Three years of comp-store sales declines in Supervalu's retail division have taken their toll on the company's market share.
On the following pages, SN details up-to-date grocery sales market-share positions in a representative sample of 10 markets relative to a year ago, based on data provided exclusively to SN by Tucson, Ariz.-based Metro Market Studies.
The data show that Supervalu is nearly almost always the biggest loser in each market, with rare exceptions. This month, in a conference call discussing earnings for the most recent fiscal year, the company said it is focused on turning that situation around.
“We have begun to implement a detailed transformation plan to fund our price investments, mitigate rising costs and restore local relevance to our retail stores so we can restore top-line growth and bottom-line earnings,” said Craig Herkert, president and chief executive officer.
Supervalu posted negative comps of 5% in the fourth quarter in the retail division, but said it expects that figure to improve to as much as negative 1.5% for the current fiscal year.
The company also sold or closed about 80 stores last year, and speculation of more asset divestitures has been rampant.
Click on the following cities for their market analyses:
- Bakersfield, Calif.
- Baltimore
- Boise, Idaho
- Chicago
- Fargo, N.D.
- Minneapolis
- Philadelphia
- Providence, R.I.
- St. Louis
- Virginia Beach
Bakersfield Albertsons Lose Share; Discounters Gain
BAKERSFIELD, CALIF., is a tough market these days for supermarket operators.
![](http://supermarketnews.com/images/0425_SNBakersField.jpg)
Located approximately 100 miles north of Los Angeles, the city of just under 850,000 has seen unemployment rise to 30% or more during the last couple of years as jobs in agriculture have dried up, prompting large numbers of residents to leave.
“It's even hard to get employees to transfer from stores in another area to Bakersfield,” one retailer told SN. “And with people moving out of town, it's hard for the supermarkets there to find new business.”
![](http://supermarketnews.com/images/0425_bakerfieldchart.jpg)
Albertsons, with 12 stores in the broader Kern County region, has the area's largest market share, with an estimated 19.4%, according to Metro Market Studies, Tucson, Ariz.
“Albertsons has been there a long time,” one observer pointed out, “and though it's opened one or two new stores over the last decade, most of the stores have not been touched in more than 10 years.”
Local observers said the Albertsons stores have seen volume decline as quality began slipping under the company's management prior to the 2006 sale to Supervalu, and store conditions have continued to deteriorate, they said.
Several observers said they believe most of the Albertsons stores in Bakersfield, along with most of those in Southern California, will be sold over the next couple of years. “There are 79 for sale right now,” said one.
Coming in second behind Albertsons is Vallarta Markets, a Hispanic-oriented chain based in Sylmar, in Southern California, which controls a share of 11.9% at its seven Kern County stores — including four locations it acquired last year from Pro's Ranch Markets (two in Bakersfield and one each in surrounding Kern County locations).
As Albertsons' share declines, the primary beneficiaries appear to be the area's price operators — Costco, WinCo, Wal-Mart and Food Maxx. Costco, with two warehouses in Bakersfield, has a 10.9% market share, virtually tied with Safeway-owned Vons, whose seven stores have a 10.8% share.
“I think over time you'll see Vallarta, WinCo and Wal-Mart continue to dominate the area north of Los Angeles and expand farther up the West Coast,” one observer said.
Fresh & Easy Neighborhood Market, the U.S. division of United Kingdom-based Tesco, has opened seven stores in the Kern County region that encompasses Bakersfield over the past few years, and while units in surrounding areas — where the downturn has not been as sharp — are said to be doing well, those in Bakersfield have been negatively impacted by the weak local economy, observers said.
— Elliot Zwiebach
Opportunities in Baltimore, but Not for Shoppers
AS FANS of the HBO series “The Wire” know, the bodies are always falling in Baltimore, keeping the homicide detectives plenty busy.
![](http://supermarketnews.com/images/0425_SNBaltimore.jpg)
Now the supermarket industry is in the game. The latest victims are A&P's SuperFresh stores, many of which have been placed up for sale in Baltimore and the surrounding region. The question is, who's able to step up and take over their turf?
