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Independent grocers brace for competition from big chains

Neighborhood grocery stores brace themselves for intense competition as big supermarket chains move onto their turf

Taras Kim stocked peppers at Baza Gourmet Foods and Spirits in Newton, where a Wegmans grocery store will soon open its doors.

Josh Reynolds for The Boston Globe

Taras Kim stocked peppers at Baza Gourmet Foods and Spirits in Newton, where a Wegmans grocery store will soon open its doors.

In nine days, Wegmans will open a new supermarket on Route 9 in Chestnut Hill, roughly five minutes from Andrian Shapiro’s ethnic grocery store, Baza Gourmet Foods and Spirits.

And Shapiro says he is ready to take on the giant new competitor.

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The owner of the independent grocery store has a plan to defend his local market share from the popular Rochester, N.Y., chain. He secured a liquor license months ago. Now he is dropping prices on produce and increasing his marketing budget in preparation for Wegmans’ arrival.

“They aren’t going to put us out of business,” Shapiro said. “We’ll fight for every customer.”

Independent grocery store owners are worried about their livelihoods as big supermarket chains such as Wegmans and BJ’s Wholesale Club open more locations in Greater Boston neighborhoods. The arrival of new competition is particularly troubling for small grocers already struggling to gain market share in an industry dominated by large companies.

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For example, Stop & Shop is the most prosperous grocery retailer in the Northeast, with a 12.35 percent share of the market. The largest independent grocery retailer, Dave’s Marketplace in Rhode Island, controls just .07 percent of the Northeast market, according to the Griffin Report of Food Marketing.

Josh Reynolds for The Boston Globe

Baza Foods in Newton is planning on cutting prices and trying other new strategies to compete when Wegmans opens nearby in late April.

Adam B. Davis, director of retail finance at Wells Fargo Capital Finance in Boston, said the local grocery market is becoming increasingly competitive.

‘They aren’t going to put us out of business. We’ll fight for every customer.’

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“Some of the smaller regional players are going to have to keep fending off the big chains,” Davis said. “These mom-and-pop places have to be extremely thoughtful of who their customers are and continue to provide value.”

Soon, customers who shop at Shapiro’s Baza could go to an 80,000-square-foot Wegmans filled with food counters serving everything from soup to sushi. The new competitor will also have a coffee shop; a pharmacy; and a wine, beer, and liquor store. The store is actually small for a Wegmans but still dwarfs the 15,000 square feet Baza occupies on a side street in Newton.

Shapiro said his store has competed with nearby Whole Foods and Shaw’s stores for the last six years by offering Eastern European foods his customers cannot find anywhere else.

With a large produce section and many specialty counters, Baza resembles a smaller, Russian version of Wegmans. It is packed with counters serving smoked fish, meats, cheeses, sandwiches, and other prepared foods. A hot foods section serves duck wings and draniki, a Russian potato pancake. The bakery offers fresh khachapuri, a Georgian cheese bread, and smetannik, a Russian sour cream cake.

But Wegmans’ reputation and emphasis on fresh produce prompted Shapiro to make changes in his store. He spent $200,000 on a liquor license last year and now serves a unique collection of Russian vodkas. The store also sells a variety of European beers like Leffe from Belgium, the German brand Bitburger, and Lezajsk of Poland.

Shapiro also created a customer loyalty program that gives big spenders a small discount, and he recently introduced a grocery delivery service. He intends to run advertisements before Wegmans’ arrival, offering deals on produce, such as tomatoes for 99 cents a pound.

Other independent grocery stores in Massachusetts will face similar challenges in the near future. Wegmans plans to open a store in Burlington this fall, another in Westwood next year, and one in the Fenway at a later date.

Meanwhile, the owner of Tropical Foods on Washington Street in Roxbury was dismayed to learn this month that BJ’s Wholesale Club is in negotiations to open its first Boston grocery store about a half-mile from his market. The Westborough company intends to open a 90,000-square-foot store on Tremont Street in the spring of 2017.

Like Baza, Tropical Foods caters to ethnic communities. The store sells foods from the Caribbean, Central and South America, and Africa and other more traditional groceries.

Despite the diverse array of foods, roughly 80 percent of the store’s sales are earned on staple items that every other grocer sells, such as bread, milk, sugar, and eggs, said Ronn Garry Jr., the store’s president.

Josh Reynolds for The Boston Globe

Olga Klimova helped a customer at Baza Foods. Owner Andrian Shapiro says he offers foods not found elsewhere.

A chain like BJ’s can buy in greater bulk than Tropical Foods and probably offer lower prices on those best-selling foods. Garry said it would be tough to survive if he lost those sales to BJ’s.

Later this year, Tropical Foods will move into a new space next to its current location and grow from 8,500 to 27,000 square feet. The move will allow the store to expand its inventory, increase the size of many of the food departments, and double the number of checkout counters.

But Garry said the idea of adding square footage makes him nervous now.

“Supermarkets operate on very small margins,” Garry said. “To have someone come in and potentially take away volume at a time when we’re going to be fighting to increase volume is worrisome.”

In Boston’s North End, Frank Scire, the owner of the Going Bananas grocery store, is troubled by the news of Star Market coming to North Station. The 45,000-square-foot store is expected to open in 2016.

Scire said the chain’s arrival would hurt his 27-year-old business, but with just 1,600 square feet, his ability to add inventory to compete with Star Market is limited.

“I don’t like it, and not just because I’m in the business,” Scire said. “I want to see family businesses survive, and I see a day where there won’t be any small businesses at all.”

Taryn Luna can be reached at taryn.luna@globe.com. Follow her on Twitter @TarynLuna.
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