The Gelson's Market in Sherman Oaks, Calif. (File photo)
The parent company of Gelson’s Markets is considering putting itself for sale.
Compton-based Arden Group operates 16 Gelson’s Markets in Southern California, in upscale areas like Marina Del Rey and Pacific Palisades. In a statement, Arden Group said it’s exploring “strategic alternatives, which may include a possible sale of the Company.”
The first Gelson’s opened in Burbank in 1951. In recent years, the chain has faced increasing competition in the upscale grocery market space. Food industry analyst Phil Lempert says 2o or 30 years ago, Gelson's was the envy of supermarket chains across the country.
"The problem has been that Gelson's hasn't kept up," said Lempert, editor of Supermarket Guru. "The rest of the industry, whether it's Whole Foods, whether it's Trader Joe's, has really surpassed what they've [Gelson's] done." (Story continues below poll.)
He said in the Gelson's service area, from Santa Barbara to Dana Point, Whole Foods, the national organic food powerhouse, has many more locations, operates on a larger scale and offers a wider selection.
"Whole Foods is overpriced, probably more overpriced than Gelson's," Lempert said. "But they [Whole Foods] are able to take that value and go multidimensional with it, so it's not just the price of the food, but it's the service, it's the relationship they've formed and that's where I think Gelson's has fallen short."
Still, Lempert doesn't believe Gelson's biggest problem is Whole Foods but rather the increasingly sophisticated shopper in a changing Los Angeles grocery market. He said a lot of Gelson's competition in the specialty foods market is now coming from AmazonFresh, which last month launched its online grocery delivery service.
In February 2012, a Gelson's closed in Northridge. Last month, a Gelson's closed in Pasadena. In the statement, Arden Group said a new store under construction in Long Beach is scheduled to open later this year.
Arden Group said its hired Moelis & Company as a financial adviser for its strategic review process, but the process has no defined timeline and no assurance that it will result in a sale.
View Gelson's Markets in Southern California in a larger map