Local observers don't seem to believe that Supervalu's Shoppers Food & Drug has the muscle. The chain's 19 stores in the market, which includes six surrounding counties, have the No. 3 grocery share at 7.6%, well behind No. 1 Giant of Landover with 22% and trailing No. 2 Safeway with 9.9%, according to data from Metro Market Studies, Tucson. Shoppers' share slid 0.6 points vs. a year ago.
“Shoppers has been having a tough time in this market,” said Jeremy Diamond, an analyst with Baltimore-based Diamond Group, citing a couple of recent store closures. “They run that warehouse style format on such a slim margin, and it's hard for them to make a profit.”
![](http://supermarketnews.com/images/0425_baltimorechart.jpg)
Shoppers stores generate average sales of about $20 million per store, according to a recent report by Karen Short, a New York-based analyst with BMO Capital Markets.
Diamond said he sees some of the strong local independents, including Mars Super Markets, with 16 stores in the market and a 5.2% share, as potential buyers for some of the SuperFresh sites in the area. Mars is scheduled to open a new store in Bel Air, Md., later this year in a former SuperFresh location.
Stop, Shop & Save, another local independent, also could be in the market for some of the SuperFresh locations, Diamond said.
“I see Shoppers sitting on the sidelines, trying to fix what they have, and sticking to their game plan,” he said.
Food Lion, based in Salisbury, N.C., has a strong presence in the market, where it also operates the Bottom Dollar discount format, but hasn't been too aggressive in its expansion efforts recently. Its share was up 0.2 points in the past year, to 6.4%.
Harris Teeter also is making inroads in the market, with one new store in development, and Wakefern's ShopRite banner also is pressing into the region with a new store opening last year in Glen Burnie, Md., operated by licensee Collins Family Markets.
“Shoppers has a lot of competition for that No. 3 spot behind Giant and Safeway,” Diamond said.
Bob Gorland, vice president at site-selection and consulting firm Matthew P. Casey & Associates, Clark, N.J., said it appears Shoppers has struggled to maintain the volume necessary to be successful with its large stores.
“Giant and Safeway have done a lot of remodeling, and opened replacement stores, and there have been some new Wal-Mart supercenters, and more are coming,” he said. “A couple of years ago, Shoppers was the price leader, but it has lost its price leadership.”
— Mark Hamstra
Albertsons Still No. 1 in Boise
ALBERTSONS remains the market-share leader in Boise, Idaho, the city that was once its national home base, and it is likely to hold that position for the foreseeable future, despite a high price perception among consumers, observers told SN.
![](http://supermarketnews.com/images/0425_SNBoise.jpg)
Albertsons, a division of Minneapolis-based Supervalu, operates 20 stores here that account for a market-share of 31.6%, according to Metro Market Studies, Tucson, Ariz. It is followed by WinCo Foods, a locally based chain whose five Boise stores have a 20.2% share; Wal-Mart, with six stores and a 19% share; Costco, with two warehouses and a share of 11.4%; and Fred Meyer, a division of the Kroger Co., with six stores and a 10.1% share.
Albertsons operates as a high-low supermarket, as it did when it was an independent chain, and though it promotes heavily, its price perception remains high, Mike Griswold, a locally based consultant for Gartner Inc., Boston, told SN.
“That remains its biggest challenge in this market,” he said. “The perception of Albertsons before Supervalu took over was not much different, but the company was regarded back then as a family-run business that reflected a more service-oriented approach.”
![](http://supermarketnews.com/images/0425_boisechart.jpg)
That reputation has eroded under Supervalu's ownership, he said. Though store conditions are good, “the high price perception hurts.”
Dick King, senior vice president at Associated Food Stores, Salt Lake City, who has a home here and who worked here for 25 years with Albertsons, ultimately as the chain's president, said Albertsons has remained consistent in terms of pricing and store conditions.
