Saturday, November 15, 2008

Small-Format Food Retailing Memo: Schenectady, New York-Based Price Chopper Supermarket Chain Creating New Small-Format, Urban-Concept Grocery Store

The Schenectady, New York USA-based Price Chopper supermarket chain is designing a small-format, urban-concept food and grocery store it will use to serve primarily urban neighborhoods in the eastern U.S. and New England markets it operates in, Natural~Specialty Foods Memo has learned.

Neil Golub, the president and CEO of Price Chopper, which is owned by his family's Golub Corporation and is celebrating its 75th anniversary as a family-owned supermarket chain this year, says the supermarket chain's new urban-concept food and grocery store format will be a brand new small-format rather than just a smaller version of its Price Chopper banner supermarkets, which are located New York, Vermont, Connecticut, Pennsylvania, New Hampshire and Massachusetts. [You can read a history of the Price Chopper chain here, along with other information about its 75 years of food and grocery retailing history.]

Privately-held Price Chopper operates 116 supermarkets in the regions listed above. It's 2008 annual sales are estimated at $3.2 billion by the supermarket industry trade publication Supermarket News, which publishes an annual ranking of the the top 75 food and grocery retailers (all formats) in the U.S. Supermarket News ranks Price Chopper as the 38th-largest food and grocery retailer in the U.S. in terms of the grocery chain's 2008 annual gross sales.

The new small-format, urban-concept market will be about 15,000 square feet in size, according to Golub. The format's size is similar to small-format stores created in just the last couple years by Safeway ("The Market"), Wal-Mart (Marketside), Tesco (Fresh & Easy), Supervalu's Jewel Foods (Urban Fresh by Jewel) and others. Those small-format stores run from 10,000 -to- 16,000 square feet.

The urban store will have most of the departments -- produce, meat, grocery, deli/prepared foods, dairy, ect. -- the chain's larger Price Chopper Supermarkets have, Golub says. However, he adds the departments and product selections will be geared to the urban neighborhood consumer base and the size of the stores, making the ultimate look of the store much different than the grocer's standard-size supermarkets.

Golub also said its likely the new, small-format urban-concept grocery market will have a different name, other than Price Chopper, or that if Price Chopper is used in the name it will include and additional word or two in order to differentiate the format and store(s) from the Price Chopper banner supermarkets.

Price Chopper has just started designing the urban-concept format based on a location already chosen for the first store. That store will be in Saratoga Springs, New York, in the city's downtown core.

The Golub family's Price Chopper chain operates an old (built in 1957) 24,000 square foot Price Chopper banner supermarket not far from the new downtown Saratoga Springs location where it will build the first of its small-format urban food and grocery stores, once the company has completed the design.

The lease on the 24,000 square foot supermarket, which is located at 19 Railroad Place in the city, runs out in a little less than three years, according to Golub. The new urban market will open shortly before that lease expires. Price Chopper will then close the 19 Railroad Square supermarket.

Saratoga Springs, New York-based Bonacio Construction bought a 2.8 acre piece of property at Church Streets and Railroad Avenue in downtown Saratoga Springs earlier this month. The new, urban-concept small-format market will be located on that parcel, according to Golub Properties, which is the property arm of the Golub Corporation, which owns Price Chopper.

Sonny Bonacio, the owner of the construction company that's worked with Golub Properties and Price chopper before, will built the new urban, small-format grocery market at the location, which will be completely developed with other retail and perhaps housing as well.

Since Price Chopper is working on creating the new urban market format, and the old Price Chopper supermarket at 19 Railroad Avenue still has nearly three years left on the lease, its likely construction on the retailer's first small-format, urban grocery store at the location won't begin until 2010.

The store will be built at the end of the 2.8 acre downtown Saratoga Springs parcel over part of the parking lot that's now located in the space, Sonny Bonacio says.

Price Chopper's Neil Golub says the chain decided to close the 19 Railroad Place Price Chopper, which was built in 1957, last year. However, the company did not want to give up on serving downtown Saratoga Springs, so it decided to create a completely new urban-concept, small-format store it could built in the new, nearby location, plus use in other urban areas in the markets it does business in, according to Golub.

In fact, earlier this year word got out Price Chopper planned to close the old 19 Railroad place 24,000 square foot supermarket when its lease is up in about three years. A group of downtown Saratoga Springs residents who are customers of the store organized and petitioned Price Chopper not to close the supermarket because they said they would have to travel too far outside the neighborhood to buy groceries if it closed.

One of the urban neighborhood's residents, Caroline Stem, who collected 1,250 signatures on a petition to keep the store open, feared Boacio construction would buy the downtown Saratoga Springs property and then bring in a high-end grocery store that lower- and middle-income neighborhood residents wouldn't be able to afford, she says.

However, Bonacio and representatives from Price Chopper met with local neighborhood residents and explained to them in general the type of urban grocery store they plan on creating and building at the downtown location.

Price Chopper's Golub says the new small-format urban market format will be one that offers basic groceries as well as specialty items. He also says the prices in the small-format urban grocery store will be affordable, just as they are in its Price Chopper supermarkets. In other words, based on what Golub says thus far, it looks like the grocery chain's small-format concept will be a neighborhood-focused, 15,000 square foot store that offers everyday food and grocery products along with specialty items rather than an upscale or gourmet market.

"It (the downtown Saratoga Springs small-format grocery market) will be a grocery store that will serve the basic needs of the community," Golub says. "It's not meant to be something that's going to have things that are priced way up here that people won't want," he adds.

That appears to have pleased Caroline Stem and the other neighborhood residents who want a grocery store that serves all of their needs in the downtown core; a neighborhood food and grocery market.

Earlier this month Bonacio Construction, Price Chopper and the mayor of Saratoga Spring, New York invited the downtown neighborhood residents to an announcement of the new, small-format grocery store in downtown Saratoga Springs. All appeared to be pleased with the development, and what the store will and won't be, we're told by people who attended the announcement at city hall.

Of course our interest goes beyond that first, single store, although we are pleased the neighborhood is getting it. Our thoughts go to the fact Price Chopper is yet another U.S. food and grocery retailing company that's creating a small-format prototype store.

In this case Price Chopper's small-format market will focus on urban neighborhoods.

The small-format food and grocery store revolution in the U.S., and elsewhere in the world, continues on, adding New York-based Price Chopper, which in its 75 years of in business as a family-owned chain has been a major innovator, to those chains that have already joined the trend towards creating format-specific, small-format food and grocery stores.

And of course, independent grocers, America's original small-format, neighborhood-focused food and grocery retailers, continue to be strong in smaller store neighborhood retailing, as well as continuing to innovate in the small-format and neighborhood grocery market realm.

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