Newcomers Establish a Presence in Sacramento

Sacramento, Calif., may become one of the most competitive markets in the U.S., if the industry’s recent interest in moving and expanding there is any indication.

Wal-Mart Stores is making a major push there, viewing Sacramento as a key region for its Neighborhood Market format.

Sprouts Farmers Markets, Phoenix, and The Fresh Market, Greensboro, N.C., are also beginning to exploit opportunities there, and Tesco's Fresh & Easy Neighborhood Market opened several of its last new stores there shortly before Tesco put a halt to its expansion. In addition, Costco Wholesale Corp., Issaquah, Wash., is a growing factor in the market, and WinCo Foods, Boise, Idaho, is coming on strong.

The new players are combining to disturb the relative hegemony the area’s conventional chains have had in Sacramento for many years.

Raley’s, with multiple banners, is still the market-share leader, with Safeway a distant second. But Costco and Wal-Mart are nipping at Safeway’s heels for second place.

Despite being the state’s capital, Sacramento was for years considered pretty much of a “cow town,” one local observer told SN — lacking the sophistication of next-door San Francisco or the bright lights of Los Angeles to the south.

“For many years Sacramento has been absolutely dominated by Raley’s,” one retailer told SN. “Shoppers there got used to shopping at that kind of conventional store, and I’m not sure how willing they are to switch. And when Safeway began converting its stores to the lifestyle format several years ago, it was more of the same — just a different version of Raley’s.”

But an influx of younger consumers from the Bay Area — fed up with high housing prices and too much traffic congestion — began moving eastward to Sacramento, resulting in a growth spurt in bedroom communities around the city, which opened up more locations for supermarkets and greater demand for more varied food options.

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Trader Joe’s Co., Monrovia, Calif., with seven stores, and Whole Foods Market, Austin, Texas, with four, have established beachheads there over the past few years, while Sprouts has three stores in the marketplace and The Fresh Market, which entered the region last fall, has plans to open its second and third locations there, with additional sites in the pipeline.

Speculation continues to persist that family-owned Raley’s may opt out of the picture at some point — if it can improve its operational performance.

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