“It took a hit when WinCo began opening its low-priced stores, but it's been able to price more competitively by getting its basics back down,” King said.
Supervalu is unlikely to seek to sell Albertsons here for at least 12 to 18 months, Griswold suggested, “because those stores are still a good source of revenues, and any attempts to sell them to an in-market buyer would likely run into challenges from the Federal Trade Commission.”
According to King, WinCo is the low-priced leader here most of the time — keeping prices below Wal-Mart's on most items, although its selection can be hit-or-miss.
“WinCo operates very well-run stores, with a strong emphasis on perishables and other perimeter departments,” he said.
According to Griswold, Wal-Mart and Fred Meyer will each open new stores here next year, and Whole Foods Market is scheduled to enter the market late this year or early in 2012.
Given Boise's younger population, Whole Foods — which will locate its initial store in the city's downtown area — could have considerable appeal to the outdoors-oriented, healthy lifestyle of the area's demographic, Griswold pointed out — though with a WinCo and a cooperative grocery store nearby, he said he isn't sure how locals will respond to Whole Foods' prices.
— Elliot Zwiebach
Newcomers Tarnish Jewel's Chicago Luster
ALTHOUGH A VARIETY of retailers are likely to chip away bit by bit at the market-share leaders in Chicago, it's unlikely anyone will surpass Jewel or Dominick's in the foreseeable future, industry observers told SN.
![](http://supermarketnews.com/images/0425_SNChicago.jpg)
“Wal-Mart may come into the city and try to knock Jewel off its pedestal, and though it's doubtful it can do it, Wal-Mart will certainly increase the competitive pressure,” said Neil Stern, a consultant with McMillan Doolittle here.
Jewel, a division of Minneapolis-based Supervalu, is the market leader, with 170 stores controlling a share of 33.9%, according to Metro Market Studies, Phoenix. Dominick's, a division of Pleasanton, Calif.-based Safeway, is in second place, with 78 stores and a share of 10.9%.
![](http://supermarketnews.com/images/0425_chicagochart.jpg)
Both chains sought to improve their pricing image last year. “In fact, Supervalu launched its national pricing program at Jewel,” Stern noted, “though it didn't stick with it for long, whereas Dominick's has stuck with its program — though neither chain has seen much sales lift.”
Craig Herkert, chairman and chief executive officer of Supervalu, acknowledged as much earlier this month when he told analysts fourth-quarter results in Chicago were below the corporate average of negative 5% in comparable-store sales.
According to one observer, “Jewel stores have shown noticeable operational improvements in the past couple of years in terms of store conditions, and pricing has improved — both regular shelf pricing and promotional pricing. But it isn't getting the credit it deserves for those efforts because it isn't communicating them well.”
Dominick's, which operates most of its stores in the suburbs around the city, has not benefited much either from its own lower-pricing efforts, the industry observer told SN, “because the company is more interested in guarding margins than gaining share, and it isn't projecting its pricing very forcefully in its advertising.”
Costco follows Dominick's in the market with 17 warehouses and a 6.7% share. Wal-Mart, with 22 locations has a 6% share. The company is on the verge of opening additional stores here, including Walmart Express, a new 20,000-square-foot format in some under-served areas of the city “that stand to do between $500,000 and $700,000 a week, which will come out of the pockets of a lot of different competitors, including the two market leaders,” Stern said.
Stack and Van Til, a group of 31 independents operating like a chain, has a 5% share. Stern said the company has become a stronger player since acquiring the Cub Foods on Chicago's south side from Supervalu in 2006.
Target has 72 stores — including 16 Super Targets — and a 3.9% market share, but stands to gain with the addition in the last few months of P-fresh grocery sections to all its Chicago-area stores, one local observer said.
Grand Rapids, Mich.-based Meijer, with 15 stores in the market, is also expanding closer to the city.
