce widely available from a variety of outlets, he said.
Some of the larger chains try to differentiate themselves from competitors by selling private-label products, like the nuts, dried fruit and candy that St. Paul, Minn.-based Bergin Fruit & Nut Co. offers, said Corey O’Connell, marketing and product development manager.
“Private label is a big thing right now,” he said.