Kroger Store May Signal Growth Plan

Kroger Store May Signal Growth Plan

CINCINNATI — Kroger Co. [4] is putting a big foot forward in South Carolina.

The retailer last week began construction of a Marketplace superstore on Hilton Head Island, a store that would become its first such outlet in the Palmetto State, and only its second store in the Hilton Head-Beaufort metropolitan statistical area. Although company officials last week did not indicate that additional stores were planned for the market, a Marketplace store build has typically signaled additional market expansion for Kroger, as it has in other Southeast markets like Richmond, Va., and Virginia Beach.

Kroger currently operates 10 stores in South Carolina, most in the Myrtle Beach area where it controls approximately 11% of the market, according to 2012 figures from Metro Market Studies, Tucson, Ariz. Its only store in the Hilton Head market is a conventional Kroger store in Bluffton, S.C. Kroger is the No. 1 grocer in the neighboring market of Savannah, Ga.


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A stronger presence on Hilton Head would mean additional competition for Publix Super Markets [6], which according to Metro Market Studies is the largest grocer in the MSA with six stores and a 29.2% market share. Wal-Mart [7], Bi-Lo [8], Piggly Wiggly Carolina and Food Lion [9] also have a larger market presence than Kroger on Hilton Head.

According to Kroger, the new store, planned for 88,000 square feet, would be the largest on Hilton Head Island and feature a Starbucks coffee kiosk, full-service Murray’s cheese shop, freshly prepared sushi, a bistro with chef-prepared meals with indoor and outdoor seating available, a walk-in beer cooler with growler station, expanded wine selection and a drive-thru pharmacy [10]. The store will also have an outdoor seasonal selling area and bike repair stations on the sidewalk unique to this location.

The store will anchor a redevelopment of The Mall at Center Cove, which was purchased by Kroger’s real estate department two years ago. The newly christened Shelter Cove Town Centre will be a 42-acre, $74 million mixed-use lifestyle center including planned residences and recreational uses. It is being developed by Kroger Real Estate and a local developer, Blanchard & Calhoun Commercial.

“We are very excited about the future and the successful opening of this amazing energy center for Hilton Head Island which will generate millions in revenue for retailers, restaurateurs, hotels, tourist attractions, partners and the city. At the same time, creating a vital hub for people to congregate,” Michael Schlotman, chief financial officer of Kroger, said in a statement.

Read more: Kroger Drives Sales Gains in Q4 [11]

Speaking at an investor event last week in Florida, Schlotman reiterated Kroger’s desire to use Marketplace stores as part of a multi-format strategy to crack new markets and grow density within existing markets. Schlotman added that the company had already identified two markets where it intends to spend additional capital to build density, but he declined to specify those locations.

“We are focused on … some markets where we have decent market share, and our store density isn’t where we want it to be and where customers tell us they like what we’re doing,” Schlotman said in remarks at the Morgan Stanley Retail & Restaurant Conference. “The opportunity in those markets is, in our judgment, very strong.”

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