New stores, changing trends spark grocery competition

Great Falls grocery stores are geared up for two major market changes, big enough changes to send grocery carts spinning and cash registers clicking.

New stores are opening in the highly competitive Great Falls arena and all stores are making changes in the foods they offer and the services they provide to meet changing trends and consumer demands.

Two big super markets have or are entering the Great Falls market, which isn’t all that huge. The Electric City has a population of about 60,000, Cascade County has about 82,000. Adding in outlying areas might push the market to 110,000 to 120,000 potential shoppers.

First Super 1 Foods, a Hayden, Idaho-based company, opened a large store at 3160 10th Ave. S. in late August, expanding what was a former IGA by about one-third into a larger, 53,000 square foot store that features a large produce section, take-home deli meals and a lot of organic foods.

As curious Great Falls shoppers swarmed to the new store, the Albertsons at 2250 10th Avenue South tried to combat the surge by posting billboards and small signs on its grass boulevard stressing its “new lower prices.”

Next Super 1 Foods itself and Great Falls’ more established groceries will be fending off the large new Wal-Mart Super Center, the city’s second, expected to open in early spring at 5310 10th Ave. S. About half of the 186,000-square-foot store is expected to be devoted to groceries.

Tight grocery margins drive competition

“The super market business operates on a very tight margin, with net profits between 1 and 1.5 percent,” said Phil Lempert, a consumer behavior and marketing trend expert widely known as the Supermarket Guru. “That small profit margin is shocking to many people, but larger stores can do between $50 and 100 million in sales a year and all groceries try to make up for that small profit margin through volume of sales.”

Big new stores in such a competitive business, where a few cents markup on a can of soup or gallon of milk make a difference, obviously will put a squeeze on existing groceries in the relatively small market, Lempert and other experts said. They say additional local facilities will draw only a limited number of additional shoppers from outside Great Falls, so all the stores will have to compete among themselves for shares of a slightly bigger grocery market pie.

Located near housing for Malmstrom Air Force Base, the new Wal-Mart could draw a lot of military shoppers away from the base commissary who are interested in lower prices, health conscious selections and shorter lines at the beginning of the month when they’re paid, Lempert said.

While the new Wal-Mart also could draw more area shoppers from east of Great Falls, there’s only so many families in the market, he said, and those stores closest to the new grocery businesses are likely to be hit hardest.

The two smaller, Everyday IGAs serving the downtown and north side neighborhoods and 2 J’s Fresh Market, the west side specialty store that emphasizes natural and organic foods, might fare OK, Lempert said. There’s a trend nationally for smaller, limited format groceries that are no frills and offer savings on specially selected, high quality goods, he noted.

But those stores, as well as the larger Albertsons markets on 10th Avenue South and western Great Falls and the Smith Foods in southwestern Great Falls, will have to compete with big, low-cost Wal-Mart by offering competitive prices, good quality and friendly service, he said.

“Few stores can compete with Wal-Mart’s on overall pricing, based on its bulk purchasing,” Lempert said. “So they might need to have community events such as cooking classes or provide more personal shopper attention than they’re likely to get at Wal-Mart.”

The sheer size of the Wal-Mart stores might deter older shoppers and others who find walking such big stores “cumbersome,” said Lempert, who has a popular website and frequently comments on national news programs.

“Perhaps saving a few cents on a can of creamed corn is not as important to such folks as shopping in a smaller, clean stores with clear signs that have good produce and meat and friendly checkers who are deep seated in the community,” he said.

In the meantime, “greater competition from new stores is good news for Great Falls consumers,” Lempert said. “As all these stores try to compete for customers in a limited market, it will be a great time for shoppers to get special pricing.”

Changing trends spotted

“The periphery of stores is being emphasized and expanded,” said Eric Gottlieb, a senior research analyst for Davidson Companies. “Produce and deli departments are being revitalized and expanded due to higher demand and generally higher profits. Certain categories of foods are moving into such sections, like nuts and refrigerated dressings. There is a new emphasis on the dairy case, expanding beyond traditional dairy to include organic and plant-based products.”

Lempert said some grocery trends that have been popular for a few years continue, such as providing locally grown and produced foods, more organic and natural food options and “grab and go” meals that are already heated or prepared to take home to cook.

