Pace of retail change picks up in Northern California

As in many regions of the U.S., the Northern California retail scene, which has seen gradual changes over the years, could be on the verge of another shakeup.

The acquisition of Whole Foods Market by Amazon will have a lot to do with that shakeup, but as of yet, no one knows for sure how extensive any changes will be, said Larry Brucia, president of the San Francisco Wholesale Produce Market board of directors and president, CEO and owner of Burlingame, Calif.-based John Sutti & Associates Inc.

As a designer and builder of supermarkets, John Sutti & Associates stays informed about the retail grocery segment, Brucia said.

“We tend to keep track of things, see trends and see where things are going,” he said.

 

Pace of change increasing

Brucia has observed a significant uptick in the pace of change in the retail industry, which traditionally has evolved slowly because of the risks involved in investing money in new ideas with tiny profit margins.

“Over the last five years, the pace of change by the consumer has accelerated,” he said. “The cell phone has become an extension of people’s arms, brains, minds and experiences, and they’re looking at it throughout the day.”

That in turn is affecting the retail grocery industry and the brick-and-mortar industry as a whole, he said.

“The bottom line is, the food world is changing faster than it’s ever changed,” he said.

The Amazon acquisition of Whole Foods is just one example.

“(The purchase) triggered an anxious environment within the retail community because all of a sudden ... everyone is recognizing that something is going to change in retail with technology and with brick and mortar,” he said.

The Whole Foods acquisition isn’t the only change in the Northern California supermarket scene.

Portland, Ore.-based New Seasons Market, a chain of 20 supermarkets that feature natural and organic food as well as conventional items, plans to open four Northern California stores by the end of 2018, Brucia said.

The chain opened a 29,000-square-foot store in Sunnyvale on Aug. 23, already has a store in San Jose and plans to open locations in San Francisco and Emeryville. The company also operates four New Leaf Community Market locations in Northern California.

San Francisco-based Gus’s Community Market operates three stores under different banners in San Francisco and plans to open “quite a few more stores” in the San Francisco area under the Gus’s Community Market banner, Brucia said.

Gus’s offers a traditional produce department and is bucking the trend toward cutting back on bulk produce in favor of packaged salads and kits.

“They like offering an extensive wet rack,” he said.

 

Hispanic stores merging

Finally, Ontario, Calif.-based Cardenas Markets, a group of 31 stores, many of which are in the Riverside/San Bernardino area east of Los Angeles, announced in early July that it is merging with San Jose-based Mi Pueblo, which operates 15 stores in the Bay Area, forming one of the nation’s largest Hispanic supermarket chains.

The combined chains will operate under Cardenas Markets LLC, with Cardenas CEO John Gomez holding that position under the combined business.

Each banner will operate separately, managed under one executive team.

Hispanic markets are realizing their demographic is changing as second- and third-generation Hispanic consumers enter the marketplace, Brucia said.

Despite all the changes, Brucia said it’s an exciting time to be in business in Northern California.

“A lot of people are fearful about all the change, but from my perspective, change is a time of great opportunity,” he said.

 

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