Dive Brief:

• Wegmans should accelerate its southerly store expansion along the East Coast, grocery analyst Burt P. Flickinger III said in an interview with the Rochester Democrat & Chronicle. The New York-based grocer has four sites planned in North Carolina, with additional stores going up in Virginia, Pennsylvania and New Jersey.
• According to Flickinger, Wegmans’ execution has helped it beat Whole Foods in markets where the two compete, while its many products and services help it stand out against discounters like Lidl.
• A Wegmans spokesperson, however, told the newspaper “we are not changing course” because of the Amazon-Whole Foods announcement.

Dive Insight:

Wegmans, a customer favorite and one of the most respected grocers in the industry, has not expanded quickly in its more than 100 years in business. It has taken a measured, careful approach to locating, building and operating each of its 92 stores. In return, the grocer enjoys tremendous loyalty and sales volume. Last year, the privately held company saw its sales hit $8.3 billion — a 5% increase over the previous year, according to the Democrat & Chronicle.

So the suggestion that Wegmans should speed up its growth goes against a process that has worked very well for the company. But does the opportunity warrant a change of pace?

The Mid-Atlantic region, where much of Wegmans’ growth is happening, presents attractive demographic and real estate opportunities. It’s also home to several underperforming conventional grocers. But it’s also one of the most crowded grocery markets in the country, with store growth in regions like Virginia Beach far outpacing population growth.

With its top-notch execution, store services and operational efficiency, Wegmans has many advantages over traditional grocers. Crucially, it’s also differentiated from newcomer Lidl, as well as Aldi and Walmart. Shoppers can save money with these three retailers, but for a great experience, they’ll go to Wegmans.

At the same time, Wegmans can’t afford to rest on its laurels. It needs to make sure it’s putting its stores in the right places, hiring the right employees, and filling its shelves with the most profitable merchandise mix. The company is renowned for its local sourcing efforts.

In a recent interview with Food Dive, Fred Broadwell, head of Local Organic Y’All, a North Carolina organization that advocates for local and sustainable agriculture, said Wegmans has been working with small farmers throughout the state months ahead of its store openings. That kind of work takes time, and will likely pay off as Wegmans tries to extend its appeal into a difficult part of the country.