GIANT EAGLE SET FOR COLUMBUS, OHIO?

ELLIOT ZWIEBACH

PITTSBURGH -- Giant Eagle here is reportedly preparing to move into central Ohio by establishing a beachhead in the Columbus marketplace.

The privately held chain reportedly plans to build six units of 100,000 square feet each in affluent neighborhoods of the city. Company officials declined comment last week on those plans and on persistent trade reports that it hopes to acquire units of Columbus-based Big Bear from Penn Traffic Co., Syracuse, N.Y.

Penn Traffic officials denied last week that they have any plans to sell off any divisions.

Although Giant Eagle has stores in eastern Ohio, it does not operate any stores in the 120-mile stretch between Cleveland and Columbus.

In Columbus it would compete with Kroger Co., Cincinnati; Big Bear; and Meijer Inc., Grand Rapids, Mich.

With all three retailers operating generally high-margin stores -- leaving the price end to Aldi's limited- assortment stores -- some observers said Giant Eagle's arrival is unlikely to have much effect on local pricing. According to one, "Giant Eagle has already figured out gross-profit margins in Columbus are at a level at which it can operate very comfortably."

Chuck Cerankosky, a securities analyst with McDonald Investments, Cleveland, cited the example of Giant Eagle's earlier entry into Cleveland in order to explain how the chain could make a difference in the Columbus area's pricing. By offering Cleveland consumers a broader selection of private-label products, "Giant Eagle has probably improved the price-value relationship with consumers," he said.

With only six stores in Columbus, "Giant Eagle isn't going to shake things up, nor would it want to," Cerankosky added. "But it would establish a beachhead for the company."

Market sources in Columbus told SN Kroger dominates market-share statistics there with a 56% slice for its 47 area stores, compared with 20% each for Big Bear's 30 area stores and Meijer's seven units of 220,000 square feet each.

Big Bear and Kroger were running about even in market share, at about 31%, in the late 1980s. However, after Penn Traffic acquired Big Bear in 1989, store conditions began to decline, local sources told SN -- at the same time Kroger's fortunes picked up as it became more aggressive in its pricing and consumer awareness efforts.

Since Penn Traffic emerged from bankruptcy in June, its has brought back Roy Flood, a veteran Big Bear executive, to oversee the local operation. Meanwhile, local observers said the chain has begun running better ads, increased store cleanliness and launched a major remodeling program.