Dive Brief:

• SpartanNash has updated Forest Hills Foods, a nearly fifty-year-old grocery located near Grand Rapids, Michigan, to include more fresh departments and foodservice offerings, according to The Shelby Report.
• The update includes an expanded produce and meat department, an enhanced selection of craft beer and wine and additional services such as a craft beer station and a produce butcher.
• Forest Hill Foods also has been retrofitted with store updates that aim to reduce energy consumption by 1.4 billion BTUs. New features include LED lights, dimming lights and more energy efficient entry and exit doors.

Dive Insight:

When SpartanNash bought Forest Hills Foods in 2012, it reassured customers and employees that no changes would be made to the beloved store, which opened in 1959.

But in a highly competitive upper Midwest market, keeping things the same doesn’t pay. SpartanNash, which had previously served as Forest Hills Foods wholesaler, clearly saw potential to expand sales with the store’s affluent customer base.

With these additions, Forest Hills Foods becomes more of a destination shop. But will the changes agree with many longtime shoppers of Forest Hills Foods? Balancing the need to stay relevant with the need to appease loyal shoppers can be difficult. But adding more fresh and prepared foods, expanding store technology, among other steps, are usually agreeable to a wide range of consumers. The key is knowing a store’s current and potential shoppers, and making changes that don’t sacrifice the retailer’s core spirit.

With this, SpartanNash joins other conventional retail grocers such as Hy-Vee, Niemann Foods and Weis Markets in offering destination stores. These locations provide food experiences, and offer a new look for retailers that tend to have a middle-of-the-road identity.

The real value of these stores is in their ability to test new products and concepts for use across the broader chain. SpartanNash, which operates several retail banners, including Family Fare Supermarkets and D&W Fresh Markets, could amplify the returns on promising items by rolling them out to more stores. The prudent use of data and store research could help the company better address specialty shoppers across its retail footprint.

Spartan may also have an advantage in its fresh food processing facility, which came with its Caito Foods acquisition last year. The facility, which has been slow to come on board, should help the company source more in-demand fresh items to wholesale customers as well as to stores it owns, such as Forest Hills Foods.

Right now, Spartan could use a boost for its retail division. The most recent financial quarter saw its retail sales drop 3.9%, while comp store sales dropped 1.8%. The company’s conventional supermarkets, including Family Fare Supermarkets and D&W Fresh Markets, are having a hard time differentiating themselves in a crowded market, and are under pricing pressure from Walmart, discounters and dollar stores.