— Elliot Zwiebach
In Fargo Market, Hornbacher's Maintains Its Lead
IF SUPERVALU had its way, more of the markets where it runs stores would resemble Fargo, N.D., where its retail banner is No. 1, the market is growing, its stores are new and up-to-date, and local ties are strong.
![](http://supermarketnews.com/images/0425_SNFargo.jpg)
Hornbacher's, the company-owned banner, has six stores and a leading 35% market share in Fargo. Financially, the banner is also a winner, albeit a small one: Stores are productive, with $90 million in total annual volume and EBITDA margins of 5%, according to estimates by BMO Capital Markets.
The Fargo market, including the neighboring city of Moorhead, Minn., has seen its population grow for several years behind manufacturing jobs, relatively low unemployment and a decidedly conservative fiscal mind-set that resisted the temptation to develop any more than it could absorb, according to Jim Buus, vice president of Goldmark Schlossman, a Fargo-based commercial real estate services firm. The result has been a steady market where few new stores arrive and few close.
![](http://supermarketnews.com/images/0425_fargochart.jpg)
“This region came through the recession just fine,” Buus told SN. “Things slowed down but we never reached a recessionary kind of economy here. It also means that developers and lenders in this region are conservative, so we don't see as much speculative development as you might see in other regions. So when the economy slows, you don't see vacancies all over the place.”
According to Buus, the most recent new activity among grocers in the region came five years ago when Hornbacher's opened a location in the Osgood neighborhood. Wal-Mart opened two new Supercenters in 2009, and renovated third in the region in 2010. Its market share in Fargo has zoomed to 31.8%, up from just under 30% a year ago, according to Metro Market Studies.
“When you look at a market the size of Fargo, about 200,000 people and in the last few years have three full-line grocers come aboard, that's quite a bit. And for that reason, I don't see any of these guys looking to build any more in the near-term future, a few years at least,” said Buus.
Hornbacher's has been able to maintain a strong position by embodying many of the characteristics Supervalu officials have said they want their brands to embrace, including “premium fresh and healthy” positioning and local flavor. It's been an operating division of Supervalu since 1975, and was run by Dean Hornbacher, a son of its founder, until he retired a year ago.
“One of the reasons Hornbacher's maintains a dominant position in the market is because of the name,” Buus noted. “Hornbacher's may be a goofy German name, but it's a family name, and it's from Fargo. It's a rooted, established name here.”
— Jon Springer
Cub Foods Faces Big-Box Attack in Home Market
FOR A RETAILER with home field advantage and close to double the market share of food sales of its nearest competitor, things are anything but comfortable for Cub Foods in its hometown in Minneapolis.
![](http://supermarketnews.com/images/0425_SNMinneapolis.jpg)
Cub, the leading grocer in the region owned by hometown distributor Supervalu since 1980, is weathering what one observer called an “unprecedented” assault form big-box discounters Target and Wal-Mart.
Target Corp., another locally based company, is leading the attack by converting virtually all of its stores in the state to the so-called P-fresh model including expanded selections of produce, deli, dairy and frozen foods. Target's 26 fresh stores — in addition to another 23 awaiting conversion — account for around 12% of the market share in Minneapolis, a market of nearly 3.3 million residents. Supervalu's 38 Cub stores account for a leading share of 20.7% in the market, although licensed independents operating another 19 stores flying the Cub banner gives the franchise — and its supplier — added strength in the region.
![](http://supermarketnews.com/images/0425_minneapolischart.jpg)
Wal-Mart is not backing away from either hometown threat. The Bentonville, Ark.-based discounter continues to expand “seemingly unaffected by the [sluggish economic] market,” according to CB Richard Ellis' 2011 Minneapolis Market Outlook, published by the real estate services firm here. Wal-Mart purchased and redeveloped the former Brookdale Center for a new store in 2010 and has purchased the Four Seasons Mall in Plymouth. The company also has plans for a second store in Blaine.
