Schenectady County

Schenectady area near saturation point on supermarkets

Competition is tight, with one store recently closed and another poised to replace it
Some of the 18 active supermarkets in the Schenectady area.
PHOTOGRAPHER:
Some of the 18 active supermarkets in the Schenectady area.

SCHENECTADY COUNTY — Like a cooler case packed with 217 varieties of yogurt, there’s a remarkable concentration of supermarkets crammed into the Capital Region.

The competitive pressure can be good for consumers, if it drives prices down, and it can be bad for retailers, if it drives prices down. One store in the saturated Schenectady area finally dropped out this year, but that may not ease the pressure for long: another store is awaiting construction approval.

The situation is similar across much of the inner Capital Region, but to limit the scope, imagine a circle extending about 3.5 miles in every direction from Collins Lake in Scotia.

Within it, you’ll find one Aldi, two Gabriel’s, three Hannafords, the Niskayuna Co-Op, a Market 32, three Price Choppers, a Price Rite, a Save-A-Lot, a ShopRite, two Targets and two Wal-Marts. 

That’s 18 big grocery stores in 38 square miles, which adds up to a whole lot of competition. 

I got a coupon in the mail with great deals on watermelon and berries, so that’s why I’m here. But my mother-in-law swears by ShopRite because they deliver right to her door. —Nancy Fronczek on ShopRite

(There’s also a BJ’s Wholesale Club, various specialty food markets, multiple urban corner stores, numerous pharmacies and a welter of suburban convenience stores that are competing for the grocery shopper’s dollar … but to keep the comparison manageable, we’ll look only at supermarkets and big-box retailers that sell groceries.)

All of the supermarket operators that spoke to The Gazette for this story said they aren’t afraid of competition. Some even welcome it.

Competitive business

Just about every retail sector is competitive, said Mona Golub, a spokeswoman for the Golub Corp., which is gradually rebranding its supermarkets as Market 32 but still operates most of its stores under the Price Chopper name. The key, she said, is not to react to the competition, but to respond to the clientele.

“How any store does within any retail industry is reflective of how that store goes to market,” she said. “Those that evolve with their customers are the ones that succeed.”

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This map shows the 18 supermarkets and large grocery stores operating in the Schenectady area, plus a potential 19th store, which is proposed but is still awaiting approval for construction. The X indicates the location of a market that closed in May. (Google Maps)

The lengthy and expensive effort to rebrand more than 100 supermarkets as Market 32 stores is not a response to the competition, Golub said. It’s a strategy for the future formed by research and refined by feedback, in both cases from customers.

“It reflects what customers have told us they want in a supermarket,” she explained. “They’re letting us know we’re hitting the mark. That’s through their feedback and purchasing.”

The 7-mile-wide circle with 18 big grocery stores had 19 big grocery stores until May, when Wal-Mart abruptly shut down its underperforming Neighborhood Market in Niskayuna. But the circle may have 19 supermarkets again, soon enough, if Aldi gains town permission to build its ninth store in the region on Route 50 in Glenville (within a half-mile of a Target, a Hannaford and a Market 32). 

I often stop here on my way home from work because I like the size of the Co-op. —Bill Collins on the Niskayuna Co-Op

But for now there are “only” 18.

Wal-Mart’s 40,000-square-foot Niskayuna mini-store was the first recent casualty on the Schenectady County supermarket scene. Independent Greulich’s closed down in Guilderland in 2014 and Grand Union shut its area supermarkets in the mid-2000s. Golub Corp. has had a couple of rounds of headquarters staff layoffs in recent years, even as it builds new supermarkets and renovates existing locations.

The industry is a huge employer in the region — Golub and Hannaford alone have more than 12,000 workers here among their various stores, two massive distribution facilities, and a headquarters building. Thousands more work at Capital Region stores and distribution facilities operated by Target and Wal-Mart, neither of which would comment for this story.

Industry analysts don’t offer odds on which company will shut which location next, but they predict a lot more closures will come, as supermarket operators are pressed by competition from one another and from online retailers.

