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2011 Connecticut Profile: Some Grocery Retailers Go, Others Grow

Mystic Harbor Connecticut
In spite of many economic challenges and a daunting business environment, most grocery retailers in Connecticut are thriving, particularly family-owned independents.
[gn_note color=”#b1cbde”]The 2011 Connecticut Profile originally ran in the April 2011 edition of The Shelby Report of the Northeast. Due to reader requests we will be posting our Profiles from each edition of The Shelby Report. The profile will be published on theshelbyreport.com one month after it has run in print.[/gn_note]

by Terrie Ellerbee/associate editor

In spite of many economic challenges and a daunting business environment, most grocery retailers in Connecticut are thriving, particularly family-owned independents. As larger retailers have exited the state, smaller chains have taken up the slack and ­expanded their businesses.

Last year Minneapolis-based Supervalu left behind 18 Shaw’s Supermarkets locations that were to be sold or closed.

Wakefern Food Corp., the largest retailer-owned cooperative in the U.S., bought 11 of those leases. Forty-five member companies make up the cooperative, which operates ShopRite and PriceRite retail stores. The acquisition led to an updated store count of 22 ShopRite and nine PriceRite locations in Connecticut.

ShopRite stores opened in Canton, Enfield, Stratford and Hamden last May in former Shaw’s stores. Each is more than 65,000 s.f. in size and features a fresh bake shop, full-service butcher, fresh seafood, a full-service floral department, a coffee bar, a wide variety of gourmet cheeses, a prepared foods department featuring salads, sandwiches, soups, pizza and other specialties for dining in or taking out, and a fresh-made sushi bar.

The Stratford store also offers full-service catering and ShopRite From Home® delivery services. The Hamden store features full-service catering as well as a full-service pharmacy and on-site registered dietitian (consultations are free).

The ShopRite of Canton, located at 110 Albany Turnpike in the Shoppes at Farmington Valley, is owned and operated by Joseph Family Markets, headed by Chuck Joseph and his wife, Debbie. They also own a West Hartford location.

The ShopRite of Enfield, 40 Hazard Ave., is owned and ­operated by Raymond Miller of Miller Farms Family Markets.

The ShopRite stores of Stratford and Hamden are owned by Milford Markets, which is owned and operated by Harry Garafalo and his wife, Ann. The ShopRite of Stratford is located at 250 Barnum Ave. Cutoff. The ShopRite of Hamden is located at 2100 Dixwell Ave. The Garafalos also own the ShopRite stores of Milford and West Haven.

Grade A Markets Inc. operates the Fairfield and Southbury ShopRite stores. Five Star Supermarkets of Clinton operates the Clinton ShopRite and Waverly Markets operates the store in East Hartford.

This year, ShopRite announced that it is the only grocery ­retailer with a presence on three major mobile spaces—iPhone, Android and a mobile website. Customers can use the apps to look at digital circulars and pick items to add to their online ­shopping lists.

“We want to provide our customers with the opportunity to ­interact with our weekly savings circular wherever they are,” said Cheryl Williams, VP of marketing for Wakefern Food Corp./ShopRite. “By using mobile apps and a mobile website, we’ve found a way to make ShopRite customers’ lives easier, and to engage them in a space where they spend a great deal of their day.”

ShopRite in February introduced “Potluck” at ShopRite.com that features food and mom bloggers. Writers post recipes, ­reviews and cooking demonstrations using ShopRite private label products.

Save-A-Lot, itself a division of Supervalu, recently opened in a portion of one of the former Shaw’s that had been closed since 2007. The 17,000-s.f. Save-A-Lot in Waterbury at 1805 N. Main St. is one of nine now in Connecticut.

Save-A-Lot wants to continue its growth via existing and new licensees. The region is a prime growth area for the retailer, where it currently has about 128 stores.

“We are actively seeking retailers who may have an interest in store ownership,” David Hall, director of licensed development-North, told The Shelby Report. “The Northeast plays a huge part in our future growth plans.”

Save-A-Lot is on a mission to double the number of its locations from 1,200 to 2,400 in five years, the most aggressive expansion plan in the company’s history.

The limited assortment discounter targets urban, suburban and rural markets with household incomes less than $40,000.

This year Save-A-Lot will introduce a new line of smaller package-sized products at lower prices. Cereal, for example, costs $1.79-$1.99, with a slightly smaller package that will cost 99 cents.

Save-A-Lot has a distribution in Coxsackie, N.Y., that will ­accommodate the division’s growth in the Northeast.

The Great Atlantic & Pacific Tea Co. (A&P) left northern Connecticut last summer, and Big Y stepped in to purchase seven of its vacated stores last September. Big Y is one of the largest independently owned supermarket chains in New England. The Springfield, Mass.-based family-owned chain operates 61 stores in Connecticut and Massachusetts.

