Kroger put in a bid to buy the Fresh Market last week and announced an online ordering system that it would roll out in the next year. The week before, a Southeastern grocery chain based in Florida, Publix, made plans to build its first store in the area on a piece of land slated, back in the day, for a Ukrop’s Supermarket.
Wegmans is coming, Aldi is here and Lidl is on its way. Add Martin’s and new sibling Food Lion, Wal-Mart, Target, Whole Foods, Trader Joe’s, Amazon’s Prime Now and a plethora of independent grocery stores, and Richmond soon will look like one long checkout line stretching up and down the James River.
What’s going on around here?
Host Roben Farzad asked the same question on the latest episode of his radio show and podcast, “Full Disclosure.” I sat in on the roundtable discussion, which included Andy Brownstein, chief financial officer and general counsel of Global Realty Services Group, and Scott Ukrop, director of New Richmond Ventures and former vice president of sales and marketing for Ukrop’s Supermarkets. Here’s an edited version of that wide-ranging conversation.
Farzad: What do you make of all this, Mr. Ukrop?
Ukrop: Richmond has always been a good test market because of the demographics -- and a lot of people have their sights on it given its geographical location. Wegmans is coming south, Publix is coming north, Harris Teeter would probably have liked to have been here, but then Kroger picked them up.
Farzad: But what is everybody chasing? What’s the holy grail? What moves the high-margin needle at a massive supermarket? And by the way, when I talk about a massive supermarket, there’s a whole other screenplay to be written called “Waiting for Wegmans.”
Ukrop: I think you take a step backwards and look at where people are these days and look at the number of meals eaten outside of the house and the growth of prepared foods. A lot of it is just how do you get people to eat? Everyone is trying to get in everyone else’s pockets.
Fox: Is this a situation that looks surprising to us because the market was underdeveloped when Ukrop’s was in full force?
Ukrop: I think what’s changed now is that when you’ve got a Publix and a Wegmans, you look at their strategies and growth -- to keep on growing, they need to expand geographically. The East Coast corridor is a natural place to do that.
Brownstein: It feels like [the market] segments into three basic categories when you’re going to shop for food. You’re either going to shop just for price -- you’re going to shop at Wal-Mart or Aldi/Lidl because you know the prices are bottom dollar. You’re going to shop for convenience -- whatever’s closest. Your time is more valuable, so you’re going to go to the traditional supermarket. Or you’re shopping for the experience. The feel-goodness of where and how you buy your food matters to you more. They’re all butting up against one another geographically, as well as the way they’re trying to brand their shopping experience.
Farzad: If you throw back to a situation akin to 2007, 2008, 2009, when suddenly it doesn’t seem like there’s this bumper crop of disposable dollars to support eight or nine grocery chains -- what do you see happening in a doomsday scenario?
Brownstein: In a downward-trending market, I think people start eating at home more -- they may not buy as many prepared foods -- but there’s a reason this is considered a consumer nondiscretionary segment. People may go out to eat less, but they’re going to keep shopping for food. I think the basic, traditional, convenience grocery stores and the discounters will probably do fine.
Ukrop: It’s going to be: How do you make each store local? You can’t just put your stamp on your chain and say this is the way we go to market. When we go into the next recession, whenever that happens, I think still there’s an ever-increasing segment of the population that doesn’t know how to cook and doesn’t know the center of the store -- people will go back to dollar meals and other ways to find convenience food inexpensively that may or may not be from the supermarket.
To hear more about what’s happening in Richmond grocery stores, including a thriving singles scene in certain stores, and in the future, especially when Amazon and digital ordering are thrown into the mix, follow this link for the full version of “The Great 2016 Supermarket War” on “Full Disclosure.” The show can be heard on NPR One, WRIR-FM 97.3, Soundcloud and downloaded via iTunes and Stitcher, and you can follow it on Twitter at @FullDRadio.