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North Dakota's growing grocer, Hugo's, adds Minn. store, plans new location in Grand Forks

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GRAND FORKS -- Grand Forks' dominant grocery chain is adding its fourth store in Minnesota and developing plans for its fifth store in Grand Forks.

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"It's a beautiful store that's run very well by the two brothers who run it," said Kristi Magnuson-Nelson, referring to the acquisition by Hugo's Family Marketplace of J & B Foods in Park Rapids, Minn. "It was the right-size fit for us."

Hugo's recently reached a deal with owners Jeff and Bob Hensel to take over the 53,000-square-foot store in the community about 50 miles south of Bemidji.

The addition to the Hugo's chain fits the profile of the places the company likes to move into, said Magnuson-Nelson, its president since 2007.

It is within a ring surrounding its Grand Forks base and is in an area that draws shoppers from the surrounding region.

Hugo's also has plans, though further off, to follow the southern growth of Grand Forks with a new store at 47th Avenue South and Washington Street.

That project is probably three to five years away, depending on how quickly the area develops, though the company already owns land there.

Magnuson-Nelson said a new store would probably be a little bigger than the 32nd Avenue South Hugo's, but would keep the same format.

Regional chain

That store would be chain's first new construction since 1998, when it opened stores in East Grand Forks and Jamestown.

Magnuson-Nelson said there was no set goal for the number of stores to be in the chain, but that Hugo's growth has been driven more by opportunities as they happen.

"Really, we're not looking at numbers. We're looking at what's good for our chain," she said.

Hugo's also acquired a Wally's Supermarket in Grafton a year ago.

Another area of potential expansion that Magnuson-Nelson said she is often asked about is downtown Grand Forks, where a grocery store would complement development of the area for housing.

But that is not likely to happen since the area is not suited for the typical supermarket model with spacious buildings and big parking lots.

"I don't know how that would work without parking," she said, adding that the Amazing Grains cooperative and nearby convenience stores are serving downtown residents.

Organic growth

It has been five years since Magnuson-Nelson became the third president of the company founded by her grandparents, Hugo and Dorothy Magnuson, in 1939. Hugo Magnuson died in 2003. His son and Magnuson-Nelson's father, Curt Magnuson, died in 2007, and she took his place as president.

Since then, Hugo's has expanded beyond its core grocery business by adding liquor stores at some of its locations and seen big box retailers Wal-Mart and Target expand their grocery offerings, including Target's "P Fresh" concept and new or expanded Walmart stores in some of Hugo's markets.

Magnuson-Nelson said it was not likely that the company would make another move into a new business area as it did with the liquor venture, which she sees as a logical fit with shopper habits.

"I think it's a nice compliment to our business," she said.

Hugo's has also responded in recent years to the popularity of organic, natural and specialty foods that have helped chains such as Whole Foods and Trader Joe's take off by increasing its offerings in those product areas.

In competing with the big national retailers, Magnuson-Nelson said local grocers have been able to compete in areas such as freshness and quality of perishable products.

"You focus on what you well and focus on improving customer service... and you'll do fine," she said.

With the addition of about 120 employees of the Park Rapids supermarket, Hugo's now employs 1,200, some of whom have stayed with the company for decades.

"A lot of people on our team have worked with us 20, 30 or 40 years," Magnuson-Nelson said.

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