Wal-Mart, Independents Gain Share in Baton Rouge

JON SPRINGER

FIVE YEARS AFTER hurricanes Rita and Katrina blew through town, Baton Rouge is withstanding economic headwinds better than many of its counterparts, with recovering energy and agriculture businesses and growing populations tempering rising unemployment rates.

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“After the worst back-to-back hurricanes in decades, Baton Rouge has been bouncing back from a low base,” Burt P. Flickinger III, managing director of Strategic Resource Group, New York, told SN. “In terms of economic development, it's gone from the worst of times to the best of times.”

In grocery, the ever-increasing might of Wal-Mart Stores prompted several competitors to leave town in recent years. While this has probably been to Wal-Mart's ultimate benefit, it's also created opportunity for nimble independents in a market that still values its local food heritage.

“Louisiana consumers take grocery shopping much more seriously than the typical American consumer,” David Livingston, a Pewaukee, Wis.-based supermarket consultant, told SN. “Nearly every independent in Baton Rouge has some unique characteristic — Calandros, Matherne's, LeBlanc's, Ralphs, Oak Point, Carter's to name a few.”

Those independents all cling to a slice of the pie dominated by Wal-Mart, which between Supercenters and Neighborhood Markets controls 48.2% of the Baton Rouge market, according to Metro Market Studies, Tucson, Ariz. The market comprises about 772,000 residents living in nine parishes.

Wal-Mart's share of the Baton Rouge market has skyrocketed in recent years as Albertsons, A&P Save-A-Center and Winn-Dixie have retreated. Of those, only Winn-Dixie is still investing in the market, maintaining a 10.1% share. Albertsons LLC is down to seven stores and a 12.8% share. Grey Mullins, a broker with local retail real estate firm Beau Box Commercial Real Estate, said he feels the market would embrace another big name.

“This market could really use a Kroger, a Publix or a Harris Teeter, but for whatever reason they haven't gotten here yet,” Mullins told SN. Rouse's Supermarkets, a regional chain headquartered in Thibodaux, La., has looked at potential sites in Baton Rouge but hasn't moved to expand there yet, Mullins added. “I think they would be a great fit here.”

Independents that have picked up locations from departed supermarket operators have largely been successful, observers said. There is more opportunity where that came from, but area independents are concerned over costs and may not have the capital to make the improvements those stores might need to revive them.

“The issue affecting independents in Baton Rouge has been a lack of capital,” Flickinger said. “Many of them aren't sure what's happening in Washington with regard to costs for health care and other tax expenses. Even highly capable independents aren't going to invest more until there's more certainty about the tax situation and rules and regulations.”

Wholesaler Associated Grocers of Baton Rouge services more than 220 stores in the area, and its 35 owned stores comprise 5.8% of the Baton Rouge market. Its independent customers include LeBlanc's, Matherne's and Calandros.

Target in the meantime looks determined to increase its presence in Baton Rouge with the conversion of its area stores to its P-fresh market — the Minneapolis-based discounter has two stores and a 4.2% share currently.

Whole Foods, which opened its first and still only store in Baton Rouge just months ahead of the hurricanes, gained traction as population increased following the storms, observers said. A more recently opened Fresh Market store is still getting off the ground.