‘Overstored’

Supermarket analyst David J. Livingston, who has been following the industry for 35 years, said he could foresee 500 supermarkets closing on the East Coast within a decade.

“We’ve been in an overstored situation,” he said. “In another five or ten years, a lot of grocery shopping will be done online, in the cloud.”

Shoppers benefit from the current saturation of stores, Livingston said.

It’s very convenient. I only live about one mile away. It’s also quieter than the Price Chopper near me, I feel. —Allen Skestoski of Niskayuna on Hannaford

“It’s good for the consumers. For the most part, the shopping experience is getting much better.”

Against the backdrop of multibillion-dollar regional, national and international firms operating supermarkets in Schenectady County, a few independents are holding onto market share, in large part because they offer shoppers a different experience in their smaller stores. They are Gabriel’s Supermarket, open since 1953 in Rotterdam and 1987 in Scotia, and The Niskayuna Co-Op, which will mark its 75th anniversary next year.

The member-owned Co-Op has suffered from declining revenue and laid off one full-time and five part-time employees earlier this year in an effort to slow the losses. With the help of a consultant and a lot of community members alarmed by reports of their beloved co-op’s troubles, the store managers and board of directors have refocused on the Co-Op’s core values, said board President Donna Evans. 

Those would be convenience, community and customer service: Shoppers can get in and out quickly, are likely to meet neighbors there, and will be waited on by people who know them and know what they want. 

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Niskayuna Co-Op butcher Elijah Lyon stocks coolers. (Marc Schultz)

Of all the stores mentioned in this story, the Co-Op feels most like a boutique when one steps inside.

“One of the things that makes the Co-Op unique is that it is the center of the community,” said Evans.

General Manager Rit Gabree said the second quarter of this year appears to have seen a turnaround in revenue. The second quarter is always stronger than the first, he said, but unaudited results show that the second quarter of 2017 was better than the second quarter of 2016 

“It feels like our membership has really come out to support us,” he said.

Family tradition

Rudy Gabriele Jr., co-owner with his brother Jeff of the two Gabriel’s Supermarkets, said their stores have been updated physically since their father and grandfather went into business, but they still operate on the original business model: A friendly place where checking off the shopping list doesn’t take as long as in a megastore.

I hate Price Chopper. They never give me the price I want. I usually go to Aldi, but when I can’t find what I want there, I go to Price Rite. I live in Southern California during the winter, and the Aldi there has exactly the same prices as the Aldi here. I like that. —Dave Rey of Rotterdam on Aldi

Asked if he sees any drawback to the smaller size, Gabriele said he did not.

“We’ve been like this for 60 years, no,” he said. “Another big plus to us, a lot of our employees have been with us for more than 20 years. We don’t have the big turnover.”

He says he doesn’t view the Hannafords and Price Choppers as competition; they’re simply in a different league.

“We can survive on smaller numbers — they need the volume, they need the constant dollars,” Gabriele said.

His stores are members of IGA, an alliance of nearly 5,000 independent markets in 30-plus countries, so he has access to much more buying power than two little supermarkets would have on their own. But that’s not the best part of Gabriel’s, he said.

“My opinion: You can buy Hellman’s Mayonnaise in any store.”

What they’re selling is deli meats they marinate and roast themselves, bread baked on-site, and sausage still made in-house with the family recipe brought over from Italy. 

That and the atmosphere.

 I go to both Aldi and Price Rite. I was just at Aldi actually. First I go there and then I come here. They both have good deals on different types of things. —Pat Skaarup of Schoharie on Price Rite

But just about every supermarket operator puts a priority on atmosphere and image.

Part of the image Maine-based Hannaford Supermarkets promotes is fresh food and locally sourced food, spokesman Eric Blom said.

“Generally when you walk into our stores you first enter through our produce section,” he said. “We do really showcase that.”

