It should come as little surprise that Whole Foods Co-op is using environmentally friendly innovations in the remodeling of its new location. The member-owned Duluth grocery store has extolled the virtues of organic living since the co-op first formed in 1970.

What may come as a surprise is the size of the new store, a three-fold expansion, and the ambitions that come with it. The co-op will expand product selection in every department, and Sharon Murphy, general manager, expects annual revenues to increase from $4.5 million to about $7 million in its first year at 610 E. Fourth St., site of the former CW Chips Bar & Grill.

“We’ve done our homework,” Murphy said. “Our members wanted more from us. The only way they could get it was with this move.”

The $1.5-million building purchase closed in March, and some demolition of walls and asbestos abatement already has begun. A “Golden Hammer” ceremony to officially launch the remodeling project is scheduled at 9 a.m., April 11.

The co-op is seeking Leadership in Energy and Environmental Design (LEED) certification for the project. Developed by the U.S Green Building Council in Washington D.C., the program promotes “buildings that are environmentally responsible, profitable and healthy places to live and work,” according it its Web site.

LEED does not give out grants; it is a fee-based organization that offers project certification, accreditation and other resources. Murphy said Whole Foods Co-op would be the first certified LEED project in Duluth, and the first retail LEED project in Minnesota. The process will take into consideration factors such as building energy efficiency, materials selection and indoor environmental quality.

“I can’t deny that it’s going to cost more money up front,” Murphy said of the added costs associated with eco-friendly development. “I think in the long term it’s going to pay off. We’re using materials that are longer lasting, so there will be less maintenance costs.”

“It’s hard to measure if people notice these things. All in all we just hope (our customers) feel more comfortable,” she said.

Remodeling is expected to cost $1.8 million. Common Ground Deconstructors is handling the demolition work, LHB designed the plans, and Builder’s Commonwealth is the general contractor.

Founded in 1970 at Chester Creek House on 13th Avenue East & Second Street, the nonprofit cooperative has gone through a handful of moves over the years. It settled into its current location at 1332 E. Fourth St. in 1993.

Murphy said the co-op had been looking to move and expand since 1998. Two other relocation plans fell apart, one due to lack of parking, another due to lack of alley space for truck unloading.

If the new location seems perfect, that’s because the building was constructed in the 1950s as a grocery store — National Food Stores. The building was later occupied by Arrowhead Home Furniture and the Casa de Roma Italian restaurant.

Charlie Lemon bought the building in 1998, when he opened CW Chips Bar & Grill. The restaurant closed in February because of the sale to Whole Foods Co-op. Lemon said he decided to sell last fall when a proposed ban on smoking in Duluth bars threatened to hurt his business. “We would have stayed, had we known it wasn’t going to pass,” he said.

The new Whole Foods Co-op is set to open Oct. 1, with the present operation expected to close about a week earlier.

Bigger, better, brighter

The current operation, at the foot of the Chester Creek Trail, is certainly cramped. But research by Cooperative Development Services of Minneapolis concludes it’s in the middle of the Duluth population bubble most likely to buy organic foods. The new location actually will move the co-op out of its target area.

But Murphy said the move still makes sense because it’s only eight blocks west on the same street. Members will easily adapt to the change and enjoy the more spacious store, she said. The co-op also will also enjoy greater visibility at the busy intersection of Sixth Avenue East and Fourth Street, and be much more accessible to the hospitals and downtown business community.

The new store will use the entire two-level building, with the basement level serving as office and storage space, meeting rooms and a kitchen for cooking classes the co-op plans to offer in the future, through community education. In all, the new space is 18,700 square feet, compared to the current 5,000 square feet. There will be five register aisles, up from two.

Whole Foods employs 50 people and will have to add an additional 30 this fall, Murphy said. Presently, a group of 14 local growers supplies the store, mostly with produce. Murphy said she’ll “substantially expand that program.”

The co-op also will add a full line of fresh meats, a salad bar, and expand its deli selection at the new site. With a new seating area, the deli should be a major growth area for the co-op, capitalizing on walk-in traffic from the hospitals.

The remodeling will add windows for a brighter ambiance.

“Right now, it’s a total cave. We’re going to have a lot more color and we’re looking forward to having natural daylight,” she said.

The co-op has about 2,600 members and Murphy hopes to double that number in four years. Those members receive annual rebates based on store profits and the amount of their purchases. Because of the expansion, Murphy said the co-op suspended rebates in 2004, and may resume them in 2007. The co-op raised $800,000 in member loans to help with construction costs.

“That’s quite a show of support,” Murphy said. “We’re very proud of that.”

What competitors think

Whole Foods’ main competitors are two chain stores, Cub Foods on Central Entrance and Plaza Jubilee at 15 S. 13th Ave. E. Though the move will put the co-op closer to Cub and further from Jubilee, it will remain closer to the Jubilee. Based upon neighborhood layouts and demographics, new customers most likely will come at Plaza Jubilee’s expense.

Steve Scrignoli, president of Plaza Holding Co., which owns six Jubilee and two Festival supermarkets in the region, did not respond to telephone inquiries for this story.

Ken Weyenberg, general manager of the Duluth Cub Foods, said it’s unclear how the Whole Foods move will affect his store. He said Cub’s organic foods section has seen continuous growth since it was launched shortly after the store’s 1993 opening.

“I’m guessing we may see a slow down,” he said. “We have a lot of different types of competition out there. Our biggest competitors currently are obviously Super One, the neighborhood Jubilee and Festival stores, and Super Valu.”

Weyenberg said Cub’s biggest future competition is posed by the proposed Wal-Mart Supercenter in Hermantown. “That’s what we’re most concerned about as an industry and here in town,” he said. “They are a non-union competitor that plays on a different field.”

There are several small grocers near the co-op, but most likely will see minimal affect on sales from the co-op expansion.

First Oriental Grocery was sold last fall to Lee Cummings, who moved the store to 1131 E. Fourth St., just two blocks from the co-op. Cummings said the store has lost significant traffic since its move from the downtown site, which she attributes to the loss of tourist customers, and to Cub Foods’ addition of ethnic food sections, including Asian foods.

“It hurts that Cub has an oriental section,” she said. “I have a family neighborhood store. I can’t compete with a big corporation.”

Just five blocks from the new co-op location is Little John’s Fourth Street Market, at 102 E. Fourth St. Owner John Nygard has operated the store since 1970. He said it caters to a lower income clientele than the co-op, and believes his customers will stay put. He said the co-op is “fairly spendy” and doesn’t handle products popular with his customers, including tobacco, soft drinks, snack foods, home videos and lottery tickets.

“This is a low-income neighborhood,” he said. “I think people with limited incomes will find it difficult to do all their shopping (at the co-op).”

That said, the co-op would only need to take a small cut of Fourth Street Market’s business to put it on thin ice.

“There’s not much room for more belt tightening, that’s for sure,” Nygard said. “Between the box stores and the C-stores, we’re in kind of a unique situation (as) one of the last surviving neighborhood stores. I guess we just have to roll with the punches as we have in the past.”