“The grocery ‘wars’ will escalate as new salvos are fired by Target emphasizing groceries and perishables with its P-fresh concept and by Wal-Mart … remodeling smaller stores to carry more grocery offerings,” CB Richard Ellis said. “Cub will maintain its dominant market position and continue to add liquor stores where permitted.”
A pioneer of high-volume discounters, Cub stores are the most productive in Supervalu's portfolio, producing average weekly revenues of $634,000, according to a recent study by BMO Capital Markets. Their focus on efficiency, and long-standing equity in Minneapolis, make it unlikely the chain would be sold, sources said.
“It makes financial and operating sense to hold onto it because it's still a powerful price-impact format that people have copied all over the world,” Burt P. Flickinger III, managing director of Strategic Resource Group, New York, told SN. “It gives them procurement power, operating leverage, distribution efficiency and supply chain scale. It would have a healthy list of buyers if it were for sale.”
— Jon Springer
Acme Slips, but Stays Atop Philly Market
PHILADELPHIA HAS long been Acme's town, but the Supervalu-owned chain is seeing sales and market share fall off like peppers on an overstuffed cheesesteak.
![](http://supermarketnews.com/images/0425_SNPhiladelphia.jpg)
Under the new leadership of Dan Sanders, Acme is seeking to hold onto its No. 1 position — and healthy 16.8% market share, according to Tucson, Ariz.-based Metro Market Studies — against a tableful of hungry rivals, including new entrants Bottom Dollar and the P-fresh format from Target.
“Acme has been the last one in the market to make adjustments to their pricing,” said Bob Gorland, vice president with site selection and consulting firm Matthew P. Casey & Associates, Clark, N.J. “Even now that they are making adjustment on some items, it seems like too little, too late.
“When competitors come in with EDLP pricing, whether its Giant [of Carlisle, Pa., which has the No. 2 share at 12.3%] or others, Acme has taken some major hits.”
![](http://supermarketnews.com/images/0425_philadelphiachart.jpg)
A recent report by Karen Short, a New York-based analyst with BMO Capital Markets, estimated Acme's average annual sales per store at about $19 million, and Supervalu itself recently acknowledged that its Northeast division — which includes both Acme and Shaw's — helped drag down the company's comps to negative 5% in the most recent quarter.
Although Gorland said Acme has many excellent locations, the competition from stronger operators such as Rochester, N.Y.-based Wegmans Food Markets and Keasbey, N.J.-based Wakefern has taken its toll on Acme, which has seen its share slide 0.8 points in the last year.
Bottom Dollar, the 46-store “soft discount” chain owned by Delhaize America, Salisbury, N.C., made its debut in the Philadelphia region last year and quickly ramped up to 18 locations. It opened its first store within the city limits of Philadelphia, a 17,000-square foot location in the Olney area, just this month.
Benefiting local operators has been the deterioration of the legacy Pathmark and A&P stores in the region. A&P has closed several locations under the Pathmark and SuperFresh banners, including a handful that just shut their doors this month.
“I don't think Acme will benefit as much as other lower-priced stores in the area,” said Gorland. “The traffic will probably go to chains like Giant, ShopRite, Redner's, Wegmans.”
— Mark Hamstra
Shaw's Cedes Ground to Local Chains in Providence
IF SHAW'S is the poster child for Supervalu's struggling retail operations, the Providence, R.I., market could be seen as the poster child for Shaw's.
![](http://supermarketnews.com/images/0425_SNProvidence.jpg)
Although Shaw's is somewhat insulated in Providence from some of the larger competitors in New England that have taken its market share, such as Price Chopper, Hannaford Bros., and Big Y, the chain is still up against the region's No. 1 player, Ahold's Stop & Shop, which commands a 38.8% share, according to Metro Market Studies, Tucson, Ariz., as well as some strong local operators.
Shaw's is No. 2 in Providence with a 16.1% share, down from 18.4% a year ago.
“Shaw's really has no brand relevance in the New England market,” said John Rand, director of grocery retail insight at Management Ventures Inc., Cambridge, Mass., a division of Kantar Retail, who noted that the chain's problems predate Shaw's acquisition by Albertsons and then Supervalu. “There seems to be no overly dramatic trip driver in terms of marketing or price or offer that distinguishes Shaw's in New England these days.”
