Growth Markets: Lexington's Maturing Grocery Landscape

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Changes abound in local stores with competition shifting to organic food, customer experience and expanded services

Lexington’s grocery scene, once as humble and steady as an old-school deli counter, has grown into a layered and competitive environment. With signs pointing toward continued growth and diversification, the battle grounds have shifted strikingly to organic and natural food offering, as well as to service and customer experience.

Lucky’s Market, the newest major addition to the area’s grocery landscape, opened its doors Jan. 26 at 1030 S. Broadway. The Boulder, Colorado-based operation markets its offerings as “organic for the 99 percent” to highlight prices that are generally lower than at other natural foods-focused groceries.

Store director Toby Truitt said produce is Lucky’s top concern and that the store hopes eventually to source 10 percent of it locally.

“That’s the goal we have,” said Truitt. “And as time goes on and we become more in touch with the community, we intend to make that happen.”

Lucky’s officials said the Lexington spot is the company’s 16th location, with plans in place to expand to 100 stores.

Organic competition

The increase in competition was apparent even before the ribbon-cutting. One week before Lucky’s opened, Good Foods Co-op – the stalwart natural foods and community-minded grocery on Southland Drive – announced via letter to owners that it is seeking a second location in Lexington to address declining sales and an increase in local competition.

“We always want to be transparent with our owners,” said general manager Bill Bickford. “We also want them to know what we are doing in response. We don’t think the right answer is to do nothing. So we think planning out a path to continue growing the co-op, to make the co-op more resilient, is the right answer.”

Bickford said they had been talking about expanding long before they knew Lucky’s was coming to town. They believe the end of 2017 is the earliest they could open, with some time in 2018 being a more realistic estimate. They could not yet comment on the specific locations they were looking into.

“In order to remain relevant, we need to seek out additional sales and additional customers, and one of the best ways to do that is to have a location that’s accessible to more people,” stated Bickford.

Bickford said little more than a decade ago the competition in organic groceries had few players beyond the co-op and Whole Foods.

“Sprouts might’ve had a few stores out west, and Lucky’s didn’t exist,” said Bickford. “Earth-Fare didn’t exist, and Fresh Market might’ve been around, but they were pretty young. So there’s been a lot of new entrance into the market.”

Bickford says Good Foods’ commitment to local products is deeper and stronger than at other stores. While markets like Lucky’s aim to source 10 percent of produce locally, Bickford said Good Foods routinely carries 35 to 40 percent local produce and meat, with produce falling to about 10 percent only during winter.

“If you look critically at what they’re carrying, I think we have a higher percentage of local,” he said. “We don’t just have a couple of areas in the store where there’s a concentration of local products, we have it in any department you look in.”

Food: The experience

Lucky’s and others know that in such a crowded field, food selection alone isn’t the only draw for customers; amenities and overall experience matter.

In the prepared foods section, Lucky’s customers can expect to find in-house roasted and smoked deli meats, pizza and sandwiches, with vegetarian, vegan and gluten-free options.

In the café, patrons can choose among five local beers on tap and use a cart with a cupholder to “sip and stroll” – an official designation.

“We’re trying to set ourselves apart in any and every way we can,” said Truitt.

Truitt credits food-focused television shows for what he calls the “demystification” of good food and technique, which he says aided the rise of markets like Lucky’s.

“We’re following along with that whole trend: demystifying the ingredients and making them accessible at affordable prices, which is something that’s gotten a little lost in this all-natural organic format.” he said. “We’re priced right along with your grocery store supermarkets. It’s accessible to everybody.”

Despite a decline in sales, Good Foods continues to have an unusually strong bond with its customer base, which has grown in recent years. In 2015, the co-op added 570 new owners, bringing the total to more than 7,500, Bickford said.

“One thing we can say that no one else can say is that we are owned by regular folks right here in this community,” said Bickford. “So that’s about as local as it gets. We don’t have any millionaire CEOs or foreign investors that we’re beholden to. We’re beholden to only our owners in this community, and I think that makes us different.”

Majors and start-ups join in

Small, scrappy players aren’t the only ones on this increasingly lucrative, if crowded, field. Even Kroger and Costco have become major players in the organic market, and Target and Meijer are now launching their own natural brands due to high demand.

Some Kroger locations have begun diversifying even further, offering online grocery orders where customers can pick up their packaged items at a time of their choosing.

Taking that one step further, a company formed in 2007 out of Indianapolis called Green BEAN Delivery, delivers organic groceries right to a customer’s front door.

Green BEAN (Biodynamic-Education-Agriculture-Nutrition) currently serves hundreds of customers in the Lexington area, according to company Vice President John Freeland. Customers order online and receive deliveries in insulated packages on Wednesdays and Thursdays.

Freeland said the initial goal was to give a network of mid- to small-size family farms easier access to consumers.

Green BEAN operates two 60-acre farms of its own, supplementing a combination of local and national products.

Even without a lot of players in the delivery market, Green BEAN sees the growth in brick-an-mortar stores as a competitive challenge.

“They’re not delivering, but that’s still an impactful piece to us,” said Freeland. “There’s just been an onslaught of new, all-natural grocery stores coming in.”

Freeland said Lucky’s, Fresh Thyme and Earth-Fare all seem to be jumping into markets where Green BEAN operates.

“Some of the biggest grocery companies in the nation are shifting their gears toward a local and natural model,” he said. “They can just see that the consumer demand for that has been snowballing for a number of years.”

Freeland says that even without the growing competition, demand for local and regional food far outweighs the supply.

“We would strive to have 100 percent local food in our offerings on a weekly level,” he said, “and there’s just not enough available for us to even do that.” cc

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