“Are the grocery store chains sacred of Wal-Mart? You bet they are,” says Dan Graham, a Los Angeles retail consultant. “And if they’re not, they should be. Not only is Wal-Mart smart, but they’re so big, they can make a mistake and afford to fix it.”
In fact, the industry analysts says the success of the Neighborhood Market style of store might signal the beginning of the end for regional chains such as Minyard’s and Winn-Dixie, because the Neighborhood Market is designed to do the same thing to them that Wal-Mart did to dime stores and regional discount chains.
In that, it’s part of a nationwide consolidation in the grocery store business.
The biggest chains, such as Safeway, Kroger, and Alberston’s, are buying well-known regional companies in an attempt to increase market share, take advantage of economies of scale and boost sales. Safeway, for example, not only owns Tom Thumb, traditionally the market leader in the Dallas area, but also Randall’s in Houston. Kroger owns Ralph’s, the Tom Thumb of the Los Angeles area, while Albertson’s runs Jewel-Osco, the market leader in and around Chicago. Currently, the top three chains (which also are the three largest in the country) each have about 20 percent of the market in the Dallas area.
In addition, Wal-Mart and Target have been massing at the edges of the industry, the former with its Super Wal-Mart and Sam’s Club, and the latter with Super Target – each of which includes grocery stores as a key part of its design.
“What happens to you if you stand still in the grocery store business? It kills you,” says Bob Rissing, a senior real estate manager for Albertson’s. “I think, if you look at what everyone is doing and try to make sense of it, that’s what you’ll see. None of the big players want to stand still.”
The two most obvious are Whole Food’s expansion of its Greenville Avenue store into the current Blockbuster space, which will be finished later this year, and HEB’s Central Market, a gourmet-style superstore set to open shortly at Greenville and Lovers. Central Market has received most of the publicity, but what whole Foods is doing also is significant in the supermarket battle. The Greenville store is not only expanding, but the company is opening a location in the Park Cities, which spokeswoman Nona Evans says will relieve congestion on Greenville Avenue, especially on the weekends.
That so many changes are occurring in our neighborhood is only a surprise to retailers, says Susan Mead, a lawyer who specializes in land-use issues and has worked with the city to attract retail development.
“Retailers have finally figured out that not everyone is in their car driving to Oklahoma,” Mead says. “They are finally realizing that the income levels they want are in cities. And one of the first things you see is that the first retailer who figures it out is going to do well enough to attract more retailers, and then you’re going to have more retailers than you can shake a stick at.”
