ALTOONA — The long-running food fight among Chippewa Valley grocers is about to reach a whole new level.
With the impending opening of Woodman’s Food Market in Altoona’s River Prairie development — tentatively scheduled for Sept. 1 — the region’s already crowded grocery market will have to make room for a giant new competitor.
At 240,000 square feet, the first Woodman’s store in northwestern Wisconsin is more than 2½ times as large as any other supermarket in the Eau Claire area.
While it has yet to be determined how Woodman’s entry into the market will affect existing grocers, the added competition should be good news for consumers, industry analysts say.
“If you’re a shopper in Eau Claire, you’ve got Woodman’s, and you can’t get any better than that when it comes to prices,” said David Livingston, a Pewaukee-based grocery industry analyst. “They will keep everybody honest for prices. You should never have to complain about overpaying for groceries.”
Meg Major, chief content editor for the industry trade publication Progressive Grocer, agreed, declaring, “Shoppers are by all means the winners in this heightened competition.”
Indeed, Woodman’s President Phil Woodman doesn’t shy away from his company’s reputation as a low-price operator. He unabashedly promotes it.
“We don’t add value,” Woodman said. “Therefore, our overhead is very minimal, so our prices are extremely low because of the size of our facilities.”
By not adding value, Woodman is referring to his company’s practice of not getting involved with many of the extra services that other supermarkets offer, such as operating in-store bakeries, roasting chickens or making their own deli items.
Instead, Woodman’s focuses on offering a huge selection of food products — 77,000 different grocery items — at low prices. “We just have a lot more of everything,” he said.
As an example of the variety, he said Woodman’s stores devote 96 feet of shelf space to yogurt, which he claimed is nearly four times as much as a major national competitor.
Nearly 40 percent of the new Woodman’s store is devoted to warehouse space as well, enabling the company to cut wholesale costs by buying many products directly from manufacturers.
That specialized niche presents both a challenge and an opportunity for existing grocers in the market, industry observers say.
The challenge — competing with a high-volume store that emphasizes low prices — is obvious.
It’s not uncommon for a Woodman’s store to post sales of $2 million a week, so that’s going to affect all the companies vying for a piece of the local grocery pie, although it likely won’t have a major impact on national competitors such as Wal-Mart, Target and Aldi, Livingston said.
“They’re going to hit everybody,” he said, noting that it can be tough for local competitors to respond because they can’t get as big as Woodman’s, and Wal-Mart likely already has led them to push their prices down.
Sometimes, the pressure of a big new supermarket is enough to push an existing store out of business, Livingston said. He offered an analogy that hints at the potential impact on a local market: “You’ve got a fat guy getting on a crowded bus and there’s only so much room on the bus. Somebody may have to get off that bus.”
That doesn’t necessarily mean the arrival of Woodman’s will result in the inevitable departure of any existing grocery stores, the industry analysts say.
What it does, however, is force existing grocers, who already have proven their mettle by surviving the industry’s tumultuous past couple of decades, to sharpen their game even further, Major said. It gives those longtime local players the opportunity to emphasize their differences from the new goliath in town.
That’s exactly the approach taken by Onalaska-based Festival Foods and Eau Claire-based Mega Co-op.
Referring to Woodman’s, Festival Chairman Dave Skogen said, “They’re not going to intimidate us; they’re going to elevate us.”
While Skogen said he has the utmost respect for Woodman’s, he noted that Festival already competes with the company in La Crosse, Green Bay, Appleton and other markets. In fact, Festival is planning to open a store this fall in Janesville, the hometown of Woodman’s.
“There’s room for both of us; I can tell you that,” Skogen said of the Eau Claire market.
In describing Festival’s approach to competing with Woodman’s in Eau Claire, Skogen said, “We’re known for our people being friendly, and we’ve got to get friendlier. We’re competitive, and we’ve got to be more competitive. We’re clean, and we’ve got to get cleaner.”
Jeremy Dickinson, director of the Mega Co-op store on South Hastings Way, said the 80-year-old company also plans to respond to the new competitor by paying extra attention to quality and service.
“We’re really going to hang our hat on putting out a quality product and making sure we have fantastic customer service for all the people who come in our doors,” Dickinson said.
Mega, which operates two grocery stores in Eau Claire and one in Barron, along with 15 Mega Holiday convenience stores in the region, also plans to increase its emphasis on locally made products, including dairy, produce, mustard and salsa, as a way of differentiating the company from Woodman’s and its large variety of goods from around the world.
“We’ve always supported the local products and companies, but we’ve never really taken the initiative to put that out there for our customers,” Dickinson said. “Now we’re making it more known that we do that.”
Dickinson and Skogen both said their respective companies also would seek to highlight their in-store bakeries, delis and meat departments — areas they believe give them a competitive advantage over Woodman’s. Major endorsed that strategy based on those categories being critical for most grocers today.
Representatives from Chippewa Falls-based Gordy’s Market, which operates 21 grocery stores and 11 convenience stores in western Wisconsin, didn’t return several telephone messages seeking comment on the impact of Woodman’s.
In a competitive business like groceries, store operators are too savvy to wait until a new store opens to determine how to respond, said Brandon Scholz, president of the Wisconsin Grocers Association.
“Grocers know their customers, and they know their marketplace,” Scholz said. “They’re born and bred to survive.”
Existing store operators in the Eau Claire area recognize they likely will see an initial drop-off in business as curious consumers check out the new guy in town, “but then they’ll get to work to bring those people home again,” he said.
Eventually, consumers settle back into a pattern after they determine what they like and don’t like in their grocery stores, Major said.
Expanding the market
Bob McCoy, president of the Eau Claire Area Chamber of Commerce, said he believes Woodman’s will expand a regional trade center that already enjoyed retail sales growth of 10 percent last year.
Though he understands the tendency of consumers to flock to new ventures initially, McCoy said existing grocers have had time to make adjustments in preparation for Woodman’s entering the market. Companies such as Mega and Gordy’s also have multiple supermarkets and convenience stores that could help make up for any potential lost sales at stores located near Woodman’s, he noted.
Gordy’s has a store just two-thirds of a mile west of Woodman’s on Birch Street, while Mega’s Hastings Way store — rebuilt three years ago near its original location — is only about a mile way.
“I believe our grocers have all positioned themselves so that if one store takes a dip, they can ride through that,” McCoy said. “I think they will all make it through and stay successful. I actually believe it will create a bigger base and pull more people into our trade area.”
Livingston expects Woodman’s to increase overall grocery sales in the Eau Claire market, with the new store attracting customers who previously bought groceries in communities such as Menomonie, Rice Lake, Chippewa Falls and Stanley.
Woodman confirmed that he believes Woodman’s stores draw shoppers from a 50-mile radius because of their huge variety, including large sections devoted to organic, gluten-free and vegan items.
“We’re more of a destination-type retailer. We’re going to expand the market,” Woodman said.
The Eau Claire metro area was a logical expansion site for Woodman’s because it is just outside the 150-mile circle around Madison that contains its other 15 stores. And it meets the company’s minimum standard of having at least 150,000 people within a 30-mile radius.
“Everybody eats,” Woodman said.
And now Chippewa Valley residents will have yet another place to buy their food.
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