As Cincinnati continues to wait for a grocery store in the Central Business District, Cleveland turned its dream of a downtown market into reality last year.
Heinen’s Fine Foods saw it as an investment in the future of downtown Cleveland. Making a profit was secondary — and is still hypothetical.
“The conventional wisdom is that you need 20,000 people living in an area to support a grocery store,” owner Jeff Heinen says. Downtown Cleveland’s population was around 13,000 when Heinen started and is around 14,000 now, but “we saw this as a chance to continue the momentum and the growth of residential living in the core downtown that had never really happened to a significant extent at all.
“We understood it was a chicken and egg situation,” he says. “People didn’t want to move downtown because there wasn’t a viable downtown grocery, and no grocery wanted to go downtown because there weren’t enough people.”
Heinen’s opened the 27,000-square-foot store in a beautiful former bank building at the corner of Cleveland’s East Ninth Street and Euclid Avenue in February 2015. That’s about half the size of its standard suburban stores, with the added complexity of the square footage being split among multiple levels.
When you enter the rotunda, you’re greeted by lots of ready-to-eat options and deli cases. Look up, and you’ll see the second floor’s wine and beer emporium under a beautiful stained-glass dome, thought to have been created by Louis Tiffany or one of his students. Head down a ramp or some steps and you’ll enter the heart of the supermarket — its aisles of dry goods, frozen foods and produce are condensed for the urban environment.
“As cities and urban areas become more attractive areas for people to live, the retail follows,” says Jon Springer, retail editor at Supermarket News. “What you see in Cleveland is grocery stores that are trying to find a way to serve a denser population.”
It’s often a matter of location, Springer says.
“When the population is right, it’s time to try it. With trends suggesting society is becoming increasingly urban, that’s gotten the supermarkets’ attention,” Springer said, especially in the past three to four years, with small urban grocery concepts such as Kroger’s Main and Vine and Ahold’s bfresh popping up.
Founded in 1929 in Cleveland suburb Shaker Heights by German immigrant Joseph H. Heinen, Heinen’s Fine Foods now has grocery stores in Northeast Ohio and suburban Chicago and is run by twin grandsons Jeff and Tom Heinen. The downtown Heinen’s occupies the old Cleveland Trust Building, a majestic structure finished in 1908 and designed by George Browne Post, who also designed the New York Stock Exchange. The rotunda had been shuttered since Ameritrust closed in the early 1990s.
The Geis Cos. redeveloped a good part of the entire block, creating a new hotel and apartments, and the retail space Heinen’s now occupies, which alone cost more than $10 million to renovate. Heinen tells the 80 associates who work in the downtown store, “I don't know how you could be in a bad mood working here — you should be smiling. It’s a one-of-a-kind building.”
But wedging a grocery store in a tighter urban space isn’t easy — traditional store layouts must be adapted, parking comes at a premium, and tough choices have to be made about what product to stock. Where a suburban store is often more than 50,000 square feet, an urban store can be 20,000 square feet or smaller.
A large percentage of downtown shoppers are walk-ins, Springer says, so a grocery might serve a larger lunch crowd and sell a smaller variety of items in smaller packages.
“They’re all trying to concentrate the trends you’re seeing in food in these stores,” he said. “They’re a little bit smaller and more sharply focused on the hot food trends and ways to appeal to the specific audience for those stores,” whether it’s people who live in that building, or daytime office workers or people in surrounding neighborhoods.
That’s exactly what Heinen’s is working with. Housing in the downtown Cleveland area is primarily targeted at professional singles and couples aged 25 to 35, people who don’t necessarily cook a lot. The downtown store is selling a lot of prepared foods, and the bottle shop is doing well.
Real estate and labor will also tend to be more expensive in the heart of the city, so you have to get the financial side right, Springer says.
Heinen’s has made its bet on downtown, though.
“We’re going to struggle through a few years of losses, but that’s kind of Heinen’s paying back to Cleveland,” Heinen says. The company is in it for the long haul — there’s a 15-year lease and Heinen’s plans to ride it out.
“We hope to make some money there, absolutely, but as an economic investment, this makes no sense,” he says.
Being able to think long-term is a big benefit to being a privately held company.
“The health of Cleveland is important to us as a company. All that payback is long term and not necessarily quantifiable, but we believe we’ll be there. We’ll feel good that we saved a landmark and did something that was the right thing for Cleveland.”
WCPO contributor Grace Dobush writes about tech, design and innovation. Follow her on Twitter at @gracedobushtogo.