Broader Menu of Food Stores Arriving in Manhattan
May 9, 2004
Broader Menu of Food Stores Arriving in Manhattan
By JOHN HOLUSHA
The Whole Foods store at 252 Seventh Avenue at 24th Street. The company is looking for locations in Manhattan in addition to this one, the Time Warner Center and a site near Union Square.
THE food marketing landscape in Manhattan is changing, with national chains arriving or scouting for locations. Whole Foods recently opened its flagship 58,000-square-foot store in the basement of the Time Warner Center and is building a trilevel 50,000-square-foot store on 14th Street facing Union Square.
These are huge stores by Manhattan standards, where most groceries occupy 7,000 to 10,000 square feet, according to retail brokers. They are even larger than many suburban stores, which average 44,000 square feet, according to the Food Marketing Institute.
Trader Joe's, another food specialty chain that is well known elsewhere, including some New York suburbs, is scouting for locations in the city, according to brokers. Some foreign stores like the British chain Waitrose may enter the fray as well.
To some retail specialists, the prospect of more national chains in the city recalls the arrival of the Barnes & Noble and Borders bookstore chains, which swept away many local bookstores with a broader selection and such innovations as in-store coffee shops. Others, however, point to the limits imposed by carless shopping — not to mention zoning rules and other intricacies of Manhattan retailing — as factors differentiating the food trade from the bookstore battles.
These developments come at a time when, brokers say, food stores are once again becoming attractive as tenants in office and residential buildings. The newer stores, many of them selling upscale prepared foods, are less messy than more traditional operations, and their convenience appeals to time-pressed residents.
A 45,000-square-foot Pathmark supermarket will take up most of the first floor of Bradhurst Court, a full-block residential development at 145th Street in central Harlem, and other Manhattan buildings are looking for fancy food stores to fill empty spaces. One of these is a 20,600-square-foot space in the Puck Building at 295 Lafayette Street in SoHo that is currently rented out for parties and other public functions.
The existing upscale food business may undergo change as well, as a result of an injection of Wall Street money late last year into the company that took over the venerable Balducci name. The merchant banking unit of the Bear Stearns Companies took over the Sutton Place Group, owner of the Balducci name, and said it planned to open as many as 50 stores in New York and its suburbs, most under the Balducci brand.
While old and new names are both part of the changing food scene in Manhattan, another brand — Wal-Mart — looms large in the rest of the country. Wal-Mart has increasingly been opening supercenters, which add a grocery operation to a standard Wal-Mart store, and average 187,000 square feet in size, about double the typical Wal-Mart department store.
In New York, existing supermarket chains like D'Agostino, Gristede's and Food Emporium will probably coexist with the newcomers because of their locations, product mixes and prices, said Faith H. Consolo, vice chairwoman of Garrick-Aug, a brokerage specializing in retail leasing.
"Not every neighborhood has space for a Whole or Trader," she said. "So Gristedes and D'Agostino will continue to operate."
Rents for grocery stores vary in different parts of the city, as they do for all types of retail operations. According to brokers, stores on an avenue in the 60's and 70's on both the East and West Sides range from $175 to $200 a square foot in annual rents. Those closer to Midtown are lower, at $125 to $150 a square foot, and rents in SoHo range from $100 to $150 a square foot, depending on whether they are on an avenue or a side street.
The Retail Mix
A Wider Range of Shopping Choices
Ms. Consolo said that the newcomers would simply add to the mix of retail approaches to marketing food and groceries. "Consumers in Manhattan want the same range of shopping opportunities as people in the boroughs and suburbs," she added. "That's why we have Home Depot and Target here."
Whole Foods is not attempting to impose a national model on this most urban of locations, according to Christina Minardi, the company's manager for the tristate region, although it does follow the company's emphasis on natural foods. "We try to do new things with each store," she said. "Prepared foods are a big part of our business and we figured we would have a bigger lunch and dinner crowd at Columbus Circle" than at the company's existing store in Chelsea at 252 Seventh Avenue at 24th Street. "So we spent time to design the store to make it customer-friendly," she said.
But unlike the boroughs and suburbs, where shoppers can push a week's worth of groceries in a shopping cart to a car in the adjacent parking lot, shopping in Manhattan occurs in smaller installments.
Although home delivery of groceries is increasingly available in Manhattan and FreshDirect and other online services are gaining visibility, people are often limited to what they can carry from a store to where they live.
"There is a bifurcation of shoppers," said Richard Hodos, president of Madison HGCD, a retail brokerage. "I know people who shop online for mundane items they don't want to carry — things like detergents, orange juice and bottled water. They are heavy and they are commodities."
In contrast, he said, there are plenty of things most people do not want to buy sight unseen, notably produce. "There are items that people want to look at, feel and hold up to the light," he said. "They will be shopped personally."
