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Updated: February 3, 2020

Another Whole Foods competitor just bit the dust

Organic grocery chain Earth Fare is going out of business, making it the latest chain to unravel from pressure squeezing small supermarkets.

Earth Fare, which has around 50 stores, mainly in the South, said Monday that it would begin to liquidate merchandise at all of its stores. It will attempt to find a buyer for its locations and other company assets.

Earth Fare is the third grocery store to announce closings in the past several weeks, following Lucky's Market and Fairway. Lucky's and Earth Fare have been competing with each other in Florida, a battle that proved costly for both. The two were fighting for the same organic, healthful part of the market that Whole Foods occupies.

The closings are part of broader pattern of shrinking traditional supermarkets. Small and regional grocery chains are facing competition from Walmart, Amazon, Aldi, Lidl and others. They're pressuring traditional grocery stores to keep prices down. Shoppers are also buying more groceries online, forcing grocers to invest in new technology.

"The outlook for small and regional grocers is becoming increasingly challenging in a rapidly changing digital food retail landscape," Kelly Bania, analyst at BMO Capital Markets, wrote in a research note to clients.

The number of supermarkets in the United States declined by 1.3% last year to under 25,000 as SuperValu, Southeastern Grocers and Tops shuttered stores, according to Inmar Analytics. The number of US supermarkets will decline by 6% in the next five years, the firm predicted.

Based in Asheville, North Carolina, Earth Fare was founded in 1975. The grocer sells natural and organic foods that are free of hormones, artificial sweeteners, antibiotics and trans fats. That strategy was designed to help Earth Fare stand out in the cutthroat grocery sector.

"There's competition in food retail, but if you want a place that's clean, that you can feel secure about what you're bringing home, there's only one place left in America and it's Earth Fare," Earth Fare CEO Frank Scorpiniti told the Tampa Bay Times last year.

In 2012, a private equity firm purchased Earth Fare.

Just last January, Scorpiniti pledged the chain would roughly double its store count in the United States over the next five years.

"The acceleration of the growth really comes from the access to capital we now have with our private equity partner," he told the Charlotte Observer.

But a year later, Earth Fare has collapsed.

The company said in a statement Monday that "continued challenges in the retail industry impeded the company's progress" to refinance its debt.

"Earth Fare is not in a financial position to continue to operate on a go-forward basis," it said.

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