Monday, February 11, 2013
Swann convinced new store will fly
Reposted from Asheville Citizen-Times | by John Boyle
With Trader Joe's, Whole Foods and Harris Teeter joining a town already chock full of organic and high-end groceries, some entrepreneurs might be a tad reluctant to open yet another store.
Not John Swann.
Swann, 61, plans to drop some $2 million to open a high-end grocery focused on local and prepared foods into an 11,200-square-foot space in Biltmore Village. He plans to have Katuah Market - the name stems from the Cherokee word for their mountain lands - open by late summer in the former Interiors Marketplace space at 2 Hendersonville Road.
"In Asheville, from the retail side, there's not many people developing stores like this anymore," Swann said this week, standing in what is now a cavernous empty space next to Ichiban Japanese restaurant.
"It's an expensive proposition, they're big projects and it's hard to get in the game these days because there is so much competition," he said. "And in this town, there's incredible competition for real estate. Just trying to find a box this size with this many parking places, it's real hard to find."
People who know Swann, who with a partner opened the GreenLife store in north Asheville in 2004, say he probably has more experience and know-how in the natural food market than just about anyone around.
"The food business is a really tough business, but John is smart and savvy and he's shown success in everything he's done," said Charlie Jackson, executive director of the of the Appalachian Sustainable Agriculture Project. "If anybody can do it, John Swann is the guy."
Swann is a past president of the organization's board and currently serves on it.
Local is king
Asheville certainly has a population obsessed with local, organic food.
ASAP's research shows Western North Carolina residents in 2011 spent an estimated $1.5 billion on groceries, including more than $100 million on "Appalachian Grown" food, which is a program to brand locally grown food.
That popularity was evident Friday in the GreenLife parking lot, which teemed with vehicles jostling for spots and shoppers heading to and from the store.
"The mentality and energy of this city is very focused on local," said McKenzie Ortego, who works in prepared foods at the store, which is now owned by Whole Foods.
She moved here from Baton Rouge, La., three months ago and said GreenLife "does local better than anybody I've ever seen."
From the parking lot, the grading work at Trader Joe's is visible. Beyond that, on the other side of Chestnut Street, Harris Teeter's facade was getting a layer of bricks.
While Ortego is partial to GreenLife, she thinks Swann's store could work, partly because it's in a good location in a town literally hungry for food grown nearby. "You don't know unless you try," she said. "People love local."
GreenLife shopper Doug Jones, a Burnsville resident, said he thinks more stores can be viable, and it will help keep prices down. "There's always room for competition," he said.
Long career in groceries
Swann knows well what an obsession local food is.
Some were skeptical back in 2004 when he and a partner opened the GreenLife store off Merrimon Avenue, saying it couldn't compete with Earth Fare, across the French Broad River in Westgate Shopping Center.
But GreenLife thrived from the start, and Swann and his partner sold it three years ago to Whole Foods, the biggest national player in the organic markets industry. By then, the store had become a north Asheville powerhouse, employing 175 staffers and carving out a niche for local and prepared foods.
Before the GreenLife venture, Swann spent seven years working for Earth Fare, the Asheville-based organic supermarket chain that is now pushing 30 store locations in the South. He started as the grocery manager at the Westgate store, moved into the corporate office where he worked on opening five new stores and finished up in purchasing.
An Asheville resident since 1989, Swann has also run a tofu company and an import company that distributed Japanese food products nationwide. He also worked for Mountain Food Products, which distributes produce and other foods.
After selling GreenLife, Swann took a little time off, but he still had the itch to be in the grocery game. He started John Swann Consulting, working on multiple small grocery projects and one large new store in California.
e's also spent two years formulating the business plan for Katuah and scouting locations.
While he's well-versed on local grocery demographics, Swann did not commission a market study before taking the plunge. The $2 million is coming partly from equity derived from the GreenLife sale, partly from a bank loan.
"I'm kind of mostly trusting my 20 years experience in this town, and most of that in retail in this town, to know what the niches are and what the opportunities are," Swann said. "It was more of a demographic analysis of the city and the competition."
Besides a strong emphasis on local, Swann also is going heavy on prepared food and a cafe. Inside, Katuah will have 120 seats for dining and another 35-40 outside.
Tapping into 'mega-trends'
All the competition is great for consumers, because it will make pricing more competitive, said Roger L. Beahm, professor of marketing at the Schools of Business at Wake Forest University.
"It can, however, become very challenging for certain competitors who are not able to differentiate themselves in that sea of competition," said Beahm, who is also executive director of the Center for Retail Innovation at Wake Forest.
"The key for any company to compete in a market is to differentiate themselves and have points of difference in their offerings. That's really key to consumers."
Beahm said grocery retailers are wise to tap into retail "mega-trends" that will continue over the next 10 years nationwide. "One is the increased interest in health and well-being, so stores that promote themselves and offer products that meet those emerging trends are going to do well," he said. "Stores like Whole Foods are going to ride that growth and be successful."
The heavy emphasis on locally sourced foods likely will give Swann and Katuah a leg up on competition.
"That's a true, unique point of difference and something that truly seems to be meaningful," Beahm said. "It's says, 'We're familiar. We don't want to appeal just to the head; we also want to appeal to the heart.' His positioning seems to capture the head and the heart."
Many Americans are also concerned with sustainability, and locally produced foods greatly reduce the carbon footprint of production. That's important to a lot of shoppers.
The 12,000 farmers in the state's 23 westernmost counties grow 42 types of fresh fruits and vegetables, and in 2011 WNC residents spent $382 million on this produce, according to research done by the Sustainable Agriculture Project.
In a consumer survey, the organization found the percentage of WNC residents saying local food sourcing played a key role in where they eat or shop stood at 76 percent.
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