Competition heats up among specialty grocers
Three new specialty food stores have opened in the Des Moines area since last fall, joining an already competitive grocery market and a string of established grocers that sell ethnic, gourmet and health-conscious food.
The attraction is simple: Shoppers are demanding healthier and diet-sensitive food options, prompting national specialty grocery chains to seek out metro areas such as Des Moines, where they can sell organic, natural and gluten-free produce, meat, dairy and baked goods.
Retail sales in 2015 of natural and organic food in the U.S. totaled $54.9 billion and is expected to grow to $61.1 billion in 2017, according to Statista.com, a company that collects and evaluates statistics.
Newcomers The Fresh Market and Fresh Thyme Farmers Market, both in West Des Moines, and Natural Grocers in Clive, join established grocers Whole Foods and Trader Joe’s, both in West Des Moines, and Gateway Market and Campbell’s Nutrition, both in Des Moines.
“I am not sure the market can support all these places,” said Paul Rottenberg, president of Orchestrate Hospitality, the Des Moines company that owns Gateway Market and several area restaurants and hotels. The 9-year-old combined specialty grocery store and cafe near downtown Des Moines has been building a customer base that will help Gateway withstand additional competition, he said.
“It’s too early to tell if these new markets have had an effect on us,” Rottenberg said. “We are feeling some impact due in part to Fareway opening.”
But he realizes shoppers can be tempted by a nationally known retailer new to town. When Whole Foods opened in 2012, Gateway sales took a 10 percent hit that Rottenberg said took a year to regain.
Fareway, a Boone-based grocery chain known for its signature fresh meat counter, recently debuted a store at 329 Grand Ave. in West Des Moines.
Consumers hungry for organic and specialty foods also are price-conscious. Thirty or more years ago when companies such as Whole Foods started offering healthier alternatives, they were able to command premium prices.
Now, with more organic and natural food stores opening, “it’s not just an upscale phenomenon anymore,” said Jim Hertel, senior vice president of Williard Bishop, an Inmar analytics company. “Having natural and organic offerings are not enough to sustain premium prices.”
Chains such as Fresh Thyme Farmers Market, a newcomer to the field, are promoting value pricing. And traditional grocers such as West Des Moines-based Hy-Vee Inc. are offering greater selections of competitively priced natural and organic foods.
Sustaining a growing number of organic and natural markets is improbable, said David Livingston, a Waukesha, Wis., grocery industry analyst.
“Somebody is going to get pushed out,” he said.
Whole Foods and Trader Joe’s have proven themselves nationally and created a strong following.
“They have set the bar high,” he said.
Specialty markets in general will have to find new ways to attract shoppers, Hertel said. Chains such as Sprouts Farmers Markets have started offering uncooked prepackaged meals that shoppers can prepare at home.
“Offering natural and organic is not enough,” he said. “They need to differentiate themselves.”
Homegrown chains such as Gateway and Campbell’s Nutrition in Des Moines must “play on the fact that they are local and trusted members of the community,” Hertel said.
An even bigger factor in who not only survives but thrives in the natural and organic market field will be the availability of supply, he said.
“Suppliers cannot just snap their fingers and go from growing conventional crops to organic," Hertel said. "We may be in line for a squeeze because there is not enough supply.”
Shoppers trying to choose among the new players in Des Moines will find differences in offerings, service and prices. For instance, Natural Grocers and Campbell's Nutrition both have a heavy emphasis on vitamins and organics. Fresh Thyme is promoting its value pricing. Gateway Market and The Fresh Market both offer specialty foods along with organic and natural selections.
Here's a guide to the new and a few of the established specialty grocers in the metro:
Fresh Thyme Farmers Market
2900 University Ave., West Des Moines
(515) 635-6016
Hours: 7 a.m. to 10 p.m. daily
Headquarters: Downers Grove, Ill.
Opened: March 2016
Feel: Fresh Thyme feels like a neighborhood market and is bright and easy to navigate. The store offers fresh produce, meat and limited bakery items. Selections include gluten-free, preservative-free, organic and natural items. The chain’s motto is “Healthy Food. Healthy Values.”
Claim to fame: The relatively new chain is taking on other specialty markets with more competitive pricing.
