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 March 2008

March 2008

 

Oakland's All-New SuperMarkets

More Stores, More Options Reshape the Grocery Scene

Lara Hata

    When the much-anticipated Whole Foods in Oakland finally opened in late September, Ruth Turner was one of the first people to follow Jerry Brown inside. The former mayor, standing in front of a jazz band and a throng of shoppers toting reusable bags, proclaimed the massive market to be “a great achievement” for downtown Oakland and then went off to find some buffalo mozzarella. Turner, meanwhile, stood gaping while a sea of shoppers flowed past exotic produce islands and icy shellfish bars.
    “I can’t believe how huge it is, and all the variety,” she said, craning her neck to take in the lofty 55,000-square-foot space at the corner of 27th and Harrison streets. “Look at all these great things—it’s overwhelming! There’s a good feeling, a good energy, and it’s right down the street!” A longtime resident of the neighborhood between Lake Merritt and Broadway Auto Row, Turner says she used to ask herself, “Why are we taking money out of Oakland to go to these types of stores? This really helps Oakland’s image and puts Oakland on the map for a good reason.”
    Never before have Oaklanders been so excited about something so mundane: grocery shopping. It’s not only the Whole Foods and two Trader Joe’s, which opened in October in the Lakeshore and Rockridge districts, that have people swapping stories about best buys and comparing the chains to their locally owned grocers. Additional markets are coming on the scene, old markets are recasting themselves to appeal to today’s shoppers, and a public market that’s trying to emulate Seattle’s Pike Place is taking shape along the Waterfront (see “Your Grocery Guide,” p.44, for a rundown on Oakland’s new grocery options). “Having Trader Joe’s and Whole Foods come in sends a big, strong message to the retail community that ‘If they’re there and doing well, maybe we can do it,’ ” says Keira Lee Williams, a retail specialist with Oakland’s Community and Economic Development Agency.
    Over the next one to two years, an entirely new grocery chain is expected to become part of the landscape in Oakland’s flatlands, thanks to a British invasion called Fresh & Easy. U.K.-based Tesco, the third-largest retail company in the world, began rolling out a line of Fresh & Easy stores in Southern California in the fall, and now the company is expanding up here. Their first lease was announced in early December for the Jack London Gateway center in West Oakland. Williams says the Community and Economic Development Agency has been sending Tesco’s broker multiple locations to look at, mainly in redevelopment zones that lack quality retailers. “They’re very happy to go into urban areas,” she notes. “Low-income areas don’t scare them.”
    Fresh & Easy markets are similar to Trader Joe’s in size (10,000 square feet), price and quality—an all-natural private-brand label, for
example, and wholesome prepared foods—but unlike the eclectic TJ’s, Fresh & Easy offers a fuller line of basic foodstuff and household goods. Fresh & Easy cuts costs through a no-frills, streamlined format, but the company strives through marketing and design to seem more hip than cheap (think Jet Blue or Ikea). Tesco spokesman Brendan Wonnacott is mum about where and when other stores will be announced but confirms “we are looking all over Oakland for potential sites.”
    “Tesco is coming hot and heavy. … You’ve got a vacuum, and finally the world has recognized there is an unsatisfied demand in Oakland,” says John Jay, a former real estate analyst for Safeway and other major retailers who co-owns the Jay-Phares Corporation, which is redeveloping Foothill Square in Oakland’s southeast corner.
    Not only do many of Oakland’s 400,000 residents live in neighborhoods underserved by grocery stores, according to the Community and Economic Development Agency, but some 10,000 new residents are calling downtown home as a result of the city’s decade-long 10K Downtown Housing Initiative to build housing and attract people to the urban core. It all adds up to a lot of households wanting to fill their shopping carts closer to home, and retailers eager to meet their demand.
    Over at Foothill Square, meanwhile, Jay signed a lease with an independent “lifestyle” grocer, Lucas Harvest Market, which will fill a void in the South Hills and Eastmont neighborhoods when it opens sometime between September and early ’09. “Lifestyle” is shorthand for offering extensive fresh and organic selections, made-from-scratch bakery items and other high-end features. “It reflects a shopping experience on a human scale,” explains Jay, “and an aesthetic that is less plastic, more wood grain.”
    The demand for organics, handmade “artisan” products, hot-food bars and in-store amenities such as cafes has grocers remodeling their stores to fit today’s tastes and lifestyles. Also dubbed “the mainstreaming of affluence,” the lifestyle trend reflects the fact that more shoppers, regardless of income, want higher quality, less-processed products, along with a feel-good experience as they push a cart down the aisles and through the checkout line.
