PITTSBURGH -- Giant Eagle Inc. is mulling the launch of a smaller store prototype that eventually could allow it to fill in the underserved areas of the region's grocery market, reported the Pittsburgh Business Times.
The initial designGE xpress RX-Rwould combine groceries, a drive-through pharmacy and gasoline pumps in a 13,000-square-foot location, said the report. Representatives of Giant Eagle have presented a plan to Harmar Township, Pa., to replace [image-nocss] an existing Giant Eagle with the new format.
Larry Seiler, who serves as engineer for Harmar, told the newspaper that the plan would call for tearing down a former Ames department store, a bank and an existing Giant Eagle supermarket. Replacing them on the corner of Route 910 and Freeport Road would be a Target store situated behind the GE xpress. The store would offer both a drive-through pharmacy and eight gasoline pumps.
Seiler confirmed Giant Eagle's proposal and emphasized that the company has not decided whether it will go forward with the new store type on the property. Giant Eagle met with Harmar's planning department recently to present its proposal to see if it will meet the township's zoning standards.
A spokesperson for Giant Eagle said the company could not talk about the new store prototype at this time.
Recently, Giant Eagle has been active in launching new store concepts that serve different segments of its customer base, the report said.
After acquiring the former Crossroads convenience store chain a few years ago, Giant Eagle converted it to a new chain called GetGo, which has grown to more than 100 locations with the help of the company's fuelperks gasoline incentive program. Last month, Giant Eagle went head-to-head with Whole Foods by rebranding two of its most-successful grocery store locations as Market District.
With the proposed GE xpress, the company is considering a hybrid kind of store that would serve both grocery and pharmacy customers in a location around the same size as major drug stores such as Walgreens and Rite-Aid, said the report.
Commercial real estate broker Brian Kerr, who has represented grocery chains, told the Business Times that he sees plenty of underserved communities in the region where such a store could find a willing customer base, if it can work financially. "You need a bigger store to push the volume," Kerr, a senior vice president of Langholz Wilson Ellis, Pittsburgh, told the newspaper. He also noted the small profit margins grocers typically work under. "But if they can make the model work, there's lots of places to do it."
Neil Stern, who follows the grocery store industry as an analyst for the Chicago-based firm MacMillan Doolittle, said the 13,000-sq.-ft. size suggests a store intended for urban neighborhoods or mature suburbs, the kinds of highly populated communities major grocery store chains left behind years ago in favor of building stores of 60,000 to 90,000 sq. ft. in less-developed outer suburbs. He said he has has seen other major grocery chains, such as Safeway and Kroger, experiment with similar stores with limited success. "No one I can think of has deeply developed this in the United States," Stern told the paper. "There are a lot of one-offs."
Perhaps the most successful example of a grocery retailer diversifying its store formats to offer stores in smaller locations, Stern said, is Tesco, the U.K.'s largest grocery chain. The report, citing anonymous sources close to Giant Eagle, said Tesco has been an influence on Giant Eagle's new concept and that Giant Eagle executives have consulted with Tesco's leadership.
As reported in CSP Daily News, Tesco is launching its own scaled-down concept on the U.S. West Coast, modeled on its Tesco Express stores.
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