Wegmans to close Natick, MA location

[storewanderer]

There is a lot of new competition and people's tastes are changing. While customers may have previously gone to the big destination Wegman's on a weekend and done all of their shopping there, now they may still go there but also go to a new ethnic store or perhaps to a Farmer's Market type of store, etc. There are a lot of options for the customer.

I think this is really a large part of the puzzle. Do people destination shop for much of anything these days? I used to do the afternoon shop at Wegmans including a "break" (lol) for lunch. But as time has gone on I want to do other things with my time that don't include being in a grocery store. Smaller is better, efficient shopping is in. And I can do that in so many more places now. Wegmans still brings people in but I don't think it is the universal draw that it once was.

Interesting!

And I am just the opposite.

My time is better spent NOT shopping (for anything) so "one stop" works for me. I am not an impulse shopper so I can navigate a very large store quickly! But there has to be easy and abundant parking with good ingress and egress.

More time for walking, hiking, museums, travel, zoos, swimming, discoveries, art galleries, live theatre, etc. etc., just NOT shopping (buying stuff).

With a very sporadic center store mix I am not sure what you would think of Wegmans offer. I don't think it would be an easy one stop shop.

[BatteryMill]

Several items come to mind: Selling the "national" brands of chips and pretzels like Lays and Rold Gold instead of the local PA brands like Snyders of Hanover or Herrs. Also not selling Hatfield pork products. With Hatfield I wonder if not selling the product was related to Hatfield being owned by Clemens who still would have had their grocery stores at that point. Lat one I remember was not selling a "premium" deli meat like Dietz and Watson that has it HQ in Philadelphia. The stores really and truly were exact copies of the DC area stores at the time. You thought you were back home in DC but you were really in PA or NJ.

The first Super G stores opened in 1994, a year before Izzy Cohen died. The last Super G location to open in PA or NJ was the store near King of Prussia that opened in 1998 or 1999. The FTC allowed that store as a Super G under Ahold because it had been "substantially complete" when the merger took place. The other PA stores were sold off and the store near King of Prussia lasted about 18 months and closed. The NJ Super G stores first were merged into Stop and Shop but were ultimately sold off to mostly Shop Rite owners.

Now it is quite interesting to have seen those brands been local at the time, whereas now they are making their ways across America; not to mention there could have been other factors hurting those stores but I think those just weren't as important. The first Super G in PA most likely opened 1996 (entered DE in 1994, NJ in 1995). I'm not sure if the Devon/KoP store would have had that much competition from Carlisle as well. I could quite tell there was a market failure if Stop & Shop lost out as well in South Jersey, however.

Back to Wegmans - looks like the southern expansion has been hampered thanks to the struggles in approving the Ashland, VA warehouse.

[mjhale]

Now it is quite interesting to have seen those brands been local at the time, whereas now they are making their ways across America; not to mention there could have been other factors hurting those stores but I think those just weren't as important. The first Super G in PA most likely opened 1996 (entered DE in 1994, NJ in 1995). I'm not sure if the Devon/KoP store would have had that much competition from Carlisle as well. I could quite tell there was a market failure if Stop & Shop lost out as well in South Jersey, however.

Yes, Devon is the city that store near King of Prussia was located in. I couldn't think of the name before. You are correct that the store had no Giant-PA competition. Closest stores were Acme either way on US 202 and a SuperFresh a bit west on US 202. I was in the Devon store a couple of times while it was open while visiting friends in the area. The store was hard to get in and out of and I remember it being all on its own with no other retail nearby. I couldn't have seen the store surviving even as a Giant-PA location.

Stop and Shop had failed in North Jersey once before. I'm not sure what Ahold was thinking other than using a name that had some proximity name-wise to the stores they ended up with. When Ahold phased out the Edwards name a few of those locations in South Jersey became Super G locations. I visited a couple of them. I wish I could remember where specifically they were. The stores were still in the Giant-PA 80s format before the 90s glass front came along. Small stores and not up to the "standard" that Giant-MD had set with the native built Super G stores. All of this South Jersey stuff became Stop and Shop and then closed or sold off. I believe that the majority of the Super G stores that Giant-MD built are still Shop Rite locations. The former Edwards stores except the one in Trenton are all non-grocery uses now I'd think.

