HANNAFORD PLANS TO ADD TWO SOUTHEAST MARKETS

MARK TOSH

SCARBOROUGH, Maine -- Hannaford Bros. here is ready to roll its Wilson's Supermarkets division into two new Southeast markets.

Wilson's, which Hannaford acquired in July, will open stores in Charlotte, N.C., and Richmond, Va., Charles Crockett, assistant secretary for Hannaford, told SN last week. The initial stores in each market may "possibly" open late next year, he said.

Wilson's currently operates 21 stores, most of which are located near its headquarters in Wilmington, N.C.

In confirming the two store openings, which had been rumored in the market recently, Crockett said Hannaford has established a platform for future growth.

"I think to make a statement in the Southeast you need to make it a number of places," he said, explaining the company's decision to enter two markets more than 200 miles apart.

Richmond and Charlotte are the headquarters locations of two leading Southeast chains: Harris Teeter in Charlotte and Ukrop's Super Markets in Richmond.

Crockett declined to estimate the size of Hannaford's projected expansion in either Charlotte or

Richmond, where Ukrop's has a market-leading 30% share. "Obviously, you can't go to those towns with just one store," he said. "But you have to start somewhere."

Food Lion, based in Salisbury, N.C., is the market-share leader in Charlotte, with an estimated 40% share. Harris Teeter ranks second with a 23% market share, according to trade estimates.

Wilson's also has two new stores under construction in suburban Raleigh, N.C., which are expected to open in mid-1995, Crockett said. Wilson's 21st store recently opened in Fayetteville, N.C., which is about half way between its headquarters in Wilmington and Charlotte.

In Wilmington, which is in southeast North Carolina, Wilson's is the market-share leader with a 36% share, according to trade estimates.

Overall, Hannaford expects to open about 12 new stores in 1995 for a 15% increase in square footage. About 50% of these stores are planned for the Wilson's chain and the balance for Hannaford's core markets in New England.

H.B. Thomson III, a securities analyst at Wheat First Butcher Singer, Richmond, said he believes it may be difficult for Hannaford to find a niche for the planned Wilson's stores among the existing competition in Richmond and Charlotte.

"Hannaford operates very good grocery stores, generally catering towards a better clientele, with good selections," he said. "It has all of the things you look for in a Ukrops, for example."

Thomson said Harris Teeter, which is planning to expand in the Tidewater area of Virginia, has chosen not to enter the Richmond market, in part, because it does not want to challenge Ukrops. "So I wonder why Hannaford wants to go up against Ukrops," he said.

Giant Food, Landover, Md., which also caters to an upscale clientele pulled out of Richmond years ago "because the competition from Safeway and Ukrop's was more than they could handle," he said. "There was too much of the same sort of grocery retailer here. I don't see Hannaford being significantly different."

Although Richmond is not an over-stored market, Thomson said, the existing competition -- including Farm Fresh and Food Lion -- is expanding "in line with the population growth."

Hannaford has annual sales of more than $2 billion. In addition to the Wilson's chain, it operates 95 supermarkets in Maine, New Hampshire, Massachusetts, Vermont and New York.

As it continues to open new stores in the Carolinas and Virginia, Hannaford also moves closer to the point where self-distribution would become a more cost-efficient alternative than using a wholesale distributor to supply the stores. (The company already self-distributes to its New England stores.)

At the time of Wilson acquisition, Hannaford said Wilson's 20 supermarkets accounted for annual sales of about $200 million. The new store in Fayetteville opened since the deal closed.

A grocery retailer, according to trade observers, must operate about 40 stores or have annual sales of about $500 million before going to self-distribution. The Wilson's stores are being supplied by Fleming Cos. through one of its Scrivner Group warehouses. Fleming, Oklahoma City, acquired Scrivner in July.

Crockett said he was not aware of any planned changes for distribution at this time. He said, however, at the $500 million sales level self-distribution becomes "a possibility, not a definite, but a possibility. That would be about the point we would make a decision."