The Twin Cities supermarket scene is as competitive as ever, giving local consumers an opportunity to spend their food dollars at any of a number of high-performing retail chains.
One issue that remains top of mind in some circles in the Minneapolis/St. Paul area is the pending sale of Cub Foods.
Cub Foods, the No. 1 supermarket chain in the Twin Cities area with a 27.4% market share, was included when Providence, R.I.-based United Natural Foods Inc. acquired Boise, Idaho-based Supervalu Inc. in 2018.
UNFI would like to divest itself of the banner and concentrate on its role as a supplier, said Don Goodwin, founder and president of GoldenSun Insights, a Minneapolis-based strategic marketing firm.
UNFI said in June that it would continue to operate Cub Foods and certain Shoppers Food Warehouse stores for up to 24 months, putting off the sale until the COVID-19 crisis dissipates.
“I think the most likely suitor will be private equity,” Goodwin said.
But he did not rule out the possibility of a major player like Albertsons making a play.
Goodwin gave high marks to many of the chains operating in the Twin Cities.
West Des Moines, Iowa-based Hy-Vee Food Stores Inc. has done a nice job the past couple of years, Goodwin said.
“Their stores are outstanding,” he said.
The chain ranks No. 3 in the region with about a 13% market share, according to the Shelby Report.
Goodwin expected the company to have 25-40 stores in the Twin Cities area within the next three to five years. The retailer has 11 stores in the area with a new one about to open.
“I think they’re being well received in the marketplace,” he said.
Lunds & Byerlys, an upscale chain based in Edina, Minn., also continues to do an outstanding job, Goodwin said.
The chain ranks No. 6, with a 4.19% market share.
Minneapolis-based Target Corp. also continues to make progress.
Goodwin said he was the first person hired at Target with a produce background and ran the company’s produce division when it was rolled out in 1998.
“They’ve made a lot of improvements,” he said.
The company is shifting away from its huge Super Target format to what is called internally the p-fresh — for prototype fresh — format, which includes a limited selection of groceries and fresh produce.
“There is an incredible amount of loyalty here toward Target because of their role in the community.”
Meanwhile, even as supermarket chains expand, “home delivery is exploding,” Goodwin said.
“It’s doubled since COVID-19 started.”
Amazon is leading the charge, but all major retailers have adopted the concept, which was widespread in the Twin Cities area even before COVID-19.
Many chains use the Instacart delivery service, Target can take advantage of the Shipt operation — which it acquired in 2017 — some chains operate their own delivery service, and many use a hybrid of multiple services, Goodwin said.
The click-and-collect model, where consumers place an order online and pick it up themselves later, also has become popular, but that can impact impulse purchases in the produce department.
“Produce is very visual,” Goodwin said. “You can affect sales by how you display and sign and promote product in store.”
“We’ve lost that because people are buying online or people are going into the store very quickly.”
Long term, the “highly impulsive categories” may be at risk, he said.
Twin Cities’ supermarkets continue to perform well during the COVID-19 epidemic, but Goodwin said the industry was not immune from the impact of the civil unrest that gripped Minneapolis — the flashpoint of the nationwide disturbances — starting in late spring.
“There’s a section of the city that has had tens of millions of dollars of damage, including 10 grocery stores,” Goodwin said. “It’s going to be a long time before that gets back to any semblance of normal.”
Some stores reduced their hours during the height of the disturbances and others closed temporarily. Some remained closed in mid-August.
The impact will be long lasting, he said.
“It changed the psyche of our community.”
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