Erewhon is going to crush it in NYC (eventually)

Sorry, that tiny kiosk inside a Kith club doesn’t really count. Also: Lululemon’s stale sweats, PwC’s sketchy holiday forecast, and more.

Hello hello! It’s Dan Frommer, back with The New Consumer. Bonne rentrée! What’s on your mind?

If you accessed the internet this week, you likely saw that Erewhon, the culty, high-end Los Angeles-based grocery brand, is supposedly opening its first New York City outpost, inside a padel-focused luxury members club called Kith Ivy.

This is, to be clear, not an actual Erewhon grocery store, or anything close to one.

If you look at the floorplan that streetwear tycoon and Kith founder Ronnie Fieg first posted on Instagram — which started the global frenzy — the footprint for the room labeled “Erewhon” is about the same size as a bathroom. That’s enough space for a smoothie bar, maybe a coffee station, and that’s about it. (During a busy lunch shift in a LA store, I recently counted 23 people working in the smoothie bar area alone.)

But I assume that Erewhon, which has been opening a couple locations per year in Southern California, will eventually come East — there’s too much opportunity not to.

(Erewhon, the brand, was created in Boston in the 1960s as a tiny natural foods store. But the current incarnation — celeb smoothies, sea moss wellness, crazy beverage cases, $40 jars of nut butter, Stripes Group cash — fully embodies Instagram-era LA, where it has ten stores with three more coming soon.)

The truth is that New York has been underserved in the high-end grocery market for years.

Whole Foods — which, let’s be fair, still leads in overall prestige, and continues to add new locations under Amazon’s ownership — has not kept up, especially in prepared foods and the hot bar, which feel dated and lacking ambition.

That alone is a huge opportunity for Erewhon, which has a much more modern, high-end, hot bar and café. (The company told Forbes in 2019 that prepared foods drive 40% of its sales.) New Yorkers have an insatiable need for good food that they don’t have to cook, and the Erewhon hot bar gets the job done well, even if it’s $25 per plate.

For groceries, in Manhattan and Brooklyn, there are one-off gourmet shops: The new, heavily-Erewhon-inspired Happier Grocery seems to be doing well, and could expand, but is still tiny. There’s also the inconvenient-to-everywhere Tin Building, the vintage Citarella, Eataly, a few Union Markets, and not much more. (RIP Dean & DeLuca, Foragers, etc.)

The produce at Erewhon isn’t that special, and the grocery selection has a high overlap with Whole Foods. But there’s still a strong discovery element to the stores, and if you don’t look too closely at the prices, Erewhon is genuinely fun to shop.

Data point: The average in-store check size at Erewhon is around $50, and has been trending up, according to transaction data from Consumer Edge, which tracks US consumer credit and debit card spending. For context, it’s around $47 at Whole Foods, and $52 at Trader Joe’s, so it’s similar. What we can’t see is the number of items in each of those baskets — I’d guess it’s smallest at Erewhon.