Last updated on December 12th, 2024
Maine is known for its picturesque mountain and coastal landscapes, as well as its seafaring traditions, agricultural and forestry businesses. It also is a state dealing with economic and workforce challenges and an evolving retail landscape.
Layered on top of this, Maine is experiencing a profound pandemic-fueled population shift. COVID had (and is still having) an impact in many New England communities including Maine, as hybrid agreements have allowed those formerly unable to work remotely to do so at a lower cost of living. And the migration to Maine is continuing, impacting everything from schools and retail to the state’s infrastructure.
Population growth is disproportionate, with certain pockets seeing more than others. The area in and around Portland, the southern and coastal area of Maine, for instance, is among those areas seeing a large influx of new residents. It also is one of the areas seeing a high number of new store openings and retailers entering the market.
“New residents, many of whom come from Southern New England, New York and New Jersey, have moved to Maine to enjoy a better quality of life and lower cost of living, but they brought their shopping expectations with them, too,” said Rob Twyman, a principal with Twyman Consulting.
The past few months have been a bit of a challenging time for residents and businesses in Maine. Much of the state experienced severe flooding and power outages in back-to-back storms in December and January. The storms had a devasting impact on many retailers, resulting in extended power outages, lost product and cold goods and significant damage to buildings.
These events have made for a challenging start to the year, noted Christine Cummings, executive director of Maine Grocers & Food Producers Association.
Changes aside, opportunities abound in this state.
“Maine offers an undeniably distinctive market environment within the grocery industry. Understanding the unique dynamics of this market is crucial for independent retailers to successfully navigate it and remain competitive,” said Russell Greenlaw, SVP of sales at Associated Grocers of New England.
Socioeconomic landscape
Describing Maine’s grocery industry as “stable,” Cummings calls Maine a “geographically diverse state with many close-knit communities and stores that are well-networked, nimble and creative.”
Among the ongoing challenges Cummings noted grocers in the state are facing include the escalating cost to do business.
“The state’s increasing minimum wage continues to weigh heavy on our rural stores,” she said. “Likewise, our businesses have faced significantly higher electricity costs over the past few years and combined with the overall increased costs of doing business has made it challenging for businesses to reinvest.”
Cummings added that the severe lack of affordable housing has made finding and retaining workers challenging. “Our state economist has noted, ‘housing and energy prices are coming down, while inflation is still elevated’ so businesses are operating conservatively.”
Expanding on this point she noted, “We’re fortunate to have so many different settings all within one state. But our vast size and varying regions can make for challenging statewide policy discussions. Our state’s regional differences allow for stores to hone in on their customers’ preferences and manage their business model based on our robust tourism industry.”
Though many of Maine’s key economic challenges are not exclusive to the grocery industry, they affect the state’s supermarkets and convenience stores in a powerful way, noted Greenlaw. Among the most prominent of these topics are labor, inflation and consumer buying behavior.
“Businesses across the country continue to struggle with their talent acquisition efforts, but Maine has an additional contributing factor that makes staffing that much more challenging. They have the highest median age across the entire country,” Greenlaw said.
This generational impact, he noted, limits the finite labor pool, further exacerbating businesses’ recruitment efforts and their need to remain competitive.
The extraordinary inflationary effects, Greenlaw pointed out, have drastically changed consumer spending in the state.
“Now more than ever, Maine’s residents purchase with intention. They approach their expenditures through a lens of practicality and purpose, which means their business cannot be taken for granted – it must be earned,” he said.
To stay competitive and thrive, independent grocers are learning to leverage their strengths. To stand out, retailers are emphasizing quality, unique flavors and offerings, unparalleled service, and community support.
“A key advantage independent retailers have is their ability to offer a personalized shopping experience deeply rooted in the local flavor,” Greenlaw said. “Whether it’s responsibly sourced seafood off Maine’s coast or blueberries fresh from a nearby farmer’s harvest, promoting the local bounty fosters a sense of community connection that resonates with residents.”
Retail landscape continues to diversify
Several major grocers are expanding operations in the state and new entrants have also opened locations.
Founded in 1883 in Portland, Hannaford – part of Ahold Delhaize – is the largest supermarket chain in Maine, accounting for 41.85 million visits in 2023. It has 68 stores in Maine and another 189 across New York, Massachusetts, New Hampshire and Vermont.
Hannaford recently opened its second store in its hometown of Scarborough. The 58,000-square-foot-location features a large grab-and-go section, and hot and cold food bars offering fresh, ready-to-eat items made on-site daily, including brick-oven pizza and chef-crafted sushi. It also stocks a variety of items from local farmers and producers, offers pickup and delivery options and has nearly 20 self-checkout registers and a full-service pharmacy.
