From Erewhon to Bayley & Sage, luxury grocers are back in fashion

Bayley & Sage, the high-end grocery shop in Wimbledon, is known for its £8.50 punnets of French strawberries and fragrant cheeses, but its top-selling products in tournament fortnight are plainer fare. Tennis players in town come to buy chicken breasts, orange juice, pasta and natural yoghurt. Rafael Nadal was once a regular.

It helps that the store is a 15-minute walk from the All England Club, and that it looks so inviting. Baskets of Spanish peaches, racks of Bayley & Sage sandwiches and displays of cold-pressed juices and wines entice visitors to splash out. “We are expensive, I won’t pretend otherwise,” says Jennie Allen, its founder and owner.

The same goes for another grocery 5,400 miles away in Los Angeles. Erewhon, the chain that grew from a 1960s health-food stall, has become a foodie cult. Gen Z influencers and celebrities throng its 10 LA outlets and cafés to sample $23 smoothies and organic buffalo cauliflower. “We’re more than a grocery store. We’re a community,” it declares.

As supermarkets fight against the growth of discounters such as Aldi and Lidl, delicatessens for the affluent are the new places to be seen. “It’s like a cross between Whole Foods and Studio 54 [the former New York celebrity disco],” one Erewhon investor told me recently.

These new emporia are united by three qualities, aside from their well-off patrons and fast growth. One is health and wellness: vegan and macrobiotic foods were once seen as fads but are mainstream now. When Erewhon mixes up a $9.50 vegan “germ warfare shot” containing colloidal silver, reishi powder, astragalus extract and other potions, no one turns a hair.

Erewhon’s UK counterparts, from Bayley & Sage to the Daylesford Organic farm shop chain founded by Carole Bamford, are more conventional and less LA-infused. But they also focus on natural and organic food, and work with small producers. The more traceable and healthier the products, the less likely shoppers are to question how much they are asked to pay.

The second quality is local appeal: the stores pick locations carefully, not only to bring in the right shoppers but to form the heart of a community, whether Wimbledon or Venice in LA. Bayley & Sage started in the former and now has 13 grocery outlets around London, in districts including Parsons Green and Chelsea that Allen defines as “affluent, but with a village atmosphere”.

Its last store opening was two years ago in Marylebone, which stretches the definition of a village, given that it is among the wealthiest, most international districts in central London. But Marylebone has a busy high street and already accounts for 20 per cent of Bayley & Sage’s sales. Daylesford Organic also has a shop there, one of a cluster of fancy culinary outlets.

Last, their fame is out of proportion to their size. Young Londoners on TikTok know about Erewhon and have opinions on its celebrity smoothies, even if they have never been near LA. Expensive foods and exotic liquid concoctions are fodder for memes and jokes. The more costly and absurd a grocery sounds, the more of a cult it can become.

Stores that combine these qualities can do surprisingly well, even if their prices are high. Buying groceries came second to dining out in a recent McKinsey survey of activities on which US consumers intend to splurge. Both Erewhon and Daylesford have cafés attached to their stores to turn grocery shopping into a social experience for those who want to make more of it.

Erewhon now wants to expand its network to New York, while Bayley & Sage’s revenues rose 29 per cent last year. There is plenty of room for such chains to grow, since they only have a tiny share of national markets. Erewhon was founded in Boston and it is easy to imagine it fitting smoothly into Brooklyn, along with prosperous parts of other cities in the US and beyond. 

Unfortunately, the bottom line for groceries is often less exciting than the top one, even at the top end. Daylesford Organic lost £3.6mn last year amid high inflation and relies on Bamford’s financial backing. Bayley & Sage made a net profit on sales of only 1 per cent and constantly battles with wastage since most of its food is fresh. “Grocery is a low-margin business, whatever you do,” says Allen.

There is also a history of groceries and supermarkets for the affluent enjoying a period of glamour before failing. The luxury food chain Dean & DeLuca was overwhelmed by debt in 2019 after expanding globally. Fairway, a cornucopian supermarket at which I used to shop in New York, collapsed. It is hard to translate a retail niche into a mass-market success.

These latest groceries might want to enjoy the good times while they last. There is a moment when an emerging chain is large enough to be the haunt of celebrities and subject of social media memes, yet small enough to remain exclusive and desirable. A strawberry glaze smoothie can be fashionable but fashions also change.

john.gapper@ft.com