Richmond Grocery Wars: 2017 Update

Posted on in Commercial Real Estate, RVA Grocery and Delivery Wars

As we approach the second half of 2017, Richmond's grocery scene continues to experience tremendous activity. For those of you who have not been closely following the grocery sector changes in our region and don't know where you're going to shop when your go-to Martin's closes this summer, you have come to the right place! I have summarized the recent activity below. Not a fan of grocery shopping? You're in luck, too. You can read my article on Richmond's Delivery Wars to learn how to have your groceries delivered directly to your doorstep.

The Whole Foods project at The Sauer Center on West Broad Street in the City at the former Pleasants Hardware location has continued to sit idle. At first, rumors tied the inactivity to several consecutive quarters of losses as Whole Foods felt the heat of competition from Aldi, Kroger and Walmart as these stores increased their selections of "healthy foods". Then, Whole Foods announced a reduction in the number of new store openings nationwide, leaving the project's fate in question. However, in March, Whole Foods' plans were submitted to the City for review and approval, and it now appears that the project is back on track!

Discount grocer Lidl is poised to enter the U. S. market this year with 20 stores planned across Virginia and the Carolinas. In the Richmond market, stores will be at West Broad Street (the former site of Colonial Downs OTB location), on Iron Bridge Road, Charter Colony Parkway and Mall Drive in Chesterfield, and at South Laburnum Avenue, Staples Mill Road and in Greengate in Henrico. Lidl will open its first U. S. stores on June 15, but it has not announced which stores will open on that date.

Kroger, with its Kroger Marketplace Concept (typically in the range of 120,000 to 130,000 square feet of space), is aggressively attacking Walmart and Target by offering more home goods, clothing and kitchen appliances. Their goal is to carry almost everything sold by these two rivals, but with a stronger emphasis on groceries, alcohol and prepared foods.

Publix Super Markets will occupy 50,000 square feet of space in a new shopping center to be constructed on Mechanicsville Turnpike at Brandy Creek Drive. In addition, it has purchased 10 area Martin's stores in the Richmond and surrounding markets and has another new construction project slated at Nuckols Place in Henrico County. Publix stores focus on premier customer service. It is an employee-owned grocery chain based in Lakeland, Florida.

Martin's recently announced the closing dates for their nine locations that were not purchased by Publix. Four locations will close on July 10: Chesterfield Meadows, Chippenham Crossing Center, Chesterfield Town Center and Monticello Marketplace. Five locations will close on August 2: Stratford Hills, Brook Run, Charter Colony, Bermuda Square and North Ashland Plaza.

Jim Scanlon is planning to open a Jim's Market in North Church Hill at the intersections of North 24th Street, North 25th Street and Nine Mile Road to offer healthy options to the community. This area has been identified as a food desert. Scanlon formerly worked for Hannaford and Ukrop's and currently operates a Jim's Market in Newport News in another grocery-store starved neighborhood.

Rumor has it that both of the Wegmans stores in the Richmond market are exceeding company expectations, even after the initial novelty has worn off. It is interesting to note (and certainly no accident) that the company's two Richmond locations are located in the zip codes that are the highest in the area in terms of per capita income.

Food Lion announced earlier this month that it will spend $110 million to remodel 71 stores in the greater Richmond region. Food Lion ranked 4th in market share based on sales (behind Walmart, Kroger and Martin's) for the 12 months ending March 31, 2017. It had been ranked 1st for several years before slipping to 2nd in 2014 and 3rd in 2015.

Amazon and Walmart are in a toe-to-toe battle for free shipping of their offerings, including grocery products. Walmart offers customers free two-day delivery, something Amazon only offers to its Prime members, who pay $99 per year for the Prime benefits. Walmart has seen the necessity to invest heavily in e-commerce, as its online sales rose to $13.7 billion in 2015, but it still has a long way to go to compete with Amazon's $107 billion in annual online sales. More about Richmond's Delivery Wars can be found here.

Stay tuned for more updates! Richmond's grocery market is HOT. So far my take is that with all of this competition, Richmond's consumers will be the real winners!

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.