Dive Brief:

• Supervalu will open a 46,000 square foot Cub Foods store in Minneapolis in the spring of 2019, according to a company release. Typical Cub stores are about 78,000 square feet. 
• The store will anchor a 148-unit apartment development by Oppidan Investment Co. and be located on a heavily traveled commuter route in the Longfellow neighborhood.
• The store will include a large deli area with its Quick & Easy meal line, a popcorn shop with a theater feel, a produce section with a farmer’s market layout, enhanced floral and gift space, and a pharmacy. The chain is planning multiple entrances and indoor cafe-style spaces, an outdoor seating area with bicycle parking as well as a walk-up window serving coffees, ice cream and cookie sandwiches from its Refresh! bar.

Dive Insight:

Despite activist investor Blackwells Capital's call for it to drastically change course, Supervalu is still soldiering ahead in hopes of improving its retail business. 

Along with recent remodeling efforts in its Cub banner, the retailer-wholesaler's urban-concept store represents a push to differentiate stores and appeal to higher-income consumers. The Minneapolis pilot will be roughly 40% smaller than its typical footprint, and contain all the prepared foods and service stations that young, moneyed consumers desire these days. It will have a dedicated customer base from the apartments and the many people commuting to and from downtown by car or bicycle who will pass by. 

It's a new look for Cub Foods. But unfortunately for Supervalu, it probably won't stand out against the competition. Target, which is gaining grocery share in the Twin Cities market, plans to remodel 28 stores in the region this year with an eye towards fresh and prepared foods, among other touches. Hy-Vee, which recently moved to the neighborhood, is also updating its stores. ​

Nationwide, chains are looking to smaller stores with more precisely targeted merchandising, improved in-store experience and online ordering with either curbside pickup or home delivery. Publix is planning a 30,000 square foot store in a highly residential neighborhood, and a focus on online with curbside pickup and delivery. Just this week, MiBiz reported that Meijer’s 39,000 square foot Bridge Street Market under construction just west of downtown Grand Rapids will serve as a “proof of concept” for future expansion of the smaller urban grocery stores. Meijer is building another 42,300 square foot store in Detroit in a mixed-use environment somewhat like the new Cub store. 

Meanwhile, Kroger closed its 27,000 square foot Main & Vine store in Cincinnati late last year, but it has a “significant” investment in Lucky’s Market which operates natural and organic stores in the 20,000 square foot range, and is set to open in Cleveland this year in a neighborhood very much like the new Cub Foods'.

Are smaller stores the future for supermarkets? It's looking increasingly likely. With more consumers looking to grocers for meal stops and quick fill-in trips, curated assortments will likely trump vast aisles of products. Grocers also like the lower costs and site flexibility that comes with a smaller box.

Since competitors have beat Supervalu to the punch, it's hard to imagine significant expansion for the company under this new concept. But it will likely gain valuable insights that may just help inform its retail business along with its much healthier wholesale division.