The San Francisco Chronicle has a piece of the anticipated 2010 closing of a Cala Foods market on Nob Hill, suggesting that it reflects a broader problem facing the independent food retailing community.
“Although Cala is making money, the profit margin for a large supermarket isn't large,” the Chronicle writes. “Food costs are up, vendors are charging more to deliver products. Wages and insurance costs are rising. But more than that, supermarket sites are some of the last large real estate lots in the city. Eager developers are making such generous offers that store owners would be crazy to turn them down. No wonder supermarkets are an endangered species in the city.
“Increasingly, they are being replaced by specialized markets, places like Whole Foods, Trader Joe's, and the new Fresh and Easy markets from the United Kingdom.”
While these stores hardly are a blight on local communities, some say that they don't offer shoppers the kinds of mainstream options that a store like Cala Foods does, but instead focus on private label items, as well as prepared and gourmet foods.
“Although Cala is making money, the profit margin for a large supermarket isn't large,” the Chronicle writes. “Food costs are up, vendors are charging more to deliver products. Wages and insurance costs are rising. But more than that, supermarket sites are some of the last large real estate lots in the city. Eager developers are making such generous offers that store owners would be crazy to turn them down. No wonder supermarkets are an endangered species in the city.
“Increasingly, they are being replaced by specialized markets, places like Whole Foods, Trader Joe's, and the new Fresh and Easy markets from the United Kingdom.”
While these stores hardly are a blight on local communities, some say that they don't offer shoppers the kinds of mainstream options that a store like Cala Foods does, but instead focus on private label items, as well as prepared and gourmet foods.
- KC's View:
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Especially in communities hard-hit by the current economy, not having low-cost and mainstream options can be a real problem.
On the other hand, for example, Trader Joe’s may only offer private label cereals and cookies…but they tend to be less expensive than national brands in a lot of stores. So sometimes brands have more to do with perception than actual monetary concerns.
The challenge, I suppose, is for chains like Whole Foods, Trader Joe’s and Fresh & Easy to be persuasive in making their case to local shoppers. If they can't do that, then their real estate won’t be worth that much.
