SF Chronicle Reports Troubling News For Davis’ New Grocers –
Residents of West Davis spent many months working to bring a new grocer to the grocery site that had been vacant for three and a half years before Westlake IGA Opened their doors last winter.
Now published reports earlier this week in the San Francisco Chronicle show that the small family-owned grocery chain, DeLano’s IGA Markets, is struggling financially and has plans to close many of its stores soon. Right now it does not appear that the Davis Market, where the company is headquartered, is one of them.
Mr. DeLano told the Chronicle, “All the stores aren’t going to close, but some of them are,” and then hung up the phone.
The Chronicle was able to confirm that the DeLano’s locations in the Castro, Mission and Outer Richmond neighborhoods would be closing in a matter of weeks. The same was true for two stores in Marin.
However, employees at the Fairfax location said it plans to remain open.
The Chronicle reports, “An employee at the Westlake IGA Market in Davis, also owned by DeLano, said he was unaware of any plans to close the store.”
All hope is not lost for the Davis Market, but clearly it is struggling and changes are needed along with a concerted community effort to ensure the business remains open.
According to the Chronicle, “Some supermarket experts, as well as some competitors, said DeLano’s Markets didn’t do enough to lure customers.”
“They had the wrong format for the locations,” said John Sutti, founder of Burlingame’s Sutti Associates, which designs and builds grocery stores, to the Chronicle. Mr. Sutti did not work for DeLano’s. “They were too much of a nondescript, conventional grocer.”
The Chronicle goes on to quote “Supermarket guru” Phil Lempert, the food trends editor on NBC’s “Today” show.
“I think the downfall here was that the stores didn’t say much to the people living in those areas,” he said. “They didn’t walk in the store and say, ‘This is my store.’ Nothing made them want to shop there.”
That does not seem to be the problem in Davis, although when the store first opened they had numerous community activities, bringing in people from across town to participate. That has since changed.
Mr. Lempert went on to tell the Chronicle that many independent grocers are doing “extremely well by establishing a personality that is reflected in their locations.”
That is clearly what Westlake IGA needs to do in Davis to survive, as well as work to make the prices more competitive.
According to what Mr. Lempert told the Chronicle, that should not be a problem. “But Lempert said that since DeLano’s was affiliated with IGA – the Independent Grocers Alliance, a huge buying and brand alliance of 4,000 grocers worldwide, including 1,750 in the United States – it had enough purchasing power to compete on price.”
The Richmond District blog of San Francisco on November 28 reported that the problems for the Delano’s go further, “So why is Delano’s Market closing? James and Daniel said the market chain is in financial distress and would be declaring bankruptcy soon. James emphasized that the Geary location does fine, but that the other six Delano’s locations in the greater Bay Area have been struggling. Curiously, when I tried to visit their website tonight at delanomarkets.com, it came up empty.”
However, the author added, “I was not able to confirm with Delano’s if bankruptcy issues are the reason for the closure.”
The Grocery business has always been a dicey prospect. Clearly there has been a struggle to change the habits of the neighborhood residents with regards to shopping. Added to that, in Davis, the addition of Trader Joe’s and soon the Grocery Outlet have put pressure on Westlake.
However, if we believe that having neighborhood shopping options is an asset, and in the last year with a small baby, let me tell you, it has been a huge asset for me to have the grocery store next door, then we as a community need to find a way to make this work.
We spent too much time fighting to get the grocery store to lose it after just one year.
—David M. Greenwald reporting
Must of had to high of a advertising cost for the store on this blog .
From what I have seen, the folks running Westlake market have worked hard to make a nice store, but they face an uphill struggle. I don’t think it is accurate to state, though, that:
[quote]– the Independent Grocers Alliance, a huge buying and brand alliance of 4,000 grocers worldwide, including 1,750 in the United States – it had enough purchasing power to compete on price[/quote]
Having the IGA helps but the store cannot compete with Trader Joe’s, Costco (roughly half of Costco’s sales compete with grocery stores if you include “sundries” like candy) Target, and Safeway based on wholesale price, though maybe they can compete with Nugget on price (not hard to do though!)
Small grocery retailers face intense competition from larger retailers (who have economies of scale) larger stores and non-union labor. The new TJs is doing well. Consumers have more choices than ever. Davis’ Save Mart is also struggling may move to a more discount oriented format soon. While the Nugget stores in Davis are doing well, it has many weak stores elsewhere.
We have a number of shopping centers in town that will face pressure in the coming years, e.g., the center on G street next to the coop has seen much better days.
It seems to me that grocery prices are suffering more from inflation than hard goods in this economy. That has a beneficial side-effect to local grocers who provide better service for their customers. I happily pay a couple of cents more for fresher produce and meat, help loading my bags, and managers who listen to their customers'(neighbors’)needs.
