The Middletown Press (Middletown, CT)

Market saturation

Some grocery chains cool to expansion in state

- By Luther Turmelle

Based strictly on demographi­cs, supermarke­t chains ought to be clamoring for a spot at Connecticu­t’s table.

Connecticu­t residents had the nation’s highest personal income in 2018 and the state’s workforce is filled with highly educated and discerning consumers. But when it comes time to put their money where the mouths are, grocery store chains are increasing looking elsewhere for expansion.

Even Stew Leonard Jr., whose family owned grocery stores are widely known beyond Connecticu­t’s boundaries, doesn’t seem to have an appetite for another Connecticu­t store at the moment.

Grocery and retail experts, along with a trade group executive and a local first

selectman, say a variety of factors contribute to grocery chains’ reluctance to establish a new territory in Connecticu­t or expand upon the existing presence they have in the state.

The reluctance of some the most popular grocery chains in the country to either enter the Connecticu­t market or expand here seems odd to David Cadden, a professor emeritus at Quinnipiac University's School of Business.

“I would think Trader Joe’s and Whole Foods would have seen Fairfield County and the rest of the Connecticu­t shoreline as attractive locations to expand in,” Cadden said. In particular, he said a number of Shoreline communitie­s from Branford east to the Rhode Island border have attractive customer demographi­cs.

But Wayne Pesce, president of the West Hartfordba­sed Connecticu­t Food Associatio­n, said the state’s economy and a market place already saturated with different types of stores selling groceries is discouragi­ng new retailer from entering the market. In addition to the mainstream supermarke­ts, warehouse clubs and discounter­s such as Walmart and Target also have grocery items, Pesce said.

And with the state’s minimum wage having gone up to $11 an hour at the beginning of the month, with additional increases schedule to raise the pay rate to $15 by 2023, he said a decrease in the the number of grocery stores around the state is a real possibilit­y. He cited the recent announceme­nt of a West Hartford ShopRite closing in late November as “the tip of the iceberg.”

“The market has plenty of retailers and their profit margins are very tight,” he said. “It’s getting more and more difficult to be profitable.”

North Haven First Selectman Michael Freda has made sales pitches to Trader Joe’s, Stew Leonard and Wegmans about opening a store in town. North Haven already has a Big Y and Stop & Shop in town and Freda said officials with the three chains he approached all turned him down.

“Trader Joe’s told me we don’t have a highenough population count or household income to be considered,” he said.

Trader Joe’s has eight Connecticu­t stores, including five in Fairfield County and one in Orange.

A logical location for another supermarke­t in North Haven would be in the former Sports Authority location in the North Haven Commons shopping center on Universal Drive.

But Freda said that when Stop & Shop sold the former Universal Distributo­rs warehouse to National Realty & Developmen­t Corp. in 2003, a restrictio­n was included in the deal that prohibits a supermarke­t from every being developed in shopping center.

Discount retailer Target is one of the original tenants and anchors of the shopping center and that store includes a limited grocery selection, he said.

Trader Joe’s employees in Connecticu­t are saying there are two more Connecticu­t locations currently being considered for stores. But Kenya FriendDani­el, the company’s public relations director, said Trader Joe’s has no plans to open any additional stores in Connecticu­t at this time.

Pesce said another reason that Trader Joe’s may be reluctant to expand its Connecticu­t footprint is the chain’s inability to sell wine and spirits in its stores here.

The chain sells wine and spirits in other states, including some of its stores in neighborin­g Massachuse­tts. Trader Joe’s has become well known for its “Two Buck Chuck,” a bargainpri­ced collection of wines under the Charles Shaw brand.

But the trade group representi­ng package stores in Connecticu­t has plenty of political clout. The Connecticu­t Package Stores Associatio­n has successful­ly convinced state lawmakers several times in recent years that supermarke­t sales of wine and spirits would be a death knell for its members’ businesses and thay aspect of the liquor laws has remained unchanged.

Pesce said giving supermarke­ts the right to sell wine and spirits would help improve their profit margins.

One company that does appear to be interested in opening new grocery stores in Connecticu­t is technology giant Amazon. Whole Foods is owned by Amazon and the Seattlebas­ed technology giant is reportedly interested in expanding its supermarke­t presence beyond that grocery brand.

The Wall Street Journal reported on Oct. 1 that Amazon has signed more than a dozen grocery store leases in the Los Angeles area that could open as early as the end of this year.

The newspaper also reported, citing unnamed sources, that the company was eyeing space for potential grocery stores in Connecticu­t, New Jersey and New York metro area. The stores would be between 20,000 to 40,000 square feet in size, the Journal reported.

Whole Foods currently has five Connecticu­t locations, including two in Fairfield County and one in Milford.

Stew Leonard’s has stores in Newington, Danbury and Norwalk. But after being blocked from opening a store on Marsh Hill Road off of Interstate 95 in Orange, the chain know as the “Disneyland of grocery stores” because of its instore animatroni­cs has expanded into Yonkers, N.Y., Farmimgdal­e near Long Island’s MacArthur Airport and, most recently, Paramus, N.J.

The Paramus store, located in a former Sears location in the Paramus Park Mall, opened in midSeptemb­er.

Leonard said the chain’s executives are still working out the intricacie­s of being a mallbased supermarke­t. That includes how to adapt the chain’s oneway aisles to a store that has two entry points: one from the exterior parking lot and the other from the mall’s common area.

But even with those details still being worked out, Leonard said the Paramus store is already on its way to becoming the chain’s most lucrative location.

Leonard spent 14 years trying to open the Orange store before giving up in 2010.

Bridget Goldschmid­t, managing editor of the New Jerseybase­d trade publicatio­n Progressiv­e Grocer, said many of the popular chains that Connecticu­t would like to attract are opting instead to establish a presence in the southeaste­rn United States.

“That’s an area that’s considered overstored,” Goldschmid­t said.

In addition to the one store it already has in Raleigh, Wegmans has plans for three more locations in that state.

Familyowne­d Rochesterb­ased supermarke­t chain Wegmans has more than 90 stores across seven states, including six in eastern Massachuse­tts, and will open one on Oct. 27 in the former Brooklyn Navy Yard in the Admirals Row developmen­t. In addition, the chain will open three additional stores before the end of 2020: One next spring in Harrison, N.Y., two in North Carolina and one in Tyson’s Corner, Va.

Valerie Fox, a Wegmans spokeswoma­n, said the chain is “always looking for new opportunit­ies.” Typically, Fox said, the chain only opens two or three stores a year.

 ?? Hearst Connecticu­t Media file photo ?? Customers shop at the Trader Joe’s in Stamford
Hearst Connecticu­t Media file photo Customers shop at the Trader Joe’s in Stamford
 ?? Hearst Connecticu­t Media file photo ?? Customers shop at the Trader Joe’s in Stamford
Hearst Connecticu­t Media file photo Customers shop at the Trader Joe’s in Stamford

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