He described more recent trends and expectations in his recently released “Supermarket Guru’s 2017 trend forecast,” including:

• More small, high-quality, low-price and convenient stores.

• More enhanced food, adding protein and other ingredients to improve sales of slow-moving goods, such as frozen appetizers.

• The younger Generation Z, just approaching age 20, which is more likely to cook and eat home meals and to enjoy ethnic foods.

• Keener interest in sustainable foods that are raised cage-free or in pastures.

Here’s how Great Falls grocery managers say they are dealing with tighter competition and changing trends.

IGAs provide neighborhood service

Rich Chadwick and his insurance agent wife Rita own the smaller Everyday IGA stores at 701 1st Ave. N. and 2506 6th Ave. N., locations that have had groceries for more than 50 years.

They purchased the 10,000-square-foot downtown location in 2008, five months after Albertsons closed its store there.

Downtown area residents and workers clearly wanted the store reopened, with some 3,000 signing petitions, he recalled.

The Chadwicks were tickled when the larger Van’s IGA company sold them the 20,000-square foot north side IGA in 2014. They could buy in greater bulk with two stores and use the larger store’s bakery and deli to provide fresh bread, doughnuts and sandwiches for both stores.

“We try do everything a big store does, but in a smaller footprint,” said Chadwick, 57, who began his 35-year-plus grocery career as a shelving clerk at former Holiday Village store. The stores have “grab and go” pre-cut, pre-made or pre-cooked food selections, a lot of Montana grown or made products and at least some organic offerings, he said.

It’s hard for a small store to beat a larger chain store in prices Chadwick said, “but we believe our prices are competitive, with some prices listed in weekly ads that are lower.”

“Our goal is to meet the goals of our customers by providing a clean, well-stocked store with great employees who walk the aisles and help customers,” he said.

The IGAs are smaller stores that serve their neighborhoods, including many who walk to the stores a few times a week, he said, and others who like stores that are “quick walk-arounds.”

Chadwick listed other advantages to smaller stores:

• Being able to respond quickly to a customer request. He can usually get orders for say, a different kind of pepper, added to the next delivery truck.

• Having veteran employees who know many shoppers by name and what products they like.

• Active “cause marketing,” or helping charities, which Chadwick said appeals to a lot of younger generation and other customers.

He cited several examples, including providing day-old bread, meat and dairy products to the Great Falls Rescue Mission and donating $50 for every 500 IGA labels collected to Toby’s House, a proposed crisis nursery for families under stress.

Connecting with Montana growers and producers to provide a variety of Montana-made products, such as Luz’s Salsa, Popcorn Colonel Popcorn, Truzzolino’s tamales, Hutterite colony produce, Big Sandy cantaloupes and Smoot Honey.

The biggest change Chadwick has seen is the popularity of “grab and go” meals, for busier adults who don’t have time to cook from scratch much anymore. He included himself and his wife among those working couples who often try to decide at 4 p.m. what to eat for dinner.

The Everyday IGAs provide premade sandwiches, salads, soups, lasagna, fried chicken, kabob meat, chicken pot pies and pre-chopped fruits and vegetable for such folks, he said.

“We’re so much more than just a grocery,” Chadwick said. “Our customers want a friendly touch, good food and service and many like our being involved in the community.”

Isabel and Dick Blossom, a couple in their early 90s shopping at the north side store, agreed.

“We live nearby and this store has everything we’re looking for,” Isabel said. “The prices are OK, the clerks are friendly and other groceries are too big for us.”

2 J’s offers fresh produce, organics

Michael Vetere, general manager and owner of 2 J’s Fresh Market, 105 Smelter Ave. N.E., said he’s noticed regular groceries have begun selling more natural, organic and specialty groceries such as 2 J’s has for years.

“That makes the market more competitive, which is good for customers who can get better deals and fresher produce,” said Vetere, 37, who got into the industry delivering food and gradually started seeking healthier foods for his own diet. “We feel we do a better job because we’re small enough to work directly with producers to get top quality produce and meat.”

The store was started at the same location in 1986 by the couple Don and Cherie Johnson – “two J’s,” he said. They sold mostly produce to start and gradually took on bulk foods, groceries and vitamin supplements.