Some good news; regards the center that houses the Co-op, Kens, Radio Shark Etc. I hear from Jim Eldon that the owners have decided to give the entire center a facelift from it ’70s facade and the old sushi joint is being replaced with the new Montecello seasonal cuisine restaurant. With parking on G Street being crowded further down town, the new restaurant will offer fine dining within a quick walk to Davis’ theatres.
Glad to hear they are sprucing up that center.
The decision not to have a Russell access point to the new University development can only hurt access to those future potential customers for Westlake. But that’s the way the west Davis folks wanted it.
[i]”… the center that houses the Co-op, Kens, Radio Shark Etc. … the entire center a facelift from it ’70s facade …”[/i]
I think that facade actually goes back to the 1960s. It’s one of the two ugliest commercial buildings in all of Davis–the other is the strip along 4th Street betwee E and F.
I know–at least when it first changed–that some people were unhappy with the Co-Op’s new facade. But I personally liked it then and think it has held up. I appreciate a fun use of colors. I don’t go by the strip mall on E. 8th very often, but it also has a nice splash of color.
The current pigmentation of the strip mall north of the Co-Op is just the opposite–it’s lifeless.
I would imagine–especially in today’s economy–that the owners of that mall will not be able to do what really should be done, but the best plan would be to tear down that misplaced, badly designed building and rebuild near the street and put the parking in the back by the rail line. They could have a new building which fits in better with that old neighborhood, one which engages the street and sidewalk and allows for some window shopping. I would even imagine in that spot there would be plenty of space for a second floor suite of offices or apartments.
The Westlake IGA is a nice store with good service and great produce and meats, but there’s no getting away from the fact that it’s noticeably more expensive than Save Mart or Safeway. In this economy, you really can’t expect people to choose to pay more for groceries. I don’t think Trader Joe’s is going to compete so much with traditional grocery stores as it will with wine sales at World Market. I heard some rumor awhile back about the possibility of a Grocery Outlet going in at the East 8th. shopping center where Ralphs used to be. Does anyone know anything about that?
Dr. Wu is correct. Trader Joes, (anyone read the book about Trader Joes that they did not want writen?) – has so many of their own brands. They used to have a high percentage of brands that there more smaller buisness than they have now, actually dramatic change. I was just there on that side of town at TJ I should have kept going west on Russell blvd.
Doubt they would close the Davis branch anytime soon, as they will wait to see over time how it does and probably are closing the ones that have proven over time not to be economically. (at least I would think so and being small they can make smarter choices like that)
Unlike Ritz Camera, where all the staff from Davis and Sac told me that the Davis store was financially fine, but corporate shut it down. Sad, really sad.
it would just be nice to have my money go into the hands of a smaller buiness, (and local to boot) than a big corporation like Target (Hmm..) or wallmart, or even Safeway (which I have been to lately) So thank you for this story and it hopefully will help remind me not to stray so much from a more socially responsable person.
Now I want to go grocery shopping there!
I have to disagree with JayTee, have you been into Trader Joes Lately, their food prices are very good, not just their wine. many of my coworkers shop at trader joes to guy the instant frozen or boxed meals for lunch (and many are only concerned with price). Unfortunately, TJ is not as socially concious as they used to be decade or more ago. very sad
wdf1: “The decision not to have a Russell access point to the new University development can only hurt access to those future potential customers for Westlake. But that’s the way the west Davis folks wanted it.”
Not all west Davis folks…
The Fresh & Easy Buzz blog has a couple updated posts about the closing DeLano’s stores. Five are closing in the Bay Area. One in Fairfax and Westlake IGA are staying open.
http://freshneasybuzz.blogspot.com/2010/11/delanos-iga-markets-closing-five-stores.html
http://freshneasybuzz.blogspot.com/2010/11/veteran-grocer-harley-delanos-delano.html
DeLano’s IGA is in trouble though. They’re being sued for over a million for back rent for the five stores closing.
Since Westlake has a different landlord its not closing now. But if we see the inventory in the store going down that’s going to be a bad sign. I work in the grocery industry and what happens often when a grocer is in financial trouble like this is it can’t pay its wholesaler. If that happens we will see out of stocks in the store. Was in Westlake a couple days ago and it looked OK. Anybody been in today?
JayTee:
The Grocery Outlet store is coming to town. I talked with a person at the headquarters in Berkeley recently and he confirmed it. The stores are owned by independents, often husband and wife teams. Grocery Outlet is a franchise-type of operation.
I was last in Delano’s 3 days ago. Has anyone been in more recently? Wondering how the inventory looks?