Specialty supermarkets flock to over-stored East Cooper
Self-proclaimed foodie and retired restaurant owner Janet Tekavec gushes over the Newton Farms grocery store at Freshfields Village between Kiawah and Seabrook islands.
City, town incomes
Median household income for local area 2007-2011
Mount Pleasant $76,688
Charleston $50,938 North Charleston $39,182
Source: U.S. Census Bureau
“This is just nirvana,” the first-time visitor from Upstate New York said while scouring the aisles of Charleston-based Piggly Wiggly’s boutique supermarket. “This has everything and more as far as a major chain.”
The specialty food customer
66 percent of U.S. consumers purchase specialty foods, up from 59 percent in 2011.
The top two reasons to purchase specialty food are for everyday meals at home and for consumers to treat themselves.
Mean weekly spending on food has increased to $94 from $90 in 2011 per specialty food household, with 22 percent of that spent on specialty food.
Taste is the top reason for purchasing specialty foods, followed by recommendations from a friend or relative.
Diet and health concerns influenced more purchases in 2012 than in 2011.
Three-fourths of specialty food consumers have shopped at a farmers market within the past year.
Family food traditions are important to 79 percent of specialty food consumers.
More than half of specialty food consumers purchase foods that support charities
Source: National Association for the Specialty Food Trade
That’s the attitude Piggly Wiggly hopes will carry over to its second Newton Farms planned for Isle of Palms when it opens before tourist season in 2014. Ditto for upscale newcomer Southern Season when it sets up its first store outside of home base Chapel Hill, N.C., in Mount Pleasant by this summer.
By the numbers
Mount Pleasant grocery stores
Trader Joe’s 1
On the way
Southern Season to Mount Pleasant
Newton Farms to Isle of Palms
They are the latest specialty supermarkets headed for East Cooper, an area suddenly attracting a flurry of finer food merchants. Trader Joe’s opened in 2011 in the former Hungryneck Antique Mall and, by all accounts, appears to be a hit. It’s just around the corner from high-end grocer Whole Foods, one of only three in South Carolina.
But what’s driving the race to set up more grocery stores in the already-saturated East Cooper market, and, more importantly, can all of them survive?
“They obviously are looking at the demographics of Mount Pleasant,” said commercial real estate agent and retail specialist Will Sherrod of Lee & Associates. “They are looking at the higher-end demographic.”
Mount Pleasant’s median household income is close to $77,000. That’s $32,000 more than the state average, and $22,000 more than Summerville, the next closest major municipality by income in the Charleston region.
It’s an affluent, 91 percent white suburban community just minutes from the beach, and nearly 60 percent of the residents over the age of 25 hold a college degree. The state average is 24 percent.
“It’s obviously a desirable customer,” said Lorrie Griffith, editor of food trade journal The Shelby Report of the Southeast.
And the market segment is growing.
Sales of specialty foods have been going up for the past few years, rising to $75 billion by 2011, an increase of 19.1 percent from 2009, according to Louise Kramer of the National Association for the Specialty Food Trade.
Specialty foods represent 13.7 percent of all food sales at retail, a number that is only expected to go up, especially with the new desire for local or special items.
Eighty-one percent of people earning more than $75,000 patronized a specialty food store in 2012, up from 48 percent in 2009, according to the trade group.
Two-thirds of all U.S. consumers have purchased specialty foods within the past six months, an increase of 11 percent over 2011 and a significant jump over the 46 percent who bought specialty foods in 2009.
“We see it as a robust area in the food economy,” Kramer said.
Driving the increased interest in specialty food stores is the foodie’s interest in good food, knowing a little about the people behind the food, renewed interest because of economic conditions in staying home for dinner and the rise of specialty cable TV outlets such as The Food Network and the Cooking Channel, she said.
“There is much more of an interest and conversation with people about food,” Kramer added. “The specialty food consumer seems to be more affluent than traditional grocery consumers. They are looking for foods that are apart from the mainstream.”
As fallout from the Great Recession, she also said people have gotten used to dining out less and cooking at home.
