There’s good news and not-so-good news for Alabama as 2015 gets under way.
Like much of the U.S., the state seems to be emerging from the recession—adding 31,600 jobs during its fiscal year from September 2013 to September 2014. The Cotton State’s unemployment rate of 6.0 percent is the lowest it’s been since October 2008.
“The governor has done a really good job of bringing businesses in, like AirBus, and he just made an announcement about the addition of a Polaris plant in north Alabama that’s going to bring about 1,700 jobs to that part of the state,” Ellie Smotherman Taylor, president of the Alabama Grocers Association, tells The Shelby Report. “Next year, we’re expected to see the addition of between 25,000 and 30,000 in our state.”
Despite the optimism generated by the gain in jobs, the state’s budget presents big challenges looking ahead into the new year, with Taylor pointing out a $200-$300 million shortfall in the general fund. Adding another wrinkle is the fact that the new legislators in the state House and Senate—and there are many—all ran on platforms to not raise taxes.
“It’ll be interesting to see, having that $200-$300 million deficit, where the legislators go to find those funds,” Taylor says. “…Over the last several years they’ve cut agencies, combined agencies—they’ve cut just about everywhere they could cut.”
One idea being proposed involves increasing the state’s tobacco tax, which currently is 42.5 cents on any pack of tobacco.
“That puts us 47th in the nation for tobacco tax (or fourth lowest),” Taylor says. “However, Alabama really is not that low because you have to add in county and city taxes, which is different from most states. If you add in county and city taxes, along with the 42.5-cent tobacco tax for the state tax, it really puts us at about 75 cents per pack for taxes. That is about middle of the road for cigarette taxes, which puts us at a very competitive disadvantage to other states.”
Neighboring Georgia’s state tobacco tax is 37 cents per pack, for instance—making the proposal of upping Alabama’s tobacco tax a risky move.
“We have to be careful when we start increasing taxes so that we don’t go too high above our neighbors and then push consumers to not only buy cigarettes out of state but also, during their shopping trips, buy other things out of state. Then you’re not only losing your tobacco tax money, you’re losing your sales tax money on other items. It’s very tough. Those consumers are not just going to buy tobacco, they’re going to buy other items, so you’re losing more than just the tobacco tax money.”
Retail movement picks up across state with a ‘fresh’ focus
Despite the state’s budget woes, 2014 proved a busy year for the grocery industry in the state, and 2015 is forecasted to see continued activity on the food retail front.
In addition to Louisiana-based Rouses entering the state in the Mobile market in early 2014 with a handful of former Belle Foods stores it picked up through the Associated Wholesale Grocers consortium, other grocers made known their plans to open their first stores in Alabama.
Phoenix, Arizona-based Sprouts Farmers Market, for example, will open its first Alabama store Feb. 18 at 5291 Highway 280, Unit 130, in Birmingham. It also has plans to debut a store on March 11 at 7504 U.S. 72 West NW in Huntsville, and on April 15 at 5250 Medford Drive in Hoover.
Trader Joe’s also will make its Alabama debut in 2015.
The California-based specialty grocer will open an approximately 12,600-s.f. store at The Summit Shopping Center in Birmingham sometime in the second half of the year. Trader Joe’s sister company, Aldi, also has expanded in the Birmingham market in the last several years.
Another specialty retailer, North Carolina-based The Fresh Market, will expand its presence in the state this year, too—opening its seventh Alabama store in Tuscaloosa at the intersection of McFarland Boulevard and 13th Street East in The Shoppes at Legacy Park in mid-2015.
Natural and organic grocery leader Whole Foods Market, with headquarters in Austin, Texas, is perhaps making the most aggressive expansion efforts in the Alabama market.
With only one store currently in the state—in Birmingham—Whole Foods will open its second Alabama location in Mobile this year in the Pinecrest Shopping Center at the intersection of Airport Boulevard and South McGregor Avenue.
The company plans to open stores in Hoover, Huntsville and Montgomery as well.
The Hoover store will be located in a former Belle Foods/Bruno’s location in the Riverchase Village shopping center.
