Chain Store Age - July 2009

GROCERY-ANCHORED CENTERS

Super Markets
The grocery-anchored shopping center has mostly defied the recession

By Katherine Field

A newly renovated
Kroger supermarket
will anchor the 322,258-
sq.-ft. Lawrenceville
(Ga.) Town Center.

The grocery segment has felt less of a pinch from America’s belt-tightening than any other category, except dollar stores and other discounters.

That’s not to say that grocers are all flourishing; notable bankruptcies in the category include BiLo and Bruno’s. Whole Foods Market has reported flat sales and shrinking profits; and Costco Wholesale Corp. missed Wall Street’s mark in the fiscal third quarter, attributing its weakening sales to the slowdown of high-ticket purchases and fuel.

But grocer good news outweighs the negative. Kroger is actively rolling out its Kroger Marketplace concept. In May, the Cincinnati-based supermarket chain announced it was opening its largest Kroger Marketplace store to date, in Texas, this October.

Aldi opened its 1,000th U.S. store in March, and the discount grocery retailer said it plans to open 80 U.S. stores, at an average size of 17,000 sq. ft., in 2009.

Publix profits rose 12.4% in its fiscal second quarter, and sales at Giant Food and Stop & Shop supermarkets shot up in the first quarter, according to results released by Dutch parent Royal Ahold. (Giant’s same-store sales rose 3.6%, and Stop & Shop’s rose 4.8% in the quarter. In tan-

dem, operating income for the two chains increased 20% from the quarter last year.)

Trading down: Helping supermarkets earn a spot among the best-performing business sectors in the recession is not only the category’s focus on selling the essentials, but also a result of shoppers trading down to them from restaurants and pricier specialty food retailers.

But, trading down can benefit some groups more than others. “If you divide supermarkets into three groups — the high-end retailers such as Whole Foods, the mid-range grocers such as Kroger, and discounters like Aldi — then the mid-range and discount grocers have benefited most from trading down,” said Richard Dube, president, Westchester, Ill.-based Tri-Land Properties, an active developer and redeveloper of grocery-anchored properties.

After the recession took hold, higher-income shoppers traded down from Whole Foods to the mid-range stores, said Dube. “And the middle customers, who used to shop Kroger and Jewel, have traded down to Aldi’s and Costco.”