![](http://supermarketnews.com/images/0425_providencechart.jpg)
Even Shaw's strong natural and organic offering, Wild Harvest, a point of differentiation in the past, appears to have been eclipsed by the offering of Stop & Shop, Rand noted.
Last September Shaw's made sweeping price reductions across thousands of items in an effort to fight back against its hybrid-EDLP competition, but analysts said the chain did not appear to have the resources to engage in an all-out price war. Shaw's also has been said to be for sale, although Rand said there have been so signs of a serious offer — or at least one that would make financial sense for Supervalu.
Earlier this year Shaw's said it would close two stores in Rhode Island, in addition to three in Massachusetts. Those closings follow the exit from all of the chain's locations in Connecticut last year.
Stepping up to capture those sales are some strong local operators, including Dave's Marketplace, the No. 6 player in the market with eight stores and growing, and a 3.6% share, according to Metro Market Studies, and Demoulas Market Basket, No. 9 in Providence and rapidly gaining share with its aggressive pricing and local positioning.
“Wherever we feel people want us, we'll be there for them if we can do it,” said Bob Fabiano, the director of store development for Dave's Marketplace, in an interview with local TV station earlier this year. “We have different models from the Stop & Shops and Shaw's and all the other stores.”
PriceRite, the price-impact banner operated by Keasbey, N.J.-based Wakefern, with 10 stores in the market and a 4.3% share, also has been gaining ground. And Austin, Texas-based Whole Foods Market, with two stores on the east side of the city and another in Cranston, R.I., has a 2.7% share, up 0.1 points over a year ago.
— Mark Hamstra
Schnucks Leads in St. Louis, but Supervalu Has Stake
NEW-STORE activity has been relatively light around St. Louis in the last year or so, as the market digests a flurry of openings that came on the heels of the recession. The new stores in the region included notable new arrivals by Whole Foods, Straub's and Schnuck Markets, the latter debuting a downtown specialty store, Culinaria, and completing a new flagship in the wealthy city suburb of Des Peres, Mo.
![](http://supermarketnews.com/images/0425_SNStLouis.jpg)
In 2011, Schnucks is devoting its energies toward renovating existing stores with an eye on fresh decor and features appealing toward a shopper seeking more from their local store in a recovering economy, said Lori Willis, a spokeswoman for the retailer. Schnucks is the St. Louis market leader with 67 stores and a 28.4% market share, according to Metro Market Studies.
“We've had remodels on every scale from just modernizing stores to actually reconfiguring the interior to allow for ease of shopping and additional services,” Willis said.
At Schnucks, such programs include the addition of “Schnucks Cooks” kiosks, in-store cooking stations featuring recipes, ingredients and equipment demonstrating a range of meals. The program seeks to provide an answer for what Schnucks calls the “What's for Dinner dilemma.”
![](http://supermarketnews.com/images/0425_stlouischart.jpg)
“Business is holding steady, and we feel confident going forward that we've got a combination of services that will appeal to people in these hard economic times,” Willis said. “We are a partner with many of the families who shop with us, in helping them cook faster meals, more nutritious meals and more economical meals.”
Schnucks competitors in the market include Dierbergs — like Schnucks, a family owned local retailer, with 22 area stores and a 12% market share, according to Metro Market Studies. Dierbergs is at work on a 75,000-square-foot competitor to Schnucks' Des Peres flagship. Local sources said Dierbergs has aimed toward a higher end demographic, steering clear of a battle among discounters.
Supervalu has a large stake in that battle, operating the conventional banner Shop ‘n Save, with 37 stores and 17% market share, as well as Save-A-Lot, with 29 discount stores and 2.8% share in St Louis. Both concepts were founded in St. Louis, and have been part of Supervalu since it acquired their parent company, Wetterau Inc., in 1992. Supervalu is also a distributor to Dierbergs.
