Safeway Fire. At 35th and Northern Phoenix

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rwsandiego
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Re: Safeway Fire. At 35th and Northern Phoenix

Post by rwsandiego »

Marginal stores in neighborhoods like 35th and Northern pose a damned-if-you-do-damned-if-you-don't situation for a grocer like Safeway/Albertsons or Fry's. If the store remains open (or is re-built, as in this case) the company loses money because the business is not there to support the store. If the store downsizes or closes, the company is accused of abandoning the neighborhood. It reminds me of the criticism Safeway faced over a small DC store. The middle-class customers complain about the lines and out-of-stock conditions, but they don't want big-box stores (like a mode Safeway) in their neighborhood.
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Re: Safeway Fire. At 35th and Northern Phoenix

Post by arizonaguy »

rwsandiego wrote: August 3rd, 2018, 6:43 pm Marginal stores in neighborhoods like 35th and Northern pose a damned-if-you-do-damned-if-you-don't situation for a grocer like Safeway/Albertsons or Fry's. If the store remains open (or is re-built, as in this case) the company loses money because the business is not there to support the store. If the store downsizes or closes, the company is accused of abandoning the neighborhood. It reminds me of the criticism Safeway faced over a small DC store. The middle-class customers complain about the lines and out-of-stock conditions, but they don't want big-box stores (like a mode Safeway) in their neighborhood.
The difference in Phoenix is that Fry's tends to keep its stores open in these types of neighborhoods whereas Albertsons, Bashas', and Safeway tend to close them. The Fry's stores that have closed in these types of neighborhoods were stores that were "overlapping" other stores as a result of the late 1990s combination of Fry's, Smith's, and Smitty's. Fry's tends to keep the stores open in these neighborhoods whereas other Kroger divisions seem more likely to close these stores. Fry's stores tend to cater more to the neighborhoods they're in (their "marginal" stores in neighborhoods like this don't have the Boar's Head Deli program or as many organic items but do tend to have more "value" items and more Hispanic products). Albertsons and Safeway seem incapable of doing anything other than "limiting" their standard product assortment.

If the fire hadn't destroyed this store, it still would've closed within the next couple of years anyways as Safeway just can't make these types of stores work.

As far as what does work in these types of neighborhoods, I'd argue WinCo would be the best bet. The former Kmart at I-17 / Northern seems to me the perfect place for them to serve the neighborhood.

Aldi is moving upscale (especially with their new builds in new markets) and Walmart is currently suffering from a case of "invest in digital at all costs" mode of capital investment.
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Re: Safeway Fire. At 35th and Northern Phoenix

Post by storewanderer »

Part of the consideration on rebuilding may have also been to consider "where the store will be in 5 years." If an ongoing decline in the neighborhood was expected, it just doesn't make sense to rebuild.

Unfortunately whatever money insurance would pay, will not equate to the entire cost to redevelop a new store on the site to today's standards. Add to that all of the resources it takes the company to open a new store, and I can see why they may decide this is the right time to move on.

We will see what happens next. Maybe the developer already has another grocer lined up. Hopefully Safeway will not pay rent here to keep another grocer out.
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Re: Safeway Fire. At 35th and Northern Phoenix

Post by rwsandiego »

arizonaguy wrote: August 3rd, 2018, 7:54 pm
rwsandiego wrote: August 3rd, 2018, 6:43 pm Marginal stores in neighborhoods like 35th and Northern pose a damned-if-you-do-damned-if-you-don't situation for a grocer like Safeway/Albertsons or Fry's. If the store remains open (or is re-built, as in this case) the company loses money because the business is not there to support the store. If the store downsizes or closes, the company is accused of abandoning the neighborhood. It reminds me of the criticism Safeway faced over a small DC store. The middle-class customers complain about the lines and out-of-stock conditions, but they don't want big-box stores (like a mode Safeway) in their neighborhood.
The difference in Phoenix is that Fry's tends to keep its stores open in these types of neighborhoods whereas Albertsons, Bashas', and Safeway tend to close them. The Fry's stores that have closed in these types of neighborhoods were stores that were "overlapping" other stores as a result of the late 1990s combination of Fry's, Smith's, and Smitty's. Fry's tends to keep the stores open in these neighborhoods whereas other Kroger divisions seem more likely to close these stores. Fry's stores tend to cater more to the neighborhoods they're in (their "marginal" stores in neighborhoods like this don't have the Boar's Head Deli program or as many organic items but do tend to have more "value" items and more Hispanic products). Albertsons and Safeway seem incapable of doing anything other than "limiting" their standard product assortment.