Natural Grocers
8650 Hickman Road, Clive
(515) 278-8000
Hours: 8 a.m. to 9:04 p.m. Monday through Saturday; 8:30 a.m. to 7:35 p.m. Sunday
Headquarters: Lakewood, Colo.
Opened: February 2016
Feel: The newly constructed store is bright and offers a selection of natural and organic products along with a large assortment of vitamins and supplements.
Claim to fame: Natural Grocers started out with founders Margaret and Philip Isely going door to door, lending books on nutrition and giving samples of whole grain bread, according to the company’s website. In 2009, the company decided to stop using plastic bags for groceries.
The Fresh Market
5901 Mills Civic Parkway, West Des Moines
(515) 225-4754
Hours: 8 a.m. to 9 p.m. daily
Headquarters: Greensboro, N.C.
Opened: October 2015
Feel: The upscale specialty grocer has a large selection of organic goods but also offers prepared food in an expansive deli counter. It also has fresh meat, seafood and a bakery. Classical music greets customers in the European market atmosphere.
Claim to fame: The stores sell 30 varieties of whole bean coffee and always has orchids for sale near the entrance.
Whole Foods
4100 University Ave., West Des Moines
(515) 343-2600
Hours: 8 a.m. to 10 p.m. daily
Opened: July 2012
Headquarters: Austin, Texas
Feel: Of all the specialty grocers, Whole Foods feels most like a traditional grocery store, but with an upscale vibe. It’s spacious, with a large selection of organic and natural produce, meats and other items.
Claim to fame: A little pricier than most, Whole Foods has battled the “whole paycheck” moniker. The store has a large produce department and a seafood and meat counter offering bison, lamb and veal. Stores also have expansive prepared food offerings including salad bar, pizza, sandwiches and more that customers can eat in a cafe area.
Hy-Vee
8701 Douglas Ave., Urbandale
(515) 270-2572
Hours: 24 hours
Headquarters: West Des Moines
Opened: August 2012, new store, replaced a smaller store at the same location
Feel: Hy-Vee is a traditional grocery store with extensive grocery, bakery, meat, produce and general merchandise offerings. Hy-Vee stores have a growing organic and natural foods selection.
Claim to fame: Along with its “helpful smile in every aisle” slogan, the company employs dietitians in every store to help customers with food choices and special diets.
Trader Joe’s
6305 Mills Civic Parkway, West Des Moines
(515) 225-3820
Hours: 8 a.m. to 9 p.m. daily
Headquarters: Monrovia, Calif.
Opened: November 2010
Feel: Trader Joe’s has a laid-back, Jimmy Buffett vibe, where clerks wear Hawaiian shirts “because we're traders on the culinary seas, searching the world over for cool items to bring home to our customers,” according to the company’s website.
Claim to fame: The company is known for offering a variety of products, the majority of which are not brands found in supermarkets. Its infamous house wine, Two Buck Chuck, is now $2.99 a bottle.
Gateway Market
2002 Woodland Ave., Des Moines
515-243-1754
Hours: 7 a.m. to 10 p.m. daily
Headquarters: Des Moines
Opened: April 2007
Feel: Gateway feels like a market. Aisles are close together and filled with specialty items as well as groceries for the everyday shopper. There’s also an impressive cheese department, olive and salad bar, wine shop and meat and seafood counter. Attached to the market is a cafe that serves breakfast, lunch and dinner.
Claim to fame: Gateway owners include restaurateur and chef George Formaro, whose skill at making bread has benefited Gateway customers. The store also is homegrown, which has created a growing and loyal customer base.
Campbell’s Nutrition
4040 University Ave., Des Moines
515-277-6351
Hours: 9 a.m. to 7 p.m. Monday through Thursday; 9 a.m. to 6 p.m. Friday; 9 a.m. to 5 p.m. Saturday; and noon to 4 p.m. Sunday.
Headquarters: Des Moines
Opened: 1937
Feel: The store has the feel of a comfortable neighborhood market. The produce, meat and dairy selections are limited but with an emphasis on locally sourced goods. Half of the store is filled with vitamins, supplements and beauty products.
Claim to fame: Campbell’s was offering healthy and organic foods before it became popular. Along with groceries and supplements, Campbell’s offers a variety of books and other items in the Des Moines store. Campbell’s has another store at 2749 100th St. in Urbandale that offers vitamins and supplements.