by Kristen Cloud/staff writer
Virginia has managed to escape the worst of the recession. The state’s unemployment peaked in 2010 at 7.3 percent and currently, at 5.9 percent, is far better than the national average of 7.8 percent. There does, however, appear to be some nervousness about the future, particularly among business, and retail especially. That anxiety likely won’t subside until the presidential election is decided.
“A lot of companies are waiting until after the election is over to make a lot of important decisions,” Michael J. O’Connor, president and CEO of the Virginia Petroleum, Convenience and Grocery Association (VPCGA), tells The Shelby Report. “And unfortunately, I think, as we’re seeing (the election) get closer and closer each day, I almost wonder if the inevitable is going to be postponed and wait until a new Congress, until we really have some finality on the fiscal cliff.”
O’Connor echoes information from a Huffington Post report published Oct. 13.
“The state’s fortunes are tied to the outcome of the deficit debate on Capitol Hill and its outcome could dramatically alter its economy,” the report says. “Unless Congress finds a way to avoid the tax increases and spending cuts that could send the nation barreling over the so-called fiscal cliff early next year, the state could face serious pain.”
Fuel retailers feel the pinch
The cuts that could impact federal workers, defense firms and Virginia’s numerous military installations and beyond also would be felt by the food retail industry.
“For our industry that’s particularly dependent upon motor fuel, it’s a big deal,” O’Connor said. “We have very few retailers in our association that don’t have motor fuel outside their stores, whether it be convenience or grocery.
“The volatility of that, and the fact that there are so many competitors that like to use that as a loss leader, continues to make it very difficult to make any money off of that product, which, in the convenience store business used to be the No. 1 driver of sales,” he added. “Now it’s used more as a loss leader in a lot of companies.”
Bright spot: state’s business-friendly environment boosts store openings
In August, Pollina Corporate Real Estate Inc. ranked Virginia No. 2, behind only Utah, for its pro-business climate. This has boosted store openings in the state among traditional grocers as well as upscale formats, mass merchandisers and dollar stores.
• Norfolk/Virginia Beach area
Harris Teeter opened a 48,000-s.f. store in the Churchland Marketplace in Portsmouth on May 9. It is located at 3249 Tyre Neck Rd. and is open 24 hours. The Charlotte, N.C.-based grocer also will anchor a shopping center at the southeast corner of Granby Street and Little Creek Road in Norfolk. It is slated to open by the beginning of 2014.
Food Lion, another North Carolina-based grocer, held grand re-openings at four stores in Norfolk and one each in Hampton and Newport News in September. The stores were former Bottom Dollar Food locations. They were renovated during the conversion to the Food Lion banner.
Whole Foods Market was expected to open a new store in Virginia Beach in late October. The approximately 40,000-s.f. store is located in the Hilltop area.
The Kroger Co. completed a remodel of its store on Shore Drive in Virginia Beach in June. Additionally, the Cincinnati-based grocery giant plans to build its first new supermarket in Hampton Roads since it entered the region 12 years ago, The Virginian-Pilot reports.
The 123,600-s.f. Kroger Marketplace, expected to open next summer, will be located at the former Kmart site on Holland Road. In addition to food and fuel, Kroger Marketplace stores carry furniture, jewelry, kitchen supplies and home décor. The store in Virginia Beach, as well as one planned for Richmond, will be the company’s first Marketplace stores in the state.
Walmart will open its second Neighborhood Market, the Bentonville, Ark.-based retailer’s all-grocery format, in Virginia, this one in Roanoke (the other is in Norfolk). The 40,000-s.f. store will be located at the intersection of Jefferson Avenue and Harpersville Road. No opening date has been announced.
The Fresh Market opened a store at 10 N. Nansemond St. near Carytown on Sept. 19. The North Carolina-based specialty grocer employs 90 at the new 23,000-s.f. Richmond store.
An expansion project that Ellwood Thompson’s Local Market began in 2011 was completed earlier this year. The expansion added more than 4,800 s.f. to the natural foods grocer’s footprint at Ellwood Avenue and Thompson Street near Carytown. The grocer, which took over the space when its neighbor Blockbuster left, used the new space for an enlarged dining and seating area, coffee and juice bar, expanded meat and seafood and beer and wine sections, a full-service bakery and a community room. The additional space increases the grocer’s footprint to nearly 20,000 s.f.
Located in Richmond’s Fan District, Ellwood Thompson’s is in part of what has been described as an “over-served” area of the city.
“We’re in a situation…where you have a huge new Kroger, you have a Martin’s that used to be a Ukrop’s, you have an Ellwood Thompson’s…and you have (a new) Whole Foods all within—you could really walk to each one of these within two minutes,” he said.
“I think the issue has yet to really play itself out because in that particular area you do have probably have more stores than there are customers.”
• Leesburg/Arlington area
Harris Teeter recently opened two new stores in the Leesburg and Arlington areas.
In June, the grocer opened a 53,526-s.f. store in the Purcellville Gateway Shopping Center in Purcellville. The store includes a salad bar, Asian bar and cheese kiosk as well as a pharmacy. It also features a sustainable, energy-efficient design, including motion-detection lighting, LED lighting in cases as well as doors on medium-temperature cases in both the Farmers Market and Butchers Market departments. All hand sinks also are equipped with water-saving devices.
On Oct. 3, Harris Teeter opened a new 48,000-s.f. store in The Shops at Moorefield Station in Ashburn.
The Fresh Market will open its ninth Virginia store in Charlottesville in winter 2013. The store plans to open in the Albemarle Square Shopping Center at the dormant spot occupied for about a decade by Circuit City, which closed in late 2009. Prior to Circuit City, the location was home to a Safeway until the mid-1990s.
Trader Joe’s is expected to open in the new Shops at Stonefield, at US 29 and Hydraulic Road in Charlottesville, in November. The California-based specialty grocer will anchor the mixed-use development.
Wegmans Food Market also plans to increase the -grocery options in Central Virginia, The Daily Progress reports. The Rochester, N.Y.-based upscale grocer is concentrating on two markets, according to the report—the Mid-Atlantic and New England. Wegmans’ Charlottesville-anchored project is expected to be complete in 2015.
The Kroger on Rutgers Street near Town Square Shopping Center in Roanoke is undergoing a remodel. Roanoke.com reports that the company is spending $400,000 to upgrade the store’s décor and raise the ceiling height to 14 feet to match the ceiling height in the center store. The store is open during the remodel.
Dollar, discount, drug stores keep growing
Dollar and discount formats as well as drug store chains have experienced an uptick across Virginia, particularly in the state’s many rural areas. Of course, these retailers have grocery offerings, including a handful of perishables that make for convenient one-stop shopping in some cases.
“They’re certainly extremely competitive, and they’ve been able to go in a community where there is not a Walmart (Supercenter) and really pick up some market share,” O’Connor said. ”What’s the volume? I can’t really say, but there has been a large growth.”
In stores like Walgreens and CVS, grocery items often make up 10 or 15 percent of the store, according to O’Connor, whereas “15 years ago, you didn’t see any groceries in a chain drugstore.”