To attract shoppers, Hannaford also uses the everyday low price strategy — with fewer weekly specials of the kind favored by comparable local competitors ShopRite and Price Chopper/Market 32, which employ the promotional strategy.

“We do have specials, but we don’t rely on a high-low strategy,” Blom said.

Hannaford urges customers to look at the total price of what’s in their shopping cart, rather than look at the price of each item and chase prices from store to store. 

The company is confident about its prospects in the crowded Capital Region market.

“While that area is highly competitive, it’s by no means the only area that’s highly competitive for us,” Blom said. “We’ve always had competition, we welcome competition.”

Online competition

Hannaford also is confident about increasing online competition.

“We were founded in Maine in 1883 and we’ve seen an awful lot of change over those years,” Blom said.

I like the meat. That’s why I shop here. —Scotia resident on Gabriel’s

Hannaford’s own online ordering service is rapidly growing, he added.

“We’re always looking for new opportunities.”

Another supermarket chain looking for opportunities is New Jersey-based ShopRite, which is building its fifth Capital Region store in North Greenbush.

“We feel the competitive environment of the supermarket industry makes us stronger and ultimately benefits our customers,” a spokeswoman said. “ShopRite is always innovating and exploring new ways to better serve the community.”

ShopRite periodically publishes coupons good for $10 off a purchase of $75 or $100 to boost traffic at its stores. It also has a loyalty card good for extra discounts on selected items. Using a similar strategy in the Capital Region, Niskayuna Co-Op members get a discount on prices, and Price Chopper/Market 32 is one of the more aggressive users of loyalty card marketing in the supermarket industry, with its AdvantEdge Card.

Jon Springer, senior editor of the trade publication Supermarket News, who has been covering the supermarket industry for 14 years, said he’s somewhat familiar with the Capital Region market, and he said its abundance of stores is far from unique.

“It’s definitely part of a larger picture that’s happening around the country, some cities and localities more than others,” he said.

I don’t have a preference. I go to ShopRite and Price Chopper too, but I’m just here today because it’s the closest and I don’t have a lot of time. —Niskayuna resident on Hannaford

Two factors he sees affecting this area: the growth of online retail and the arrival of Aldi stores, which offer low-priced, private-label brands in addition to or instead of national-brand merchandise.

“They are proving to be quite disruptive,” Springer said of German-based Aldi. “Their cost structure and efficiency is on another level.”

He added: “There’s anxiety out there about what’s going to happen with online providers. There’s a lot of change that’s happening right now.

“The shopper’s changed a little bit, too.”

By this, Springer means that with all the options available to them, consumers can be demanding, and are.

Once upon a time, a supermarket could make its name on a single factor, such as price or service or freshness. Now they need to do all three.

“Consumers are demanding more of their retailers,” Springer said. “You can’t get away with just having a beautiful store if you can’t be within a tight range of the price leader in town.”

Faced with the growing digital grocery trade, traditional bricks-and-mortar stores have ways to keep people coming in the door.

I really just shop wherever the deals are. But I like Price Chopper because of the Advantage Edge gas deal. —Niskayuna resident on Price Chopper

Mona Golub said a combination of factors in a well-run supermarket trumps online price and convenience.

“Digital cannot compare to experience,” she said. “There’s still something about seeing the freshness and experiencing the aroma, and the colors and the feel of a fresh-baked loaf of bread.”

What about Wegmans?

One form of competition Price Chopper/Market 32 apparently won’t face is from a supermarket brand that is, like the Golub Corp. itself, a family-owned, upstate New York-based regional chain dating back to the early 20th century: Wegmans.

There’s a longstanding rumor, or perhaps even an urban legend by this point, that the Golub and Wegman families have a non-compete agreement that keeps each away from the other’s hometown.

Schenectady-based Golub’s service region abruptly stops 70 miles east of Rochester at a north-south line running from Oswego to Owego.

Rochester-based Wegmans has stores in Massachusetts, southeastern New York and all over western New York, but nothing within 100 miles of Schenectady.