If the fire hadn't destroyed this store, it still would've closed within the next couple of years anyways as Safeway just can't make these types of stores work.

As far as what does work in these types of neighborhoods, I'd argue WinCo would be the best bet. The former Kmart at I-17 / Northern seems to me the perfect place for them to serve the neighborhood.

Aldi is moving upscale (especially with their new builds in new markets) and Walmart is currently suffering from a case of "invest in digital at all costs" mode of capital investment.
I agree that a WinCo could work, although I was thinking more along the lines of Food City. To me, it is less about Safeway/Albertsons not being able to make it work than it is about not wanting to make it work.
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Re: Safeway Fire. At 35th and Northern Phoenix

Post by storewanderer »

rwsandiego wrote: August 4th, 2018, 7:59 am
arizonaguy wrote: August 3rd, 2018, 7:54 pm
rwsandiego wrote: August 3rd, 2018, 6:43 pm Marginal stores in neighborhoods like 35th and Northern pose a damned-if-you-do-damned-if-you-don't situation for a grocer like Safeway/Albertsons or Fry's. If the store remains open (or is re-built, as in this case) the company loses money because the business is not there to support the store. If the store downsizes or closes, the company is accused of abandoning the neighborhood. It reminds me of the criticism Safeway faced over a small DC store. The middle-class customers complain about the lines and out-of-stock conditions, but they don't want big-box stores (like a mode Safeway) in their neighborhood.
The difference in Phoenix is that Fry's tends to keep its stores open in these types of neighborhoods whereas Albertsons, Bashas', and Safeway tend to close them. The Fry's stores that have closed in these types of neighborhoods were stores that were "overlapping" other stores as a result of the late 1990s combination of Fry's, Smith's, and Smitty's. Fry's tends to keep the stores open in these neighborhoods whereas other Kroger divisions seem more likely to close these stores. Fry's stores tend to cater more to the neighborhoods they're in (their "marginal" stores in neighborhoods like this don't have the Boar's Head Deli program or as many organic items but do tend to have more "value" items and more Hispanic products). Albertsons and Safeway seem incapable of doing anything other than "limiting" their standard product assortment.

If the fire hadn't destroyed this store, it still would've closed within the next couple of years anyways as Safeway just can't make these types of stores work.

As far as what does work in these types of neighborhoods, I'd argue WinCo would be the best bet. The former Kmart at I-17 / Northern seems to me the perfect place for them to serve the neighborhood.

Aldi is moving upscale (especially with their new builds in new markets) and Walmart is currently suffering from a case of "invest in digital at all costs" mode of capital investment.
I agree that a WinCo could work, although I was thinking more along the lines of Food City. To me, it is less about Safeway/Albertsons not being able to make it work than it is about not wanting to make it work.
I don't think Safeway/Albertsons has the ability financially to put resources out to rebuild this marginal store in a marginal neighborhood. They are in a very precarious financial condition with their debt and the current rising interest rate environment, plus the issues with the pensions and the Safeway Bondholders claiming a covenants violation. They have to be very careful what money they spend. They seem to be carefully targeting opportunities to build a few new stores, in not yet fully developed but long underserved areas, that will hopefully perform better than marginal (but will just end up marginal stores at best once the areas grow enough for Kroger or Wal Mart to come in unless they fix their pricing problems and start doing things like offering self checkout).

WinCo has tried a few smaller format stores in recent years. I wonder how that would work in Arizona. I think it could actually be worth a shot. It is a lot cheaper to air condition a smaller box... Historically WinCo has not opened stores in what I'd call marginal areas, but I feel like more recently they are opening in some areas that I would call borderline.
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Re: Safeway Fire. At 35th and Northern Phoenix

Post by arizonaguy »

storewanderer wrote: August 4th, 2018, 1:22 pm
rwsandiego wrote: August 4th, 2018, 7:59 am
arizonaguy wrote: August 3rd, 2018, 7:54 pm

The difference in Phoenix is that Fry's tends to keep its stores open in these types of neighborhoods whereas Albertsons, Bashas', and Safeway tend to close them. The Fry's stores that have closed in these types of neighborhoods were stores that were "overlapping" other stores as a result of the late 1990s combination of Fry's, Smith's, and Smitty's. Fry's tends to keep the stores open in these neighborhoods whereas other Kroger divisions seem more likely to close these stores. Fry's stores tend to cater more to the neighborhoods they're in (their "marginal" stores in neighborhoods like this don't have the Boar's Head Deli program or as many organic items but do tend to have more "value" items and more Hispanic products). Albertsons and Safeway seem incapable of doing anything other than "limiting" their standard product assortment.

