- The Washington Times - Friday, December 30, 2005

At least 23 new food stores are set to open in 2006 in the Washington area, competing for a share of the $8.5 billion residents spend on groceries each year.

Harris Teeter, an upscale grocery chain based in North Carolina, and Whole Foods, an organic grocer, seek a piece of the pie from market-share leaders Giant Food and Safeway, analysts say.

Harris Teeter, which opened its first store in this area in 1999, has plans to open at least nine stores here next year, according to Food World, a trade magazine based in Baltimore.

Whole Foods, which entered the Washington area in 1996, is slated to expand with two new locations, in Chevy Chase and Fairfax City. The chain, which specializes in organic, locally grown products, is seeking other locations.

“We haven’t reached saturation in any one market,” said Kate Lowery, spokeswoman for Whole Foods. “We have a lot of interest in the Mid-Atlantic region.”

Giant plans to open nine stores in the Washington area next year. Spokesman Barry Scher said there is no particular reason the chain is opening triple the number of stores it opened in 2005.

“Everything doesn’t always fall together according to plans. It’s a constant process. More elements fell together for ‘06,” Mr. Scher said.

Safeway expects to open two stores — in Alexandria and Bowie — and will outfit them with a “lifestyle” decor of wood-grain fixtures and halogen lighting and a push for home-meal replacements of sandwich and salad bars, spokesman Craig Muckle said. The chain also is remodeling three stores.

Shoppers Food Warehouse plans to open one store in Lorton in southern Fairfax County.

The 23 stores expected to open are more than the 10 to 12 the area typically receives.

“We’re seeing a significant increase due to the new competition and the explosion of our housing market,” said Richard Lake, managing principal at Madison Retail Group and partner of Roadside Development, both in the District.

Some grocery chains are focusing instead on massive renovations. Food Lion, a grocery chain based in Salisbury, N.C., is not building any new stores in the Washington area, but is renovating all 80 locations. Safeway is renovating three stores into its “lifestyle” format.

The Washington area’s average income — from $46,000 in the District to Fairfax County’s $88,000 — and high education level are attractive to retailers.

“You can imagine why they want to be here,” said Sandy Paul, national research director at Delta Associates, an Alexandria research firm. “There is also the expansion of the population out west and more people going out to the suburbs.”

Most of the grocery stores are opening in Northern Virginia because of higher average income and education levels compared with the District and Maryland suburbs, he said.

Urban areas also are short on space, posing another challenge to grocers. Three stores are opening in the District — Harris Teeter in Adams Morgan and Capitol Hill and a Giant in Van Ness.

Grocery chains are modifying for urban markets, including parking garages instead of surface lots. A Giant in Tivoli Square, which opened this summer, and a Whole Foods at 14th and P streets Northwest, show that parking garages can help urban stores succeed.

Harris Teeter worked around space challenges in the Ballston section of Arlington and in Fairfax City by building two-floor stores there.

“The retailers are finding ways to actually operate where they traditionally were not able to put a large-sized spot,” Mr. Lake said.

A successful grocery store can send a signal to other retailers that the area is ripe for development.

“It’s the most important retailer a neighborhood could have. It really identifies if the market is sustainable for retail,” Mr. Lake said. “I think you’ll see an additional amount of retail following those stores.”

Urban grocery stores often fill a need in underserved areas, said Grant Ehat, principal at JBG Rosenfeld Retail in the District. He also said the rapid grocery growth is on par with the area’s 5.9 million residents.

Oversaturation “will happen, but it hasn’t happened yet,” Mr. Ehat said.

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