Mr. Hodos said he has been in discussions with a London-based grocery store chain, Waitrose, about the possibility of opening stores in this country. "We'd love to bring them over," he said. One of Waitrose's specialties is preparing entire meals and flash-freezing and shrink-wrapping them for home use.
Two Kinds of Goods
Prepared Foods Versus Staples
Whole Foods' stores combine grocery staples with elaborate prepared foods, said Robert K. Futterman, a retail broker who helped locate the store to the Time Warner Center at Columbus Circle. He said the approach met the developer's original desire for a multitenant food hall on the lower floor, similar to the one in the Harrods store in London. He said the casual dining area in the Whole Foods store fulfilled the food hall requirement, and the developer was happy to deal with just one tenant in the space.
Mr. Futterman said New Yorkers may be attracted by the wide selection available in big food stores. "We have had big appliance stores, big bookstores and now big food stores," he said. "The old supermarkets may not be around for too long,"
The operators of existing supermarkets are not throwing in the towel just yet, however. "The landscape changes all the time, but we have been here for 75 years," said David D'Agostino, director of online shopping for the family-owned company.
He said Whole Foods was attracting crowds at the Time Warner Center, but questioned the long-term economic viability of the store. "You have to ask what they are paying for that space," he said. "Columbus Circle is not a cheap location."
He also noted that his company is unionized, unlike Whole Foods, which has resisted unionization and stresses its philosophy of teamwork and employee participation in store management.
D'Agostino's has been delivering in the neighborhoods of its 18 stores in Manhattan for 13 years, Mr. D'Agostino said, starting with a telephone service. He said it was a growing part of the company's business, describing it as "another way to shop conveniently in a time-starved community."
Some retail brokers question whether time-starved New Yorkers will have the patience to browse through a large store to find the few items they need. "New Yorkers like to get in and get out, and they don't want to go to a store that is more than a few blocks away," said Alan Victor, an executive vice president of Lansco, a retail brokerage. "So the strong specialty neighborhood store will maintain its presence."
But others say they believe shoppers are increasingly separating purchases of staples like paper, soap and canned goods from prepared foods, exotic fruits and vegetables and fancy cuts of meat. Shoppers, they say, go to established supermarkets to buy the former, while going to stores like Dean & DeLuca or Citarella or, now, Whole Foods for the evening's meal.
"The trend is that both people work and there is no time to cook," Mr. Futterman said. "So one goes shopping for prepared food. And it is perfectly acceptable to serve prepared foods to guests."
Of course, prepared food is more expensive than the raw ingredients, though that appears not much of a deterrent in high-income neighborhoods in Manhattan. These offerings, whose prices cannot be easily comparison-shopped with other stores, are providing a fatter profit margin for stores that otherwise compete fiercely on price.
"Any supermarket company that wants to survive has got to get away from price promotion," said Mr. Hodos. He observed that the middle of most supermarkets, where canned and boxed goods are sold, makes little or no money because of competitive price promotions like advertised specials and coupons. "They make money on the periphery of the store, in the dairy and meat cases," he said, adding that prepared foods help fatten the margins.
Mr. Hodos said it is possible that the supermarket business will evolve into two types of stores: one that very efficiently markets commodity goods and those that sell higher-margin prepared foods. "You have to be able to deliver commodities efficiently or have top quality," he said.
Even the corner deli may be in danger, he said, because of competitors willing to pay higher rent. "Banks and wireless operations want those corners, too," he said.
A Comeback
Why Food Stores Are More Welcome
But if grocery stores are being squeezed out of some locations, they are making a big comeback in residential developments. The Pathmark supermarket at Bradhurst Court was an essential part of the development, said its architect, Marvin H. Meltzer.
"The food market was part of the criteria for the project," he said. "The economics did not work without it."
Designing a structure with 126 co-op apartments above the store and a parking garage below it was a complicated undertaking, he said, particularly because Pathmark and ShopRite, two chains that expressed interest in the space, both insisted on using the layouts found in their one-story suburban stores.
"In a standard, one-story building, you put your mechanical systems on the roof," he said. "But here, the roof of the supermarket is an outdoor courtyard for the residential units."
In the end, Pathmark, he said, specified the size of the display cases and the freezer units and the locations of the deli section, checkout lanes and loading dock. This influenced the size and placement of the structural columns, which have to support both the roof and the apartments above.
The return of grocery markets to favor as retail tenants in residential buildings is the completion of a cycle, according to Benjamin Fox, a partner in Newmark New Spectrum Retail, a brokerage company.
