Inside Wegmans' Rapid Expansion In The D.C. Region
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The opening of a new Wegmans generates buzz aplenty among grocery shoppers, and with at least six new stores planned, D.C.-area residents will be making quite a bit of noise in the coming years.
The Rochester, New York-based grocer is charting a rapid expansion in the D.C. market spurred by the success of its existing locations, and its growth is leading the traditionally suburban chain to shift its strategy toward urban-style stores in mixed-use developments.
Wegmans opened its first D.C. Metro-area store in Dulles in 2004. It now has eight stores open in the D.C. suburbs. It has 10 total stores in Virginia and eight in Maryland.
Wegmans signed on in May 2017 at the redevelopment of the Fannie Mae headquarters in Northwest D.C., in November at Alexandria's Hoffman Town Center and last week in Rockville. It is also under contract to acquire a site in southern Loudoun County for a future store. That deal, first reported in November, was confirmed by KLNB principal Sam Hodges, who is working on the deal. A spokesperson for Wegmans declined to comment on the chain's expansion in the region.
Hodges, who has worked with Wegmans since it entered the D.C. region 14 years ago, said it is not done expanding. The D.C. area has been one of the highest-performing markets for Wegmans, he said, and he expects the company to pursue more stores in addition to the locations where it has already committed.
"There might be two or three more, maybe, in the market if the right locations are there, and I think those locations will probably be inside the Beltway," Hodges said. "There are areas that are not going to be covered by the store they're doing in Northwest D.C., so if the right opportunity came open in D.C., they might do it."
As the company expands its footprint to D.C. and its close-in suburbs, it is also beginning to experiment with smaller stores integrated within mixed-use developments, rather than its traditional, suburban-style model.
The next D.C.-area Wegmans will open June 3, a 120K SF store at the Field at Commonwealth shopping center in Chantilly, following the grocer's traditional suburban style. But after that, each of the leases it has signed are for about 80K SF and part of mixed-use projects with residential and commercial components.
Hodges said the company's preference is to open a 120K SF stand-alone store, but given the scarcity of large, available sites and higher land prices in urban environments, it makes more sense to be part of a mixed-use project.
The grocer plans to open in 2020 at the 5M SF Capital One headquarters development in McLean. It will occupy 80K SF as part of the mixed-use project that will also include a 470-foot-tall, 930K SF office building, 1,200 residential units, 170K SF of additional retail and a 125K SF performing arts center.
Wegmans will then open an 80K SF store as part of the redevelopment of Fannie Mae's former Northwest D.C. headquarters at 3900 Wisconsin Ave., with an expected opening of mid-2021. Roadside Development's mixed-use project will also include 700 residential units, a 140- to 150-room hotel, about 120K SF of additional retail, a health club and cultural arts space.
Roadside Development founding partner Richard Lake, who is spearheading the Fannie Mae redevelopment and consulting on the Capital One development, said the plans for smaller, urban-style stores are part of Wegmans' growth strategy.
"Wegmans do extraordinarily well in suburban markets, but there is more population moving into cities in all markets. If you don't move with them, you're going to lose that loyal customer base," Lake said. "This, I think, is a response to the customers and ability to capture more of that population."
Lake is also consulting on another future Wegmans store in the D.C.-area that has yet to be announced. He said he couldn't share the location but said it will also be part of a mixed-use development.
"There's still room for growth," Lake said. "I think there are still some markets they would like to penetrate, but it depends how well these stores are received and if they continue to do volumes, I think they'll continue to grow."
The grocer signed on in November for an 84K SF store at StonebridgeCarras' Hoffman Town Center mixed-use project in Alexandria, expected to open in 2022. Last week, it agreed to open a store at B.F. Saul's planned 2.8M SF development near Rockville's Twinbrook Metro station, but the square footage and anticipated opening have not yet been announced.
The Hoffman Town Center store will be Wegmans' first location nationwide on a building's second level, rather than in ground-floor space. StonebridgeCarras principal Doug Firstenberg said the second-floor space works because the 10-foot slope of the site will allow Wegmans to offload trucks directly into the store from the back, a requirement the retailer had. The project will also give the store good visibility, another one of the company's priorities, with the Wegmans sign on the corner facing the passing cars on Eisenhower Avenue.
"With urban locations, people are willing to look at things differently because the standard suburban footprint is not going to work," Firstenberg said. "With [Wegmans], it was really trying to understand what were their most important needs."
As Wegmans expands its presence in the D.C. market and shrinks its store footprints closer to that of other grocers, it has the potential to take customers and market share away from competitors such as Whole Foods, Trader Joe's and Harris Teeter.
The Wegmans planned at Hoffman Town Center will sit about 1 mile from the Alexandria Whole Foods on Duke Street. The Northwest D.C. location sits about one mile from the Tenleytown Whole Foods and half a mile from a Giant. The Twinbrook location is less than 2 miles from the North Bethesda Whole Foods and less than a mile from a Trader Joe's and a Giant. The McLean Wegmans will be about 2 miles from the Whole Foods under development at The Boro and about 2.5 miles from the West Falls Church Whole Foods.
"I think Wegmans and Whole Foods definitely compete for the same customer," Lake said. "If Wegmans is on top of their game, Whole Foods is going to have to be on top of their game so they can properly compete. Their organic marketplaces are very similar. These two retailers are going to battle a little bit on that customer base."