Downtown Vancouver’s Block 10: The Grocery Gap

“There’s enough demand for a grocery store to be downtown right now, no doubt about it,” Cain said.

But he’s going to need more time than originally planned. Last year, he assured the city council he’d have a lease signed by May 2019. That’s looking unlikely, he said last week.

“The time frame with the city, it’s been a little slower getting through the process,” Cain said. “Hopefully we’ll get something going and have something announced this year.”

Meanwhile, city leaders are starting to wonder whether they might want to hedge their bets. At a city council retreat earlier this month, councilors discussed other options for the development of Block 10, including some that would not include a grocer.

Portland has more than a dozen grocery stores downtown, including a smattering of New Seasons Markets, a handful of Fred Meyers and a few Safeways. And while Vancouver might have a smaller population, it’s certainly larger than one-twelfth the size. It begs the question: why is this so hard here?

No room for error

As it happens, the city is hitting the gas on trying to get a grocery store at the exact same time that most major grocers are starting to pump the brakes. The food retail industry certainly looks different than it did when the city council decided in 2007 that the downtown area needed a full-service grocer.

“We wanted a grocery store to bring in all that commercial activity and serve all the residents and all the employees. But that was 12 years ago, and I think grocery stores are changing,” McEnerny-Ogle said.

Chad Eiken, director of community economic development, said the business model could be moving toward grocery delivery in lieu of the traditional cart-and-aisle shopping experience. Think Amazon-esque warehouses located on cheaper land just outside city limits, with droves of grocery delivery drivers.

Some local grocery locations like Fred Meyer, Safeway and Walmart already offer home grocery delivery for a fee.

“Amazon bought Whole Foods, and that’s kind of turned the industry upside-down,” Eiken said.

FMI, a food retail research and lobbying group, reported in its most recent annual “U.S. Grocery Shopper Trends” that millennials, especially those with children, expect that they will shop online more.

Downloads of grocery store smartphone apps are up by 50 percent since 2017, FMI reports, and grocery store apps are expected to be among the fastest-growing categories of apps this year.

“We realized how pervasive technology is in the relationship between shoppers and their grocery purchases,” an FMI release stated. “Depending on how you ask the question, about one-third of shoppers have purchased groceries online.”

As the dust settles, grocers are trying to figure out their most profitable model. Cain said the usual grocery store players have been sitting on the sidelines.

“There hasn’t been as much grocery development in the market as there normally would be,” Cain said.

All about the density

With such an uncertain future for the industry, retailers are reluctant to take any risks on a traditional store location. Downtown property is expensive. Parking spaces are at a premium. And Eiken said some grocers continue to be concerned about Vancouver’s density.

“They (Gramor) have been talking to all the big names, and what they’re hearing is that the numbers still don’t work well,” Eiken said.

It’s counterintuitive. The construction business is booming. Approximately 5,200 new housing units are in the works, McEnerny-Ogle said, including those going up on the waterfront.

But “in the works” may not be good enough for grocers working on thin margins and specific density formulas.

“They don’t want to just hear about (new units), they want to actually see them before they bring things in. I think they are very conservative in that manner,” McEnerny-Ogle said.

Downtown Vancouver is a weird shape, too. Grocers would typically draw a circle around a proposed store location to measure density, but in Vancouver, it’s a semicircle. The Columbia River forms a hard boundary and makes it so that the population in the northern half of the circle needs to be that much denser to make up for it, Eiken said.

Still, Cain said he’s convinced that there’s enough people to support a grocer in downtown — over 35 years, his company has helped bring in more than two dozen to different communities.

“I think there’s plenty of people. The only holdup these days with grocery stores is the change that’s been going on in the grocery industry, and existing grocers trying to determine where they’re going to be in the future,” Cain said.

And while the companies might exercise caution in the changing environment, upheaval in the grocery business isn’t anything new, Cain said. The holdup doesn’t exactly spell the end for the grocery business.

“When we first started, Safeway and Albertsons were putting mom and pop out of business,” Cain said.

When Walmart got into the grocery market, it catapulted to one of the top-selling grocers in the country, he continued. That also turned the industry upside-down. The recent swerve toward grocery delivery is just the latest in a long line of changes, and while the upheaval can be rough, it ultimately pays off.

“The business continues to change, and people in this country really get the benefits of these changes. Because these companies keep trying to put each other out of business, working on 2 to 3 percent margins,” Cain said.

What if it doesn’t work?

Cain remains confident he can bring in a grocer, despite the delay on the project. Block 10’s proximity to the waterfront also means that a grocery store could help support further development along the city’s most profitable property.

But city leaders are acknowledging that they may need to compromise on size in order to coax a grocery store into the downtown area. Since the initial 30,000-square-foot proposal, they’re starting to consider what a 15,000-square-foot grocer might offer.

(For comparison’s sake, the Safeway store at Southeast Mill Plain Boulevard and 136th Avenue is around 68,000 square feet. The Trader Joe’s at Southeast Chkalov Drive and Mill Plain Boulevard is about 12,000 square feet.)

Push come to shove, they’re also willing to move forward on a deal that would add value to an acre in the heart of downtown that’s sat vacant for more than 25 years — with or without a grocer.

“Council wants the block developed as soon as possible. I don’t believe the council is willing to continue waiting. At the retreat, the council said we should consider other options,” McEnerny-Ogle wrote in a message to The Columbian. But council would “continue to look for ways the City can incentivize grocery services downtown,” she wrote.

What might that look like?

One option, broached by McEnerny-Ogle at the recent city council retreat, is to just beef up C-Tran routes that run from the downtown area to nearby grocery stores.

“Maybe what we do is work on transit,” she said. “So we have more of a circulator that goes to the grocery store, instead of bringing the grocery store to us.”

Another option is to start looking at other vacant lots downtown. Eiken declined to speculate on the record where those locations might be.

We should know by Thanksgiving of this year what the future of Block 10 holds, McEnerny-Ogle said.

“I don’t think we have enough information yet. It’s still our hope that the Gramor Development will come through. If it doesn’t, we’ll have to sit down and have that conversation about what we can realistically do,” McEnerny-Ogle said.