STUDY PROJECTS EXPANSION FOR BOSTON

Nancy Brumback

BURLINGTON, Mass. (FNS) -- Boston's suburbs saw a 7.5% increase in the number of supermarkets from 1997 to 2002, according to a study by Finard & Co., a commercial real estate firm here. The study also describes future expansion in this market as "eye-popping," with the construction of almost three dozen new supermarkets planned or currently under way.

The 2002 Study of Grocery-Anchored Shopping Centers in eastern Massachusetts includes the precaution, "This potential additional supply of space on top of the 17% growth during the five-year period examined by the study should raise some warning flags about potential turbulence ahead.

"Given the growth of competing retail formats, it's hard to imagine that there won't be some casualties," particularly with the expected entry of Wal-Mart Supercenters into the market, stated the report, written by William J. Beckeman, partner, and Tami Strauss, research manager.

The Finard study offers a comparative analysis of supermarket growth for Boston's outer suburbs, the area primarily between the beltways of I-95 and I-495, but including much of the area south of I-495 to the Rhode Island border, as well as towns beyond I-495 due west of Boston.

In the 174 cities and towns in this area, the number of grocery-anchored shopping centers increased from 201 to 216 during the period, with a 1.52 million-square-foot net increase in space, a 17.1% jump. The report noted that average store size grew 9% to 48,176 square feet.

Finard also cited a trend toward more stand-alone grocery stores, which now make up about 14.8% of the grocery store market in the outer suburbs and 17.7% in the overall eastern Massachusetts market.

In its profile of the eastern Massachusetts market, adding the city of Boston and the suburbs immediately around it to the outer suburbs, the company found 271 grocery-anchored shopping centers, which serve 4.7 million people, 74% of the state's population.

Five supermarket chains occupy 85% of the 12.8 million square feet of gross leasable space in the market, according to the report. Stop & Shop accounts for 35% of the space, and Shaw's and Star Market -- both owned by J Sainsbury -- account for 29%. Demoulas Market Basket occupies 12% of the space; Victory Supermarkets, 5%; and Roche Bros./Sudbury Farms, 4%.

Stop & Shop has accounted for half the new stores built in the outer suburbs during the five-year period of the study, the report added.

Commenting on the competitive climate in the region, the Finard report noted that neither Safeway nor Kroger moved into the Boston market via acquisition, as had been predicted. Wal-Mart, it added, is just beginning to be a player in this market's grocery business.

In addition to new store construction by Stop & Shop and Shaw's, Roche Bros. and Victory are looking for new sites, the report said, and Big Y, with stores in western and central Massachusetts, plans to enter the Boston market with a new store in Walpole. Other firms with additional stores in the works in the Boston area are Hannaford Bros./Shop 'n Save, Price Chopper and Bread and Circus, the report said.

And Demoulas Market Basket is also "showing signs of activity" after a lengthy family legal battle.

In the city of Boston alone, Stop & Shop, with 10 stores, and Shaw's/Star with eight combined occupy 84% of the grocery space, the report said. The inner suburbs are dominated by four chains taking 87% of the grocery store space: Stop & Shop, Shaw's/Star, Demoulas Market Basket and Bread & Circus.