Independents Grow Through Chains' Castoff Locations

MARK HAMSTRA

Independent supermarket operators in the Detroit and Oklahoma City markets are expanding their presence by capitalizing on downsizing efforts by two large chains.

In Detroit, several independent customers of Spartan Stores have stepped up to purchase some of the Farmer Jack stores that Montvale, N.J.-based A&P is seeking to sell, while in Oklahoma, Albertsons LLC is selling several of its stores there to independent customers of Associated Wholesale Grocers.

Of the 66 Farmer Jacks for sale in the Detroit area, Kroger had acquired 20 as of late last week and independents had bought nine, according to area sources and local reports. A&P previously said it had expected to wind down operations at the chain by this past Saturday, but would continue to seek buyers for the stores.

Among the independents who had acquired stores were Hollywood Super Markets, which bought three locations; VG's, which bought another three; Busch's, which bought two stores; and Hiller's, which bought one.

Many of the acquired stores had been struggling, said William Welch, president of Troy, Mich.-Based Hollywood Supermarkets, which nearly doubled in size with the addition of the three Farmer Jack's.

“They've been in a mode of self-destruction for God knows how long,” he told SN. “I think we're going to do at least as well as they did in those locations.

He said Hollywood is known for its quality and presentation in the perishables sections of its stores, and he hopes to bring those elements to the Farmer Jacks he was planning to convert by this week. He declined to disclose terms of the deal.

“We're a union operator, so those workers will get to keep their benefits,” he added. “It's good for them, and it's good for us.”

Kroger said it was planning to reopen six of the Farmer Jacks it acquired this week and the remaining stores later this month.

In Oklahoma, some independents built their operations considerably through the purchase of the Albertsons stores there.

Jeff Williams, president and co-owner of Williams Discount Foods, which is buying six of the Albertsons locations, told SN the acquisition will triple his sales volume as the new stores are about double the size of the average Williams Discount Foods locations and are in excellent condition.

“It's a nice acquisition for us,” he said. “We've been looking at these stores for a long time. We wanted to buy them last year when Albertsons was for sale, but we couldn't get the deal done.”

Williams said the stores are about 52,000-55,000 square feet, compared with Williams' typical stores, which are about 28,000 square feet and focused on competitive pricing. The chain currently operates nine supermarkets and six convenience stores, and competes extensively with Wal-Mart supercenters.

In addition to Williams, the other independents who are acquiring Albertsons stores in Oklahoma are RPCS Inc., Springfield, Mo., which is buying nine Albertsons; Reasor's, Tahlequah, Okla., which is buying one location; and Homeland, a subsidiary of AWG, which is buying the other seven locations.

For RPCS, based in Springfield, Mo., the acquisition of nine Albertsons in the Tulsa, Okla., market marks the company's move into new territory.

“We like Tulsa, because it's close to Springfield, and the towns are very similar to each other,” Erick Taylor, chief executive officer, RPCS, told the Springfield News-Leader last week.

The company, which already operates 34 stores under the Ramey's, Price Cutter, Price Cutter Plus and Smitty's banners, will convert the nine acquired Albertsons locations to a new banner, Taylor told the paper. Three of the acquired locations offer gasoline.

Other changes the company reportedly plans include upgrading beef offerings from USDA Select to USDA Choice, adding Starbucks outlets, expanding the bakery and deli departments, and lowering prices on some offerings.