Thursday, September 15, 2005
It’s a supermarket super brawl.
On Sept. 20 the Monterey City Council will listen to public comment on development proposals from incumbent heavyweight store Safeway and the challenger, Trader Joe’s.
Both grocery chains are fighting for the right to sign long-term leases at 570 Munras Ave., the city-owned property in downtown Monterey.
Safeway has done business at the location since 1951, but its lease will run out in April 2006. City officials put out a formal call for proposals during the summer of 2003, but appeared to be dealing exclusively with Safeway until this June, when they announced they would once again consider other development proposals. Despite extensive negotiations beginning in September 2004, Safeway representatives failed to reach an agreement with city officials.
“We weren’t able to resolve all the issues associated with Safeway so we went back to the original proposals in addition to Safeway,” says Bill Wojtkowski, Monterey’s community development director.
When talks between Safeway and the City appeared to break down, a Northern California development company with plans to build a Trader Joe’s market in Monterey stepped into the ring.
“They were in negotiations [with Safeway] a long time and couldn’t come to an agreement, so they threw up their hands and came to us,” says Douglas Weile, president of Foothill Partners, the retail property firm proposing a multi-tenant plan featuring a full-service Trader Joe’s.
Safeway execs are quick to put a different spin on the talks, however.
“It’s not that anything fell apart,” says Jennifer Webber, director of public affairs for Safeway in Northern California. “The negotiations have just been ongoing since last September.”
Regardless, the council definitely wants a grocery store on that particular site, according to Wojtkowski. “Not a Whole Foods specialty kind of store,” he says. “We want something affordable.”
After considering a number of different ideas, the council narrowed the proposals down to a new, expanded-format Safeway and the multi-tenant proposal from Foothill Partners.
Should the city council choose Safeway, downtown grocery shoppers will essentially see a whole new store.
“We want to expand the store by adding about 10,000 feet onto the 21,500-square-foot structure and renovating it into our new Lifestyle format,” Webber explains.
Safeway’s Lifestyle concept, which the chain has been aggressively expanding since last year, features larger delis, a sushi bar, a full-service bakery, more organic foods and ready-to-eat meals, warmer color schemes and upscale wines.
“Our traditional stores were very sterile—all white tile and fluorescent lights—they kind of looked like an operating table,” Webber says. “This new format enables us to expand our offerings and provide up to 50 new local jobs.”
Alternately, if Weile’s development company is awarded the lease, his company would subdivide the building into a 12,000-square-foot space for Trader Joe’s while leasing the other 10,000 square feet to small stores, which would line the sidewalk frontage along Munras Avenue.
According to Weile, these small stores would most likely consist of cafés with sidewalk dining, coffee stores and specialty retailers.
“It’s got the right solar exposure, nice and generous sidewalks,” he says. “A bakery out of SF has already raised its hand and said, ‘I think we’d like to be there,’ but all that remains to be seen.”
Regardless of what types of businesses end up inhabiting the 10,000-square-feet unoccupied by the Trader Joe’s store, Weile feels his company’s proposal will provide a big boost to the downtown’s energy and atmosphere.
“Don’t get me wrong,” Weile says. “I love Safeway; I’ve built six stores for them. But the best co-tenant they could ever attract next door to them is a mattress store. Is that the best they can do? The downtown deserves something more energetic and more lively than a mattress store.” (Mattress Discounters moved into the space at 584 Munras Ave. in late August.)
Additionally, Weile argues that the Monterey Peninsula needs a second Trader Joe’s.
“The Pacific Grove store can’t handle any more business,” he says. “The parking lot is a zoo. People park in the neighborhoods behind the store and sneak in through the fence. There has to be another Trader Joe’s.”
Weile is quick to point out that the new Trader Joe’s would be a larger, full-service grocery store, which would offer a more comprehensive selection than the Pacific Grove store.
Critics of Safeway, including Weile, point out that the company has had plenty of opportunities to provide much-needed renovations to the downtown store, but waited until its lease was close to expiring before addressing the problem.
“I find it interesting how Safeway has made all these promises about how great their store is going to be,” Weile says. “You have to ask why they haven’t done anything about making these changes already.”
“I guess as their lease got closer and closer it didn’t make sense for them to renovate,” says Wojtkowski. “They did clean up the site some a few years ago. It used to be a big hangout for the homeless and they’ve done something to address that, but I don’t know why they didn’t go ahead and do a renovation five to 10 years ago. You’ll have to ask them.”
When asked, Webber insists that her company did express interest in remodeling the site to the City in the “past few years.”
“We proposed some renovations to the city council a few years back when they began the process,” Webber says, “We let them know we were interested in that, and renewing the lease on the site. And as you know, we announced our new Lifestyle format renovations last April.”
The chain now has more than 150 such Lifestyle locales and says it plans to convert an additional 300 of its 1,800 existing stores to this format by year-end. They’ve already begun renovations at their other Monterey store on North Fremont Avenue.
As the Sept. 20 meeting approaches, both Safeway and Foothill Partners have launched campaigns to influence public opinion by encouraging customers to review their respective proposals. Safeway has hung large easels and signs in their store, while Foothill Partners have begun distributing fliers throughout the city.
But don’t expect a knockout punch—it’s unlikely that the city council will not vote up or down on either grocery store at the Sept. 20 meeting.