March 11, 2010

Local fans of Trader Joe's may finally get their wish

The popular grocer is awaiting FTC approval to buy a Wild Oats store that Whole Foods closed.

By Matt Wickenheiser mwickenheiser@mainetoday.com
Staff Writer

PORTLAND — For years, there have been hints and wishful thinking about the possibility of Trader Joe's opening a store in the city.

click image to enlarge

Trader Joe’s is awaiting approval to buy the former Wild Oats store on Marginal Way in Portland. The grocer has some enthusiastic followers in Maine.

2005 Press Herald file

Now there's confirmation that the grocery chain that features exotic foods and moderate prices is seriously looking at Portland.

According to documents filed with the Federal Trade Commission, Trader Joe's has made an offer to buy the closed Wild Oats store on Marginal Way.

"We are interested in that location," said Alison Mochizuki, director of publicity for California-based Trader Joe's. "Beyond that, I don't have anything to confirm."

It would be the first Trader Joe's in Maine; the next closest is in Massachusetts.

If it happens, the deal will have been brought about because of anti-monopoly regulations.

Whole Foods Market Inc. bought Wild Oats Market Inc. in 2007. The FTC challenged the $565 million deal, arguing that it would create a natural-food monopoly.

As part of the settlement it reached last year with the FTC, Whole Foods agreed to sell 13 of its stores, and to sell the leases and assets of the 19 Wild Oats stores it had closed, including the one in Portland. Whole Foods closed the nearby Wild Oats Market soon after it opened its Portland store in 2007.

A third-party trustee appointed by the FTC has found buyers for several closed Wild Oats stores. According to FTC documents, the trustee has completed negotiations with buyers that made good-faith offers for the stores before Sept. 8, 2009. The trustee has recommended that commissioners allow Trader Joe's to buy the former Wild Oats store in Portland.

"Requiring Whole Foods to divest of the Portland, Maine, store would increase competition in the marketplace," the documents said.

The FTC opened a 30-day public comment period Monday. At the end of the 30 days, it will evaluate the comments and decide whether to require the divestiture and allow the sale to go through.

Trader Joe's would pay the sale price to the trustee, who would take a percentage as a fee and give the rest to Whole Foods, as in a normal business sale.

The closed Wild Oats store and the Whole Foods grocery are both in the Bayside neighborhood, less than one-third of a mile from each other.

Whole Foods Regional Vice President Kim St. Paul noted Wednesday that the sale still has to go through the public comment period, then face a vote by FTC commissioners.

And if it does go through?

"We feel like competition is a good thing," St. Paul said. "It's good for us, it's good for our customers, it makes us better."

Mark Hamstra, retail editor with Supermarket News, said Trader Joe's has a pattern of setting up shop near Whole Foods markets.

Whole Foods is known for its fresh, organic, natural products, he said, while Trader Joe's is known for its "shelf stable" organic, natural products, such as sauces and pastas.

"They've kind of had a bit of a symbiotic relationship," Hamstra said. "It's been a good strategy for Trader Joe's."

David Livingston, a Wisconsin-based grocery industry analyst, said the two chains have different store formats. Whole Foods concentrates on fresh offerings. Trader Joe's is more of a "treasure-hunt store," where customers find odd items and bargains, he said.

Trader Joe's, he said, does the highest sales per square foot of any grocer in the country. Its markets tend to be small, and do an average of $300,000 in sales per week.

Dan McGovern, publisher of Portland-based Sustainable Food News, said a Trader Joe's in the city would give consumers another option for grocery shopping.

"It's way overdue. It's been a desert here for natural organic foods," he said.

A Trader Joe's in Portland could prompt other grocers, such as Hannaford and Shaw's, to further expand their natural-food sections, he said.

The vacant Wild Oats store has detracted from the rapidly evolving Bayside neighborhood. It's part of the same building as the relatively new Eastern Mountain Sports store. Across Marginal way is new development, including private student housing, the relocated Miss Portland Diner, and medical and law offices.

"It was obviously a disappointment to see that space be empty for so long, just as we were building that part of Bayside up," said Ron Spinella, president of the Bayside Community Development Corp. "I think (Trader Joe's) is going to be greeted as good news."

 

Staff Writer Matt Wickenheiser can be contacted at 791-6316 or at:

mwickenheiser@pressherald.com

 

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