The Midwest is the home of the “supercenter” as we know it. Michigan’s Meijer is credited with originating the concept, and Missouri was the site of the first Super Walmart.
Supercenter options, as well as cash and carry wholesale clubs Sam’s Club and Costco, are still prominent in all seven metro markets covered in this series.
But Midwestern consumers, even in the suburbs, aren’t as committed to supersize shopping trips. Local media outlets report Aldi continues to chew into Walmart’s market share in St. Louis. Aldi has long impacted the Midwest grocery scene, and its footprint continues to grow. In May, Aldi announced distribution center expansion at its Cleveland-area location, in Hinckley, OH.
But it’s not just Aldi carving into supercenter sales. St. Louis-based Save-A-Lot maintains its presence in both urban and outlying markets, and Kroger’s Ruler Foods expanded in St. Louis.
Smaller-format specialty retailers have also found homes in the Midwest. Meijer-backed Fresh Thyme aggressively expanded, only slowing its store openings during the past year. Meijer itself unveils its Bridge Street Market this year, a smaller-footprint urban store piloting in its headquarter city, Grand Rapids, MI.
Receivers expect petite retail footprints, especially in downtown settings, to continue. Joan Daleo, president of Ole Tyme Produce Inc., St. Louis, is curious to see if new, smaller grocery formats will erode existing market share in the St. Louis area.
She’s surprised that an area not expanding rapidly in population is seeing so many new options. In her view, the food retail “pie” is being sliced much thinner, and “it’s very possible smaller stores could take some of the share” from the larger store formats.
Receivers believe smaller-format stores will likely keep expanding in the Midwest because of basic economics. “It’s getting harder for retailers to invest in sales per square foot. That’s resulting in unique merchandising and store layouts. And retailers are also dealing with labor shortages,” says Daniel Corsaro, director of sales and marketing at Indianapolis Fruit Company.
On the other hand, larger chains often have deep pockets and can expand services. Time-strapped Gen Xers and Midwestern millennials — and their Boomer parents — are seeking omnichannel options.
“Most of the larger retailers are exploring omnichannels, selling both in physical stores and online,” says Brendan Comito, COO at Capital City Fruit Company Inc., West Des Moines, IA.
One thing is certain: competition will continue to be fierce.
“In the St. Louis area, we’ve seen a lot more stores moving in every year and forcing everyone to get more aggressive in terms of pricing,” says Dan Pupillo, president of Midwest Best Produce, St. Louis. Still, he says, “business here in St. Louis has been steady to good.”
This is an excerpt from the most recent Produce Blueprints quarterly journal. Click here to read the full article.