“The acquisition of these stores provides an opportunity for Big Y to move into some key locations that make it a natural fit for Big Y by filling in holes within our existing markets,” said Charles L. D’Amour, president and COO of Big Y. “And, despite the troubling economy, we are especially excited about providing our employees with opportunities as we grow within our home markets.”

Last November, Big Y opened four World Class Market stores in former A&P locations in West Hartford, Branford, Old Lyme and Mystic. Other Big Y stores are in North Haven and North Branford.

The chain announced in mid-February plans to open a World Class Market in Meriden. The 55,000-s.f. supermarket will be located in Townline Square shopping center, where it will ­renovate a location vacated by ShopRite when it relocated to Wallingford last year.

World Class Market stores feature prepared meals such as freshly made pizzas and rotisserie chicken dinners, fresh cooked-to-order fish and chips, a broad selection of specialty foods ­including organic and gluten free foods, a full-service butcher shop, seafood direct from New England piers and an extensive produce department with more than 500 different items including organics as well as fruits and vegetables from local farms and orchards. Big Y produce buyers work with local growers throughout the year in order to be able to sell as much native produce as possible throughout the growing season.

The Meriden store represents an investment of about $5 ­million. The store is expected to open in late spring.

“This is a wonderful opportunity for us to bring our legendary World Class Service and quality products to the Meriden/Wallingford community,” D’Amour said. “This development will enhance Big Y’s position as a leader in the Connecticut supermarket industry which has recently been bolstered by our transformed A&P facilities.”

Big Y announced last November that it is working with Bozzuto’s Inc. in Cheshire, its wholesale partner, to find suitable independent operators for the Naugatuck and East Haven stores this year.

In Deep River, the freshest Adams Hometown Market made its debut last December. The retailer has seven Connecticut locations, according to its website. The Deep River store grew to 23,500 s.f. and now features a cheese island, Boar’s Head meats in an upgraded deli and seafood “fresh from the docks,” ­reported Valley News Now. The store also now offers organic produce and prepared foods.

Whole Foods Market has stores in development in Danbury (construction to begin soon) and Fairfield (expected to open this fall). The Texas-based organic grocer currently has stores in Bishops Corner, Darien, Glastonbury Greenwich, Milford, West Hartford and Westport.

Deep discounter Aldi opened a store in South Windsor last Dec. 13, bringing its store count in The Nutmeg State to 18. It plans to open a store in Danbury by late summer.

Last December, Stop & Shop Supermarket Co., part of Ahold, opened a new store in West Hartford, its second location there. The store features refrigeration systems that use a natural refrigerant. It is the first in the state to operate with the technology.

The multi-million-dollar, 38,000-s.f. store, located at 176 Newington Rd., also uses technology for customer services. Check It! allows customers to utilize self-scanning units to expedite the checkout process. Scan It! hand-held devices allow ­customers to scan and bag groceries while they shop.

The store features full-service seafood, deli and floral departments; a cheese shop; sushi; natural and organic products; and specialty items.

A Stop & Shop branded gas station is onsite, and customers can use a loyalty card for gas rewards. For every 100 points earned on groceries, customers save 10 cents per gallon on gas. Just by using the card, they get 5 cents per gallon off on regular and 10 cents per gallon off on premium gasoline.

Stop & Shop brought fuel cell technology to its Torringford Street store in East Torrington. The UTC Power PureCell® System Model 400 is expected to generation more than 90 percent of the store’s electric energy. The fuel cell was commissioned last June and dedicated early this year. It enables the store to operate without burdening the local power grid and without fossil fuel combustion.

‘Blue Laws’ remain intact, business environment a challenge

Connecticut is where “Blue Laws” supposedly originated. On March 3, 1755, in a newspaper story in the New-York Mercury, a writer longs for the revival of “our Connecticut’s old Blue Laws” (see box below).

In 2011, Connecticut grocery retailers are blue because state lawmakers failed to even bring the issue of selling beer on Sunday to the floor, despite at one point having the numbers to get it passed.

“It’s very disappointing,” said Stan Sorkin, president of the Connecticut Food Association (CFA). “There was a lot of infighting and it never got out of (the general law) committee.”

All hope is not yet lost, Sorkin told The Shelby Report. It could still be worked into the governor’s budget as it “gets picked apart and they’re looking for revenue,” he said.

With big holes in nearly every state budget, legislatures across the country have taken a new look at blue laws this year.

Connecticut Gov. Dan Malloy believes “the people …are wise enough to purchase their liquor on the days they want it. We’re losing that revenue.”

He said so in a televised gubernatorial debate last June.

For some, the issue is whether government should have the power to dictate to businesses when they can open, when they have to be closed and what they can sell. Connecticut grocery retailers can only sell beer, and not on Sunday. Package stores around the state, the only retailers allowed by law to sell wine and liquor, are closed on Sunday.