The Johnsons sold the store in 2007 to Vetere and partner Dylan Pedersen, who continued expanding selection in the same space. Last summer Vetere bought out the share of Pedersen, who is running a similar store, Hennessey Market, in uptown Butte.

Vetere estimated that 2 J’s sales have dropped by about 20 percent since Super 1, which also stresses natural and organic foods, opened.

Vetere thinks the opening of the east side Wal-Mart will draw a lot of customers from that side of town away from shopping on the West Side, where he said the original Wal-Mart has been a magnet helping attract customers to all west side businesses.

“We can’t fully compete in prices with larger chains that buy in big quantities, so we stress quality and service,” he said. “Many 2 J’s customers are middle to high income, health conscious folks who buy organic produce, cheese and meats that can be more expensive.”

“But we can provide really fresh produce because I drive twice a week to Missoula to pick up produce from an Oregon company that emphasizes quick picking,” he said. “Our staff has good knowledge of the broad range of products we offer and can answer customer questions.”

Vetere stressed three other reasons to shop at 2 J’s:

• The largest selection of bulk foods in town. With flour, coffee, pasta, cereal, nuts and cookies in bins the store might resemble a 19th century general store, he said, but such merchandising is increasingly popular in urban markets. That’s because customers can buy smaller quantities to fit their needs, especially handy for items like spice, and there’s less waste in packaging.

• A large sampling of products grown or made in Montana, including Oil Barn organic safflower oil and organic Kracklin’ Kamut snack, both from Big Sandy, Montana Red Neck Sauce, from Helena, Montana Emu Oil lotion from Kalispell and B Bar Ranch organic, grass-fed beef from Big Timber.

• Community generosity, including providing about $20,000 in food for benefit fundraisers each year.

Customer Lyle Meeks said he does about 50 percent of his shopping at 2 J’s.

“They have a lot of locally grown, high quality goods, including produce and grain,” he said. “Because I live in a rural home, I also buy specialized cleaning products from 2 J’s that are gentler on the septic system.”

Super 1 stresses prices, fresh food

Super 1 Foods had lines of customers praising the store’s appearance, big produce and organics sections and hot deli specials when the store opened at 3160 10th Ave. in August.

Sales have continued strong, said Ron McIntire, vice president of the Hayden, Idaho-based Manito Super 1 Foods, which owns 14 super markets in northern Idaho and western Montana.

He expects the store to compete well when the new Wal-Mart opens two miles to the east on 10th Avenue South.

“Our pricing is very competitive with Wal-Mart’s and our perishable departments such as produce, meats, deli and bakery are very good,” he said. “In every area we serve, we’re known for the freshest produce and meats, along with a full-line of organic foods.”

McIntire said Super 1 Foods sells only choice grade Angus beef, with many of its rancher suppliers from Montana.

Nurse Gay Obroslinsky said she shops at Super 1 Foods “because it has good prices and is about half-way between my home and the hospital where I work. We like its hot deli meals and variety of fruits and vegetables.”

Like other stores throughout the country, McIntire said, “Super 1 is helping meet the growing public desire for fresh food that’s either partially or fully prepared or ready to take home to cook and eat.”

The traditional centers of Super 1 Foods stores, with canned and boxed goods, are growing smaller, McIntire said, and its produce and meat departments have expanded as more people seek fresh and locally grown foods.

Wal-Mart has low prices, one-stop shopping

Wal-Mart is expecting to hire 300 full- and part-time employees by the time it takes possession of its new super center at 5310 10th Ave. S. in February, said national spokeswoman Delia Garcia. They will put in fixtures, receive merchandise, stock shelves and train for the store opening expected in the early spring.

At 186,000 square feet, the store will be slightly smaller than the 202,000-square-foot original, west-side Wal-Mart. With two stores and “an endless aisle of online orders,” that can be shipped to either store, the second store’s size will be sufficient, she said.

The new store will include a full-service pharmacy with a drive-through lane, an eight-pump fuel station, a tire and lube center auto care center and a full line of general merchandise.

“We believe the new store will provide more convenient shopping for those coming from the growing east side of town, including military folks at Malmstrom Air Force Base, and will help revitalize that commercial corridor along 10th Avenue South,” Garcia said. “It also will relieve some of the pressure from our busy existing store.”