"When a typical 21-story building was developed on the West Side, it usually had 7,000 to 10,000 square feet of space on the ground floor," he said. Since they were usually rental units, the landlord decided what would go into the retail space and often it was a supermarket. Many of the operators of these markets were keenly aware of their neighborhoods, he said. "If they noticed a lot of people with dogs, they stocked up on dog food; if they were in a Hispanic area, they stocked up on rice."
Having the market was convenient, Mr. Fox said, but it had drawbacks. Delivery trucks would arrive noisily in the small hours of the morning, disturbing sleeping residents. Garbage trucks made noise as well, and if they did not come often enough, rotting garbage produced smells and attracted vermin.
"By the 80's and 90's many of those buildings had been converted to condos and co-ops, and the new owners decided to get rid of the supermarkets," he said. "This was coupled with the rise of health and beauty stores: Walgreens, Rite Aid, Duane Reade. They were a `dry use' that could pay more and cause less mess, and many went into spaces formerly occupied by markets."
But the rise of the small upscale food store, which has far fewer heads of lettuce to dispose of, has made them more acceptable in residential buildings, Mr. Futterman said.
"Ten years ago, condo developers considered a food store a detraction," he said. "Now a gourmet food store is considered an amenity because of the quality and convenience."
Ms. Minardi said the Whole Foods store in Chelsea had been successful and said the initial crowds at Columbus Circle had been so large that the company had been forced to post a guard at the top of the escalator to limit entry. She said the company was looking for locations in Manhattan in addition to the store under construction near Union Square.
Ms. Consolo of Garrick-Aug said the Columbus Circle store's location at the bottom of the Time Warner retail-office-hotel-residential complex will ensure it success and assist the stores on the next two floors above.
"That's how the hypermarkets work in Europe," she said. "They have a food court at the base, and it drives traffic to the rest of the retail."
Copyright 2004 The New York Times Company
Trader Joes is excellent, I go to one in Westfield NJ.
They just built about 2 years ago a Wegmans here in my hometown of Manalapan NJ, on the weekends the parking lot is full of folks from NY. Wegmans is based out of Rochester NY, great atmoshpere with an awesome food court.
Another great store is Stew leonards, there three locations. Yonkers, Danbury and I think Stamford.
I stopped in TWC soon after it opened to check out Whole Foods. Given the location, I was prepared for sticker shock, but it's competitive with the average in Manhattan. I think anyone living downtown would agree - this is food shopping to die for.
I hope we get something like this at the WTC.
Fresh Direct is not an option for me. Being of Italian ancestry, buying produce sight-unseen just goes against the grain.
I love the Whole Foods in the Time Warners...sometimes I shop there. It is a bit of walk but if the weather is right I try to go there.
I mean the produce is really fresh. no complaints yet. 8)
Not sure how I feel about further chain-i-fication, but word is Whole Foods is planning an 87,000 sq. ft. location in the Avalon building on Chrystie Street in the village.
Das beeg.
Whole Foods, Fairway, Stew Leonards, Trader Joes - bring them all. We need better supermarkets and food suppliers more than we need a Walmart".
hmm
I wonder if wild oats will ever try to compete with whole foods in Nyc...
This thread needs some updates.
CULT OF JOE'S
By CHRIS ERIKSON
February 28, 2006 -- New Yorkers salivate for eccentric grocer's March 17 debut
Software designer David Galbraith pronounces himself "stoked." East Village resident Brooke Nipar has been talking about it for months. And artist E.V. Day says she's "so excited I'm frothing at the mouth."
The event that has them in such a dither: the opening of a gourmet food store on 14th Street near Union Square.
In a city already awash in enough extra-virgin Tuscan olive oil and organic fingerling potatoes to keep an army of foodies in rations until the next millennium, that might seem an odd cause for jubilation. But this isn't just any gourmet food store - it's the city's first outpost of Trader Joe's, set to open March 17 at 142 E. 14th St., near Third Avenue.
Still confused?
New York, meet Trader Joe's, a 39-year-old California-based chain that inspires a fervor among its many rabid fans that might seem a little unusual to the uninitiated. They sing the praises of its prices (so cheap!), its exotic treats (the Thai lime-and-chile cashews!) the cheerful, Hawaiian-shirted workers (so friendly!), the goofy humor (so down-to-earth!). There are two Web sites devoted to Trader Joe's, and at least one singles group for Trader Joe's shoppers, based in Seattle.
"It's the only supermarket I know that has a cult following," marvels Len Lewis, a business writer and the author of the new book "The Trader Joe's Adventure: Turning a Unique Approach to Business Into a Retail and Cultural Phenomenon."
"It's unique among retail food stores. It's kind of like the Grateful Dead of supermarkets."
The object of all that adulation is a chain of 250 stores, spread over 19 states, that has its roots in Southern California. The namesake and founder, Joe Coulombe, owned a chain of convenience stores around Los Angeles that in 1967 he upscaled into gourmet-food operations selling imported and specialty items at bargain prices.
