Natural Grocers plans September opening

Feb. 26--Activity will start to pick up soon at the former Red Lion Hotel site on Coburg Road in Eugene where Natural Grocers plans to build a store, scheduled to open on Sept. 9.

The Denver-based chain plans to raze the mid-'60s-vintage hotel and break ground on April 1 on a 21,441-square-foot, single-story building, which will house the grocery store, and a 3,200-square-foot cotenant -- most likely a restaurant "that would be synergistic with our operation," Natural Grocers coPresident Kemper Isely said.

The grocer is expected to open with 23 to 30 employees and to grow over time. The typical Natural Grocers store has 40 to 70 employees, Isely said.

Natural Grocers carries only organic produce, meats from animals raised without antibiotics or hormones, and other products free of artificial colors, flavors, sweeteners and hydrogenated oils.

The no-frills store tries to keep prices as affordable as possible and will have a nutritional health coach who will teach free cooking and nutrition classes in the store's demonstration kitchen, Isely said.

Based on its experience in other communities, Natural Grocers said its arrival in Eugene will probably expand the market for natural foods and "more than likely divert (sales) from mainstream grocery stores," Isely said.

"Our arrival should expand the market for natural foods because we do a great deal of education, and the awareness for natural foods becomes great when we're in a market," he said.

Natural Grocers' entry into the local market should heat up competition in the Coburg Road area, said Robert Whelan, senior economist who specializes in market research and forecasting for the consulting group ECONorthwest.

The Coburg Road corridor is home to some of Eugene's wealthiest neighborhoods and to half a dozen grocery stores, including Safeway, Albertson's, Market of Choice and Trader Joe's.

The addition of Natural Grocers will simply spread grocery spending in that area a little thinner, Whelan said.

He splits the natural/organic consumer into two types -- the affluent "who are more than willing to pay a ridiculous price for a food item," and lots of people who "don't have a lot of money and they have trouble buying the types of foods they want at a reasonable price," Whelan said.

"So targeting that segment by making it affordable is a great idea and showing how to cook and prepare these foods is a fantastic idea," he said.

"But the truth of the matter is the average household is going to spend five grand on groceries a year, and that ain't going to go up because this store is going in," Whelan said.

"You're not creating new demand," he said. "It's not like introducing a new product no one has had before. It's just, 'Hey we've got kale and it's 50 cents cheaper.'"

Whelan concludes that the newcomer will make it tougher on the existing stores and "you could lose some other store."

Several competing grocers declined to comment on how Natural Grocers' arrival might affect their business.

Albertson's spokesman Dennis McCoy said, "we don't really comment on the competition. We kind of concern ourselves with who we are.

"We're working to become the favorite neighborhood food and drug retailer," he said. "We want to be known for good prices and high-quality, fresh products and very helpful associates, so we'll continue down that path."

He added that Albertson's has focused on improving the quality of its meat and produce in the past year since Boise-based Albertson's LLC bought its Northwest stores back from Minnesota-based SuperValu, which had owned them since 2006.

To clear the way for the Natural Grocers store, Red Lion Hotels Corp. gave up its ground lease on the hotel site at 205 Coburg Road on Jan. 31. The 3.5-acre site is owned by the Hewitt family of Lane County. Isley said that Natural Grocers has signed a 48-year ground lease and will spend a "substantial amount of money" on the building. He declined to say how much.

Passersby will notice activity picking up at the highly visible triangular shaped site bordered by Interstate 105 and Coburg Road.

Remediation crews have begun removing asbestos, Isely said. In the next few weeks, fire and police department personnel will do training at the site.

"They're not going to burn the building; they'll be knocking doors down," he said.

Isely said building materials and fixtures will be recycled when possible. With 137 guest rooms, that's a lot of toilets, sinks and bathtubs.

Crews will raze the front section of the hotel by April 1, the scheduled ground-breaking date for the store. The rear portion of the hotel will be knocked down after April 1, Isely said.

Plans show two entrances to the store off Coburg Road at the southern end of the parcel, and 120 parking spaces in front of the entrances.

Part of Natural Grocers' formula for keeping prices affordable is to be very cost-conscious, Isely said.

The store "isn't going to be particularly fancy, no," he said. "But it's very functional and friendly to shop."

"We work on a little bit lower margin than most other retailers do, and we buy very well," Isely said.

That includes stocking plenty of locally made and grown products, he said.

"There's a lot of local vendors in Oregon and we've made it a big priority to partner with those local vendors to bring them into our stores," Isely said. "We have a lot of Oregon products in our stores already, and we keep adding them as we are approached by those vendors and as we seek them out.

"It's much better to have something that's local, close by, brought into your stores and that's unique to that area, rather than to ship something from Colorado out there. Part of keeping your prices low is to cut down your handling and your freight costs."

Fueled by its initial public offering of stock in 2012, Natural Grocers is expanding rapidly. It now has 78 stores in 13 states, including stores in Medford, Salem, Beaverton and Bend that have opened in the past year. Isely said the retailer looked for a suitable site in Eugene for two years.

He said Natural Grocers wanted a store in Eugene because "Eugene is a pretty unique city and it seems to be underserved in terms of natural grocery offerings.

"From a demographic standpoint it's pretty similar to Boulder, and Boulder is one of the hotbeds of natural food retailing in this country, so we thought it would be a good place to locate a store."

The company chose the Coburg Road area because "It seems to be the center of gravity in Eugene as far as we can see," Isely said. "You've got Trader Joe's and Nordstrom Rack and the mall across the street. A lot of really good synergistic businesses are in that area."

Natural Grocers will begin hiring managers in May or June and other employees in late July or early August.

About 85 percent of Natural Grocers' workforce is full-time and eligible for benefits, including health insurance and a 401(k) retirement savings plan, Isely said.

Store clerks' wages start at $10 an hour. Workers receive an employee discount, which varies by department -- 20 percent off groceries, 30 percent off supplements, for example. On top of that, employees earn "Vitamin Bucks" of 75 cents an hour that they can spend on anything in the store, Isely said.

The name "Vitamin Bucks" pays tribute to the company's roots as a family-owned whole food and vitamin store named Vitamin Cottage, founded in 1955 in Golden, Colo.

Although the company is publicly traded on the New York Stock Exchange, it is still operated by the children of its founders.

"We took the company public in 2012 to provide us with the capital we needed to expand properly," Isely said.

In addition to free seminars in its community kitchen by its nutritional health coaches, Natural Grocers also invites local chefs to do cooking demonstrations and offers the kitchen free to the community for meetings and functions. The store plans to team up with Food for Lane County for a donation food drive in the fall. Also the store is "bag-free" -- it doesn't use plastic or paper bags at check-out. When customers bring their own bags, Natural Grocers donates a nickel to the local food bank. It also offers recycled cardboard boxes or reusable bags to customers who forget their bags.

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