Popular Online Grocery Retailer Launches Brick-and-Mortar Expansion

By Mario Tonguzzi

Online retailer Fresh City Farms has branched out its operations and is now delivering grocery items in bricks and mortar locations in Toronto.

The popular retailer opened its first physical store earlier this year at 476 Roncesvalles Avenue and has recently opened its second store at 111 Ossington Avenue.

And Ran Goel, the founder and CEO, told Retail Insider more locations are in the company’s plans.

“I started the company in 2011. At the time I was a lawyer on Wall Street (in New York City), practising investment law. I really became obsessed with this idea of urban farming and more importantly the role that urban farming can play in getting people to think about what they’re eating and giving them a positive experience with food,” said Goel.

A look inside the @freshcityfarms at 111 Ossington Ave. pic.twitter.com/ClBlZuHIhl

— blogTO (@blogTO) September 5, 2018

“We really believe in this concept especially in a city like Toronto. There’s more and more density and people are looking for convenience and they’re looking for health and they’re looking for authenticity and we think we have all those three trends on the nose. So we see potential of upwards of 10 stores – small format stores – in the central Toronto, downtown core, serving this kind of influx of people seeking a city life, who don’t have a car typically, who are looking for great options within a five-minute walk, 10-minute walk at most, of their homes.”

Goel said he doesn’t have a specific time frame in mind for expansion but will take it one store at a time.

“We really believe in our concept, really believe in our brand, and for us we’re very much a mission and values-based company, meaning how we source and how we treat our people and the kind of agent of change we want to be,” he said. “So from both a business perspective and a mission perspective we’re aligned. We have no interest in being a small player . . . We have very high aspirations but we’re taking it one store at a time to make sure we get the concept right . . . We really see ourselves as a regional player for the foreseeable future both in terms of the deep relationships we have with suppliers and the deep connections we have with our members, our customers.”

Goel said the concept is not an easy one to replicate elsewhere so for now it is focusing on serving the GTA market.

A farm of a couple of acres in size was initially created in Toronto and that slowly expanded to what exists today. Fresh City delivers farm fresh, local, organic produce bags and meals along with hundreds of grocery items. Delivery is across Toronto, including Mississauga and GTA. There are also a network of pickup locations.

“Three years ago we made a concerted effort to move into what we call curated and prepared food categories. So anything from meal kits, selling ingredients you need to make a meal, to prepared food where you literally just open the container and it’s ready to go or you can heat it up,” said Goel.

“And all along our philosophy has been rooted in sourcing as locally as possible and for us local means southern Ontario and rooted in sustainable farming and production practices. The majority of what we sell is organic . . . We see ourselves as a curator for the customers so they don’t have to do as much brain work when they’re shopping for foods. They don’t have to be as careful about labels and whether it’s healthy and whether it’s good quality. We really see ourselves as being the easy place to shop for the discerning shopper.”

Goel said the company decided to go into bricks and mortar because it felt its offering had its limitations being just online and it wanted to bring the brand into the omnichannel world.

“Our strategy is really to locate where we know our customers already are by virtue of them ordering online and really re-creating that kind of small format, neighbourhood grocer except with obviously an online capability and a full selection of organic produce, prepared meals and all your grocery staples,” he said.

Depending on the time of year, the farm, on two acres at Downsview Park, produces anywhere from five to 20 per cent of what the Fresh City Farms sells. The company has partnered with dozens of local organic farms who supply the rest of the produce needed to sell to customers. It has also partnered with dozens of other local suppliers of different products.

Fresh City Farms also operates a greenhouse off of Highway 427 on property owned by Baka. The greenhouse is fully self-contained and off-grid, boasting a rainwater capture and irrigation system and using solar energy to power the fans.

The company’s first store location was the acquisition of an existing business.

“That was more of an opportunistic thing to get our feet wet in bricks and mortar retail. It’s a very small format store. It’s about 500 to 600 square feet. But before we made that acquisition, we signed a lease for our newest location on Ossington which launched (at the end of August),” said Goel.

“That’s what we really see as the first of our store prototypes. It’s just a notch under 2,000 square feet in a very up and coming street in Toronto where we knew we had a lot of customers.”

The Ossington store has a good supply of prepared foods and produce, good-quality cheeses and deli meats, a small eat-in section, and a herb wall. Goel said the herb wall is the company’s attempt at bringing the farm right into the city.

“The idea is just this friendly neighbourhood grocery store that you know is all sourced as locally as possible and as healthy as possible but at the same time being unpretentious and making sure it’s a great value for the consumer,” he said.

The brand is capitalizing on two trends – people wanting locally-sourced products and people being short on time who are looking for convenience.

Mario Toneguzzi, based in Calgary has 37 years of experience as a daily newspaper writer, columnist and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, city and breaking news, and business. For 12 years as a business writer, his main beats were commercial and residential real estate, retail, small business and general economic news. He nows works on his own as a freelance writer and consultant in communications and media relations/training. Email: mdtoneguzzi@gmail.com