Regional Market Profile Retail Scene: Big Apple Retailers Still in Flux

Although there are signs of renewal, it’s still too early to know the extent of changes brought on by the coronavirus pandemic.

Originally printed in the July 2021 issue of Produce Business.

New York had different COVID experiences from the rest of the U.S., especially in the more densely populated parts of the city where people live in small spaces with small refrigerators. Now, New York City remains a bit betwixt and between, with many residents still unvaccinated and a mayoral election conducted at a time when social and security concerns are high on voter minds.

Marc Goldman, produce director for Morton Williams Supermarket, Bronx, NY, with 16 New York-area stores mostly in Manhattan, says the Big Apple is surviving, but the road back will be rocky. Many neighborhoods are in tough shape, especially where young people have left the city. Even as spring began with some renewed hope that vaccinations would turn circumstances around, the damage done is all too evident in restaurant areas.

“If you go to lower Manhattan, the lower you go, the worse it is,” he says. “I was coming up First Avenue in the single numbers, teens and 20s, and saw whole blocks of stores that are closed.”

Although she says prospects brightened as spring rolled on, Gabriela D’Arrigo, vice president of marketing and communications at Bronx-based D’Arrigo New York, Bronx, NY, agrees that it’s hard to determine just how things are going to move forward.

Many inner city dwellers abandoned their limited spaces, exacerbating the shift to the suburbs, sometimes purchasing or renting, sometimes moving in with parents. Although the shift back to the ‘burb was underway and one of the things accelerated in the coronavirus crisis, the upward sweep of already-expensive home prices in the New York City suburbs demonstrates that many who left aren’t going to return. The willingness of companies to allow remote work and even open remote offices outside the metropolitan area are other considerations that suggest New York City itself is bound to go through a transformation.

WHAT’S NEXT?

The new reality will have a profound effect on the food business, many retailers and wholesalers agree.

“For 2021, all I can say is that no one really knows what’s going on,” D’Arrigo says. “We’ve come full circle from pre COVID, and we’re prepared to do what we have to. Still, things are just in this weird limbo and changing on a dime.”

For wholesalers at the Hunts Point Market, business continued during the pandemic — although certainly not as usual — as personal protection equipment was purchased and other measures put into place to protect workers. The market had to deal with spikes of sick workers and truck driver shortages, but in terms of demand, there was no catastrophic drop-off at D’Arrigo.

“For us, it seems strange but we were not seeing a huge change in volume,” D’Arrigo says, although adding initial panic buying did generate a rarely seen situation of empty space in the house: What was coming in was going out just as fast.

Goldman says that wholesalers and Hunts Point in particular were a lifeline through the pandemic.

“We rely on a lot of them,” he says. “I bring more stuff direct than before, but we rely on everybody there. It gives you a lot of flexibility, with those houses in Hunts Point adapting, doing more deliveries outside and the market people looking to expand and do more for a company like us.

“If it wasn’t for them, we would have been in trouble.”

Seasons Kosher Market in Lawrence, NY, is another operation that adapted to the COVID-19 pandemic with the help of the Hunts Point Market.

Zeke Kreitner, chief produce officer for the operation and manager of the Seasons stores, says he relies on the Hunts Point Market for most of the produce he buys and was able to continue effectively through the pandemic, tapping it as a resource.

Seasons’ three core produce specifications are quality, freshness and color, the basis of merchandising for its six neighborhood supermarkets scattered across the New York metropolitan area. Kreitner says his suppliers, which also include Bronx-based Baldor Specialty Foods and some local distributors, ensured he was able to keep customers satisfied even with the difficult conditions.

He says neighborhood operations like his had some advantage in the pandemic, as consumers wanted to stay close to home and shop at stores that did not have a volume, “pack ’em in” approach to operations. Shoppers counted on neighborhood stores to be less crowded than larger area supermarkets and other retailers, which made many consumers more comfortable.

As the coronavirus hit, Kreitner made sure his store took protective measures to address the shoppers’ concerns.
“We had the masks on, we wrapped up food differently, we packaged it differently,” he says. “And we rolled with the punches.”

RETAILING IN THE OUTSKIRTS

The New York area retail market evolves constantly, but COVID-19 complicated some plans that were in the works. Lidl has been making a big push in the market over the past couple of years through New Jersey and into Long Island and, lately, Queens. The store in the New York City borough is Lidl’s second store in New York City proper, as the retailer opened up a Staten Island location a couple of years ago.

The Queens and Long Island stores emerged from the purchase of the local Best Market chain, and Lidl has continued to convert locations under that banner to its own, including recently in the towns of Franklin Square and Merrick, with more to come. And the New Jersey roll-out continues, with stores opening in Glassboro, Woodbridge and Egg Harbor Township this year, according to Lidl spokesman Will Harwood.

When COVID-19 struck the market, Lidl made a different decision than some other retailers. Rather than adding curbside or delivery services, LIDL fitted out its stores with hospital-grade air filtering systems and developed programs to support and reward workers so that its locations remained in operation, albeit with limitations to the number of customers allowed in the store at any given time.

Even as it pursued its expansion, Lidl swapped out commercially rated MERV (Minimum Efficiency Reporting Values) filtration systems with high-efficiency MERV 13 air filters that trap small airborne particles that can transmit the COVID-19 virus. It also upped employee pay, developing a first-in-the-industry program with CareFirst BlueCross BlueShield that gave all its employees access to comprehensive coronavirus medical coverage at no cost.

Lidl was the only major grocery chain in the U.S. to have a MERV-13 system operating throughout, Harwood says.
At the same time, Lidl pressed its sustainability initiatives, including “Too Good To Waste,” which offers shoppers produce, other perishables and frozen items that are flawed, but still at a high level of quality, at heavily discounted prices. Lidl’s efforts led to its being named the Produce Business Retail Sustainability Award winner in its May edition.

And, on top of it all, the Arlington, VA-based US division of the German discounter revised its produce merchandising, adding higher displays with additional product, promoting its connection with local farmers through signage, including its link to a floral grower on Long Island, and making the department easier to shop by mixing bulk and packaged products.

COVID-19 complicated expansion plans for a number of retailers, including Food Bazaar. Its conversion of a former Fairway location in Westbury, NY, also occurred under the coronavirus crisis, but the grand opening was held over the Memorial Day 2021 weekend.

Fairway was legendary for its produce price and abundance, and Food Bazaar has to replicate that on a big stage, as the Westbury location is amid a sprawling retail complex surrounding the Roosevelt Field Mall — one that includes retailers ranging from Nordstrom to Costco and Walmart to Trader Joe’s. However, Food Bazaar is among the top merchandisers of produce in the New York area with tight, but generous, displays of core produce and a wide variety of Latin and Asian specialties.

Not everything worked out during the pandemic for retailers. A planned acquisition by Ahold of the local King Kullen chain, which claims to have developed the first supermarket in the United States, fell, terminating a merger agreement in June of last year.