To Ray & Mascari’s Ray, ease of use and convenience seem to rule the day, to the detriment of wholesalers. “We see cash-and-carry formats continuing to attract restaurant customers because of the perceived freight savings,” he says.
Despite all the hullabaloo, not all chains and independents are particularly challenged or drastically changing their business models in the Midwest. Estab-lished chains like Wisconsin’s Sendik’s, Fareway in Iowa, Schnucks and Dierbergs in St. Louis, and Heinen’s in Cleveland are moving ahead with expansion despite market saturation in some areas.
T is for Trend Tracking
Growth in smaller-footprint stores, focused on a carefully curated product line, indicates Midwestern consumer tastes are moving in the same direction as the rest of the country’s—with a heavy emphasis on seasonal fare, value-added products, and meal kits. The downtown millennial consumer is expressing interest in smaller-footprint stores with broad selections of grab-and-go produce and meal offerings. “The grab-and-go concept seems to be catching on a little more than conventional packs,” says Ray.
Heinen’s, in Cleveland, operates a downtown location targeted at urban residents. Hy-Vee’s Fourth + Vine, in downtown Des Moines, offers a sushi bar and artisanal Italian sodas. And
Des Moines-based Fareway Food Stores also entered the concept store game, with more than 115 stores in the Upper Midwest, mostly in Iowa.
Small footprint stores are not only expanding with concept and “downtown” formats, but taking on the big box stores. Aldi, and Kroger’s Ruler Foods, as well as Save-a-Lot, compete with Walmart in the St. Louis metro area, where in 1988 the very first Walmart Supercenter opened.
Aldi has more than 40 stores in the St. Louis metro area, where Lucky’s and Fresh Thyme have also arrived to challenge the marketplace. Though it has been heralded in the media, the spread of grab-and-go and value-added products in new—and old—retail formats is surprising. “There are several retail segments that are now carrying produce, including convenience stores—and even hardware stores,” observes Capital City Fruit’s Comito.
Organics continue to grow in popularity with Midwestern consumers, says Corsaro, noting that Indianapolis Fruit has been offering organics for more than 15 years. “Organics continue to grow substantially in movement as availability has increased, pricing has leveled out, and consumer demand rises.”
Helping stoke organic demand are both Aldi and Walmart, as each expands organic produce SKUs. Established independents like Heinen’s, Schnucks, and Dierbergs focus on offering an upscale experience with organics and related products. Hy-Vee this year saw a corporate restructuring program that emphasized its HealthMarkets section, featuring organic, gluten-free, natural, and allergy-friendly foods. Hy-Vee HealthMarkets are present in about 75 percent of its 240 stores.
