Based strictly on demographics, supermarket chains ought to be clamoring for a spot at Connecticut’s table.
Connecticut residents had the nation’s highest personal income in 2018 and the state’s workforce is filled with highly educated and discerning consumers. But when it comes time to put their money where the mouths are, grocery store chains are increasing looking elsewhere for expansion.
Even Stew Leonard Jr., whose family-owned grocery stores are widely known beyond Connecticut’s boundaries, doesn’t seem to have an appetite for another Connecticut store at the moment.
Grocery and retail experts, along with a trade group executive and a local first selectman, say a variety of factors contribute to grocery chains’ reluctance to establish a new territory in Connecticut or expand upon the existing presence they have in the state.
The reluctance of some the most popular grocery chains in the country to either enter the Connecticut market or expand here seems odd to David Cadden, a professor emeritus at Quinnipiac University's School of Business.
“I would think Trader Joe’s and Whole Foods would have seen Fairfield County and the rest of the Connecticut shoreline as attractive locations to expand in,” Cadden said. In particular, he said a number of Shoreline communities from Branford east to the Rhode Island border have attractive customer demographics.
But Wayne Pesce, president of the West Hartford-based Connecticut Food Association, said the state’s economy and a market place already saturated with different types of stores selling groceries is discouraging new retailer from entering the market. In addition to the mainstream supermarkets, warehouse clubs and discounters such as Walmart and Target also have grocery items, Pesce said.
And with the state’s minimum wage having gone up to $11 an hour at the beginning of the month, with additional increases schedule to raise the pay rate to $15 by 2023, he said a decrease in the the number of grocery stores around the state is a real possibility. He cited the recent announcement of a West Hartford ShopRite closing in late November as “the tip of the iceberg.”
“The market has plenty of retailers and their profit margins are very tight,” he said. “It’s getting more and more difficult to be profitable.”
North Haven First Selectman Michael Freda has made sales pitches to Trader Joe’s, Stew Leonard and Wegmans about opening a store in town. North Haven already has a Big Y and Stop & Shop in town and Freda said officials with the three chains he approached all turned him down.
“Trader Joe’s told me we don’t have a high-enough population count or household income to be considered,” he said.
Trader Joe’s has eight Connecticut stores, including five in Fairfield County and one in Orange.
A logical location for another supermarket in North Haven would be in the former Sports Authority location in the North Haven Commons shopping center on Universal Drive.
But Freda said that when Stop & Shop sold the former Universal Distributors warehouse to National Realty & Development Corp. in 2003, a restriction was included in the deal that prohibits a supermarket from every being developed in shopping center.
Discount retailer Target is one of the original tenants and anchors of the shopping center and that store includes a limited grocery selection, he said.
Trader Joe’s employees in Connecticut are saying there are two more Connecticut locations currently being considered for stores. But Kenya Friend-Daniel, the company’s public relations director, said Trader Joe’s has no plans to open any additional stores in Connecticut at this time.
Pesce said another reason that Trader Joe’s may be reluctant to expand its Connecticut footprint is the chain’s inability to sell wine and spirits in its stores here.
The chain sells wine and spirits in other states, including some of its stores in neighboring Massachusetts. Trader Joe’s has become well known for its “Two Buck Chuck,” a bargain-priced collection of wines under the Charles Shaw brand.
But the trade group representing package stores in Connecticut has plenty of political clout. The Connecticut Package Stores Association has successfully convinced state lawmakers several times in recent years that supermarket sales of wine and spirits would be a death knell for its members’ businesses and thay aspect of the liquor laws has remained unchanged.
Pesce said giving supermarkets the right to sell wine and spirits would help improve their profit margins.
One company that does appear to be interested in opening new grocery stores in Connecticut is technology giant Amazon. Whole Foods is owned by Amazon and the Seattle-based technology giant is reportedly interested in expanding its supermarket presence beyond that grocery brand.
The Wall Street Journal reported on Oct. 1 that Amazon has signed more than a dozen grocery store leases in the Los Angeles area that could open as early as the end of this year.
The newspaper also reported, citing unnamed sources, that the company was eyeing space for potential grocery stores in Connecticut, New Jersey and New York metro area. The stores would be between 20,000 to 40,000 square feet in size, the Journal reported.
Whole Foods currently has five Connecticut locations, including two in Fairfield County and one in Milford.
Stew Leonard’s has stores in Newington, Danbury and Norwalk. But after being blocked from opening a store on Marsh Hill Road off of Interstate 95 in Orange, the chain know as the “Disneyland of grocery stores” because of its in-store animatronics has expanded into Yonkers, N.Y., Farmimgdale near Long Island’s MacArthur Airport and, most recently, Paramus, N.J.
The Paramus store, located in a former Sears location in the Paramus Park Mall, opened in mid-September.
Leonard said the chain’s executives are still working out the intricacies of being a mall-based supermarket. That includes how to adapt the chain’s one-way aisles to a store that has two entry points: one from the exterior parking lot and the other from the mall’s common area.
But even with those details still being worked out, Leonard said the Paramus store is already on its way to becoming the chain’s most lucrative location.
Leonard spent 14 years trying to open the Orange store before giving up in 2010.
Bridget Goldschmidt, managing editor of the New Jersey-based trade publication Progressive Grocer, said many of the popular chains that Connecticut would like to attract are opting instead to establish a presence in the southeastern United States.
“That’s an area that’s considered over-stored,” Goldschmidt said.
In addition to the one store it already has in Raleigh, Wegmans has plans for three more locations in that state.
Family-owned Rochester-based supermarket chain Wegmans has more than 90 stores across seven states, including six in eastern Massachusetts, and will open one on Oct. 27 in the former Brooklyn Navy Yard in the Admirals Row development. In addition, the chain will open three additional stores before the end of 2020: One next spring in Harrison, N.Y., two in North Carolina and one in Tyson’s Corner, Va.
Valerie Fox, a Wegmans spokeswoman, said the chain is “always looking for new opportunities.” Typically, Fox said, the chain only opens two or three stores a year.
“However, we do not comment on specific sites unless we have negotiated a lease or purchase agreement,” she said. Wegmans has a list of 11 “future stores” in six states, which are listed with general locations rather than specific address.
On the other end of the spectrum from Wegmans, at least when it comes to type of consumers being targed, is Lidl.
The German discount grocery chain is the primary rival of Aldi, which has 20 stores in Connecticut including locations in West Haven, Wallingford, Milford and New Haven. By contrast, Lidl has 71 locations in the United States, although the company expects to have 100 locations in this country by the end of next year, but none in Connecticut.
There will be about 71 stores in the U.S. counting two that opened in mid-September, according to Forbes magazine, and 27 Best Market stores. Additional store openings are slated. There will be 25 units by the beginning of next year. By the end of next year, there will be about 100 Lidl stores and 27 Best Market stores.
Goldschmidt said Lidl had a much more aggressive growth strategy when it opened its first American store in 2017, “but they had to dial it back a bit.” That change came after the company replaced its U.S. chief executive officer last year.