“One of the problems with Connecticut is there’s an over­abundance of package goods stores,” Sorkin said. “You have one package goods store for every 2,500 ­residents. It’s basically a mom-and-pop industry and they can’t compete on price, basically because it’s prices-regulated. They can only compete on location if anything. Convenience wins in most cases. They don’t want to compete on hours. They want their guaranteed day off and their lobbyist has cried wolf and with some ­success with members of the committee.”

Opponents to Sunday sales say the change would ultimately force 300 of the state’s 1,100 package stores to close, and that there would be no increase in revenue. Sorkin said no one challenged those assumptions.

“It’s (store closings) never happened in any other states,” he said. “Every other state that’s gone to Sunday sales has seen 5 to 8 percent increases in revenue.”

There are 14 states in the union still prohibiting liquor stores to sell on Sunday. Connecticut is one of three—and the only Northeast state—still prohibiting Sunday sales of alcohol by ­grocery stores.

Surrounding states have benefited greatly from Connecticut’s ban. Estimates are that the state could take in as much as $8 million if the prohibition were repealed.

Business climate holding state back

Connecticut has a $3.5 billion deficit in its $19.5 billion budget.

“On a per capita basis vs. states like California and other states that have major budget deficits, Connecticut is up there,” Sorkin said. “There’s very little job creation in the state the last three to four years. Government has grown 250 percent. The state of Connecticut for business climate is very poor.”

One major concern is the makeup of the state legislature. Sorkin said there are “very few” business people among the lawmakers.

“For the first time in a long time … the governor’s office and both branches of the legislature are controlled by Democratic, very heavy labor/social-good-doers,” he said. “You’re fighting legislation that comes from lawyers and social do-gooders, which always has a cost to the food industry attached to it. The battle continues. That has not changed over the years.”

Sorkin said members of the association are concerned in ­particular about two big issues.

“[One concern is] Connecticut becoming the first state to ­authorize paid sick leave for full- and part-time employees of ­businesses with 50 or more people.”

In addition, “Everybody’s concerned about the unemployment funds shortfall that has to be made up and what formula is going to be used to make up the shortfall,” he said.

The CFA has an impressive slate of successes this year. It ­defeated an annual fee for a test that retailers must pass to be exempt from the state’s item-pricing requirement. The fee for the test, which retailers must pass with a score of at least 98 percent (and have no problem doing, Sorkin said), depends on the size of the store for the initial inspection.

“Instead of making it a one-time fee, they were thinking of ­making it an annual fee,” Sorkin said. “It could have somebody, say, a small independent, $365; it would have cost Stop & Shop $60,000. So we were able to kill that.”

The CFA also victoriously battled the expansion of the state’s bottle bill. Lawmakers considered extending it to include juice, sports drinks and teas this year. The CFA also has staved off taxes and/or fees on paper and plastic bags.

Another important issue for Connecticut retailers is the ­minimum wage. Sorkin said that where before the state had ­routinely passed annual increases, in the last three legislative ­sessions it has not.

Legislative issues aside, retailers in the state also have to contend with high unemployment. The jobless rate stayed below 5 percent until February 2008, and has steadily risen since then.

In January, the state’s unemployment rate reached 9.6 percent, “so you’re not getting an influx of people to drive top-line sales,” Sorkin said. “There’s very little job creation in the state the last three to four years.”

Key Foods opened opened its first Connecticut store in Stamford in January. Key Food Stores Co-Op Inc. has about 110 stores in New York. The Stamford store is a neighborhood-type store taking up about 7,200 s.f.

In March The Market at Hartford 21, an 8,500-s.f. downtown store, opened its doors inside an apartment tower.

A 24,000-s.f. Elm City Market will open this summer in the new 360 State Street apartments in Hartford. A New Haven food co-op secured $4 million to open the store.

But other than small downtown operators, there aren’t many new players looking at Connecticut.

“There’s no Wegmans, no Hannafords coming into the state, so that says something about people’s views of doing business in Connecticut,” Sorkin said. “Existing operators have taken over the closed sites, but new blood has not entered the state for a while.”

Population grows in Connecticut cities

The U.S. Census Bureau in mid-March released more detailed information about the state’s population. Connecticut’s most populous cities are Bridgeport, 144,229; New Haven, 129,779; Hartford, 124,775; Stamford, 122,643; and Waterbury, 110,366. Over the 2000-10 decade, New Haven grew by 5.0 percent, Hartford grew by 2.6 percent, Stamford grew by 4.7 percent and Waterbury grew by 2.9 percent.

The largest county is Fairfield, with a population of 916,829. Its population grew by 3.9 percent since 2000. The other counties in the top five include Hartford, with a population of 894,014 (increase of 4.3 percent); New Haven, 862,477 (increase of 4.7 percent); New London, 274,055 (increase of 5.8 percent); and Litchfield, 189,927 (increase of 4.2 percent).

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