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Food Fight: Burlington-Area Grocers Spar for Customers

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SEAN METCALF
  • Sean Metcalf

The parking lot is paved, the exterior is nearly complete and construction workers are hard at work finishing the City Market/Onion River Co-op store expected to open in November on Flynn Avenue in Burlington's South End.

"We'll have a lot of elbow room," said John Tashiro, the market's general manager. The 33,000-square-foot building will be substantially larger than the cramped City Market on South Winooski Avenue. That downtown store is known for its crazy-busy parking lot — the butt of many jokes but, ultimately, not an obstacle to the store's remarkable $42 million in annual sales.

The new store will open just two miles away, near larger competitors. While downtown would be a grocery desert without City Market, the South End area is teeming with grocery retailers. Price Chopper, Shaw's and Hannaford all have a presence along the Shelburne Road corridor in Burlington and South Burlington, where they duke it out for their own bite of the heavy traffic that whizzes by.

Can the marketplace bear the expansion as the grocery wars heat up? The players are confident.

City Market has done its homework, and its new store will succeed, predicted Tashiro.

"The demand for local is strong; the demand for having a community-owned, member-owned grocery store is strong," he said.

At least one of the big-box stores is planning an expansion that could help it remain competitive. Hannaford intends to shutter its store on Hannaford Drive and open a new, 60,000-square-foot location at the boarded-up, decrepit Kmart plaza nearby. The prominent South Burlington parcel on the west side of Shelburne Road has long been considered an eyesore. Signs warn against overnight parking in the pockmarked lot. Last Friday, litter festooned a fence along one side of the vast concrete expanse, which fronts the empty one-story building.

"We've certainly gotten feedback that people want that area to be developed, to be more vital," said Mike Norton, a spokesman for the Scarborough, Maine-based Hannaford Brothers, which has 17 stores in Vermont.

Once complete, the new Hannaford and City Market will turn the area into even more of a shopping cart mecca that'll feature some 250,0000 square feet of foodstuff space. Norton is confident that there's enough consumer appetite.

"We feel really good about the investment," he said. "We move carefully."

The existing stores may have to "reinvent themselves to try not to let City Market steal their lunch," said Yves Bradley, leasing agent for the Kmart plaza property and a commercial broker at Pomerleau Real Estate in Burlington. "They'll all make it. It's just that there will be a restructuring."

Price Chopper already has changes for that location in the works. In just a few weeks, a renovation is scheduled to begin. And as part of a company-wide $300 million rebranding announced in 2014, the store will be renamed Market 32.

It'll stay open during the renovation, which should be complete by next summer, said Mona Golub, a spokesperson and chain co-owner. She suggested that the new Hannaford store proposal is an attempt to keep up with Price Chopper.

"Competitors like Hannaford, who have stores in other areas where we've either built new or converted our Price Choppers to Market 32s, are well aware of how well the new stores are doing and how attractive they are to customers," Golub said.

Groceries are a big business. Vermont has more than 600 food and beverage stores, which generate about $339 million in annual sales and payroll, according to the National Retail Federation.

Where there are people, there are food dollars. So it's not unusual for grocery stores to be clumped together in places with lots of people and cars, such as the congested stretch of Shelburne Road near the Interstate 189 ramps. Dorset Street in South Burlington features another Hannaford, the locally owned Healthy Living Market & Café, and Trader Joe's. Taft Corners in Williston is home to a large Shaw's, a Hannaford and the smaller Natural Provisions Deli & Café.

In such populous markets, said Erin Sigrist, president of the Vermont Retail & Grocers Association, the consumer benefits in two ways: Retailers provide different experiences, be it in-store cooking classes or a killer hot bar, while they also offer discounts designed to match or undercut other grocers.

To keep up, and to stand out, Norton said, Hannaford tracks consumer trends — and adjusts accordingly. The new location will include an in-store café (as found at Price Chopper), more pre-chopped and packaged fruits and veggies (a major feature at Shaw's), and a curbside pickup area for customers who order groceries online or over the phone.

Online grocery shopping is a small portion of total sales in the state, "but it is growing, so that just forces the brick-and-mortar retailers to be more creative," said Sigrist.

The South Burlington Development Review Board gave initial approval in June to the Hannaford proposal, and most of the permits are in hand. After the redo, there will be space for two or three additional tenants in the building. But none have been lined up, and, until the permitting is complete, Norton said, Hannaford does not have a construction timeline or a firm opening date for its new store.

Shoppers are watching the developments with interest. Some say they will stick to their favorites, while others may try new stores. Alycia Dobson, a physical therapist who lives in South Burlington, circulates between Shaw's (great deals and short lines, she said) and two of the stores on Dorset Street: Healthy Living (good bulk section, she said) and Trader Joe's (for items such as salsa and wine).

"I might check it out," she said of the new City Market, as she loaded groceries from Shaw's into her car last Friday.

Across Shelburne Road, Charlie Hays of Burlington stowed seltzer, bags of ice, croissants and other groceries in his car outside Price Chopper. He shops the store sometimes twice a day to supply his Global Bite Catering company and for his job as chef at the Alpha Chi Omega sorority house on Main Street, down the hill from the University of Vermont.

Hays likes the produce and deals at Price Chopper and isn't a fan of Shaw's or Hannaford. He shops at the downtown City Market, especially for fish and because he lives a five-minute drive away. That doesn't always translate to a quick jaunt. "It's close, but ... I'll wait 20 minutes for a parking space," he said.

Susan Diamond of Burlington shuttles between Shaw's and Price Chopper. She hasn't been wowed by Hannaford and doesn't see herself transferring allegiance to a new, bigger version of the store. She's likely to try the new City Market but has nearly given up on its downtown location. "It always seems hard to park," the retiree said as she exited Price Chopper with groceries.

City Market on Flynn Avenue will have 115 parking spaces, compared to 70 downtown. On a tour this month, Tashiro pointed to its larger café area, which will have retractable, garage-style doors that open onto an outdoor patio facing Briggs Street. The produce, meat and fish departments will be larger than those at the downtown store, and the new market will have a juice bar. On the second floor, finishing touches were being made on a kitchen for cooking classes. A big, bright community room will be available for events.

Don't expect expanded online or call-in sales options. City Market has a limited program now and is not planning to do more, Tashiro said. He views the co-op as a unique entity not in direct competition with traditional chains.

Instead, City Market banks on shoppers who want local products, which account for about 40 percent of its total sales downtown. The Alchemist's Heady Topper beer, for instance, is so popular that customers are limited to two four-packs. The Vermont brand is not found at Shaw's, Price Chopper or Hannaford.

The co-op projects that the new store will generate $15 million in annual sales the first three years. That includes about $8 million siphoned from the current store — a 20 percent hit to the downtown location.

Tashiro said the shift is intended to ease congestion at the South Winooski Avenue store, which was designed to max out around $33 million in sales. The Flynn Avenue site will allow for expansion down the road, Tashiro said.

The co-op is hiring 100 new employees and finalizing construction, aiming to open before Thanksgiving. A tentative plan to open a small store in a space the co-op purchased in Burlington's Old North End is on hold.

So, for now, Burlington's South End and the nearby Shelburne Road strip is the fiercest grocery store battleground around.

"Nobody can completely predict the future of where people want to be," Hannaford's Norton said, "and where they want to shop."


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