High-end grocer joining market

Harris Teeter opening store in Columbia May 20

May 06, 2008|By Andrea K. Walker | Andrea K. Walker,Sun Reporter

Decadent desserts gleam from behind counters encased in wood and metal: chocolate mousse cake covered in chocolate shavings, tarts with marshmallows on top, coconut tiramisu. Across the aisle two employees pinch ginger from huge piles and place it on sushi plates. Another worker hands a slice of homemade pizza to an area worker in early to beat the lunch crowd.

It's a typical morning at the Harris Teeter supermarket in Arlington, Va. It's also a glimpse at what Baltimore area shoppers can expect as the Charlotte, N.C., grocer enters the local market, with its first store opening in Columbia's Kings Contrivance Village Center May 20. It will open a store in South Baltimore in 2010.

The supermarket chain recently signed a lease to anchor McHenry Row, a mixed-use development of shops, office buildings and apartments being built at the former Chesapeake Paperboard site in Locust Point.

Residents and city business experts say the 60,000-square-foot store will fill a void in an area where there are few choices. The only grocer near Locust Point is a Shoppers on Fort Avenue.

Harris Teeter is also looking to possibly build at the Canton Crossing development, although it has yet to sign a lease.

"This is about as high-end as you can get for a grocery store," said Mark Sapperstein, the developer of McHenry Row, who compared Harris Teeter to a smaller version of Wegmans Food Markets Inc.

Harris Teeter is the latest grocer to jump into the city, an area chains had largely shunned for decades.

Despite a sluggish economy, high food prices and consumers who are pinching pennies, high-end grocers still see a market in Baltimore, said Anirban Basu, chief executive of Sage Policy Group, a Baltimore economic consulting firm. Empty-nesters with high disposable incomes are increasingly calling the city home, he said. Baltimore also still lacks retail when looking at the demographics of the city, he said.

"For a long time Baltimore has been significantly under-retailed and suppliers are beginning to recognize that in larger numbers," Basu said. "That has happened because overall the city's demographics still don't look particularly attractive. Retailers need to understand there are two Baltimores. One Baltimore is affluent, growing in population, growing in prosperity and enjoys a significant level of disposable income. That group has often been hidden in the overall demographics of the city."

Harris Teeter follows Whole Foods, which moved into downtown's upscale Harbor East several years ago. SuperFresh also recently opened a gourmet, urban format store on Charles Street in the Mount Vernon neighborhood.

"It's showing the growth in the city," said Geoffrey Mackler, a retail broker with H&R Retail. "The city is finally being exposed. In the past it's been overlooked. But as the economy is getting more difficult, retailers are looking at closer-in markets across the country to take advantage of densely populated areas."

There is also a growing demand across the country for grocers with strong customer service, large prepared food selections and a reputation for quality. Wegmans, The Fresh Market and Trader Joe's grocers have moved to the area in recent years. Traditional grocery stores such as Safeway and Giant have also increased their gourmet and prepared-food options.

Harris Teeter traces its origins to 1960 when Harris Super Markets and Teeter's Food Marts merged to form a 15-store chain, according to a company history. The grocer was bought by Ruddick Corp. in 1969, a holding company traded on the New York Stock Exchange, and now has 169 stores, with sales of $3.29 billion in its fiscal year ended Sept. 30. The grocer has had a prominent presence in the South for decades but only in the last several years has been aggressively expanding to the Northeast. It opened its first Maryland store in Darnestown in 2006 and its first Washington store last year.

"Our stores have been very well received in this area," said Harris Teeter spokeswoman Jennifer Panetta. "Shoppers have asked for it, and we're responding."

Harris Teeter is known for its prepared foods and value-card program, said Burt P. Flickinger III, managing director of the New York-based retail consulting firm Strategic Resource Group. Meat, produce and seafood are its signature departments, he said. The grocer tends to cater to upscale shoppers and is also popular with students.

"When they first moved into Maryland and Rehoboth Beach [Del.], it was a little bit of a struggle initially," Flickinger said. "Once they started to achieve some size and scale and consumer familiarity... they really started to take off."

The Arlington, Va., store has high, exposed ceilings, visible ductwork and beams. Like the one planned in Baltimore, it is part of a mixed-use community. The Arlington store is built beneath condos and its entrance is underground in a parking garage. The lighting in the store is dim, but bright lights spotlight produce and other food samplings.

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