Fresh Market bringing a touch of Europe here

Upscale grocery chain limits its offerings


RICHMOND, Va. -- When customers here enter The Fresh Market grocery story, they leave their Southern roots momentarily behind to shop like Europeans.

High ceilings with exposed beams give the store the feel of an open market in Paris or London. Low lighting and classical music produce a calming affect. Oriental lillies, pink Alstromenia and other fresh exotic flowers fill buckets at the front of the store.

A display of Artisan cheeses sits cater-corner to an ample section of shiny purple eggplants, crisp apples and other produce. In the meat department, butchers help shoppers pick out fresh leg of lamb, stuffed pork chops, Italian meatloaf and portabella gouda burgers from behind the counter.

The Fresh Market concept is part of a growing trend among consumers to shop at "Gucci groceries" - upscale grocers with an emphasis on fresh or organic foods. Responding to the demand, The Fresh Market is in steady expansion mode. It opened its Richmond store last month and plans to build a dozen or so others in the next year, including one to open next spring on Greenspring Avenue in northwestern Baltimore County.

The Baltimore market, with its working-class roots, has traditionally been slow to attract an upscale market, but in recent years has seen an explosion of specialty stores such as Whole Foods Markets Inc., Trader Joe's and Wegmans Food Markets Inc. join the fray of supermarket options.

Part of the growth has been driven by a push for more upscale developments that include a mix of housing, office and retail. The Fresh Market will anchor Quarry Lake at Greenspring, a mixed- used community being developed on a former rock and gravel mine at Greenspring Avenue.

"There's always been a desire for higher-end groceries in the Baltimore market. It's just now that they're coming," said David Ward, president of H&R Retail, which helped broker The Fresh Market deal.

"It wasn't long ago that you would think there are so many grocery stores that there's not room for anymore to come in," Ward said. "As higher-end stores such as Whole Foods succeeded, you realized grocery stores were carved into niches. People are willing to shop multiple stores for different products."

Upscale, niche grocery stores are gaining market share across the country as traditional supermarkets lose ground. More than a dozen types of retailers are competing for food shoppers, from discount stores and convenience stores to drugstores and Web sites, according to the Food Marketing Institute, a trade group in Washington.

The shifting trend lines echoed last week in the announcement in the Netherlands by Royal Ahold NV that it planned a further transformation of its U.S. chains, including Giant Food in the Baltimore-Washington area because of intense competition. Super Fresh Food Markets Inc. and Safeway Inc., in an attempt to distinguish themselves, have also introduced new formats with some characteristics of more upscale grocers, such as greater attention to produce, organic offerings and lighting and display.

Conventional supermarkets had 12.4 percent of the grocery market in 2004. That's expected to drop to 10.4 percent by 2009, according to a study conducted by the Food Marketing Institute.

The so-called fresh, organic market had just a sliver of the market - 0.6 percent - in 2004. Its share is expected to inch upward - to 0.8 percent - in the next three years.

Part of the shift is due to the growing popularity of prepared foods. Upscale markets tend to offer higher-quality offerings of prefixed meals, which are increasingly attractive as people feel pressed for time to cook.

"Many of these fresh stores are a little bit more interesting and a little bit more fun to shop," said Jon Hauptman, vice president at Willard Bishop, a retail consultancy in suburban Chicago. "And they are certainly places where you can find something new, providing that treasure hunt appeal."

The Fresh Market was a pioneer in the fresh market category. Ray Berry started the company in 1982 after working as an executive in Dallas and California for the 7-Eleven convenience store chain. He wanted the concept to incorporate the farmers' market feel of agricultural centers in California with the sophistication of open-air markets in Europe.

Berry knew he wanted to start the business in the Southeast, where the competition was less intense and the quality of life was good. He packed the family in the car, driving to cities such as Charlotte, N.C.; Atlanta; Greenville, S.C.; and Charlottesville, Va. They stopped in Greensboro, N.C., by happenstance when they were looking for a place to drop off a car. A stranger showed them around town. The business has been headquartered there ever since.

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