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Is a new grocery store in Durango’s future?

Several factors weigh against additional brick-and-mortar sites
Jean Fiorini, right, with south City Market rings up Petie Hunt on Tuesday. City Market says it currently isn’t looking at another location in Durango, but if the right opportunity emerges, it would consider adding a new supermarket.

Most Durangoans are familiar with the city’s big four grocery stores – two City Markets, an Albertsons and a Walmart. Could we soon see five?

The answer to the question depends on whom you are talking to, but don’t hold your breath if you’re eager to see earthmovers clearing dirt this spring for a new outlet.

A statement by King Soopers/City Market’s real estate division provided to Rhonda Remy, manager of public affairs with King Soopers/City Market, said: “City Market has a great relationship with the community of Durango. And our two stores, north and south, are well-located to serve the existing trade area. At this time, we’re not pursuing an additional location, but would certainly consider one should the right opportunity be present.”

In general, adding a new grocery store is a tough hill to climb just about anywhere in the United States right now, said Gregg Macaluso, faculty director of the master’s supply chain program at CU Leeds School of Business at the University of Colorado Boulder.

Barb Cohn picks up items Tuesday at south City Market. Three Springs is likely one of the most probable sites for a new grocery store in Durango.

Grocery stores are essentially known in business circles as “a mature industry,” meaning that segment of the economy is well-established with limited growth potential.

Unless a community is seeing 15% population growth or household income is rapidly rising with a new industry or employer adding to the job market, opening new stores is unlikely, Macaluso said.

“For a town of about 19,000, objectively speaking, it sounds to me like Durango, unless it’s seeing growth like 15% or plus, is well-served by four major grocery stores,” he said.

Some variables, he said, do help Durango. For instance, Durango is 215 miles from the nearest Amazon fulfillment center in Albuquerque, and La Plata County is proving popular with high-income immigrants from big cities.

But Macaluso said it could be years before a critical mass is reached to meet major chains’ metrics to add a new store.

Before that happens, he said it’s just as likely that Amazon could add a fulfillment center in Farmington, further reducing the chances Durango would get a new brick-and-mortar supermarket.

COVID-19 has fueled a move to online shopping, fueling a trend that’s also currently limiting development of brick-and-mortar retail, said Jack Buffington, assistant professor at Daniels College of Business at the University of Denver.

Grocery stores are rapidly adopting technology mimicking Amazon – turning their stores into their own little fulfillment centers with people ordering online and either picking up their groceries at the store or having them delivered. The move allows each store to serve more customers and further reduces the need to build new ones, Buffington said.

The trend, called “omnichanneling” by grocers, is to create models within existing stores where people choose their preferred method of shopping – traditional walking of aisles with shopping cart or ordering online for pickup or delivery.

Shoppers on Tuesday at south City Market. Major grocers are moving to accommodate shoppers who prefer to order their groceries online and have them delivered or picked up at the store.

As more people move to online shopping, each store can handle more customers while still keeping in-store crowds to manageable levels.

COVID-19 also pressured sophisticated inventory tracking methods stores use to keep shelves properly stocked.

Buffington said it took months for supply chains and stores to adjust to demand for more toilet paper for homes and less toilet paper for workplaces (there is a difference) during the height of the pandemic.

After about two months, supply chains and stores thought they had figured out the problem only to see TP shortages persist longer than anyone anticipated.

“During the pandemic, it took longer to adjust than initially forecast,” he said. “A lot of it had to do with irrational buying behavior during the depth of the COVID incident.”

Outside of a major pattern-changing curveball like the pandemic, large retailers are so good at analyzing shopping patterns they can stock stores more efficiently, thereby limiting the need to stock a huge inventory in-house.

The just-in-time inventory, beneficial to retailers during more predictable periods, also took some lumps when the pandemic hit and stores across the country lacked the ability to restock shelves from stocks – something they could have done more readily a decade ago, Buffington said.

Buffington said: “Amazon, Walmart, Kroger are crunching enormous amounts of data, and they’re likely to know when you’re out of something before you do.”

The most likely location for a new store is probably in Three Springs, which now has about 660 residential units – a combination of single-family homes, condominiums and apartments.

While City Market says it is not currently looking at adding a new store in Durango, Gary Whalen, vice president of GF Properties, the owner, planner and developer of Three Springs, says he’s received inquiries from grocers checking out the area for a possible location for a new supermarket.
Increased sophistication in managing inventory helps grocery stores dedicate less space for inventory. The system usually works well, but led to shortages when shopping patterns changed radically during the depth of the COVID-19 pandemic.

Scott Shine, planning manager with the city of Durango, said interest has been shown lately by gas stations and convenience stores in the Three Springs region, but the city has not received recent queries from grocery stores.

He said a Maverick gas station and convenience store has been approved and site work is underway near the roundabout leading to Wilson Gulch Road.

On the way to Three Springs, the city also has approved a new Dunkin’ and Freddy’s Frozen Custard & Steakburgers franchises on Escalante Drive, and site work is also underway.

Gary Whalen, vice president of GF Properties, the owner, planner and developer of Three Springs, said he has received interest in locating a new grocery store in the development, but the exploration process slowed when COVID-19 hit.

“I can’t really disclose who it is,” Whalen said. “But we’ve had interest from grocers, and we’ve also had interest from soft-goods stores. So that’s good news. The bad news is none of these groups are conducting site visits currently, because of COVID-19.”

Depending on the availability of the vaccine, Whalen said he expected market explorations to resume in spring or summer.

Three Springs – located somewhat centrally between Durango and Bayfield and Ignacio – also helps make the area attractive for a new grocery store, Whalen said.

“Bayfield does help, and so do all the surrounding areas on the Florida Mesa, everything east of Durango,” he said. “There’s a pretty good population base in the immediate region around here, and when you look at Durango, there’s not much available developable land, which really puts the focus on our area.”

parmijo@durangoherald.com

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