A Piece of the Pie

In this economy, price is king, and it shows in the snapshot of grocery market share in 10 major metropolitan areas on the following pages.

Price leaders like Wal-Mart Stores and warehouse clubs Costco and BJ's Wholesale have seen their market shares grow in the last year, according to data provided to SN from the “2009 Grocery Distribution Analysis and Guide” from Metro Market Studies, Tucson, Ariz. The data was presented to SN ahead of the publication of the book, which is scheduled in the coming weeks.

“Consumers are driving the bus,” Jay Campbell, president and chief executive officer of Associated Grocers, Baton Rouge, La., told SN, “and as a result, everyone is having to promote value more effectively.”

Observers in several markets pointed out that traditional supermarkets benefited to a large extent from the shift away from restaurant dining to more at-home meal preparation, which has helped make up for an erosion of customers to the discount chains.

The data reflect underlying strategies of the food retailers, as some, like Kroger — and more recently Safeway — have fought to gain share with sharper pricing, while others, like Supervalu's Albertsons, Acme and Shaw's banners, have instead chosen to sacrifice some market share for the sake of profitability.

John Rand, director of retail insights, grocery, at Management Ventures, Cambridge, Mass., said that strategy appears to be in play in the Boston market (see Page 16), where Shaw's and Star Market have lost some ground in the wake of an EDLP-type pricing campaign at Stop & Shop.

“If you had asked Supervalu when was a good time to schedule a recession, they wouldn't have picked now,” Rand quipped. “But that's their choice — they are in a ‘stay the course’ mode. It is harder for them to invest in traffic-building measures right now.”

The situation Supervalu finds itself in — saddled with debt from the Albertsons acquisition — mirrors the position Kroger and Safeway were in after a string of mergers in the 1990s.

“It's only been a couple of years since the Albertsons acquisition, and they are still working through that,” Rand said.

Supervalu also saw some share decline in Seattle (Page 26), where market leaders Safeway and Kroger picked up share, and Las Vegas (Page 19), where Wal-Mart took hold of the No. 1 market-share position for the first time.

Wal-Mart, which saw its market share grow in each of the 10 markets in the survey, also holds the No. 1 distinction in New Orleans (Page 20).

Some regional operators overall fared well in the markets profiled, with Florida powerhouse Publix Super Markets boosting its No. 1 position in Miami (page 19), while others, such as Raley's in Sacramento, Calif. (Page 24), held onto the top market-share position but saw share decline, in Raley's case amid gains from Safeway and Wal-Mart.

To compile the data, Metro Market Studies uses a variety of sources, including store surveys. It includes convenience stores that have significant food sales. It also lists wholesalers' volume as an aggregate of their individual customers, but breaks out the largest customers separately. To calculate share, Metro Market Studies adds the dollar sales volume from all retailers in the market and divides that by each individual retailer's dollar sales volume. Stories begin on Page 16.

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