THE SUCCESS OF THE banking industry bailouts are sure to reverberate in Charlotte, N.C., which after years of rapid growth fueled in large part by financial giants like Wachovia and Bank of America, has been shaken and slowed by the economic meltdown.
But that news, observers said, may not be all bad for food retailers, as belt-tightening sparks more shopping and entertaining at home, and other government stimulus plans — such as additional allocations for food-stamp users — provide a foundation for growth in the channel. It doesn't mean winning will be easy. Charlotte is home to several strong grocery brands, and succeeding here requires a distinct offering, executed well.
“North Carolina has been one of the best states for eating away from home, but there's been a shift,” Burt P. Flickinger III, managing director of Strategic Resource Group, New York, told SN recently. “The movement of consumers buying food from food retailers, and eating and entertaining at home is going to benefit everybody in the supermarket business.”
Statistics from Metro Market Studies illustrate the point. The six-county Charlotte metropolitan statistical area, which includes about 1.7 million people, scored retail food sales about 21% below U.S. averages. In Charlotte, nearly half of those food shopping dollars are going to locally based giants: service-oriented, upscale Harris Teeter, with market-leading share of 24.5%; and Food Lion, the conventional EDLP operator now growing behind upscale (Bloom) and discount (Bottom Dollar) entrants in the market. Food Lion's total market share is 23.9%, according to Metro Market Studies.
Those companies attained their position through investment in their stores and attention to creating strong brands, local sources said. Yet both banners lost share over the last year. The gainers were discount formats including Wal-Mart Supercenters (16.3% market share), SuperTarget (1.9%) and Aldi (1.8%); as well as all three major U.S. warehouse club stores (Sam's Club, Costco and BJ's Wholesale), which combined account for nearly 10% of the Charlotte market.
Lowes Foods, another North Carolina-based grocer, grew its market share to 3% from 2.4% last year.
Lowes, according to Flickinger, is growing on the strength of a strong perishable reputation. “They're doing well on the fresh side of the business, but they still need to get to scale on the grocery side,” he said. “Anytime you come into a market dominated by Food Lion and Harris Teeter, it is going to take the better part of a decade to get up to speed.”
The area's fourth largest grocer, Bi-Lo, slipped to an 11.8% share from 12.9% a year ago. It operates 30 stores in the Charlotte market but has invested little in them recently, observers said — a fact that may have contributed to the company's recent Chapter 11 filing.
Charlotte is a market Bi-Lo may look to vacate as it reorganizes, Bryan Hunt, an analyst at Wachovia Securities, told SN.
| RETAILER | STORES | MARKET SHARE '09 | MARKET SHARE '08 |
|---|---|---|---|
| Harris Teeter | 46 | 24.5 | 26.2 |
| Food Lion, Bloom | 82 | 23.9 | 24.8 |
| Wal-Mart Supercenter | 16 | 16.3 | 15.0 |
| Bi-Lo | 30 | 11.8 | 12.9 |
| Sam's Club | 5 | 3.8 | 3.9 |
| Costco | 2 | 3.6 | 3.6 |
| Lowes Food | 11 | 3.0 | 2.4 |
| BJ's Wholesale | 3 | 2.4 | 2.2 |
| Target Supercenter | 3 | 1.9 | 1.4 |
| Aldi | 14 | 1.8 | 1.7 |
| Circle K | 47 | 1.1 | 1.1 |
| MDI | 36 | 1.1 | 1.0 |
| Trader Joe's | 3 | 1.0 | 0.7 |
| Compare Foods | 7 | 0.9 | 0.9 |
| Ingles Markets | 2 | 0.7 | 0.4 |
Includes Anson, Cabarrus, Gaston, Mecklenberg and Union counties in North Carolina and York County in South Carolina.
SOURCE: Metro Market Studies