Back to Wegmans - looks like the southern expansion has been hampered thanks to the struggles in approving the Ashland, VA warehouse.

This is a likely part of the slow southern expansion too. I believe the closest warehouse to the MD, VA and NC stores is on I-81 northeast of Harrisburg, PA. Getting product from there further south than where Wegmans is now in NC becomes a multi-day trip. That isn't cost effective I'm sure.

Incidentally, the lack of a northern warehouse hampered Giant-MD in its expansion. I had forgotten about this but the deal Giant-MD had with the Teamsters was that distribution for the PA and NJ stores had to come from the then Jessup warehouse. This included dairy and bakery products instead of sourcing them locally in the Philly area or from a South Jersey dairy. I'm thinking that trucking all that product north couldn't be cheap. Add something else to the failure points for the Super G stores in PA and NJ.

[mjhale]

With a very sporadic center store mix I am not sure what you would think of Wegmans offer. I don't think it would be an easy one stop shop.

This is something that turned me off to Wegmans. In certain categories like sauces, canned fruits and vegetables and snacks, brand preference due to taste or some other reason really factors into what people buy. When Wegmans first came to the DC area they were pretty consistent with two national/regional brands plus their store brand. Between the three I could usually find something that I liked. Over time they have honed a lot of these categories down to one national/regional brand and their store brand. If I don't like the national/regional brand for whatever reason, am I willing to take a risk on the store brand? While Wegmans does have a reputation for high quality products, taste and ingredients are a subjective matter. It is along the lines of shopping at Lidl or Aldi where you have to have faith in the store brand product. I'll stick with the more normal sized grocery stores that have a better variety of center store products. Yes I'm going to pay more. But variety is something I value more than price.

[pseudo3d]

Smaller is better, efficient shopping is in.

The analysts said the same thing when Fresh & Easy was on the horizon, and analysts went all in on it, spooking Safeway and a few others into designing small prototypes.

The problem is that Fresh & Easy completely failed, Lidl's expansion also halted out, and meanwhile Walmart, H-E-B, Hy-Vee, and others continue to expand with large stores. I have my own opinions on H-E-B, I think they're vastly overrated, I think their merchandising sucks in many categories, and some of the same accusations leveled against Walmart apply just as much to H-E-B. But I can't deny that their 100k+ square feet stores are quite successful.

Whatever Wegmans' problem is, it isn't their size.

[storewanderer]

Smaller is better, efficient shopping is in.

The analysts said the same thing when Fresh & Easy was on the horizon, and analysts went all in on it, spooking Safeway and a few others into designing small prototypes.

The problem is that Fresh & Easy completely failed, Lidl's expansion also halted out, and meanwhile Walmart, H-E-B, Hy-Vee, and others continue to expand with large stores. I have my own opinions on H-E-B, I think they're vastly overrated, I think their merchandising sucks in many categories, and some of the same accusations leveled against Walmart apply just as much to H-E-B. But I can't deny that their 100k+ square feet stores are quite successful.

Whatever Wegmans' problem is, it isn't their size.

I think there is a LARGE segment of highly profitable (not price sensitive) customers, primarily in larger cities/suburbs, who absolutely value a small, efficient, but effective store layout.

I'm not talking an 18k square foot layout like F&E or Aldi/Lidl but rather a 30k square foot type layout that allows for some fresh departments to be present.

The 100k square foot HEB format may work in a couple metro areas in Texas but would it work in, for instance, Albuquerque? Doubt it. Oklahoma City? Doubt it. New Orleans? Doubt it. Phoenix? Maybe. etc.

