Independent Grocers Navigate Crowded San Diego Market
San Diego, the second-largest city in California, is known as a mecca for surfers and sun worshippers, but it also has a fiercely competitive grocery market, one that must cater to tourists and locals alike.
While Albertsons, along with its Vons banner, and Kroger’s Ralphs are the three dominant SoCal players, specialty grocers like Trader Joe’s, Whole Foods Market and Sprouts Farmers Market also have secure footholds. Additionally, San Diego County has several thriving independent grocery operators.
Progressive Grocer recently visited three that had previously been recognized as PG Outstanding Independents: Gelson’s, Barons Market and Cardiff Seaside Market. Like every locale, San Diego has become known for certain things. Craft beer is one.
More Local Specialties: Tri-Tip & Poké
Another local specialty is the tri-tip, a triangular cut of beef from the bottom sirloin subprimal cut. Both Gelson’s and Cardiff Seaside Market offer versions of the popular item.
At Cardiff Seaside Market, the Burgundy Pepper Tri-Tip has become known as “Cardiff Crack,” and is shipped nationwide. The USDA Choice tri-tip, trimmed, marinated and infused with a one-of-a-kind burgundy pepper marinade, is one of the store’s best sellers.
“The tri-tip is featured at Petco Park, all over the place; we ship it all over the country,” says John Najjar, co-owner of the Cardiff-by-the-Sea, Calif.-based grocer. “People within a 100-mile radius know our product, and we ship it everywhere.”
Poké is also extremely popular. Both Cardiff Seaside Market and Gelson’s feature poké bars. For Gelson’s Carlsbad location, the poké station has grown exponentially in the past few years: It was originally four sections, but has grown to 12 sections, with two kinds of rice.
“If you like poké at all, it’s amazing,” says John Bagan, CMO at Encino, Calif.-based Gelson’s. “Poké’s just been the gift that keeps on giving.”
“The U.S. has five major craft-brewing regions,” notes John Bagan, CMO for Encino, Calif.-based Gelson’s, which operates three stores in the San Diego area and 23 more in the greater Los Angeles area. “San Diego, by itself, is one of them. So we carry a lot of local brews and feature them in the bar.”
Gelson’s regularly features Tap Takeovers with local breweries, in which the local brewer commandeers the bar. Customers buy $35 tickets to sample the brewer’s selections, paired with items from the store’s prepared food department.
“We’ll take some of our steaks that we sell in our butcher shop, we’ll cook them up, and we’ll serve them as part of the event,” says Carlsbad Assistant Store Director Ted Franklin. “It gives you the ability to try the local beers, but also try our food and product that we sell here.”
The stores also have a similar program with local wineries selling $50 tickets for a pairing session. “We’ve sold out every event” of this kind, adds Franklin.
Barons Market, which operates seven stores in the region, with two more opening this year, also does a brisk business in craft beer.
“Our craft beer section is massive because San Diego is a craft beer town,” notes Rachel Shemirani, VP of marketing for Poway, Calif.-based Barons Market. “We carry mostly local craft beers, which was the inspiration for our Back Room Pairings.”
Several times a year, the stores host charity events with local craft breweries in the back room of the store or on the loading dock, in which customers purchase tickets to try the local breweries’ products, along with Barons’ food options. All proceeds go to support a select charity, and all stores host a given event at the same time.
Cardiff Seaside Market
The San Diego area’s beach-town vibe is felt most strongly at Cardiff Seaside Market. Like its name implies, the 18,000-square-foot single store, owned by John Najjar and his brother, Pete, is right on the beach. Its décor reflects that geography, with surfboards lining one wall to help tell the story of the town. The location also poses some problems, however.
“Where we’re at is a challenge,” John Najjar notes. “When you’re on the ocean, there’s only the road, and then there’s the ocean. There’s no people that live on the ocean.”
While Cardiff Seaside Market may not be in the actual center of things, it can be the center of its community, and for that reason, Najjar sees being a single location as a big bonus.
“It’s one thing to say you’re going to do stuff for the community, but when you live in the community, you’re connected differently,” he explains. “Having one store is an advantage. We see our neighbors, we actually go to the events. It’s a whole different experience, and when people connect with the proprietors, they always feel like they know where their money is going.”
“The big deal here is local fruit,” Najjar says. “Local strawberries are grown within a 5-mile radius of my store. They don’t travel well, but they pick them today, and the strawberries are in my store the same day or the next. We’re known for our fresh food and connecting with the community.”
When in season, the strawberries are positioned right by the entrance. “You can smell the strawberries when you’re coming in,” notes Michelle Tubon, Cardiff Seaside Market’s controller. “That’s not by accident.”
The store emphasizes local whenever possible, and while local in the San Diego area is defined by about a 20-mile radius, or within San Diego County, Najjar notes that his customers define the term more as within a 5-mile radius and prefer “local” to mean their own neighborhood.
