Why Connecticut remains an attractive destination to attract new retailers

Plans for up to three Amazon Fresh stores and the state’s first Wegmans are signs Connecticut remains an attractive destination for regional and national retailers, say industry experts and economists.

Though some of Connecticut’s malls are experiencing noticeable vacancy rates and scrambling to redesign amid the pandemic, “there are still a number of retailers looking at Connecticut’s retail landscape and whether they want to be here,” said Tim Phelan, president of the Connecticut Retail Merchants Association, a New Haven-based retail group.

Phelan said non-disclosure agreements prohibit him from naming specific companies that are eyeing Connecticut locations.

Burt Flickinger, chief executive of New York City-based Strategic Resource Group, said the COVID-19 pandemic has kept Connecticut retailers’ expansion plans in check.

“As COVID appears to be cleaning up again, they will begin to re-examine the landscape,” Flickinger said.

But any suggestion that Connecticut is “facing a retail apocalypse just isn’t true,” Phelan said. A variety of factors are helping the state remain an attractive location for new retailers, he said.

“The state remains a place where we have slightly higher-income consumers,” he said. “And we do a better job of making our cities more attractive places for people to be. Retailers go where people go.”

Even in malls and retail centers that are struggling to reinvent themselves, there is a silver lining, according to Phelan.

Shopping centers here are constantly trying to stay fresh, so there’s a lot of innovation happening, there’s a lot of thinking outside the box,” he said. “The trade takes note of that.”

An example of this type of innovation could take place in Meriden.

The retail hub has lost three of its anchors — Sears, Macy’s, and JCPenney — since the middle of the last decade. The latest major national retailer to leave was Best Buy, which closed there in October 2021.

But Meriden Mall’s future prospects may be taking a turn for the better.

Yale-New Haven health officials announced last October that they were buying the former Macy’s premises for a “comprehensive outpatient center.” Renovation of the two-story, 179,285 square foot retail space is expected to be complete in late 2023 or early 2024.

And next to the Meriden Mall, the grocery discounter Aldi is moving into the former Savers thrift store at 495 Chamberlain Highway. The store, which is expected to increase consumer traffic to the mall, is slated to open in late March.

Wayne Pesce, president of the Connecticut Food Association, said for supermarket operators considering expansion, the state as a place to do business is “not for the faint of heart.”

“There’s been some real turbulence: It’s getting harder and harder to get and keep workers here,” Pesce said. “And I believe that we are a state that is superimposed.”

Still, he acknowledged that some supermarket chains often talk about grocery chains opening new stores in Connecticut.

One of them is Lidl, the German discount grocery chain that is said to be a rival to Aldi, which has 20 stores in Connecticut. That’s about as many New York locations as Lidl has on Long Island alone.

Pesce said if Lidl is to enter the Connecticut market, it will buy existing chain stores in the market. He said that’s how Lidl moved to New York, buying 24 Best Market locations on Long Island and three in New Jersey in January 2019.

“I know they’re building sites from the ground up in places where the population is growing,” Pesce said. But Connecticut’s population growth over the past decade has only increased slightly, which he says would likely preclude the chain from building new stores in the state.

This week Wegmans announced it would be opening its first Connecticut location with a 95,000-square-foot store in Norwalk.

Another factor favoring Connecticut in terms of future supermarket expansion is what Donald Klepper-Smith, an economist at DataCore Partners, calls “economies of scale.”

Connecticut’s location between Boston and New York City means retailers doing business in the state benefit from easy access to products and merchandise, Klepper-Smith said.

“The food sector is very much about economies of scale,” he said. “If you’re talking about the ability to move more goods, you can buy more in bulk, which allows you to sell cheaper and get bigger margins.”

Another grocery chain Connecticut has targeted is Food Emporium, a subsidiary of the Key Food Stores Cooperative, which is based in Staten Island, NY. Plans call for a Food Emporium to be built near downtown Brookfield, although construction on the store hasn’t started yet.

Food Emporium previously had several supermarkets in Fairfield County when it was owned by the now-defunct supermarket chain A&P. Before A&P went out of business in 2015, Key Food Stores acquired the Food Emporium brand name.

Pesca said he doesn’t expect the new edition of Food Emporium to open multiple stores in Connecticut.

“I don’t see it as a big game,” said Pesce. “Considering where the store will be, they’re probably trying to capitalize on the brand awareness that Food Emporium had in the New York City area.”

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