    The venerable Safeway has succeeded in attracting a new generation of shoppers by remodeling its stores in a much-promoted lifestyle format. Two of Oakland’s six Safeways (on Grand and Fruitvale avenues) have been remodeled, a third (in Montclair) is scheduled for a lifestyle makeover this fall, and the rest are in the planning stages for remodels or replacement.
    Safeway’s rival Albertson’s, by contrast, fell out of vogue and was sold off in early 2006, shutting most of its stores. The breakup of Albertson’s, in turn, created opportunities for new stores to spice up the supermarket mix. Several of Oakland’s new markets—the two Trader Joe’s, Mi Pueblo (a full-service Hispanic grocery with crossover appeal), Farmer Joe’s and the Lucas Harvest Market—are in old Albertson’s. Another second act to Albertson’s, the retro “three’s-a-crowd” Lucky, opened four stores in Oakland in 2007 and is competing with “everyday low prices.” (Save Mart bought the Northern California Albertson’s and rebranded them with the Lucky name, which is ironic given that Albertson’s gobbled up Lucky a decade ago.)
    Another alternative format to traditional supermarkets, the public market, is gaining favor by capitalizing on the steady popularity of farmers markets and artisan goods. Developers are working to give Oakland its own in the form of the Jack London Square Market, to be housed in the first floor of a six-story retail and office complex rising on the Embarcadero between Webster and Harrison streets. Though no leases have been signed, the developers promise to attract vendors who will turn the space into a daily fresh market showcasing a cornucopia of local and seasonal produce, baked goods, cheeses, meats and seafood. It’s scheduled to open in the first quarter of 2009.
    With all of these old-school and new-style markets luring Oakland shoppers with remodeled stores, competitive prices and more product options, the city’s family-run independent grocers can’t take customer loyalty for granted. Owners of such neighborhood favorites as Piedmont Grocery on Piedmont Avenue, Village Market on Broadway Terrace and Farmer Joe’s in Upper Fruitvale are hard-pressed to compete on value and selection. Consequently, they say they plan to leverage the strength of their customer service, convenient locations and community ties.
    Village Market owner Keith Trimble says his business is “definitely hurting” from the new Whole Foods and Trader Joe’s. “We haven’t had to lay anybody off yet, but we hope it’s a fad and that the customers will come back.” He says he’ll keep focused on providing quality and neighborly service, because he concedes he can’t compete on price. In many cases, he explains, the chains are able to offer items at a retail price that matches his wholesale price: “I buy a case, and they buy a truckload, and manufacturers are willing to give them huge discounts.”
    At the century-old Piedmont Grocery, sales dropped about 12 percent when Whole Foods opened, but bounced back to regain more than half that loss, according to owner David Larson. When asked how he can compete with Whole Foods—given that his North Oakland foodie clientele is Whole Foods’ target market, but the goliath Whole Foods offers so much more—he pointed to faster service and a personal touch. “We can get people in and out quicker than most stores. We’re kind of like an old shoe—we just have a good feeling.”
    It could be said that the more things change in the grocery business, the more things stay the same. Larson and his father, who was hired at Piedmont Grocery in 1921, witnessed a great deal of turnover among Oakland markets during the mid-century, and the intensely competitive grocery business is constantly evolving. Twenty years ago, for example, the pendulum swung toward slashing prices and putting pharmacies and other non-grocery goods under the same big supermarket roof to compete with a new generation of warehouse stores. Then it swung back toward an emphasis on quality, personal service and ready-to-eat “home-cooked” meals.
    Lucky for Oakland residents, a smorgasbord of diverse and enhanced options for buying food is spreading across the city, leading many households to adopt a cafeteria approach to grocery shopping. While the large chains flex their marketing muscles, the locally owned independents stand a fighting chance of strengthening their customer base once the novelty of the new stores wears off. You can bet that no one will work harder than the independent grocers to keep you, the shopper, coming into their stores—folks like Joe and Diana Tam, owners of Farmer Joe’s, who put in double shifts and rarely take a day off. They bag, sweep, stack the produce, “whatever is necessary,” says Diana Tam. “We work side by side with our employees. We love Oakland and want to do what we can to make the community better.”

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