Kelly Peterson just wanted something for dinner.
She had no idea that she was walking into the trenches in a grocery war.
“I love this new store,” said Peterson, munching the free popcorn in a remodeled Cub Foods in Stillwater.
The supermarket, known as the company’s “flagship,” has been retrofitted with every weapon they could think of — bars for burritos and ice-cream sandwiches, an in-store popcorn stand and juice bar, and dinner-in-a-pouch line called “Quick and Easy.”
It was more than enough to win Peterson’s heart — and stomach. “I am definitely a Cub shopper,” she gushed.
Cub and all metro-area grocery stores are fighting over shoppers like Peterson, spending hundreds of millions in new stores and upgrades.
The battle began when Rainbow Foods closed or sold 27 stores in 2014. It accelerated as Cub Foods’ Eden Prairie-based parent company, Supervalu, lost 95 percent of the value of its stock in 10 years.
Now new chains and companies have swept into this fertile marketplace, and existing chains are planting new stores across the area, or rearming old ones with new weapons.
Costco will be bursting into the east-metro with a store opening Wednesday — Woodbury’s 11th supermarket. Hy-Vee, in only two years, has built eight stores and plans five more.
Target and Walmart leapt into the food business long ago, discounter Aldi and foodie-favorite Trader Joe’s are spreading, and upscale Lunds & Byerly’s is building in White Bear Lake.
For shoppers, it’s the Golden Age of grocery shopping.
HONEY AND MONEY
Nowhere have shoppers seen a Cub store with a honey bar, heated so it flows more easily, as in the Stillwater store.
Never have they seen a Hy-Vee charcuterie, a French stand for salted and smoked meats, as in the Oakdale store.
Never has Margo Liberda of Stillwater seen an in-store popcorn stand. “It’s such a good idea,” she said, after following the aroma at the Stillwater Cub.
But even as customers grin, store owners and retail analysts grimace.
The coming shake-out will kill off the weakest stores, predicted Milwaukee-based supermarket analyst David Livingston.
He said that a driving force behind the Twin Cities supermarket battle is the perceived weakness of the market leader, Cub Foods, and Supervalu, which operates other chains around the country and has a large behind-the-scenes food-distribution business. In October, an activist investor called for the closing of 30 percent of Supervalu’s stores, citing the dismal price of company stock. Through Friday, Supervalu had lost more than 52 percent in value in the past year.“Eventually, it will be like the straw that breaks the camel’s back,” said Livingston. “Eventually, something is going break.”
“When the market-share leader is mediocre, Hy-Vee has to be salivating,” said Livingston.
Iowa-based Hy-Vee, which is privately held, has been especially aggressive in the Twin Cities. If all the proposed Hy-Vee stores cost as much as the $26 million Oakdale store, the company’s investment would be $338 million.
Meanwhile, Edina-based Lunds & Byerly’s isn’t standing still. The chain boosted the square footage of all stores by 50 percent from 2002 to 2013, to 11.9 million square feet, according to a 2015 article on the MinnPost website.
The market has been further up-ended by the June purchase of Whole Foods by Amazon.com. The goal, said Amazon officials, is to allow customers to shop for food on-line, then have it delivered from Whole Foods stores. Amazon also has made a public show of cutting prices at the notoriously expensive Whole Foods.
Consultant Livingston said that Amazon’s move won’t have a big impact by stealing food sales. But it may force competitors into a classic battle mistake — overreacting.
Local stores are worried, he said, and some are spending too much money remodeling.
“I think Amazon did this to toy with the brains of their competition,” said Livingston. “The competition is going to spend money and overcorrect and make a lot of mistakes.”
‘ONE NIGHT, SOLVED’
In a recent tour of the Cub’s Stillwater store, Anne Dament seemed giddy.
As the Supervalu vice president for retail and marketing, Dament, a former Target grocery chief who joined Supervalu in February, was delighted to show off how Cub is taking the food-fight to the next level.
“You come in, you smell the popcorn, you see the popcorn,” said Dament. “That’s fun.”
She paused at the Juicery, a bar with fresh-squeezed juices, fruit- and veggie-flavored waters and custom-made smoothies. She walked by some of the store’s serve-yourself stations — a vinegar/oil bar, make-your-own trail-mix bar, a bulk tea bar.
Let the other guys worry, he said, about keeping up with Cub innovations, such as the bar for custom-made burritos. “These chips” — Ferguson slapped a bowl by the bar — “were made here today.”Chad Ferguson, President of Cub Operations, brushed off any fears of his retail enemies. “There has always been competition,” said Ferguson.
Cub Foods is betting heavily on speed and convenience. The new store brand of microwaveable meals is “Quick and Easy,” with meat, veggies and condiments in one pouch.
Ferguson pulled out a bag with tilapia, asparagus and “compound butter,” flavored with lemon.
“Here — this is one night, solved,” said Ferguson, waving the bag. “It’s like you went to a restaurant, but didn’t leave your house.”
Ferguson’s favorite is the ice-cream sandwiches at the Refresh station. He was almost drooling as he described how they are made — hot cookies baked in the store, with your choice of ice cream in between.
Ultimately, though, the opinion of shoppers will decide the fate of local supermarkets.
Food shopper Liberda seemed to like the new changes in Cub. “At my age, I want more than average. I want natural, I want real, I want tasty,” she said, as she munched the popcorn.
“Cub fits a need. You come here, you get everything you need.”
Source: Twin Cities Pioneer Press