If the fire hadn't destroyed this store, it still would've closed within the next couple of years anyways as Safeway just can't make these types of stores work.

As far as what does work in these types of neighborhoods, I'd argue WinCo would be the best bet. The former Kmart at I-17 / Northern seems to me the perfect place for them to serve the neighborhood.

Aldi is moving upscale (especially with their new builds in new markets) and Walmart is currently suffering from a case of "invest in digital at all costs" mode of capital investment.
I agree that a WinCo could work, although I was thinking more along the lines of Food City. To me, it is less about Safeway/Albertsons not being able to make it work than it is about not wanting to make it work.
I don't think Safeway/Albertsons has the ability financially to put resources out to rebuild this marginal store in a marginal neighborhood. They are in a very precarious financial condition with their debt and the current rising interest rate environment, plus the issues with the pensions and the Safeway Bondholders claiming a covenants violation. They have to be very careful what money they spend. They seem to be carefully targeting opportunities to build a few new stores, in not yet fully developed but long underserved areas, that will hopefully perform better than marginal (but will just end up marginal stores at best once the areas grow enough for Kroger or Wal Mart to come in unless they fix their pricing problems and start doing things like offering self checkout).

WinCo has tried a few smaller format stores in recent years. I wonder how that would work in Arizona. I think it could actually be worth a shot. It is a lot cheaper to air condition a smaller box... Historically WinCo has not opened stores in what I'd call marginal areas, but I feel like more recently they are opening in some areas that I would call borderline.

I did some research and found out that WinCo owns the following property: 4949 W PEORIA AVE GLENDALE, AZ 85302

It's currently undeveloped but it would likely be able to serve a lot of the customer base that the 35th Ave / Northern Ave. Safeway did (being 4 miles away vehicle wise but only 2 miles away from the Safeway as the crow flies).

A traditional 100K square foot WinCo would be overkill for this area but a smaller format store may work.

I've included a map of West Phoenix / Glendale (the "marginal" area) to display the grocery landscape.

The "stars" are Safeway locations that are closing or have closed within the past few years (the one Safeway in the area not scheduled to close is labeled).

The "diamonds" are locations of Fry's stores (all of which are open).

The "four point star" shows former Albertsons that closed during the big purges of 2006 - 2009 (the remaining Albertsons location in the area that never closed is labeled).

The "pentagon" is the proposed Winco site.

The "oval" shaped ares as Walmart stores (either neighborhood markets or Supercenters).

Image
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Re: Safeway Fire. At 35th and Northern Phoenix

Post by jdeibler »

I noticed the WinCo undeveloped land is for sale at 51st Avenue and Peoria Avenue. This former WinCo proposed site is on the market for four years. It would be a good location for Fry's Marketplace or Safeway.

WinCo undeveloped land for sale: http://www.loopnet.com/Listing/SE-Peori ... Z/3831132/
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Re: Safeway Fire. At 35th and Northern Phoenix

Post by rwsandiego »

jdeibler wrote: August 5th, 2018, 6:40 am I noticed the WinCo undeveloped land is for sale at 51st Avenue and Peoria Avenue. This former WinCo proposed site is on the market for four years. It would be a good location for Fry's Marketplace or Safeway.

WinCo undeveloped land for sale: http://www.loopnet.com/Listing/SE-Peori ... Z/3831132/
I don't think Fry's would locate a Marketplace store two miles away from another Marketplace (35th and Peoria) and a mile from a regular Fry's. If they built there they would likely consolidate the other two stores into this one.

That said, it might be a good fit for Food City, but my sense is Bashas' (their parent company) isn't opening new stores.
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Re: Safeway Fire. At 35th and Northern Phoenix

Post by jamcool »

Winco has basically stopped all new store development in Phoenix... they have a piece of land in Goodyear that a store was proposed on several years ago that is still unbuilt on.
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Re: Safeway Fire. At 35th and Northern Phoenix

Post by storewanderer »

jamcool wrote: August 5th, 2018, 11:15 am Winco has basically stopped all new store development in Phoenix... they have a piece of land in Goodyear that a store was proposed on several years ago that is still unbuilt on.
I think WinCo got off to a slow start in Phoenix. I have heard they are doing better now, though.
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