Lincoln Park's Urban Fresh to close
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(Reuters) — Supervalu Inc. is shutting down its lone Urban Fresh store after just over a year, marking its second thwarted attempt at trying a new concept on the same busy street in Chicago.
Urban Fresh by Jewel tested a small-store format aimed at upscale professionals who do not want to dine out, but do not want to cook much either.
The closure comes as small-format grocery stores from retailers ranging from Wal-Mart Stores Inc. to British import Tesco PLC are finding mixed success.
On Thursday afternoon, workers at the store in Chicago's Lincoln Park neighborhood were pulling items from shelves and packing them into boxes. Signs at self-serve checkout counters informed shoppers that the store would close on Oct. 30.
"The company gathered a lot of key sales data and customer feedback and after gathering all of that the decision was made to close it," spokeswoman Karen May said on Friday.
She said the store's 57 employees would be transferred to other stores. Supervalu chain Jewel-Osco will keep the property and attempt to lease it to another party.
"This is not a problem or an issue that's unique to Supervalu," said Jim Hertel, managing partner at Willard Bishop LLC, a grocery consulting firm. "There has been a lot of experimentation with this format and I don't think anybody's really knocking it out of the park."
The closure of Urban Fresh comes as Supervalu's new Chief Executive Craig Herkert takes steps to streamline operations and boost the chain's performance amid intense competition. On Oct. 20, Supervalu slashed its quarterly dividend, trimmed the upper end of its profit forecast and said it planned to expand its discount Save-A-Lot chain.
Supervalu shares are up about 13 percent so far this year, but down 56 percent since the start of 2008.
SAME STORE, DIFFERENT CONCEPT
Supervalu last year closed another small concept chain, the five-store Sunflower Market focused on organic items, after it failed to meet expectations following its 2006 debut.
Urban Fresh moved into the same spot as a closed Sunflower Market on Chicago's fashionable North Clybourn Avenue in September 2008 with a fresh interior, different staff and upscale offerings such as sushi, prepared sandwiches and wine.
It opened just days after the Lehman Brothers bankruptcy rocked the financial world and shocked consumers, who stopped their discretionary spending in the midst of the resulting financial crisis.
This week, several displays in the 16,000-square foot store were empty. The meat department had fewer selections filling its cases and other sections were also emptier than usual.
Competition in the already crowded Chicago grocery market has heated up this year. Supervalu's Jewel-Osco and Safeway Inc.'s Dominick's chains ignited a price war as the recession took hold of consumers' wallets. In May, Whole Foods Market Inc. shut an older store and opened in a new, larger location with a wider selection of prepared foods just half a mile from Urban Fresh.
Meanwhile Batavia, Illinois-based Aldi is building another one of its small discount grocery stores steps from Urban Fresh's spot, below an existing Trader Joe's on Clybourn. Aldi already has a store further up the street.
"The small format that seems to be really doing well these days is limited assortment stores" such as Aldi, Save-A-Lot and Trader Joe's, said consultant Hertel.
Aldi and Save-A-Lot are probably running with double-digit same-store sales growth, and Trader Joe's is also growing with "a lot of buzz and a loyal following," he said.
Other chains have also been testing smaller stores catering to on-the-go U.S. consumers. Tesco opened its Fresh & Easy stores in the U.S. Southwest in late 2007 and as of last month had 12, while Wal-Mart opened a few small Marketside stores in the Phoenix area in 2008.
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Seriously, who wants to get in their car and drive to Clyborn for the kind of groceries at that store?
Put it on Clark anywhere north of the River, where there's a density of pedestrian traffic and people who would walk to get the quick, healthy food for that night's dinner and I really believe they'd do much, much better.
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16,000 square feet is pretty small for a grocery store, much less one that also serves meals and has a butcher.
Why not lease the space to a Delray Farms? That was a small-format store with good produce and good prices.
Who owns the space? Implications seem to be that Jewel owns it? Would Jewel's unions let it lease the space out to a non-union grocer?
If they were trying to be a US Tesso, they were thinking way too small. Hard to make it on just groceries nowadays. You need the center aisles with housewares, hardware, drugs and non-food items to make it. Hard to stuff all of that into 16,000 square feet. What were they thinking? Will heads roll?
Anyone else with discretionary income getting really fed up with continuously being asked to pay through the nose "because they can"? Whole Foods, This place, even bare bones Jewel, all seem be playing Robin Hood and stealing from the rich. Too bad they're not giving anything to the poor. I shop Aldi if I can find what I want there. Otherwise I shop the sales and carry coupons. Haven't been in a Whole Foods for years, just too blatant an attempt to rip me off.
And what loser came up with a name like "Urban Fresh"? Were they trying for the generic feel?
How was this significantly different from Bockwinkels? Maybe they need Bockwinkel's management and expertise (and pay scale)?
What I really want to know is why this is such big news in Crain's???? Some little podunk 16,000 square foot White-Hen wannabe surrounded by scores of me-too competitors closes and it's big news?
How about paying some attention to the bodega's on 26th Street for a change. Let's hear about La Chiquita chain of grocers that operate profitably under Crain's radar in t he inner city. There's a heck of a lot more business in Chicago than is found in the loop or Lincoln Park. What a myopic focus. Is it Crain's CHICAGO Business or Crain's "our neighborhoods" Business?
Maybe if Crain's focused on areas of the city outside their office windows we could get some investment in neighborhoods that need it? Do we really need, or care, about still another hole-in-the-wall snack shop? Should we care that large swaths of neighborhoods outside the downtown area need groceries and other businesses?
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Ironically, the best user for this location may be SuperValu's Save-A-Lot chain were it not for the location's small footprint.