I think the more densely populated the area is, the more customers will value an efficient/smaller store layout. The less densely populated, the more a larger store will be tolerated.

You cannot compare 100k square feet of Wegmans to 100k square feet of HEB. The box may be 100k square feet but what is happening inside the box is completely different. Wegmans dedicates about 20-30k square feet of that space to fresh departments, prep areas, seating, etc. HEB dedicates significantly less space to such departments.

[veteran+]

I do not think you are considering that traffic is a HUGE problem when shopping in certain cities.

Free accessible and easy to access parking is another huge issue in densely populated cities (unless NYC style mass transit is present, and then you will have smaller purchases more frequently).

Smaller formats just can't have the variety of modern supermarkets so you have to niche shop from one place to another.

One could easily spend half your day doing that in Los Angeles (including finding or waiting for parking).

[Romr123]

There has definitely been evolution in how people spend time.

40 years ago in college I'd head out to Meijer in Meridian Township on Saturday afternoon to do the weekly shopping on the bus. Across the street was Meridian Mall (which at that point had Woolco/JCPenney and didn't even have Hudsons) and next to that was Kmart.

25-ish years ago, single me would happily go to Byerly's in Schaumburg, IL on a Friday evening, get a bite to eat, do the weekly shopping, then head over to Golf Road and do some big-box retail, ending up the evening at Borders/Tower Records between 10 and 11.

Now, I can barely bestir myself (married now) to go to Meijer except for a big shop when returning from a vacation/being away. As I have acknowledged, I'm a big Meijer fan (all their locations are as much or more complete a supermarket than the inner-ring Kroger stores near me in Detroit, plus the hypermarket merchandise as a bonus). Aldi gets an (unfortunately) large portion of my basket just because it's not an entire day to get through the store, and what i get there is good enough.

[ClownLoach]

This just sounds like the classic example of changing the formula too much (a difficult to shop multi floor store that increases overhead expense and discourages regular visits), a bad location choice with a dying mall, and the combination of the two meant that they couldn't generate enough volume to overcome the high overhead costs of such a store.

Doing the math - they have 111 stores and bring in about $10B a year. That means the average Wegmans delivers $1.73M per week, or about $90M a year.

Based on the description here I would assume that this store isn't delivering anything close to that kind of volume. Even if they delivered "only" a million a week they would assuredly be running in the red and need to close.

I just don't see a conventional mall Supermarket delivering $90M a year anywhere with all the problems malls are having right now. I also don't see where anyone else who took the same spot and built a grocery megastore wouldn't be in the same situation of losing money and closing down.

[storewanderer]

This just sounds like the classic example of changing the formula too much (a difficult to shop multi floor store that increases overhead expense and discourages regular visits), a bad location choice with a dying mall, and the combination of the two meant that they couldn't generate enough volume to overcome the high overhead costs of such a store.

Doing the math - they have 111 stores and bring in about $10B a year. That means the average Wegmans delivers $1.73M per week, or about $90M a year.

Based on the description here I would assume that this store isn't delivering anything close to that kind of volume. Even if they delivered "only" a million a week they would assuredly be running in the red and need to close.

I just don't see a conventional mall Supermarket delivering $90M a year anywhere with all the problems malls are having right now. I also don't see where anyone else who took the same spot and built a grocery megastore wouldn't be in the same situation of losing money and closing down.

Keep in mind the average Wegmans has 300-500 employees per store. They are doing big volume but their labor spend is very, very high.

Nugget in NorCal and Harmon's in Utah are very "close" to what Wegman's tries to do. Haggen was also very close. Nugget pricing has gotten out of control and their quality/service is better than Wegman's. Harmon's runs an excellent operation but some of their perimeter items don't taste as good as I'd expect them to; mix at Harmon's is very deep and pricing is, overall, fair for what they are offering. Harmon's reminds me a lot of what Haggen was before they screwed up (had to close too many stores.. then the expansion thing..) but with better pricing.