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By Jaclyn Diaz
What’s for dinner? Typical Washingtonians needing to restock their kitchen shelves might head out to the corner grocer, list in hand, to figure that out. But which store?
That’s becoming a tougher decision for residents of certain neighborhoods. Some areas are stocked with organic, discount, or supercenter-styled grocery stores to the point that there’s an average of six stores to choose from, according to D.C. Hunger Solutions.
A Western counterpart with a similar population, Denver has also seen its number of grocery stores increase, city officials said. Both D.C. and Denver have experienced an uptick in employment opportunities, at least for now, correlated to the rise in grocery stores.
The types of stores will likely change nationwide as retailers try to keep up with their competitors and with changing consumer interests, said Tim Rich, a portfolio manager with Denver Investments.
“Overstoring” is being addressed by retail companies in many neighborhoods across the U.S. as they try to fix the problem in an increasingly tough market, Rich said.
And added to that challenge is Amazon’s June 16 purchase of a very large seat at the table--the entire organic grocery chain Whole Foods.
The online giant’s action has the retail industry concerned, a retail union official told Bloomberg BNA.
Rich compared the growth of the retail industry’s brick and mortar stores to the pre-recession housing bubble. Houses were going up fast but there wasn’t enough demand to fill them.
The growth in housing helped justify retailers’ decisions to open stores. Companies were expecting a population to fill those stores, but newer communities didn’t grow as expected, he said.
Overstoring is especially seen in such areas, Rich said.
“Consumer trends are not really jiving with the physical footprint that we have in place,” he said.
Numbers show that the average U.S. retail store has anywhere from four to six times the amount of retail footage compared with those of other developed nations, Rich said. The average grocery store size in the U.S. is 43,800 square feet, according to Food Marketing Institute.
“Do we really need that amount of space? Probably not,” Rich said. But retail companies are trying to create a product that can duke it out with big competitors.
Companies are trying to remain competitive in an overcrowded marketplace by creating stores with distribution centers, selling organic or local products in store, and selling private label products to attract buyers, Rich said. Private label products are store brand merchandise.
D.C.'s population of more than 670,000 has approximately 50 grocery store chains at its disposal in the city, according to Emily Rasowsky with the Washington D.C. Economic Partnership.
More are slated to come as Wawa, a convenience store and gas station chain, and Wegmans, a supermarket chain, announced plans this year to open their first D.C. stores. Wegmans currently has stores outside of D.C. proper in the suburbs of Maryland and Virginia.
Wawa intends to make a long-lasting investment in the city, company executives said in their unveiling of the project June 13. The company plans to open at least 50 storefronts in D.C. over the course of several years. The first is expected to open in December.
Denver, with its population of more than 660,000, is seeing both chain and local brands slowly increasing, Blake Angelo, Denver’s city manager of food systems development, told Bloomberg BNA June 21.
In 2016, there were 90 grocery stores, he said. But that’s actually down from the 94 in 2014. While Denver and D.C. have similar populations, the actual sizes of the cities differ; Denver is 155 square miles and D.C. is 68 miles.
Denver has seen variations of retail growth, Angelo said. But with thousands of residents flocking there each year, Denver’s retailers are slowly responding and new locally owned or organic-minded stores, like Trader Joe’s, are opening.
Approximately 6,200 people were employed by grocery stores in the D.C. area in 2015. In 2016, that number went down to about 6,100, according to Bloomberg BNA labor data.
The Wawa and Wegmans developments are expected to bring in several thousand jobs, Joaquin McPeek, spokesman for the Office of the Deputy Mayor for Planning and Economic Development, said.
Wawa will bring in approximately 90 full-time and part-time staff members at each of its urban locations, the company said.
Based on staffing levels in other D.C. area stores, employment numbers at Wegmans could be 400 to 500, Rasowsky estimated.
Denver has been seeing a consistent growth in grocery employment since 2010.
The city added 550 grocery jobs in the past six years and now has 4,989 employees earning $182 million a year. When a new grocery store opens, it usually hires 80 percent of its employees from the area, Angelo said.
Union representation of supermarkets hasn’t expanded with retail growth, Jonathan Williams, a spokesman for United Food and Commercial Workers Local 400, said.
Unions face organizing challenges in the retail industry, he said. Newer stores, like Whole Foods, Traders Joe’s, and others, aren’t staffed with organized workers.
“The density of unionized retail workers is low,” he said. “That’s projected to continue to decrease unless we can do something.”
In 2016, 2.6 million workers were employed in the “grocery stores industry,” according to Bloomberg BNA’s 2017 Union Membership & Earnings Data Book. Of these 383,800 or 14.5 percent are union members.
Employees are happy and don’t need a union, Valerie Fox, media relations coordinator for Wegmans, told Bloomberg BNA.
“Wegmans is a family-owned company that has been in business for 101 years. Employees in our stores have never felt the need to be represented by a union because Wegmans is a great place to work,” she said.
Employees at Wawa are similarly happy, Erica Gamble, talent acquisition for Wawa, told Bloomberg BNA.
Benefits at Wawa include health care, tuition assistance programs, and employee stock ownership options, employees are well-taken care of at the company, she said.
The supermarket boom hasn’t reached all neighborhoods in D.C. or Denver, McPeek and Angelo said. While wealthier neighborhoods are swimming in organic markets, moderate- to low-income neighborhoods are in a food desert.
Wards 7 and 8 are two neighborhoods east of the Anacostia River with just three grocery stores servicing almost 150,000 residents, Vincent Gray (D), D.C. councilmember for Ward 7, told Bloomberg BNA. The neighborhoods are losing out on equitable access to fresh, healthy food as well as employment and economic development opportunities.
“I’m not as concerned about possible oversaturation in other neighborhoods,” as much as the disproportionate options for wards 7 and 8, he said.
With the East End Grocery and Retail Incentive Program Tax Abatement Act of 2017, the East End Surplus Allocation Equitable Investment Act of 2017, and the East End Health Care Desert, Retail Desert, and Food Desert Elimination Act of 2017, Gray hopes to bring more jobs, stores, and healthy food to residents.
The three pieces of legislation have been presented to the City Council for review.
(This story is updated to correct comments attributed to Tim Rich. He was referring to retail stores in general, not just grocery stores, when he described the difference between average square footage of U.S. stores versus that of other developed nations. Also, another section of the story is revised to indicate that Rich believes the trend of “overstoring” is subsiding as grocers have taken steps to address the issue.)
To contact the reporter on this story: Jaclyn Diaz in Washington at jDiaz@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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