Grocery Chains Try Small Store Approach in NYC

By Téa Kvetenadze
New York Daily News (via TNS)

Some big-name national grocery chains are testing the waters of a scaled-down approach in New York City, opening grab-and-go-style mini stores to whet the appetites of busy locals and possibly lure new customers by expanding to more neighborhoods.

Trader Joe’s opened a relatively small store in March dubbed Pronto on 14th Street near Union Square in Manhattan that was touted as a “one-of-a-kind extension” of its larger outlet down the block.

It features fresh produce and brand snacks in a sleek space that was once home to a Trader Joe’s wine shop — which closed in August 2022 as employees were trying to unionize.

Earlier in March, Whole Foods announced plans for introducing “a new, quick-shop store format” with a range of meals and snacks as well as some basic groceries. The company aims to roll out the so-called Whole Foods Market Daily Shop format to cities around the country, starting with five in the Big Apple.

While New York has seen an influx of large-scale grocery stores like Lidl and Wegmans, the express approach is relatively new, according to experts who say it could prove popular going forward.

They said a combination of factors could have inspired the pivot, such as inflation, supply chain issues, competition, the pandemic and the lack of available space in the city.

“The conventional model for groceries is very, very challenging in New York City,” Hiro Imaizumi, field research manager for commercial real estate company CBRE, told the Daily News. “That may be encouraging some of these retailers to try the smaller format.”

He said most grocery stores need at least 10,000 square feet or so to open. The Whole Foods shops will be 7,000 to 14,000 square feet, a fraction of the average 40,000 square feet.

New grab-and-go joints pose a threat to smaller, established stores, although shoppers will still likely head to regular stores for name brands unavailable at places like Whole Foods and Trader Joe’s that stock their own lines, said Scott Plasky, a retail specialist with real estate firm Marcus & Millichap.

“I think it will affect the neighborhood guy. I think there’s a lot of places where Whole Foods … or Trader Joe’s couldn’t go historically because [in] most neighborhoods you’re not finding spaces that large,” he said. “And so there’s also an opportunity for some of these tenants to come into these neighborhoods that they would never have been able to get into previously. You just jump right into these spaces.”

Whole Foods has committed to launching five Market Shops in New York, with an initial Upper East Side outlet expected to open later this year in Manhattan. A spokesperson for Trader Joe’s said the company has no plans to open other Pronto branches elsewhere.

Pronto shoppers, many grabbing a bite during a recent lunch hour rush, had mixed reviews.

One of those was David Delizio, 30, a technical accountant who lives in New Jersey and emerged from the store brandishing a can of La Colombe coffee as an afternoon pick-me-up.

“It’s super convenient because they really tailored their product to the people in the area,” said Delizio, who said he has shopped there several times since it opened.

“People come in, they just want a quick snack,” he said. “They don’t want to drop like 20 bucks on something. It’s quick.”

But property manager Candice Aqui, 42, left frustrated, carrying bags with only some of what she needed.

“I just wasted five minutes because I thought they had avocados,” said the Brooklynite, who headed down the block to the bigger Trader Joe’s to get the rest of her groceries.

While the trend is still in its early days, Plasky said other national grocery chains may be considering the smaller format in the city.

“It wouldn’t shock me if there were other brands that kind of ran the same playbook,” he said. “That question is, does it work? Can you make enough money doing what you do in those spaces? I guess you can, because other guys have been doing it for 100 years.”

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