California Centers Magazine serves retailers, developers, shopping center owners, investment sales brokers and tenant representation firms throughout the state of California.
Issue link: https://californiacenters.epubxp.com/i/711240
30 California Centers Magazine | August 2016 C C I t's been another exciting year on the California grocer front. Hag- gen exited just as quickly as it en- tered. Fresh & Easy finally threw up the white flag and retreated. The Fresh Market decided California was just too high maintenance and high-tailed it for the comforts of the East Coast. But we're just getting started. Gel- son's discovered it could capture even more of the California cool and ex- panded. Whole Foods Market created a no-frills "value-oriented" store. Gro- cery Outlet looked to stand out with its independently owned, every-store- is-unique approach. Aldi entered the state offering steep discounts in sim- ple store designs. With plotlines like these, it's hard to believe we're talking about compa- nies known for private-label, low-so- dium canned green beans and organic grapefruit displays. All this action is akin to the soap operas that shoot at CBS Studios in Los Angeles (there's a Gelson's nearby), but in the uber com- petitive world that is California's gro- cer landscape, it's just another day in Aisle 7. "California is a very difficult place to penetrate because it is so large and there are so many different options," says Donald MacLellan, senior manag- ing partner of Faris Lee Investments in Irvine. "As a gen- eral comparison, it also has a significant amount of diversi- ty in demographics across the socioeco- nomic and cultural spectrum. Like any- where else, the chal- lenge for grocery stores is fighting for the same consumer dollars. If new con- cepts are entering the market, they also have to wage the often losing battle of competing with established grocery operators who have loyal customers." If the buzz surrounding grocer ex- pansions, spin-off concepts and for- eign arrivals sounds familiar, it's be- cause we've heard that one before. This most recently — and notably — occurred when Bellingham, Washing- ton-based Haggen swiftly opened 83 locations in the Golden State. The fam- ily founded chain purchased a slew of Albertsons stores as part of the Albert- sons-Safeway merger's anti-monop- oly requirements. Haggen filed for bankruptcy in September 2015. Fresh & Easy met a similar fate. The El Segundo, California-headquartered chain was British supermarket maven Tesco's first foray into the U.S. Despite an acquisition by Yucaipa Companies' Ron Burkle, the U.K. way of packag- ing, marketing and selling groceries never really resonated with stateside consumers. Fresh & Easy filed for bankruptcy in October 2015. NICHE MARKET The arrival of a few niche grocers has created fierce competition throughout California, with the winners primarily determined by either healthy selection or price. By Nellie Day The Gelson's location in Calabasas. Donald MacLellan Senior Managing Partner Faris Lee Investments 365 by Whole Foods Market opened its first store in May in the Silver Lake neighborhood of Los Angeles.