Store Bought

Market of Choice is on a tear. In 2012 the 35-year-old Eugene-based grocery chain opened a central kitchen/distribution center in its hometown. The market opened a third Portland store in the Cedar Mill neighborhood this year; a Bend outpost broke ground in March. A fourth Portland location is slated for the inner southeast “LOCA” development, a mixed-use project featuring condos and retail. Revenues in 2014 were $175 million, a double-digit increase over 2013. CEO Rick Wright discusses growth, market trends and how he keeps new “foodie” grocery clerks happy.

Market of Choice is on a tear. In 2012 the 35-year-old Eugene-based grocery chain opened a central kitchen/distribution center in its hometown. The market opened a third Portland store in the Cedar Mill neighborhood this year; another outpost in Bend broke ground in March. A fourth Portland location is slated for the inner southeast “LOCA” development, a mixed-use project featuring condos and retail. Revenues in 2014 were $175 million, a double-digit increase over 2013. CEO Rick Wright discusses growth, market trends and how he keeps new “foodie” grocery clerks happy.

Market of Choice got its start as a big-box discount store: Price Chopper. How did you get from there to here?

After we opened up as Price Chopper, the neighborhood said: You don’t carry the products we want. The consumer directed us toward realizing there were natural food markets and conventional stores, but there wasn’t anyone putting them together. Once we did that, our sales just grew.

How are you different from all the other local organic grocers?

Our business model is built around the opportunity to choose what you want while shopping. We don’t have a special natural-foods section or organic section. We put them on the shelf with conventional products and market them side by side.

Isn’t that what New Seasons does?

New Seasons developed out of the natural-food industry. We developed out of the conventional grocery industry. We both developed similar business models. But there are a lot of differences as well.

Why expand in an oversaturated central-city Portland market?

Portland has a lot of square footage of grocery retail. That is where the population is. We move into locations when people request us. That’s why we moved into Bend. Bend is growing.

What’s cool about the Southeast Portland location?

We’ve never done an urban-style, mixed-use project: a grocery store with condos above it. We are really excited about what is happening: the size of the store, the care in which the developer [Killian Pacific] is trying to make it easy to get to the site, whether by car, by bike by walking. It drew us in.

You do all your store design in-house. What was tricky about this project?

There is so much involved when you have all the infrastructure and retailers and housing and parking garages. The design process usually takes a year, but this one has already been going on for a couple years. It’s been an eye- opening process.

What trends are driving the grocery business?

The consumer today is all about convenience. Food service is growing rapidly. Consumers want products that are fresh and easy. Sometimes they want to treat us like a restaurant. The first time we put seating in stores, we put in enough for 12 people. Now we’re putting in seating for 100. We’re putting in fireplaces.

So the layout of stores is changing?

For a long period, we were building larger and larger stores. But the center of stores, where the dry goods are, continues to shrink. That’s not what the consumer is excited about. They are excited about the perimeter: the specialty teas, coffees, the bakery, the sushi. As the center of the store shrinks, square footage shrinks. The stores are getting smaller.

How are food trends altering your product mix?

Our number-one-selling salad used to be the all-American potato salad. A few years ago, it got surpassed by the superfood kale salad. Healthy and gluten free are big.

As grocers become more like restaurants, your workforce must be changing.

Twenty years ago, I never would have guessed what percentage of employees has to be specialized: cheesemongers, wine stewards, bakers. It’s mindboggling the amount of talent we have in our organization. The more we add, the more complicated we make it.

How do you keep foodie employees happy?

That’s the biggest challenge in our format. How do you find these talented people? You’re competing with restaurants. And you have to give them creative license. We have a lot of recipe competitions, chef competitions. The thing about foodies is they all think their way is the best. So it’s important to keep them engaged. But you also want products to be the same in each store.

What is your long term growth strategy?

To continue to find A+ sites. We haven’t decided when to move outside the Oregon market. Now we hope to infill some of the areas in the state. It’s most profitable for us to have stores that are close together.

As you grow, are you going to sell out?

We are one of the few family-owned grocers in the state. I have a couple of sisters who are shareholders; our CFO [Larry Brody] and director of HR [Marcus Whittaker] are my brothers-in-law. Right now we are able to grow and reinvest. I hope there never comes a time to bring in outsiders.

Are you interested in tackling the food-desert problem?

For us to make the investment, you have to have the demographic that is going to support it: the population, household income, education levels. You would think there would be somebody developing a format to work in the food desert. The right format will work fine in a food desert. But if the location doesn’t meet our demographic needs, we don’t consider it.

How does a “market of choice” select items to stock?

Not only are we locally owned, but we support local suppliers, growers and producers. We want to push small and local, so if you fit those criteria, you will have an advantage. What’s harder is regional and national flavors. And where do you find the right mix when you’re willing to put in conventional, natural and organic and international? How much space do you dedicate to that? It’s not an easy formula, and each store is different.

What’s the next big innovation?

We have some ideas on that but would rather not share.


 

Food fight

Now that Market of Choice has scored a spot in a hot inner-city Portland development — the epicenter of New Seasons territory — are the local grocery wars about to heat up? “We haven’t seen them compete against each other, so that will be interesting,” says Tom Gillpatrick, a professor of marketing and food management at Portland State University.

Market of Choice and New Seasons have similar formats and the Portland market is “highly competitive,” Gillpatrick says. But both stores are better off than the national retailers. “Local is where it’s at, and it’s harder for Kroger and Albertsons to be adaptable with local suppliers,” says Gillpatrick. “Albertsons is trying to move to a hybrid purchasing model, and I’m sure the folks at Kroger and Fred Meyer are doing that too. But Market of Choice and New Seasons is the area where business is going.” Adding fuel to the fire: Natural Grocers, a Denver-based chain, has announced it will open two stores in Portland next year.

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