Adventure in Retailing XIII:
The Fresh Market

by

Ross M. Miller
Miller Risk Advisors
www.millerrisk.com
October 11, 2010

I do not particularly enjoy writing commentaries about grocery stores, but that is about all that seems to be able to thrive in an otherwise declining bricks-and-mortar world. Almost everywhere I go in the physical world, empty stores are being a more common site and new stores are fewer and farther between. Part of it is the overall economy, and part is that online shopping is cheaper and easier than going to stores for many people (myself included). While groceries can be purchased online, they are one category that benefits greatly from a physical presence.

The new store in town up here is The Fresh Market, the first New York state store in a chain of high-end groceries that are mostly in the Southeastern U.S. The store is part of a major renovation of a poorly located strip mall at the intersection of Routes 9 and 155 in Latham, New York. The store is about 2 miles north of affluent Loundonville on Route 9. It is relatively far away from most of the other relatively well-to-do areas that are scattered about the Capitol Region.

The concept behind The Fresh Market is a simple one, it is like the market in Manhattan's Grand Central Terminal (or the one that used to be in Fanueil Hall), but with a single owner and a single checkout. It has a flower shop, produce market, bakery, fish counter, meat counter, deli, sushi bar, coffee/nut/chocolate shop, cheese shop, etc., all under one roof with a single checkout. While it is cannot rival the two local chains, Price Chopper and Hannaford, as a one-stop shopping destination, it does try to carry somewhat more than a convenience store in the general household and grocery area. Its prices approach the Whole Foods (a.k.a. Whole Paycheck) realm and well above anything else in the area.

At first glance, The Fresh Market is like a nano version the legendary (and long defunct) Jamail's market in Houston, that Texas Monthly called the best grocery store in America (and that ain't no Texas exaggeration). Jamail's was a gigantic (for the time) grocery store near the ritzy River Oaks section of town. Like The Fresh Market, its services included taking the grocery from your cart, bagging the, and taking them out to your car. Unlike the Fresh Market, Jamail's had everything imaginable on its shelves. I was on a Pop Tarts jag back then and Jamail's had varieties of Pop Tarts that I never knew existed. I infrequently  visited Jamail's, however, because not only was it inconvenient, but I felt out of place there. The problem was not that the store was jammed with oil barons; rather, it was jammed with their domestic help. No such problem here in the Albany area.

Sadly, The Fresh Market is not Jamail's, but then again, nothing is anymore. Before delving into The Fresh Market's numerous problems, it is worth noting that I like the place a lot and expect to be an frequent customer of it until either it goes out of business or I get tired of it. Its produce is very good, almost as good as Whole Foods (but without the visual splendor of Jamail's, where the grocery staff would constantly straighten up the displays). Its meats are superb, essentially fine restaurant quality. Its store brand soups are fantastic as well. Weak areas are the deli area (some obscure private label cold cuts that might suffice in Atlanta rather than the obvious choice of Boar's Head), the fish counter (poor selection and some questionable items), and the sushi bar. The cheese is also uninspired, and unlike Jamail's it does not have a separate temperature-controlled cheese room, not that any of their cheese deserves it..

The store has a severe structural issue that could be a deal-killer; its aisles are way too narrow by local standards, not much more than the width of two carts. In theory, shoppers in both directions could pass each other; however, the local crowd is used to shopping in store with spacious aisles, not those reminiscent of a Food Emporium on the Upper East Side. Hence, the locals park themselves in mid-aisle while chatting on their phones, making passage impossible. The situation is even worse between the meat and deli counters. When sufficiently corpulent customers are waiting for their orders, no one can get by at all. This is inexcusable in a part of the country when retail space is in massively vacant and should be dirt cheap; indeed, The Fresh Market is currently the only major occupant of their strip mall and they take up only about 20% of its overall footprint. 

While the narrow aisles were a problem the first few times I visited the store, once the novelty wore off, so did the crowds. On a recent visit, I heard the checkout clerks talking about how they had only 100 customers on the previous day, which was a summery Thursday in mid-September. Doing a quick financial analysis of the place, if it is not busy enough to have the aisles crowded much of the time, then it won't be able to cover even its fixed costs.

As a finance professional, I have to wonder what Fresh Market headquarters was thinking when they placed a store in New York's Capital District. The demographics of the area is not particularly upscale and is known for its thriftiness, Dutch origins and all that. Then there is the matter of the track record of upscale retailers, and grocers in particular around here. When I arrived in the area there was Cowen & Lobel in Stuyvesant Plaza. It was a traditional gourmet shop, like Cardullo's in Harvard Square. It struggled and ultimately closed in 2001. A few years later here in Niskayuna, a Fresh Farms market (no relation to Fresh Fields, now part of Whole Foods) opened and closed less than six months later. Fresh Farms had a massive store located in a defunct Grand Union store that had good produce and a killer salad bar that I got lunch from every weekday in the early days of these commentaries. High-end electronics stores have met a similar fate here. The death toll since I have been here in that category is three, including a Tweeter.

Interestingly, it turns out that I am one of a fairly large group of Capital District folk who are fans of Trader Joe's. Every two months or so, I just happen to pass by one in my travels and I stock up with a cart or more of goodies. Trader Joe's is an entirely different experience from The Fresh Market. The overall quality of the goods is a bit lower than the Fresh Market and the ambiance is utilitarian, but the prices are much lower, even lower than many comparable items at the big chains. For some products Trader Joe's just massacres The Fresh Market on quality; its breads outclass The Fresh Market's meager offerings. It is mystifying that The Fresh Market located here, but Trader Joe's avoids us like the plague.