“There is absolutely no truth to that,” Wegmans spokesman Jo Natale said of a rumor she’d clearly heard before. She noted that Wegmans competes with Price Chopper/Market 32 in the Syracuse area and in Massachusetts.

Since Walmart stopped price matching in March, I’ve been forced to shop for everything I need between Aldi and Price Rite. —Rotterdam resident on Aldi and Price Rite

Asked why Wegmans hasn’t moved into the Capital Region, she said it is not fear of competition.

“There is not a market that we operate in that isn’t competitive,” Natale said. “It is simply the nature of the business today.”

She added: “Over the years we’ve certainly looked at the Capital Region” — but the company decided to move into the Mid-Atlantic region instead.

It’s now operating in New Jersey and Virginia, is planning a store in Brooklyn, and will be building four stores in North Carolina at an undetermined date in the future.

Mona Golub also is familiar with the Wegmans non-compete rumor.

“It’s hogwash,” she said.

“We actually compete against, I think, 18 Wegmans between New York, Pennsylvania and Massachusetts.

“We do compete against each other and we do admire each other.”

I like ShopRite’s deals on produce. —Niskayuna resident on Shoprite

They just won’t be competing on Altamont Avenue in Rotterdam, apparently. 

No worries … a 0.8-mile stretch of the street already hosts a Gabriel’s, a Hannaford, a Price Chopper, a Save-A-Lot and a Wal-Mart.


The bottom line

How competitive a supermarket is depends on a huge range of  factors, including its product selection, customer service, quality of fresh goods, convenience of location and ambience. But for many people, especially those with budget constraints, price outweighs all these other factors.

For this reason, The Gazette went to the ten different grocery companies operating in the Schenectady area and compared prices on some of the most commonly purchased supermarket items.

Visiting these stores, it quickly becomes apparent that they fall into four categories. Within each category, prices are usually fairly close from store to store. But they can vary widely from one category to the next.

  • Aldi, Price Rite and Save-A-Lot are no-frills stores with limited selection and super-low prices on some items, particularly off-brand or private-label products that don’t have big advertising budgets factored into their retail price. Products from market-leading companies, however, can be just as expensive at these stores as anywhere else. The stores are plain, with bare metal shelving and exposed fluorescent light fixtures on bare ceilings. 
  • Gabriel’s and the Niskayuna Co-Op are small neighborhood stores where you’ll find what you want quickly and run into people you know, if you are a repeat customer or neighborhood resident. Prices are generally higher. Ambiance is pleasant, atmosphere is friendly.
  • Hannaford, Price Chopper and Shoprite are large Northeast supermarket chains, operating stores mostly in the 40,000- to 80,000-square-foot range, some locations a little larger or smaller. Each has its own take on the same thing: A huge selection of fresh products at low prices. Each succeeds. Each has devoted shoppers. Each has shoppers who come only for that week’s advertised low prices or promotions. One might have a bigger bakery than the others, or a larger prepared meal operation, or larger selection of cheeses or beer. Some are brand-new and fairly glow. Others have gone decades since their last renovation and look it.
  • Target and Wal-Mart are one-stop, low-cost, big-box stores for everything. They fall between supermarkets and no-frills stores in their aesthetics. They don’t have nearly as much grocery selection as the large supermarket chains. But then, the supermarkets have zero selection of furniture, sporting goods and clothing. At Target or Wal-mart, one could buy a fishing rod and tackle, a floppy hat to wear while fishing, a knife to fillet a fish with, a gas grill to cook it on, and rice and vegetables to serve it with, all under the same roof … then go back later and buy some chicken to grill, if nothing’s biting out on the river that day. (Trivial tidbit: The Wal-Mart Supercenter in Glenville is the Schenectady area’s hands-down winner in size and scope, a megastore big enough to serve as a hangar for ten Boeing 737 airliners.)

Gazette intern Sasha Weilbaker asked shoppers at several Schenectady County supermarkets where they prefer to shop, and why.

Categories: Business, News

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