He also finds success by fostering local producers and manufacturers. For instance, Kashi cereal was first introduced in his store. “We’re very supportive of the entrepreneurial person bringing product to market,” Najjar affirms. “We help them along.”
Gelson’s Carlsbad location is unique in that it’s significantly bigger than the grocer’s typical markets, at about 38,500 square feet —10,000 square feet larger than average. However, this space has allowed the location to put in a 900-square-foot bar that seats 27, a separate seating area for the prepared food department — alcohol can’t be served outside of the bar — and a produce butcher who has a dedicated space within the produce department to cut fruit in view of customers.
The bar has proved successful, regularly ranking as the top-grossing bar in the company. In addition to the popular Tap Takeovers, the space is regularly rented out by a local retirement center for its residents to have a night out in the store. Two to three bartenders are needed to keep up with demand. “It gets crazy back there,” Bagan acknowledges.
“We have a really good connection with them,” Franklin says of the seniors. “We do offer [a local senior development] discounts, so when they do come in and shop, they get an organizational discount.”
The store also benefits from its location next to a large tourist resort that has kitchenettes, so visitors often shop the store to purchase groceries, and also come to the bar for cheaper libations than they can get at the resort.
“What’s great about us being this close to the beach [is] we have year-round beach weather with lots of tourists, and we get so many different types of shoppers,” Franklin observes. “They come and stock up. It’s the convenience to be able to fill up their hotel room, be able to pick up beach gear, go straight down to the beach, get some sandwiches, get some food and enjoy the beach weather, and really make their vacation a little easier and more comfortable for them.”
Adjacent to the bar, which is right within the entrance, is the prepared food department, which includes a carving station with turkey, prime rib and the aforementioned tri-tip. Every store has in-store chefs preparing the food on site. Gelson’s also has a relationship with celebrity chef Wolfgang Puck for signature sandwiches and salads, as well as pizza.
To help draw customers into the center store aisles, Gelson’s has introduced curation zones, which range from end caps to 12-foot sections within the aisle. The products highlighted range from coffee to olives to pasta to general merchandise. For example, the coffee curation zone has bulk coffee with a grinder, bagged coffee and coffee brewers — everything you need to make a great cup of joe.
Local is also a big emphasis for the store, with every department featuring at least two local items, which are called out on the shelf tags. Further, Carlsbad water is extremely popular, and the store is a good source for consumers. “The San Diego stores have more local assortment than the rest of the chain,” Bagan notes. “It’s hyper-local down here.”
Echoing Cardiff Seaside Market’s Najjar, Franklin adds that for much of California, “local” means the state, while in San Diego, it means San Diego.
“We really try to be more than a grocery store,” Bagan says. “What we say is, if you really value product quality, customer service, the experience, then we want to be at the center of your food life. Whether it’s great greens you take home to make a meal at home, or picking up something prepared to take to a party, or dining in with our Sip and Shop, whatever it is, we want Gelson’s to be the first place you think of when you think of food.”
Barons Market’s seventh location — two more are slated to open this year — is a departure from the suburban stores it has traditionally operated.
“This is our first urban market,” Shemirani says. “Our concept and who we are is really perfect for this neighborhood. This area is very Millennial-heavy, and people love to buy local. We sell a lot of local products. We support the community, and the Millennial generation loves knowing that their dollars go towards another cause.”
At 14,000 square feet, the North Park store is the smallest of Barons Market’s locations, but the carefully curated product line of about 9,000 SKUs fits the neighborhood. “Smaller square footage is where it’s at,” Shemirani adds. “People don’t have time to shop up and down the aisles. Our shoppers shop with us three to five times a week, sometimes three times a day.”
To keep the product selection in line with customer demands, Barons Market has weekly food panel meetings to taste 80 to 100 new products at a time. About five new products are typically chosen, which then means 10 items need to be discontinued.
For the North Park store, which is in a trendy neighborhood, the product selection becomes even more important.
“While we’re not going to follow every trend, we’re going to follow the trends that make sense for us and make sure the pricing is there, make sure the quality is there,” Shemirani says. For example, gluten-free isn’t such a big deal anymore, but sugar-free is, as is high protein for those following a Keto diet.
Most importantly, though, products have to be high-quality, priced right and preferably local. “Because [San Diego] is so competitive, you have to make sure your pricing is right,” she notes. “Get fresh meat from the local farmer, get their whole crop — that’s what we do, and make sure it’s the best price and very fresh, good quality. We’ve been known to turn around trucks of produce because the quality wasn’t there. I think, in Southern California, people do their research.”
The other key element in Barons Market’s success is its people.
“We’re not in the food business, we’re in the people business,” Shemirani emphasizes. “It’s making sure employees are happy, our customers are happy, and then offering the cool experience.”
To facilitate employee happiness, Barons has a lead program to help make sure that employees are always growing in their careers. “It’s a set program, and the manager’s sole purpose is to grow that person,” she says. “That’s what we’re here for: We’re a garden that grows people, because bench strength is a hard thing for any company.”