Will Erewhon become the next Whole Foods?
A new grocer may be debuting on the national grocery stage after years as a successful local player in Southern California — with some help from a private equity firm.
Los Angeles-based Erewhon plans to build out a new presence in Northern California followed by a potential expansion into New York City, reports Forbes. Behind the move is private equity firm Stripes Group. The firm owns a minority stake in the grocer and has backed startups like Seamless and Levain Bakery. Stripes Group envisions Erewhon becoming not just a nationally successful grocer, but “the most trusted in better-for-you food.”
In its current incarnation, the grocer has been described by foodie/travel website Well and Good as “crazy-expensive,” with a pricey but meticulously curated product mix. The L.A. locations are often listed as good places to bump into celebrities.
The chain could face hurdles as it attempts to go national due to a few factors.
Private equity relationships have grown controversial in retail, with some attributing the decline and collapse of retailers including Toys “R” Us to unserviceable debt.
Further, a national expansion could put Erewhon into competition with entrenched and well-financed organic grocers, most obviously Amazon.com-owned Whole Foods (though Well and Good indicates that the Los Angeles locations manage to thrive with Whole Foods locations in the vicinity of every store).
Amazon is introducing another wildcard to the national grocery landscape as well, with The Wall Street Journal reporting that the e-tail giant is moving forward with plans to open dozens of brick-and-mortar grocery stores unaffiliated with Whole Foods throughout the U.S. Amazon has Los Angeles, Chicago and Philadelphia locations planned, with some leases already signed.
Other established regional grocers have likewise been expanding into the national better-for-you space.
Publix, for instance, recently announced the launch of its 12th GreenWise Market location in Florida, according to Supermarket News.
- Organic Grocer Erewhon Eyes Expansion After Private Equity Deal – Forbes
- Publix Targets Florida for another Greenwise Market – Supermarket News
- Amazon’s Grocery-Store Plan Moves Ahead With Los Angeles Leases – The Wall Street Journal
- Why is everyone obsessed with this crazy-expensive LA health food store? – Well and Good
- Do Carolinians have Wegmans on their minds? – RetailWire
DISCUSSION QUESTIONS: What would it take for a company like Erewhon to be successful on the national stage? Does playing ball with private equity put the company at risk in the long term?