Garcia cited a few primary reasons for shopping at Wal-Mart.

“We provide affordable groceries and merchandise, with a commitment to low prices every day, and provide the convenience of one-stop shopping for more than just groceries,” she said.

In recent years, Wal-Mart has made a heavy investment in e-commerce, allowing customers to order an even broader assortment of products online and have them shipped free to the store where they can pick them up.

When possible, Wal-Mart obtains produce and other grocery goods that are locally grown or produced, she said. It has been increasing its assortment organic products.

“We also have many ready-made meals and similar items for customers who might want to cook from scratch, but are busy, and provide prepackaged salads, vegetables and meats,” Garcia said.

Shopper Hugh Thornley said he shops for groceries at Wal-Mart “because prices are much better.” He said he can hardly wait for the new Wal-Mart to open, closer to his east-side home.

“I don’t mind walking in a bigger store,” the retired man said. “But I wish Wal-Mart had more checkers to shorten the lines.”

Wal-Mart opened a 130,000-square-foot store at 701 Smelter Ave. N.E. in 1996, four years after the company built the Sam’s Club warehouse store at 401 Northwest Bypass. In 2000, Wal-Mart “supersized” its store in Great Falls, expanding the store by more than 70,000 square feet and adding groceries.

Remodeled Albertsons stress fresh foods

In 2015 Albertsons extensively remodeled its two 67,000-square-feet Great Falls stores, at 2250 10th Ave. S., and 1414 3rd St. N.W., said regional communications manager Kathy Holland.

Remodeling in June at the 10th Avenue South store included new wooden flooring in the produce, bakery, deli and meat areas; new check stands, refrigerated cases and wine shelving; a private area in the pharmacy department where customers can get immunizations, and a fresh cut theater area of the produce department where customers can pick up freshly cut fruit and vegetables.

Remodeling at the 3rd Street Northwest store several months earlier included many of the same improvements such as a bright décor, new flooring, historic black and white photos of Great Falls, a Starbucks coffee shop and a hand-made sushi bar, Holland said.

“I shop at Albertsons because it has a good variety and its 10 for $10 specials on products such as Hamburger Helper and soup are a big help when you’re raising a family,” said mother and grandmother June Deloy. “Stores like Wal-Mart are too big and busy to get around in with ease.”

“Prices at our Albertsons stores are competitive in the Great Falls market,” Holland said, adding that Albertsons features low weekly sales prices and personalized digital coupons through its new Just for U phone application.

“We listen to the wants and needs of our shoppers, many desiring more fresh offerings and more options for quick and easy meal solutions for their families,” she said. “In Great Falls, we focused on fresh in our departments with the sushi bar and famous fried chicken in our service deli, fresh pre-cut fruits and vegetables in our produce department, premium Northwest-grown Double R Ranch beef in our meat department and Starbucks coffee kiosks.”

Albertsons ended up with the two Great Falls stores when it bought Buttrey Foods in 1998.

Albertsons Companies is one of the largest food and drug retailers in the U.S., operating 2,300 stores in 35 states with more than 275,000 employees under 19 well-known banners including Albertsons, Safeway and Jewel-Osco. It operates 27 Albertsons and nine Safeway stores in Montana.

Smith’s offers variety and fuel savings

“Smith’s Food and Drug focuses on providing the products our customers want including a wide variety of organic and natural foods, fuel point savings and digital shopping and coupon downloads,” said regional spokeswoman Marsha Gilford. “Our Great Falls employees love our customers and will continue to work hard to be their favorite store.”

Smith’s is planning a remodeling of its Great Falls store in 2017, which will give it a new interior appearance and expanded selection, she said. “We don’t have details worked out yet, but our emphasis will be in the area of deli, baker and produce where customers are seeking good nutrition and convenience for their families’ meals.”

“I shop at Smith’s because it’s close to where I live and has competitive pricing,” said Heather Wade. “It also feels like the employees have been here a long time and are friendly, which indicates they are treated well.”

The 58,000-square-foot store was opened in 1998 at 1601 Market Place Drive in the Marketplace shopping area.

Smith’s is a division of the Kroger Co., which operates almost 2,800 grocery stores in the U.S. It operates four Smith’s stores in Montana.