Whole Foods Market’s newest New York City location isn’t its largest or most beautifully laid out, but its opening in mid-February could have some long-term effects.
The store, at East 87th Street and 3rd Avenue in a densely populated residential neighborhood, is a block from a Fairway that had opened in 2011 and is among that chain’s highest-volume stores, according to analysts.
“Fairway will take a hit, and it might be substantial, but it’s the weak operators that will feel it the most,” said Andrew Wolf, a Boston-based analyst with BB&T Capital Markets.
In fact, it was the opening of the high-volume Fairway on East 86th Street that put the final nail in the coffin of A&P’s Food Emporium store at East 86th Street and 2nd Avenue. That Food Emporium, which was also impacted by years-long construction of a new subway line, has been shuttered since 2013.
n December 2014, Food Emporium closed another store at Madison Avenue and East 87th Street, a few blocks away from the new Whole Foods and the Fairway. That former Food Emporium has since reopened as a Morton Williams supermarket, a family-owned chain with about a dozen stores in the New York City area.
The newest NYC Whole Foods store is about a five-minute walk from the last remaining Food Emporium in the neighborhood, at East 82nd Street and 3rd Avenue. A spokeswoman for A&P could not be reached for comment on the potential impact of Whole Foods on that location.
Meanwhile the East 86th Street Fairway has stepped up its price messaging — handing out coupons for $5 off an order of $50 — and has revamped interior signage with “Big Deal Basics” messaging, emphasizing price and assortment.
Wolf of BB&T said he expects that while the Fairway will see revenues decline, it will still remain profitable.
“The bigger problem they have is with volume and execution when they go out to the suburbs,” he said, citing the sharply priced ShopRite chain as a particularly strong competitor in New Jersey. “I expect their urban stores will be fine.”
Fairway, a 15-store chain that has grown rapidly in the last several years, also goes head-to-head against Whole Foods in other New York City locations, including a high-volume store in Brooklyn’s Red Hook area that competes with a sprawling Whole Foods that opened nearby in late 2013.
Jack Murphy, CEO of Fairway, recently said in an earnings call with analysts that sales at the Red Hook store fell between 15% and 17% following the opening of the Whole Foods, but a year later Fairway is seeing “very significant improvement” in volumes.
He said he expects a similar impact on the East 86th Street Fairway store.