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Whole Foods’ new Pennsylvania location eyes Delaware customers

The planned Whole Foods Market for Delaware’s busiest shopping thoroughfare in Northern Wilmington on Route 202 was rejected a few years ago because of fears of over congestion and increased competition for local grocers.

It was a disappointing day for Delaware residents who were excited about Whole Foods opening its first store in the First State. But good news came last year when Whole Foods decided to do the next best thing and found a spot right over the Pennsylvania line to build one of its popular organic supermarkets.

The new location, expected to open early next year, won’t impact traffic at the shopping hub around 202 and Naamans Road where Whole Foods was initially supposed to open. But the grocery stores in that area, all within about five miles of each other — including ShopRite, Giant, Acme, Trader Joes, and a Target with a major food section — haven’t dodged the competition bullet. When it comes to the world of supermarket shopping, a few miles don’t make a big difference and Whole Foods may be distinct enough to get Delawareans driving.

“Five miles or so is the typical radius that shoppers will go for a grocery store,” said Paul Weitzel, managing partner of Willard Bishop, a consulting group.

Whole Foods will be unique for the area, offering a wide selection of organic foods, which will lure many shoppers looking for healthier alternative, he said. With no major natural food grocer in the area, except Trader Joes, which is more of a specialty store, he noted, there’s an opening for a retailer like Whole Foods. And, he predicted, it will likely take market share away from other traditional stores in the area.

“Whole Foods saw its opportunity to capture X number of customers in that area and I expect they are going to be picking off a number of customers from those locations in Wilmington,” he continued. “You may still shop at Acme or ShopRite for most of your brand name products, but you may go to Whole Foods for another certain trip.”

The new Whole Foods location at the Glen Eagle Shopping Center in Glen Mills, Pa. will be close enough to serve both Pennsylvania and Delaware customers.

Ellen Reid of Centerville is one of those consumers planning to shop regularly at Whole Foods when it opens. She was a vocal proponent of the store opening in Delaware when the grocer was trying to enter the state in 2007 because her daughter has wheat allergies and she was unable to find enough gluten-free foods in the area at the time.

Today, Reid said, local supermarkets are offering a large selection of gluten-free products and she plans to continue to shop at them, but she also plans on making the over-the-border trip to shop at the new Whole Foods.

“Giant and ShopRite and Janssen’s took up the challenge and started stocking gluten-free foods, but [none of them] has everything I need,” she explained.

For the last five years, Reid has been making the hour or so drive to the Whole Foods on the Main Line in Pennsylvania, so the store in the Glen Eagle Square shopping center off U.S. 202 in Glen Mills, Pa. will be much closer to her home, about a 12-minute drive.

“The store on the Main Line is beautiful with a wonderful array of products and outstanding produce. But they are expensive,” she lamented.

Indeed, one of the reasons local supermarket managers aren’t too worried about losing tons of business to Whole Foods is that the grocer tends to attract a higher-end clientele. Even its devotees jokingly call it “Whole Paycheck”.

One store manager, who did not want to be identified, said many shoppers are looking for bargains today because “we’re in a tight economy. They’ll [Whole Foods] do business but it’s hard to say how much.”

There are two factors influencing shoppers, said Julie Miro Wenger, executive director of the Delaware Food Industry Council, the statewide trade association for supermarkets, convenience stores and pharmacies.

“In this economic climate people are looking to save money and stretch their dollars but everyone is health conscious and looking for healthier foods,” she noted.

Teresa Johnson, the store director of the Acme supermarket on Route 202, about 5.6 miles from the soon-to-open Whole Foods, doesn’t think her store will be impacted because it’s too far down the road from the location.

In addition, Johnson said, Acme has lots of organic items throughout the store and in the produce section, and also plans to offer more gluten-free products. But overall, she has no plans to change the merchandise mix because of the new competitor.

That’s the same for Giant, which has been on 202 for 15 years, according to Jamie Miller, a spokesperson for the grocer. “We are going to stay focused on our business principles — quality, value and service,” he said.

Giant has also seen a demand for budget items. “We’ve expanded our corporate brand products over the past few years with the downturn in the economy,” he noted. “Consumers are looking for value and alternatives, and our corporate brands have caught on quite a bit and the quality has improved.”

As for competing with organic products at Whole Foods, Miller said, “we have expanded our natural and organic products over the years.”

Clearly, organic foods have been a growth area for many supermarkets across the country, and the sector is growing faster than food products overall.

There is evidence of this trend in an Organic Trade Association survey released earlier this year:

The U.S. organic industry grew at a rate of nearly eight percent in 2010, bucking the current trend whereby “flat is the new growth” for many other segments of the economy. In 2010, the organic industry grew to over $28.6 billion.

With 7.7 percent growth during 2010, organic food outpaced the growth of total food sales, which stagnated at only 0.6 percent. Organic continues to eke out gains in total market share, climbing to 4 percent of the $673 billion food industry in 2010

Experiencing the most growth, organic fruits and vegetables, which represent 39.7 percent of total organic food value, and nearly 12 percent of all U.S. fruit and vegetable sales, reached nearly $10.6 billion in 2010, up 11.8 percent from 2009 performance. Organic dairy, the second largest category, experienced nine percent growth to achieve a value of $3.9 billion, and captured nearly six percent of the total U.S. market for dairy products.

All this bodes well for Whole Foods, which has been among the market leaders when it comes to organics, and has been on an expansion explosion lately. In a story in Supermarket News from August, company officials said they would be opening a record number of stores in the next two years — between 24 and 27 locations in fiscal year 2012 and between 28 and 32 more in fiscal 2013.

News reports put the opening date for the new Glen Eagle store in early 2012, but Whole Foods would not offer specifics.

“Store opening dates or months are never confirmed until we near completion,” said a company spokeswoman. “Given the nature of construction, things can fluctuate. As we receive updates, I will keep you informed.”

The company also would not comment on competition in the area. “What we can share is that each Whole Foods Market location is unique and designed to create a shopping experience that is tailored to our local customer base. The new store will be no exception,” said Kristin Gross, marketing director for Whole Foods Mid-Atlantic.

In the end, Wenger doesn’t expect a Whole Foods coming to the state will “change the supermarket landscape” here.

“Whole Foods has its own niche and many consumers are very excited to see it come into the market,” she said. “But it won’t drastically impact the market.”

But, she added, “Consumers will have more choices.”