Will Wegmans Revolutionize the Supermarket?

On Oct. 18, Wegmans announced that its new Astor Place location in Manhattan is open after taking over the space previously occupied by Kmart — though it was originally a Wanamaker’s Department Store a century ago, according to PIX11 News. Comprising two floors and 87,500 square feet in total, the store features hot and prepared foods on the ground level.

PYMNTS explained that “Wegmans is pushing beyond the typical grocery format to open a hybrid supermarket/food hall in New York City.” The new setup will mimic a market, offering a diverse selection of food areas, such as a sushi bar, bakery, fish market sourcing selections directly from Japan, and a pre-made salad area. Store Manager Kyle Butta emphasized that their mission extends beyond mere grocery sales to enhancing the local community.

According to the grocer's original press release announcing the new store, Wegmans' Astor Place location also offers sandwiches, pizza, soups, wings, and hot Asian cuisine options. Additionally, its "ready-to-eat and ready-to-heat options feature a wide selection of entrees and sides for both individuals and families."

Wegmans' hybrid concept is gaining traction as other supermarkets have started to evolve into pseudo-restaurants or destinations rather than simple grocery outlets. For instance, FreshTake, a grocery store opening in Augusta, Georgia, next summer, will offer amenities like a five-hole golf green, an on-site café, a bar, a barbecue smokehouse, and a fire pit.

Other examples of supermarkets moving beyond food categories include the Midwestern grocer Hy-Vee, which "brought exercise equipment showrooms to its stores" in 2021, and "around the same time, Texas supermarket chain H-E-B opened jewelry shops in its stores.”

However, many grocers are focusing more on the trend of meeting consumers' daily needs that "have been centered on the connected 'eats' category, which brings in meal kits, ready-to-eat options and restaurant meals in addition to traditional groceries." Kroger, as the No. 1 importer of sushi in America and the owner of a meal kit company called Home Chef, has already taken steps to meet these needs. Additionally, smaller chains "are adding more hot food and prepared meal options, adding self-serve in-store restaurants and more.”

Consumers often prefer to eat out rather than cook on their shopping days, which has prompted a rise in demand for hot food options in supermarkets, according to Atul Sood, chief business officer at Kitchen United. Sood believes consumers appreciate the convenience of ordering restaurant meals from grocery stores, leading to high repeat orders and strong retention rates. 

Additionally, these initiatives allow grocers to distinguish themselves from competitors and attract customers to their physical stores, creating higher margins without incurring pickup or delivery costs.

On the opposite end of the spectrum, some stores have tried creating grocery locations with an e-commerce focus, but there hasn't been much reported success. Walmart experimented with a store model that specialized in grocery pickup and delivery only and shut down operations of these locations after nine years. Another similar setup was attempted by the retail company Addie’s in Norwood, Massachusetts, which was established as one of the first drive-thru-only supermarkets yet closed down only six months after opening in early 2023. 

Forbes noted that Wegmans took the food hall model "with high service and convenience levels and [put] it into an urban, dense, high-income neighborhood where most people have tiny kitchens that aren’t made for elaborate cooking. That's a way to get much higher margins than supermarkets normally can." The question now is if this model will work equally well elsewhere.