“Hannaford has been light years ahead of other retailers when it comes to benchmarking their stores’ performance and being systematic about their approach to operational sustainability,” said Peter Cooke, co-founder of the Ratio Institute.
“They have been tracking data for more than 10 years and can direct store strategy in a way that other grocery companies cannot.”
Founded in Portland in 1860, Shaw’s Supermarket has 19 locations in Maine and garners about 9.06 million visits a year. Given that Shaw’s is part of the Albertson family of stores, its future is unclear as community officials wait to see what the fallout is from the proposed Kroger-Albertson’s merger expected to take effect during the first half of 2024.
As of December, Albertsons said it did not anticipate any of the Maine Shaw’s locations to change, saying instead the merger will mean “lower prices, more choices for fresh foods and more investments” in the communities. There has been no word yet on whether Shaw’s stores will retain their name or be rebranded.
DeMoulas Super Markets, which owns Market Basket, is readying to open its third store in the state in mid 2024. The 80,000-square-foot site being built in Topsham will feature more than 50,000 items and have an indoor café with seating.
Market Basket stores are known for low prices and quality products. Its employees often work there for years and their job performance often is cited in consumer satisfaction surveys.
Interestingly, it’s one of the few grocery chains that has resisted adding self-checkout lanes. Customers rave about the prepared food deals, neighborhood-level assortments, special diet sections, local product offerings and rotisserie chickens that rival Costco.
Walmart is well represented in the state with 19 supercenters offering groceries.
Trader Joe’s (one store), Whole Foods Market (one) and Save-A-Lot (five) are the other three grocery chains with a presence in the state.
Target now has six locations. Its most recent opened in Auburn at the end of 2022 in a former Kmart building. The location features a CVS pharmacy, Starbucks Café and a full assortment of groceries, including beer and wine, plus online ordering and delivery options.
Warehouse clubs are not well represented in the state – there are just three BJs and two Sam’s Clubs. The first Costco opened last fall just south of Portland. Like most Costcos, the 152,000-square-foot Scarborough store includes a food court, gas station, tire service center, pharmacy and optical and hearing aid departments. It draws customers from well over a 60-mile radius.
Future growth
Retail growth is coming to the state, though some predict it will be limited to a few regions.
“While it is likely that Maine will see more big box grocers and department stores with a heavy grocery focus in the near future, the lack of density outside of the coastal regions will mean these retailers will concentrate their locations in close proximity to larger coastal cities,” Twyman said.
He added that preference will be given to site selections that have excellent visibility and are close (easy-on, easy-off) to the interstate to optimize average daily traffic counts and broaden geographic penetration.
As Maine’s demographic continues to shift, experts predict grocers will feel the pinch unless they can maintain and enhance their differentiation in the marketplace.
“Price for some is a ‘value equation,’ meaning that they base their shopping on the value they receive. They exchange price consideration for personalized service, higher quality, curated selection and community connection,” Twyman said.
Disproportionately, the customers moving from more affluent communities fit in this category, he noted.
“There is an opportunity for smaller grocers to leverage this shift if they can hold to the most basic of retail tenets – service, quality, convenience and selection,” Twyman said. “In a post-COVID world, this is even more relevant as customers search for diverse foods and ingredients and are starved for community connections. This is the sweet spot for small grocers.”
As the retail landscape continues to shift, Cummings sees Maine’s grocers well positioned for growth.
“Our stores take great pride in understanding and knowing their customer base. Maine’s grocers’ owners, managers and staff are hands-on and value establishing relationships their customers,” she said. “Our local grocers are the same businesses sponsoring their towns’ sports teams and lending their store fronts for fundraisers; they’re the backbones of their communities.”
Sourcing local, Maine-made products or curated product lines that best fit their shoppers help to retain the local feel, she noted. “Maine has a plethora of high quality, locally produce food and beverage products. Featuring these items on their store shelves further supports Maine’s food economy.”
“It’s an interesting time for Maine’s grocers, and small to medium-sized businesses alike, as the next generation is acquiring stores and offering a fresh perspective on how to do business. This next generation of new owners are taking a hard look at their margins and their stores’ practices to evaluate how to become more sustainable and efficient,” Cummings ssaid
Though Maine’s grocery landscape may be evolving, Greenlaw agreed that independent retailers will consistently thrive if they leverage their strengths and lean in to their unique identities.
“As residents continue to prioritize community connections and local support, independent retailers are well positioned to be the heart and soul of the state’s grocery industry,” he said.
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