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Convenience Key for Small-Format Grocers

Trader Joe’s recently announced plans to open its 13th local grocery store, which will take up part of a vacated Borders bookstore space in Mission Valley. The 13,200-square-foot store is scheduled to open in the fourth quarter of 2012, at Westfield Group’s Mission Valley West shopping center.

The grocery company’s stores, now numbering more than 370 in 33 states, feature nautical and tropical design themes along with interior artwork reflecting the local neighborhood, with a value-oriented focus on its imported and domestic offerings.

Alison Mochizuki, spokeswoman for Monrovia-based Trader Joe’s, said the retailer generally does not discuss regional plans for its stores, although other San Diego area openings are “not in our two-year plan at this time.”

Competing for Customers

Trader Joe’s is getting more competition from rivals in the small-format grocery sector, where stores are usually no larger than around 20,000 square feet — less than half the size of a traditional supermarket.

Company spokesman Brendan Wonnacott confirmed that Fresh & Easy Neighborhood Market has a store planned for a retail center on Camino de La Reina in Mission Valley, not far from the planned Trader Joe’s.

“We don’t yet have an opening timeframe for that store,” he said. It would be the 18th local store for Fresh & Easy, the El Segundo-based U.S. subsidiary of British retailer Tesco Plc, following openings earlier this year in Chula Vista and Santee.

Wonnacott also said there was “nothing new to report” related specifically to the retailer’s long-term San Diego County plans, as the company continues to focus on new product development.

Those companies are gearing up for new stores as retail giant Wal-Mart Stores Inc. readies two locations of its small-format store with grocery items, known as Walmart Neighborhood Market.

Wal-Mart recently announced that one is expected to open in late fall or early winter in La Mesa. It has also begun construction on a Neighborhood Market store set to open this fall in San Diego’s Sherman Heights neighborhood, renovating a building that formerly housed a farmers market.

Charles Wetzel, CEO of the Texas-based retail consulting firm Buxton, noted that the small-format grocers are capitalizing on growing demand among consumers for healthful foods with budget-minded pricing. The smaller real estate footprint helps retailers in trimming overhead expenses, and gives them more potential sites for expansion.

“It’s another way to get themselves in front of the public in more places,” Wetzel said.

‘Food Deserts’

He added that national retailers are also finding the smaller format more feasible than big supermarkets for addressing the needs of communities long known as “food deserts,” unserved by major grocery chains.

Among the challenges is that the retailers, notably the expanding but struggling Fresh & Easy, continue to tinker with the product mix to come up with a formula that clicks with time-strapped and budget-conscious shoppers.

Several other natural-food-oriented chains have recently been growing locally and taking on the large national supermarket companies. Sprouts Farmers Market, Whole Foods Market and locally based Jimbo’s… Naturally! have all opened new stores or announced upcoming locations during the past year.

Jerry Engen, a senior vice president of development with Westfield Group, said Trader Joe’s will fill about half of the former Borders space in Mission Valley, with the other portion to be taken up by cosmetics retailer Ulta.

Engen said Westfield entertained several retailer proposals for the high-profile space, and was able to meet a long-term goal of diversifying the retail offerings at that Mission Valley plaza.

“Having a grocery store in there fits with a company mission to make our centers into one-stop shopping places,” Engen said.

At several of its malls, Engen said, it is in the process of adding offerings considered nontraditional for those settings, but where consumers are looking to limit their driving-around time, such as grocers, pharmacies and fitness clubs.

For instance, Westfield recently announced plans for a new location of Jimbo’s, set to open next year at its Horton Plaza in downtown San Diego.

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