The store will move into a site that has been the subject of intense community controversy in recent years, a debate that began long before the City Council voted in 2009 to approve a redevelopment of what was previously known as Alma Plaza. The project, which faced scrutiny and opposition, also includes 37 single-family homes and 14 below-market-rate units.
The closure of Miki's, a grocery store that for the city represented the primary "public benefit" of the redevelopment, briefly reignited the controversy, with many residents and some council members pointing to the project as an example of a poorly planned retail site.
In an interview Monday, July 8, McNellis said he rejects the notion that a grocery store cannot succeed at Alma Village. The problem with Miki's, he said, was that it entered a crowded field.
Palo Alto and its neighboring cities already have a slew of high-end, organic grocery stores, including Whole Foods and the recently opened Fresh Market at Edgewood Plaza, McNellis said.
"What this site needs is a great value proposition. Someone needs a reason to go there," McNellis told the Weekly. "To be offering something that isn't in Palo Alto, in this case bargain groceries, is great."
McNellis said he reached out to other high-end, organic grocers after Miki's closed, but they declined to lease the space. Grocery Outlet, whose nearest store is in Redwood City, reached out to the developer, he said. McNellis said he was pleased with the grocer's decision to open in Palo Alto.
"Anyone who doesn't want to pay absolute full price now has to go to Costco," McNellis said. "There's a niche here that hasn't been filled, and Grocery Outlet will be great for the city."
McNellis noted in a statement that Grocery Outlet's internal sales studies and forecasts for Alma Village have determined that almost all of its sales will come from Palo Alto and Mountain View and that the traffic generated by the new store will be approximately the same as that of Miki's.
The Berkeley-based chain brands itself as "the largest 'extreme-value' grocer in the U.S.," with close to 200 locations nationwide. MacGregor Read, co-CEO of Grocery Outlet, said in a statement that the company is "excited to bring Grocery Outlet to Palo Alto."
"We received many requests to open a store in the area, and we're thrilled to be able to offer Palo Alto-area residents the opportunity to save up to 50 percent on groceries and other merchandise," Read said.
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