KROGER CO. IS STILL IN the driver's seat in the Motor City, but the combination of the weak economy and a host of strong independents is making the company work hard to keep it.
The Cincinnati-based retailer amassed No. 1 market share of 27.8% in Detroit last year, according to the latest edition of Metro Market Studies, Tucson, Ariz., up 0.2% over year-ago levels.
Costco Wholesale, Issaquah, Wash., and Wal-Mart Stores, Bentonville, Ark., both gained share in the past year — to 9.3% and 8.4%, respectively — as did some of the regional independents supplied by Spartan Stores, Grand Rapids, Mich.
The market lacks stores operated by either of Kroger's largest traditional rivals — Safeway and Albertsons — but includes a strong cadre of independents and nontraditional players.
The 2007 disappearance of Farmer Jack from the market gave a boost to Kroger, which acquired 20 of the locations, and Spartan, whose independent customers acquired several more. Whole Foods also acquired a Farmer Jack in the market, as did Hiller's, a locally based chain supplied by Minneapolis-based Supervalu.
Many of the vacant Farmer Jack sites — some in prime locations — are still up for grabs, according to David Long, a senior associate at real estate firm CB Richard Ellis, Southfield, Mich.
“We won't see a whole lot of new construction, because there's just too much inventory of existing property,” he noted. “But grocery is the most active segment in retail real estate.”
Despite the massive slowdown in the auto industry that has the region's population “on edge,” Long noted that Detroit businesses are still supported by a vast network of engineers, designers and other white-collar workers affiliated with car companies from all over the world, many of whom have remained active despite the slowdown in plant production.
Kroger is one of the few companies building new stores — the chain recently opened a new Fresh Fare in Bloomfield Hills, Mich., and has another under way in Shelby Township.
Michigan native Meijer Inc., also based in Grand Rapids, has held its own in the market with a 21.8% share.
Spartan Stores, the largest wholesaler in the market, has been among the biggest gainers of share, with supply to two of the larger independents, Busch's and Hollywood Markets. The two claim market share of 1.5% and 1.3%, respectively. Both acquired stores from Farmer Jack and converted them to their own banner.
In December, Spartan also completed the acquisition of its largest independent customer, VG's Food & Pharmacy, which included eight stores in the Detroit market and combined to give the retailer and wholesaler a 7.7% share.
|RETAILER||STORES||MARKET SHARE '09||MARKET SHARE '08|
|Whole Foods Market||3||1.1||1.2|
Includes Lapeer, Livingston, Macomb, Oakland, St. Clair and Wayne counties.
SOURCE: Metro Market Studies