Richmond Grocery Wars: 2018 Update

Richmond's grocery sector continues to experience tremendous change and competition, and we are beginning to see some fallout from the intense flurry of activity over the past months. Here is a current update:

Growth

Publix is the biggest newcomer to the RVA metro-area market after initially acquiring ten of the Martin's locations that closed due the merger of its parent company with that of Food Lion. Publix has opened eight stores in the area since last July, and the Stratford Hills location is scheduled to open later this summer or early fall. Site work has commenced and demolition will get under way very shortly at The Village Shopping Center location at Patterson Avenue and Three Chopt Road, where a 48,000 square foot replacement store will be built. The opening of The Village store is expected in the fall of 2019. The Westpark location, originally a Ukrop's, has been demolished and is to be replaced by a 52,744 square foot Publix with a drive-through pharmacy. The long-awaited plans for the Richmond Shopping Center at the western edge of Carytown, now re-branded as Carytown Exchange, have been released. The Center is being redeveloped with most structures being demolished. The plans can be seen at www.carytownexchange.com. Renderings reflect new retail along Cary Street and a 49,000 square foot anchor grocery store on the corner of Ellwood Avenue and North Thompson Street, diagonally across from Ellwood Thompson's. Reportedly, no lease has yet been signed between the center's owner and Publix, although the two are working together on the redevelopment plans. My projection is that it will happen, but that it will be at least 2020 before Publix opens and provides some real competition to the Kroger across the street.

Wegmans, new to the Richmond area in 2016 with the opening of a store at Stonehenge Village in Midlothian and in 2017 at West Broad Marketplace in Henrico, quickly followed by opening a store in Charlottesville. The Richmond stores appear to be meeting or exceeding expectations. Earlier this month, Wegmans opened a store in Chantilly in Northern Virginia that includes a Burger Bar restaurant, the first in Virginia. Virginia Business reports that future Wegmans stores are slated for Virginia Beach, Tysons Corner, Alexandria, and Arcola.

Kroger has scaled back on opening new stores in the Richmond metropolitan market while focusing on delivery and online ordering through its Click List program and adding employees to better serve customers. Kroger, under its Harris Teeter brand, did acquire ten of the Farm Fresh stores when that grocery chain's parent Supervalu sold 38 stores, mostly in the Tidewater and Hampton Roads regions. USA Today reported in April that Kroger is hiring 11,000 additional workers nationwide. Kroger operates more than 2,700 grocery stores in 35 states under a variety of names.

Food Lion announced in May that it will invest $168 million in updating 105 of its stores in the greater Hampton Roads region and in the Outer Banks, where Food Lion is the market share leader. Analysts predict that Food Lion is protecting its turf in those areas. Brian Glass, Senior Vice President and retail guru at Colliers International, reports that Food Lion has invested $150 million in updating stores in the Richmond market. 

Casualties

As noted above, Farm Fresh, based in Virginia Beach, jettisoned 38 stores including its one store in Richmond on East Main Street. However, it quickly found a buyer and sold the store to Neighborhood Grocery Holdings, LLC, which operates a grocery store in Charlottesville. The store will remain open, eliminating the threat of an even greater food desert in the area.

Lidl has retreated in more than one way. When the German grocer opened last year, lines looked like they did for the opening night of Jaws, and competitors thought they were going to need a bigger boat. Lidl promised to open 100 stores by the end of this year. However, to date, Lidl has opened less than half of that total, as reported in an online article. Additionally, the design has moved away from the expensive but impressive sloped roof to a more cost-conscious flat roof. Lidl has opened stores on Staples Mill Road in Henrico and on West Broad Street in the City at the site of the former Colonial Downs OTB location and four others in the Richmond region.

Walmart has, as reported in the RTD earlier this month, slipped to the Number 2 slot among retailers selling groceries in the Richmond region. Moving for the first time into the top position is Kroger, which inched out Walmart by one-hundredth of one percent with 17.01% of market share! There were some surprising results in the Richmond area, as Walmart was followed (in order) by Food Lion, CVS, Wawa, Target, Walgreens, 7-Eleven, Wegmans, and Publix. A Walmart spokesperson noted that the company is focusing on customer service. In my opinion, it is focused on finding ways to ward off advances by Amazon.

Winn Dixie and Bi-Lo, through their parent company Southeastern, entered the bankruptcy arena earlier this year and reportedly closed 94 stores. Another grocer, Tops, with stores in Pennsylvania, Vermont, and New York, filed for bankruptcy protection on the same day as Southeastern. Analysts predict that more filings will follow.

New Entries into the Market

Market @ 25th in the North Church Hill food desert at North 25th Street and Nine Mile Road is back on track. Initially planned to be a Jim's Market modeled after and operated by Jim Scanlon and his Newport News store, Scanlon retreated and then closed his Newport News store in January. Store backer Steve Markel engaged Norm Gold from Feedmore to oversee and operate the store, which currently is under construction and is working closely with the neighborhood. The store is slated to open by the end of this year.

Big Apple international grocery store moved into the 58,000 square foot space at Brook Run Shopping Center in Henrico and opened in May. This site was previously occupied by a Martin's. Big Apple has another store in South Richmond on Jefferson Davis Highway that it has operated since 2005. The RTD reports that competition is increasing in the international food sector.

New Grand Mart, another international grocer, opened a location in West Broad Commons in Henrico that was previously a Food Lion location. The company has operated another store at 7415 Midlothian Turnpike since 2015.

Conclusion

As more of the population sees grocery shopping as a chore to be avoided, convenience is going to rule the market. Segments of shoppers will always look for value and bargains to help balance their family budgets, but an increasing portion of the shopping population simply wants to have the grocer handle their shopping needs and either deliver the groceries directly to their doorstep or have the groceries waiting for them in a convenient, hassle-free pickup line. The market leaders understand this trend and are adapting their service models to accommodate the demand.


Spotts Fain publications are provided as an educational service and are not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.

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