“They want something interesting and special and different. They might invest in an artisanal cheese made with local goat milk, and it adds a little to the dining experience and perhaps makes up for not going out to dinner,” she said. “Or they might buy extra virgin olive oil from California made in small batches to serve at a dinner party to give their guests something special.”
Glut of grocers
But the rise in specialty supermarkets also raises concern of a shakeout among the traditional supermarkets in over-stored East Cooper.
Grocers, on average nationally, serve about 8,600 residents per store.
In over-saturated Mount Pleasant, which boasts 16 full-service supermarkets, the average is even lower: about 4,400 people per store for a population of about 70,000.
“In this business climate, they must feel like they have a very good feeling that they can be profitable, that they can offer something different and be successful and go into a market already crowded with competition,” Griffith of the Shelby Report said.
“Unless there is a very strong influx of population or new development that would bring more residents to the area, people would have to spend more money (for the stores to survive),” she said. “It’s the same pie they are dividing. They must feel like they have a good shot at success to go into that situation.”
Some new housing developments are in the works such as Carolina Park on the town’s northern edge and another off of Rifle Range Road. A couple of new apartment projects are in the works, as well.
Niche grocers such as Trader Joe’s and Whole Foods probably boosts the average number of customers per store in Mount Pleasant because they draw from outside markets, such as peninsular Charleston and nearby Daniel Island. Seasonal visitors who own condominiums in East Cooper also add to the bottom line.
Southern Season, which peddles local and international fine food, wine, specialty gifts and cookware, hopes to tap the tourist trade as well.
“Their business models are predicated on tourists to a certain degree,” said Leonard Way, vice president of asset management for The Beach Co., which owns the former Food Lion in Brookgreen Town Center where Southern Season will open later this year.
The specialty food retailer also noted that it decided to locate in Mount Pleasant partly because of the 325-unit upscale apartment complex called The Boulevard being built on Coleman Boulevard, just across the street.
Finding a niche
As for the high-end Newton Farms project on Isle of Palms, also a Beach Co.-affiliated development, Way said a specialty grocery store on the island makes sense because Piggly Wiggly and Bi-Lo are just across the Isle of Palms Connector in Mount Pleasant.
“It will meet the needs of the tourists and the permanent population,” he said. “Without the tourist population, you would not need a grocery store on the island.”
The Isle of Palms’ population swells from 4,100 year-round residents to more than 20,000 during the spring and summer rental seasons, much like that of Kiawah and Seabrook islands.
“Newton Farms has proven they have the right mix at Freshfields,” Way said.
Piggly Wiggly spokesman Chris Ibsen attested to that.
“It is a very strong performer for our company,” Ibsen said.
He also discounted the notion that the new Newton Farms on the Isle of Palms will cannibalize the Piggly Wiggly just across the marsh at Seaside Farms in Mount Pleasant.
“We see it as complementary,” Ibsen said. “There has been a grocery store on Isle of Palms for decades. We are excited to be in a position of having a complementary offering instead of working against a competitor there.”
And unlike some specialty stores, Ibsen pointed out that Newton Farms carries a full array of groceries and other items that make it a one-stop shop.
“In the case of others, you can go to get a few specialty items, but shoppers go somewhere else to get paper towels, ketchup and cereal,” he said.
As for which, if any, food store will not survive the crowded East Cooper market, only time will tell.
At one point, the weakest grocery chain appeared to be Bi-Lo, with its inability to refinance a loan at the height of the recession, but it emerged from bankruptcy in 2010 and a year later bought the Jacksonville-based Winn-Dixie supermarket chain, which no longer operates in South Carolina.
Food Lion pulled out of the Mount Pleasant market a year ago, shuttering its two remaining stores there. But there is nothing to indicate any of the major players — Publix, Harris Teeter, Piggly Wiggly, Bi-Lo, Walmart or the specialty stores — are now in trouble.
“I don’t know of anyone on the fence of getting out,” said Sherrod of Lee & Associates..
But because of all the competition among traditional grocers and the emergence of specialty supermarkets in an area already overflowing with food chains, observers agree that without growth within Mount Pleasant, a correction is possible.
“Somebody eventually will have to not be profitable anymore,” The Shelby Report’s Griffith said.
Reach Warren L. Wise at 937-5524 or twitter.com/warrenlancewise.