The retail market continues to evolve in Northern California, with strong emphasis on serving consumers attuned to tech savvy solutions and organic food.
Raley’s Market 5-ONE-5, which opened in May in downtown Sacramento, is wellness-focused with a mantra of “organic, nutrition and education.”
A news release from the company said the “new specialty grocery store is conceptualized from a farmers market with fresh products delivered daily.”
“I want to go back to the basics and create a store that is reminiscent of a neighborhood corner market but with a focus on nutritious food at a fair value,” Michael Teel, owner, said in the release.
“Market 5-ONE-5 will be an unpretentious, inclusive and straightforward shopping experience.”
There was some attrition in the market as well.
Portland-based New Seasons Market early this year abandoned its plans for a cluster of stores in Northern California.
Retail share
Albertsons/Safeway have a comfortable lead in market share in Northern California.
2018 data from Shelby Market Shares indicates that the chain has 247 stores in the San Francisco; Oakland, Calif.; Sacramento, Calif.; Fresno, Calif.; and Reno, Nev., markets and commands 26.9% of total retail sales.
The year has seen plenty of news related to Albertsons/Safeway, who in 2015 had completed their merger agreement. Early this year, Albertsons and Rite Aid had agreed to a merger but the deal was terminated by both companies in August after institutional investors were not happy with the reward the deal brought Rite Aid.
Also in August, Albertsons and venture capitalist Greycroft created a fund that could put as much as $50 million toward developing technologies for the grocery space.
In the partnership, Albertsons brings the grocery expertise and Greycroft contributes investment knowledge and tech connections, according to the companies.
STORY: Albertsons, investment firm partner to fund new grocery tech
Albertsons said it already considers itself a leader in e-commerce, having placed an emphasis on home delivery, and it wants to further strengthen that position.
In September, Albertsons Cos. announced that Jim Donald was appointed president and CEO. Robert Miller, who had been company’s chairman and CEO, will continue as the chairman of the board.
Super Store Industries (a wholesaler) had a market share of 14.5% from 192 stores, according to Shelby Market Share.
Save Mart was third at a 12.4% market share and 197 stores, according to Shelby Market Shares.
Modesto, Calif.-based Save Mart Cos. in July said it will launch its new online shopping platform, ClickCart, in select stores this year. The service is now available in its Modesto Save Mart store on Pelandale Ave. and the new Lucky California on Fallon Road in Dublin.
C&S (a wholesaler), with 346 stores, was pegged at a 11.8% market share, followed by Walmart’s 95 stores at 10.6% of the market and Raley’s 118 stores with 9.2% share.
Retail factors
Northern California could see more room for growth for Sprouts supermarket in coming years, said Dick Spezzano, president of Spezzano Consulting Service Inc.
“There is a lot of room for that type of format up there,” he said.
Aldi has seen some growth in Northern California but Spezzano said it has not scaled up as fast as earlier projections. That could be related to slower than expected traffic or perhaps real estate issues.
Spezzano said vendor community estimates rate Aldi sales in California at perhaps $160,000 per week for a 15,000-square-foot store, compared with $400,000 per week at Trader Joe’s.
“On sales per square foot Trade Joes’ does much better, so I don’t know if they are happy with their sales here in California,” he said.
On the other hand, Aldi is using its refreshed designs in California for its remodeled stores in the Midwest and East, he said.
Whole Foods outlets are more price competitive since Amazon has purchased the chain. Whole Foods also is going to centralized procurement, which is leading to reduced headcount and increased pressure on the vendor community for discounts, he said.
While Amazon will likely lose money trying to deliver fresh produce and other groceries, he said the potential losses aren’t a worry in the short term.
“They will either get it right or get out,” he said.
Instacart is being heavily used by other retailers to help solve home delivery and help fend off Amazon, Spezzano said. That delivery service also is costly, but so far is a small part of the business.
“When retailers have to give 10% to 15% of your margin to a third party, when it is only 3% to 4% of sales, that’s fine,” he said.
“But when it gets into that 10% or 15% or 20%, that’s an impact on your bottom line.”