Though the chain is now owned by a German grocery conglomerate, Aldi, much of the template for those initial stores survives: cedar-plank walls, a nautical theme, an irreverent sense of humor, workers in Hawaiian shirts who bear the titles captain (store manager), first mate (assistant manager) and crew member. And rock-bottom prices on a wide range of often-beguiling items, from spinach and goat-cheese quesadillas and soy-and-flaxseed tortilla chips to shade-grown French roast coffee and frozen shrimp tempura, 80 percent of them sporting the Trader Joe's house label.
Ask Trader Joe-Heads what they love so much about the store, and in the gush that follows, the prices will invariably get a prominent mention. By largely buying direct from manufacturers, literally scouring the world for bargains and striking hard deals with suppliers, Trader Joe's is able to offer some remarkable prices on high-quality products, says Lewis. They're often well below those of stores like Whole Foods, whether it's frozen ahi tuna steaks for $4.59 a pound, key-lime cheesecakes for $3.99, or the infamous "Two Buck Chuck" - the store's house-label wine, which sells as low as $1.99 a bottle (see above). More to the point, Manhattan real estate won't change that - your favorite salmon jerky will cost the same here as it does in L.A.
The prices made E.V. Day an instant convert when she discovered Trader Joe's as a student in Southern California 10 years ago.
On a student budget, "It was incredible to find this chain where could get a six-pack of really good beer for $3.99, and amazing fresh salsa for $1.99," she says. "And the quality is so good you never feel like you're sacrificing anything."
Then there's the chain's progressive social values, which combine the aggressive pricing structure of a Wal-Mart with the business philosophy of Ben and Jerry. Many items are organic, personal-care products are not animal-tested, eggs are from uncaged chickens, detergents are biodegradable, and artificial ingredients are verboten, allowing you to score a bargain while feeling good about yourself.
"It's almost like the way a food co-op is," Day says. "You feel like you're participating in something, and it makes you feel good."
In addition, points out David Galbraith, those progressive values are delivered with a lack of sanctimony and a quirky sense of humor, reflected in labels like Trader Jose's and Trader Giotto's (for Mexican and Italian items, respectively), product names like Semi-Precious Stone Wheat Crackers, and a vitamin line called Trader Darwin's - "for survival of the fittest."
" 'Environmentally friendly' is quite often self-righteous, but they make it friendly and happy," says Galbraith, who recently rented a car and drove two hours each way to make a run to a Long Island Trader Joe's.
Which brings us to another factor invariably mentioned by acolytes: a notoriously upbeat staff, who are handpicked for their outgoing personalities and paid handsomely for retail workers - up to $40,000 a year for a starting worker, according to Lewis, which may explain some of the giddiness.
"It's a very fun place; people are always smiling there, and the staff is very friendly," says Massachusetts resident Jovanna Brooks, who loves the store so much - and noted so much similar enthusiasm among her friends - that she started the Web site traderjoefan.com, where people trade recipes and tips about favorite finds. (The offerings at Trader Joe's change frequently - new products are introduced every month, announced in the Fearless Flyer, a folksy newsletter that Lewis likens to what you'd see "if Monty Python put together a supermarket flyer.")
"It really appeals to people's hearts as well as their minds, and the heart is the fun and the uniqueness," says Brooks. The people who contact her through the site "just want to scream to the world that they're Trader Joe's fans."
That kind of enthusiasm was hard to miss when I started asking around, trying to figure out what the big deal was. Co-workers raved about the groovy vibe and the bargain cheeses; a musician from San Francisco I know practically wept with joy when I told him about the new store; when I walked through Macy's with a Trader Joe's bag, a saleswoman accosted me and waxed rhapsodic about the ones she shopped at in California. Over and over I hear the same thing, "I loooove Trader Joe's."
After days of this kind of thing, I figure I'd better go see it for myself. So I hop a train to Westfield, N.J., where a Trader Joe's sits a couple blocks from the station. As I browse aisles of ginger peanut noodle salad and frozen fire-roasted vegetables, my pulse quickens, and I immediately begin calculating how much I can carry back on the train. If I forgo the $5 bohemian lager, I can add a $3 bag of avocados (organic!) and rib steaks from New Zealand (grass-fed!).
I load up as many snacks as I can and cart them back to The Post, where my co-workers dig in - drinking the Trader Joe's Kool-Aid, as it were. They ooh over the cilantro-and-chive yogurt dip, marvel at the chili-spiced dried mango, quaff the $4 chardonnay.
"So," asks one: "When is this store opening?"
Copyright 2006 The New York Post
"a notoriously upbeat staff, who are handpicked for their outgoing personalities"...."goofy humour" AND dressed in Hawaiian shirts.
ew.
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