Wal-Mart, with 27 stores including 23 supercenters in the St. Louis market, has a 19.1% market share, while its warehouse format, Sam's Club, commands another 4% of the market with eight stores. Save-A-Lot in the meantime is battling with its rival Aldi, which has a 3% share with 33 area stores.
“I would say the economy here is really improving,” Brett Chetek, a retail specialist for CB Richard Ellis in St. Louis, told SN. “Unemployment is letting up and there is some job growth, and I think the investor demand for real estate has picked up.”
— Jon Springer
Farm Fresh Fades in Market Full of Niche Formats
IN JANUARY, Supervalu quietly closed the Market at Harbor Heights, a boutique grocery store in downtown Norfolk, Va., opened by its Farm Fresh division only three years before.
![](http://supermarketnews.com/images/0425_SNVAbeach.jpg)
The store — described by local sources as a “pet project” of Ron Dennis, the former Farm Fresh president who retired a year ago — was beset by a stagnant local economy that slowed growth of a downtown residential base, and by various construction projects that made the store difficult to access, according to Stanton Partners, which manages the high-end condominium building the store occupied. Farm Fresh in a statement said the store was not profitable — but that it still operates a similar offering called the Market at Ghent, a few miles away.
To some, the closure signaled a failure of Farm Fresh to distinguish itself in a market increasingly saturated with niche concepts. In the Norfolk market, which includes the cities of Virginia Beach, Newport News and nearly 1.7 million residents, market leader Food Lion operates its flagship banner as well as its upscale-leaning Bloom and discount Bottom Dollar stores. Newly arrived Harris Teeter has made a strong statement for the higher-end shopper with 12 stores and a 7.2% share, while Wal-Mart's 16 supercenters and one Neighborhood Market grocery store command an 18% share, according to Metro Market Studies, Tucson, Ariz.
“The grocery market here is niche-ing itself in a really visible and rapid way,” said Blount Hunter, president of H. Blount Hunter Retail and Real Estate Research, a Norfolk-based consultant. “Harris Teeter is taking the top end business, and Wal-Mart, Food Lion and Bottom Dollar are fighting at their price points. Farm Fresh is the one in the middle getting squeezed at both ends.”
![](http://supermarketnews.com/images/0425_virginabeachchart.jpg)
The Harbour Heights project was probably “premature,” Hunter said, “but worse than that, it was not special enough to cause anybody from nearby neighborhoods to drive to it. There was a [Farm Fresh] store 10 blocks away that intercepted everybody.”
With 44 stores and a 20.3% share in Norfolk, where it was founded, Farm Fresh “was considered to be one of Supervalu's real success stories in retail,” according to Neil Stern, senior partner at McMillan Doolittle, Chicago. Perhaps as a result, it was considered to be an asset its parent might consider selling, he said.
Although there were no indications acquisition talks were on, sources consider Kroger — which maintains a small presence in the market as a result of having taken over former Hannaford stores there — as a potential suitor. Ahold and its Giant-Carlisle chain, which recently moved to Richmond in a takeover — would be another possibility, sources said.
Farm Fresh in the meantime is competing with expanded offerings including gas discounts — a necessity in a region where a rapid increase in stores met with a stagnating economy. Another “wild card” in the Norfolk market is its three military commissaries, which according to Hunter do excellent business but leave competitors scratching their heads.
“They take some sales off the books but nobody knows whether people are loyal to the commissaries or who's shopping there,” he said. “Is it only the lower ranking military because they're saving money, or is it the officer's wives who know the they can get a rack of beef at a better price?
“Because of the transient nature of the military there are a lot of people traipsing through here who aren't from here. As a result the Farm Fresh name doesn't resonate as local or indigenous. They don't get a lot of credit for that,” Hunted added. “And if Ukrop's could lose its footing in Richmond, it could sure happen here, especially since Farm Fresh never had that kind of equity.”
— Jon Springer