In fall 2023, Costco opened its first and only store in Maine. A few months later, value-based retailer Market Basket opened a new location in Topsham. At the time, the buzz among shoppers in the greater Portland area was palpable and left many hopeful this would signal a wave of other food retailers wanting to invest in the state.
More than a year has passed and thus far the exponential growth that was forecasted hasn’t come to fruition, with a few notable exceptions.
Market Basket will be opening its fourth location in the state next year. The retailer will serve as the grocery anchor at The Downs in Scarborough, making it the third major grocery store in a town whose population numbers about 24,000.
In spring 2024, Hannaford reopened two stores it had acquired from Paradis Shop ‘n Save. The Madawaska and Fort Kent locations were shuttered for just a few days before opening under the Hannaford banner April 12. Shoppers there now have access to the multitude of store brands Hannaford is known for, in addition to an expanded assortment of locally produced items.
Aside from these developments, supermarket growth has been relatively flat in the Pine Tree State. Retailers that are rapidly expanding elsewhere in the country – Costco, Trader Joe’s and Whole Foods – continue to have just a single location in the state. Some industry reports indicated that Aldi potentially has interest in opening a store in Maine, but the German discount retailer has not made any formal announcements so far.
Insight into Maine’s grocery industry
A recent IBIS World market report showed Maine’s supermarket industry totaled $6 billion, with the state having nearly 500 grocery businesses.
Rising construction costs, coupled with the increasing difficulty to find land for new locations, has impacted supermarket growth. However, at least one expert tracking commercial real estate trends in Maine isn’t worried this is a long-term concern.
Joseph Italiaander, a broker with The Boulos Co. in Portland, called Maine’s retail sector “resilient, predictable and consistent.” While consumers in other states are driving online ordering trends, Italiaander said the opposite is true there.
“Mainers still prefer to get out and shop in person at brick-and mortar locations, as opposed to shopping solely online,” he said. “Grocery stores are capitalizing from this trend, which is contributing to the resiliency of the sector.”
Others point out that Maine’s robust tourism industry has the ability to buoy grocery sales, particularly during peak seasons. This seasonality creates opportunities and challenges for grocers, requiring careful inventory management and staffing adjustments, particularly during the summer and winter months.
Maine’s rural character also plays a role in supermarket growth or lack thereof. A considerable portion of the population lives in rural areas, presenting challenges for retail newcomers when it comes to distribution, transportation and access to fresh produce.
Still, experts say local sourcing represents a key opportunity for independent grocers to stand out. By emphasizing local partnerships with farmers and producers, they can differentiate themselves and tap into a growing market segment.
[RELATED: Maine’s Bow Street Market Known For Prioritizing Local Products]
Labor shortages
The grocery industry in Maine, like elsewhere, faces ongoing challenges related to labor shortages and attracting and retaining qualified employees. The state is dealing with a shrinking workforce, aging population and lack of skilled workers.
For instance, the number of Mainers in the workforce has increased by just 6 percent over the past two decades, while the national workforce has grown 20 percent. To make matters more challenging, the state’s workforce is expected to shrink by tens of thousands in the next decade.
Given that Maine has the distinction of being the oldest state in the country by median age, a large portion of its workforce is reaching retirement age. And young adults are leaving the state, creating a growing demand for skilled workers in industries such as healthcare and retail.
Hannaford Supermarkets understands workforce challenges all too well. The Scarborough-based retailer recently partnered with the University of Maine System to offer a discount to employees looking to pursue post-secondary education and training.
Full- and part-time Hannaford associates can receive a 10 percent discount on all undergraduate and graduate courses offered within UMS.
The partnership, which is a first for UMS, expands Hannaford’s Groceries to Grads education reimbursement program, which offers associates up to $5,250 in tuition funds annually at any accredited college or university, with additional discounts available at partner universities within the grocer’s network.
“We have a steadfast commitment to supporting the career growth and development of our associates, and this partnership only bolsters the opportunities available to them,” said Julie Libby, VP of human resources for Hannaford.
Introduced in August 2022, top programs of study for Hannaford associates using the Groceries to Grads benefit include business/management, finance/accounting, pharmacy/biology and computer science/information technology/cyber security.
Hannaford’s comprehensive benefits also include paid time off, medical coverage, mental and physical wellness programs, associate discounts, paid parental leave and retirement plans with company match.
Bright future
Despite slow growth in the grocery sector during the past few years, economists believe Maine has an overall bright retail future.
Amanda Rector, state economist, said the local sourcing aspect of grocery retail is one of Maine’s strongest assets.
“The state has a long history of sustainable agriculture, much of it in small family farms. There has been a national trend in recent years emphasizing local, sustainable foods, and Maine farms are well-positioned to partner with grocery retailers to align with this trend,” she said.
In addition, Rector noted that Maine’s traditional fishing industry is world-renowned. “There are many new developments in food production in Maine as well, including aquaculture and value-added products,” she said.
Rector did agree that availability of workforce remains a limiting factor for employment growth across various sectors in the state. The continued aging of the Baby Boomer generation into traditional retirement years, she noted, will require a combination of solutions to ensure an adequate workforce going forward.
“This includes supporting the continued migration of working-age populations, reducing barriers to help increase the labor force participation among residents and utilizing technological advancements to supplement the workforce.”
She added that people moving in has contributed to Maine’s housing crisis. “Housing availability and accessibility are absolutely a challenge at the moment and something that needs to be addressed,” she said.