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
36 California Centers Magazine | August 2016 C C tion of products, higher-quality fare and prepared foods. Whole Foods and Gelson's, in particular, have honed in on these and they have been well re- ceived by customers." HEALTHY 24/7 Whole Foods is attempting to ap- peal to Millennials, who want the highest-quality, health-conscious items at the lowest prices, by creat- ing 365 by Whole Foods Market. The scaled-down concept will offer about 7,000 products instead of the typical 25,000 consumers are used to seeing at the flagship stores. The Austin, Tex- as-based grocer chose the trendy Los Angeles neighborhood of Silver Lake for its inaugural store. "We think the Silver Lake area of Los Angeles is an ideal community to plant our first 365 store flag and bring a modern shopping experience that draws from the best innovations of Whole Foods Market stores and gives them a new expression," says Jeff Tur- nas, president of 365 by Whole Foods Market. "We are really excited about the progress we have made with se- curing real estate in markets where there is high demand for both quality food and value in a convenient for- mat. With a fresh format and a unique product assortment, we think 365 will offer convenience and value while providing the quality standards and transparency that consumers love and expect." The new store opened on May 25 at 2520 Glendale Blvd. This smaller for- mat will utilize about 30,000 square feet, compared to the traditional 45,000 square feet of a traditional Whole Foods. It will also employ about 100 workers, as opposed to up to 500 at the full-fledged operations. The com- pany is working on additional stores throughout the U.S., including seven more in California. Locations have al- ready been scouted in Santa Monica, San Francisco, Concord, Claremont, Los Alamitos, Long Beach and North Hollywood. Michael Corbitt, senior vice pres- ident of retail for Harsch Investment Properties in Pleasanton, believes the 365 concept is a good bet for land- lords — and for good reason. "We are currently talking with 365 by Whole Foods about a project," he notes. "This concept ap- peals to the Millen- nials, with the low- er price points and partnerships with outside businesses like vegan restau- rants, coffee bars and other desirable offerings. With online threats like Am- azon Fresh and Instacart, several gro- cery operators are changing or mod- ifying their brands to become more competitive." TAKING UP SPACE The competition between Haggen and the already-established pool of California grocers allowed another SoCal staple to gain more traction in a market where it had some previously established loyalty. Encino-based Gel- son's recently purchased eight of the previous Haggen outposts for $36 mil- lion. The deal, which was approved in bankruptcy court this past November, was just too perfect for the local grocer to pass up, according to Rob McDou- gall, Gelson's president and CEO. One of the acquisition's biggest incentives, McDougall notes, was the ability for Gelson's to finally enter the San Diego market. "We are always looking for expan- sion in trade areas where customers value great food and exceptional ser- vice, within the right shopping cen- ters, and with superior ease of access," he explains. "These stores met our cri- teria, and had the additional benefit of being existing grocery store locations. The opportunity to expand into new markets, which Gelson's had been seeking for years in places like San Di- ego, was key." The eight converted stores are lo- cated in Santa Monica, Ladera Ranch, Rancho Mirage, Thousand Oaks and Laguna Beach, as well as the San Di- ego submarkets of Del Mar, La Costa/ Carlsbad and Pacif- ic Beach. Gelson's is also gearing up to open new stores in Rancho Mission Viejo and Manhat- tan Beach, in ad- dition to a second location in Holly- wood. The latest round of openings will bring Gelson's total store count to 29, though McDougall doesn't plan to stop there. "We believe we still have many underserved areas within our cur- rent geographic area, where there are customers who love great food and service, but there is no Gelson's for miles," he says. "We are exploring op- portunities as they unfold." Those hoping to capitalize on Gel- son's exploratory nature would do well to understand what the chain is looking for. The grocer's analysis con- sists of, among other things, available shopping dollars in a given trade area versus the number and types of com- petitors in that same area; high pop- ulation density and/or high-growth areas within a three-mile radius; and higher household incomes. The com- pany considers locations between 15,000 and 20,000 square feet for high-density infill sites and 30,000 to 35,000 square feet in ground-up, exist- ing and mixed-use properties. Hoogesteger believes Gelson's has a healthy (no pun intended) take when it comes to strategically expanding within both new and established mar- kets to avoid the fate that befell its pre- decessors. "Now more than ever, grocers are doing the homework needed to re- ally understand the unique lifestyle aspects of each market they are con- sidering," he says. "In California, you have to do your homework so retail- ers know where they are more likely to succeed, and even where their com- petitors are likely to succeed." CC Michael Corbitt SVP of Retail Harsch Investment Properties Rob McDougall President and CEO Gelson's