The 42,000-s.f. Huntsville store, which will mark Whole Foods’ first north Alabama store, will anchor a new shopping center called The Shops at Merchants Walk, featuring 48,000 s.f. of additional restaurant and retail space plus a new Regions Bank. The Huntsville Whole Foods is expected to open late this year or in early 2016.
In Montgomery, Whole Foods intends to open a new store at the new Chase Corner development on Taylor Road sometime in 2016. It will be the first central Alabama location for the grocer.
The uptick in the number of natural, organic and “fresh” formats is a reflection of what Alabama shoppers are demanding, according to Taylor.
“There’s definitely a trend within the state of Alabama of people wanting these types of stores in the market,” she says.
Catering to these consumers is one reason the Alabama Grocers Association will host an extensive health and wellness seminar during its convention this summer (see box above).
“Something that we’re looking at is how the market is changing and what consumers are wanting,” Taylor says. “I think a lot of it has to do with the different health challenges people are facing—like diabetes and celiac disease. People need stores that accommodate their needs and we, as an industry, are really looking at what we can do to meet our customers’ needs.”
Publix opening 28,000-s.f. store in food desert
It’s not just specialty formats that are catering to those looking for healthier options. Publix Super Markets, with stores across the Southeast, is as well.
A new store that the Lakeland, Florida-based grocer is constructing in downtown Birmingham aims to bring healthy fare to an area that is a designated food desert. Although a number of grocery stores, such as Western Supermarkets, V. Richard and Piggly Wiggly, have stores on the periphery of downtown, the heart of the city is classified a food desert for not having convenient access to fresh foods for area residents, reports indicate.
Publix’s Brenda Reid tells The Shelby Report that the store will be 28,000 s.f. and part of (a $30 million) mixed-use development. An opening date has not been set, though reports note the store could open by the end of this year or early 2016.
“The shopping center will be called Midway Corners at the northwest corner of 20th Street South and 3rd Avenue South,” Reid says. “We are very excited about the opportunity to serve the downtown Birmingham community. We look forward to bringing our Publix brand of customer service to this developing part of town.”
In addition to the downtown Birmingham store, Publix continues to open stores across Alabama.
It opened two 45,600-s.f. stores in Guntersville and Gardendale late last year, at 2300 Gunter Avenue in Guntersville Landing and at 655 Fieldstown Road in Magnolia City Place, respectively. Both stores include a pharmacy. Additionally, the grocer plans to open a store in Moody to anchor the Village at Moody retail center. The 45,600-s.f. store will include a drive-thru pharmacy and is expected to open later this year.
Publix currently operates 58 stores in the state, according to Reid.
• Winn-Dixie closed five Alabama stores late last year as part of Bi-Lo Holdings’ announcement that it would shutter nearly two dozen stores across its Southeast footprint. The stores in Alabama that closed included those at 104 River Square Plaza in Hueytown; 2402 Old Springville Road in Clay; 2055 Coliseum Boulevard and 4035 Eastern Boulevard in Montgomery; and 1300 Gilmer Avenue in Tallassee. Winn-Dixie opened two stores in the Birmingham area in 2014, one on Montevallo Road and one in Hoover. It also remodeled three stores in the Birmingham area. Winn-Dixie currently operates approximately 60 stores in the state.
• Walmart continues to make inroads in Alabama, opening Supercenter and Neighborhood Market locations as well as its newer Express stores. The Bentonville, Arkansas-based retailer was expected to open its first Express concept in Headland last year. Before the store’s opening, Headland Mayor Ray Marler told dothaneagle.com that the roughly 12,000-s.f. store “will feature approximately 15,000 items. Fuel will also be available at the location. The Walmart Express will also offer check cashing, as well as if someone orders merchandise from another Walmart location, they can have the merchandise shipped to the Headland Walmart Express for pickup.”
• It seems the Crestline Piggly Wiggly in Mountain Brook will get a second chance. After the store closed in 2013 to the disappointment of many, in December 2014 the city council voted to rezone certain parcels on Vine Street needed to ensure the return of the grocer store. A “Save the Crestline Pig” Facebook page says “developers hope to start construction as soon as February, with a targeted eight-month completion date.”
*Editor’s note: This market profile story by Kristen Cloud also appears in the February 2015 print edition of The Shelby Report of the Southeast.