Will a Miniature Mejers Be a Big Hit?
By Matthew Stern
In the last few years, a wave of national grocers have experimented with small concept stores to break into urban environments and, as the strategy is proving successful for retailers like Target, regional grocers are following suit. Now one of the biggest names in Midwest grocery has announced the launch of a second small concept store in one of its major Michigan markets.
Meijer announced plans to open its new store early next year in Royal Oak, MI, according to the Detroit Free Press. Described as a neighborhood market-style location with an open, airy layout, the 40,000-square-foot store will be called Woodward Corner Market by Meijer. The assortment will include products from 2,000 local artisans, featuring popular regional favorites like the Ann Arbor-based Zingerman’s bakery. The store will be located in a pedestrian-friendly area and will have a coffee shop and an outdoor fresh produce and floral section.
Last year, Meijer opened its first small store, called Bridge Street Market, in downtown Grand Rapids near where the chain is headquartered.
Meijer is renowned for being a pioneer in supercenter grocery and in “one-stop shopping,” but has been shaking up its suburb-oriented formula as it works to remain competitive in today’s grocery landscape.
Dipping its toe into small concepts is not the only move Meijer has made to get more contemporary. A few years ago, the chain began what it called an “aggressive push” into redesigning its large format stores in key markets with more modern layouts, according to Produce Retailer. By 2017 it had remodeled about a quarter of its stores.
Meijer has been pursuing upgrades on the technological level as well. Last year after a successful six-store pilot, the chain announced the broad rollout of a shop and scan smartphone app that can be used in all 235 of its locations. Such technology has grown popular with Meijer’s national rivals like Walmart and Kroger as grocers work to streamline the checkout process.
In 2017, Meijer revamped its IT operations, migrating from in-house infrastructure to a third-party cloud tech vendor leveraging the cloud.
Will launching small, urban, hyperlocal store concepts be as important for regional superstore retailers like Meijer as it is for major chains like Target? What are the keys for retailers such as Meijer when it comes to making small stores work?
Comments from the RetailWire BrainTrust:
Small formats are becoming more important, mainly because shopping habits are changing and moving away from big, infrequent shops. However, making small formats work is hard. The economics on small locations are not always as good and the dynamics can be very different from larger locations. The worst small formats are those which are virtually slimmed down versions of large stores. This rarely cuts it. Small formats have to be designed and focused on local needs and different shopping patterns.
Neil Saunders, Managing Director, GlobalData
Forty-thousand square feet is nothing to sneeze at, there is still plenty of room for Meijer to thrill shoppers. But I agree with Neil, these stores cannot merely be mini-Meijers.
I love the focus on local artisans and regional suppliers, fresh florals and produce in a walking community. The Meijer store in my town looks like indie shops on the outside, but inside it’s huge. I think a lot of us are over these one-stop grocery store malls. It’s too much.
Georganne Bender, Consumer Anthropologist, KIZER & BENDER Speaking
Meijer enjoys a solid reputation in its trading areas. So its brand will create awareness for its small store concept. Success will depend on two things: One, is the urban store filling a need in the area and two, will the urban store compete against strong entrenched food stores?
John Karolefski, Editor-in-Chief, CPGmatters
Meijer superstores can feel overwhelming compared to typical Target stores, but the scale of their grocery business is much bigger. My impression from shopping a nearby store is that the food departments are consistently busy, but the “general merchandise” traffic is pretty underwhelming. Meanwhile, the neighboring Target has the opposite problem — plenty of traffic in apparel, home and commodities but not much traction in groceries.
Meijer certainly has the credibility in its home markets to open food-only stores, but it faces plenty of competition. It might study Walmart’s history in this area — why did the company’s small-format food-only locations fail to gain traction despite the size of its overall grocery sales?
Dick Seesel, Principal, Retailing In Focus LLC
As populations move to more urban environments and shopping habits shift to convenience first, urban markets are proliferating. This is a smart move for Meijer in markets where they already have an extremely loyal following. The key to making the small stores successful hinges on the right assortment. It is a huge shift from their traditional supercenters and picking the right products to offer in a small footprint store can be challenging.
David Naumann, Vice President, Retail Marketing, enVista
I see smaller stores in the future for all retailers. Eventually, online and in-store will become one — meaning the customer will know what he or she wants and when to purchase online or go to the store. Considering that most if not all items can be purchased online, the store of the future will be the place to browse, see and try things but most often not make the purchase at store level because delivery will continue to get faster so the item will be there most likely by the time the consumer gets home. Technology is changing the world at a rapid pace, and as the evolution of retail continues we will see more changes both online and at the store level. The journey is exciting and already becoming a fantastic progression to watch.
Art Suriano, Chief Executive Officer, The TSi Company