Thursday, September 18, 2008

Small-Format Food Retailing Memo: Giant Food Stores To Open its First Small-Format, Hybrid Convenience-Grocery Store: 'Giant To Go'

Carlisle, Pennsylvania-based Giant Food Stores (also known as Giant-Carlisle) is planning to join the small-format food and grocery retailing revolution in the U.S. with its first small-format, convenience-oriented grocery market, Natural~Specialty Foods Memo has learned.

Giant Food Stores, which is owned by the the Dutch supermarket company Royal Ahold just as its sister company, Landover, Maryland-based Giant Food is (the chains are operated separately though), plans to build its first Giant To Go combination convenience and grocery store, which will be 4,442 square feet, at a new retail development called Richmond square at the northwest corner of Fruitville Pike Road and route 722 in Landcaster, Pennsylvania.

The small-format hybrid convenience and grocery store will be the first of its kind for Giant Food Stores, which operates about 140 supermarkets under the Giant Food Stores, Martin's Food Markets and Foodsource banners in Pennsylvania, Maryland, Virginia and West Virgina. Royal Ahold owns chains that operate about 700 supermarkets in the U.S.

At 4,422 square feet, the Giant To Go market actually is in part what we define as a micro small-format food and grocery store (under 5,000 square feet), although because it will be part traditional c-store (which at 4,422 would be as large or larger than an average one) and part grocery store, we will call it small-format.

The c-store cum grocery store will feature fresh produce and meats, a deli which will include grab-and-go ready-to-eat and some ready-to-heat prepared foods, an in-store fresh bakery and an assortment of basic shelf-stable food and grocery items, along with some of the food and non-food products typically associated with traditional c-store merchandising.

The 4,422 square foot hybrid convenience and grocery store also will have an 8-pump gasoline fueling station outside.

A Giant Food Stores' spokesperson said the Giant To Go store is a prototype for the chain. If it's successful the company is likely to build more of the stores in its market regions.

Construction of the Giant to Go small-format combination convenience and grocery store at the Richmond Square retail development -- which is a "village -style" designed 30,000 square foot retail and residential mixed-use development featuring stores and offices on the ground level and apartments on top -- hasn't started yet.

However, the Giant Food Stores' spokesperson told Natural~Specialty Foods Memo plans call for construction to start soon, with a target opening date for the store by the end of the first quarter of 2009.

Other retail tenants in the new Richmond Square center will include a bank, two restaurants (Asian and Italian), a dry cleaners and a couple others, along with the office buildings, according to its developer.

The Richmond center is a part of a larger development at the location. That development includes single family homes as well as additional retail and office space.

Giant Food Stores' new Giant To Go combination convenience store-grocery store format fits into what we classify as the "hybrid grocery-convenience store format."

It's a cousin to but different than small-format grocers like Tesco's Fresh & Easy, Safeway's "The Market," Aldi, Sav-A-Lot, Wal-Mart's Marketside, Trader Joe's and Giant Eagle's Giant Eagle Express, for example. It's closet to Giant Eagle Express, which unlike the others listed above adopts some elements of traditional c-store merchandising in its concept. All of the formats listed above are convenience-oriented though, which is an element they too borrow from c-store retailing.

Giant To Go also is different than what we've termed the small-format "eco-convenience" or Econvenience hybrid convenience-grocery stores. These stores which we've written about --such as Green Spot and Conscious Convenience -- combine elements of c-store retailing and grocery retailing but also take major elements from natural products retailing, having a "green" or environmental focus to the stores.

Wawa food stores is a good example of a store we think Giant Foods' Giant To Go is likely to emulate in many ways. As we've written about, Wawa is a hybrid convenience and grocery market which puts a major merchandising emphasis on fresh foods -- produce and prepared foods particularly -- along with selling basic groceries and specialty items. The stores also have fueling stations and sell some traditional c-store items as well. Interestingly, Wawa is based in Pennsylvania just like Giant Foods Stores is.

Another example is Parker's Convenience Stores, which we wrote about earlier this week.

We simply call these chains -- Wawa, Parker's and a few others -- hybrid, upscale convenience and grocery markets or stores. This is where we think Giant to Go will fit in the small-format, convenience-oriented food and grocery retailing revolution happening in the U.S. and elsewhere globally.

Giant Food Stores has developed numerous upscale design and merchandising features for its Martin's Food Markets banner (and its newer Giant banner supermarkets), including attractive upscale-looking departments like produce, deli/prepared foods and bakery, along with top-quality natural-specialty foods, fresh meat, produce and prepared foods merchandiing programs. As a result, it can export this expertise to Giant to Go in whatever doses it thinks are appropriate.

Dutch Royal Ahold-owned Giant Food Stores of Carlisle, Pennsylvania is now joining the other participants in this revolution with its new Giant to Go format. It seems "GIANTS" are even going small (format). Stay tuned, as there will be many more new entrants to the party.

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