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Players getting ready for Niskayuna supermarket wars

Experts say Shop-Rite entry will heat things up

Sunday, September 11, 2011
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The construction continues at the new Shop-Rite being built in the former St. James Square in Niskayuna in this 2011 photo.
Photographer: Marc Schultz
The construction continues at the new Shop-Rite being built in the former St. James Square in Niskayuna in this 2011 photo.

— The weekly ritual of the trip to the grocery store can be eased by making out a simple shopping list. From bananas to eggs, cereal to string cheese, shoppers plan what they’ll buy for the week, get in the store and then get out.

For shoppers in Niskayuna, they’ll soon have another list to deal with — a list of the grocery stores themselves.

For much of the past decade, the town of Niskayuna has gotten by with the local Price Chopper and Hannaford, along with the Niskayuna Co-op. Come next month, though, there will be two more grocery stores to choose from .

Slated to open Oct. 2, is the new ShopRite on Nott Street, at the old St. James Square. That store is going into the spot of the old Grand Union, a site that is getting a major upgrade.

Then, just days later, the Mohawk Commons Target store is set to unveil its own expanded grocery selection. The store has been undergoing much renovation in recent months to add a grocery department. Other Targets in the region have had similar renovations.

Town officials cite the ShopRite store as leading the way in rejuvenating a shopping plaza that has long been underused. They also see it as another opportunity to bring people into town, or to keep residents shopping close to home.

“We think it’s going to benefit our residents and surrounding residents from the other towns or other counties,” town Supervisor Joe Landry said, “because they can then come into our county. … So I think we’re going to benefit — we being the town — are going to benefit from that because it’s only going to increase the activity in the area.”

Business 101

But the addition of the new grocery outlets in the town is also expected to be a lesson in economics and business — from both the consumer side and the grocer side.

Professors of economics and business said the new stores will benefit local grocery consumers in the short term, as the Niskayuna Price Chopper and Hannaford attempt to keep their customers and the new ShopRite and renovated Target attempt to give shoppers reasons to change their allegiances.

In the long run, the Niskayuna grocery scene could be a lesson in how many choices a market can sustain.

A decade ago, when the Grand Union was still in business, Niskayuna had the Hannaford and the Co-op. The rejuvenated Mohawk Commons — and the Niskayuna Price Chopper that came with it — were still a couple of years away.

The population of the town itself has grown since then, from 20,295 in 2000 to 21,781 in 2010, an increase of about 7.3 percent. That’s not counting the surrounding areas.

Still, the professors interviewed said it will be interesting to see how the Niskayuna market shakes out, and some wondered if all the outlets can survive.

But ShopRite, the main new entrant into the market, says they’ve done their research.

Investing millions

In announcing the new store back in May, Tom Urtz, vice president of human resources and community affairs for ShopRite, said the company first did a market study of the area and, with that, they saw an opportunity — one they’re going after with a $12 million investment.

Urtz confirmed last week that renovations to the site were progressing on schedule for the Oct. 2 opening.

The cost of interior renovation work has been tagged at $3 million, with site purchase and renovations to the parking lot and exterior pushing the total project cost to $12 million.

The company has also been busy getting its name out to residents, through working with local groups and organizations and conducting focus groups, Urtz said.

“When you’re entering a new market, there is always the challenge of winning over customers who are currently shopping at the competition,” Urtz said. “It’s all about establishing trust with your customer and establishing what you stand for as a retailer and what you stand for as a business.”

As far as competing with the two other big names in the market, Price Chopper and Hannaford, Urtz said ShopRite is very familiar with them from other markets and he believes ShopRite will do well.

ShopRite, based in New Jersey, operates in six states.

Down the street from the new ShopRite is the longstanding Niskayuna Co-op.

Don Bisgrove, the Co-op’s general manager, said he sees the ShopRite competing more with the Hannaford and the Price Chopper than with his store, which is smaller and offers discounts to members.

When the Grand Union was at the square, Bisgrove said the Co-op offered goods typical of the bigger stores. Since then, though, they’ve worked to focus their efforts on more organic and natural offerings and more locally made products.

“The main thing is to stay as different as we can,” Bisgrove said, “with [the] best … quality of food … we can and stay with our own product lines that are not available in the big supermarkets.”

Representatives of Price Chopper and Hannaford could not be reached.

On target

A spokeswoman for Target said the new grocery section at Target is set to officially open on Oct. 9. Targets in Colonie, Saratoga Springs, Latham and East Greenbush have already opened grocery sections, while the Clifton Park Target is set to open its new grocery section the same day as Niskayuna.

Nationwide, about 850 Targets have similar layouts. They represent a 40 percent increase in the food products offered by the old layout, with one aim being to provide an option for “fill-in grocery shopping.”

Sales and traffic have increased about 6 percent in the new stores, the company said.

As far as the impact on the region, Aaron Pacitti, an assistant professor of economics at Siena College, said he doesn’t see a big one. That is unless ShopRite can increase its number of stores in the area.

For now, he said he sees the effect as localized.

For consumers, that effect might be seen quickly, through lower prices.

“They’re coming in to an established market and they have to lure customers somehow,” Pacitti said. “The main effect of ShopRite will be price competition. Perhaps if they have a better sale on yogurt, that will force the others to bring down their yogurt prices.”

Key to success

But, he said, the key for ShopRite in the long term is differentiating itself from the competition.

At Union College, economics professor Stephen Schmidt said he thinks the impact Target has on the market might be minimal. He sees them competing more with the

Mart supercenters in the area, possibly even bringing shoppers into the town.

Regarding ShopRite and its location, Schmidt said he was surprised that Grand Union didn’t successfully sell that location when the company went out of business.

He also said he wasn’t surprised when another store, Fresh Farms Market, came and left at that location. He recalled they did little to spruce up the store, and shoppers had already gotten used to going elsewhere.

ShopRite is approaching their entry much differently, completely renovating the store, to essentially make it new again.

But Schmidt also is interested in seeing if all the stores can co-exist in the same marketplace.

“We’ll see who can provide the stuff cheaper and we’ll see who can afford to run the most loss-leaders and we’ll see who can survive what will probably be a period of low-profitability from those stores,” Schmidt said.

Donald Siegel, the dean of the University at Albany School of Business, sees an already competitive business becoming even more so. It’s also a business that generally has low margins, he said.

But Siegel also noted that the region is growing somewhat. “I think you could argue that’s why they view this as an attractive market,” Siegel said.

ShopRite will have to overcome loyalty of consumers to the established brands, Siegel said.

Price Chopper, he said, is in a good position to keep that loyalty, he said. It’s a local company that already does a lot in the community.

With so much to overcome, a new entrant into a market has to be very aggressive, Siegel said. They also have to give consumers a reason to switch.

“Most people are used to going to a specific store, so you’ve got to convince them to switch,” Siegel said. “You do that through lower prices, or higher quality or both.”

And, whatever move ShopRite or Target makes, the established stores must respond in kind.

“They’re not just going to sit there, wait and watch their market share diminish,” Siegel said.

 
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