Winners, Losers and New Entrants All Making Moves in Carolina Retailer Race

Home , Bloom (store), Delhaize Group, Harris Teeter

- Advertisement -

Winners, losers and new entrants all making moves in Carolina retailer race

May 18, 2012

While Whole Foods and Trader Joe’s (and purportedly Publix) are making inroads into the Carolinas, one hometown grocery chain is fighting to hold its own while others are thriving.

Three North Carolina-based grocers made this year’s Top 100 retailers list of Stores Magazine, a trade publication published by the National Retail Federation. There were no South Carolina-based retailers on the list. Bentonville, AR-based mammoth Wal-Mart topped the list, followed by Cincinnati, OH’s Kroger. Salisbury, NC-based Delhaize America, a wholly owned subsidiary of Belgium’s Delhaize Group which owns grocery chains Food Lion, Bloom, Bottom Dollar

1 / 4

The North Carolina-based Harris Teeter chain is booming, with $30.3 million in net income on sales of $1.12 billion — up 6.7 percent from $1.05 billion a year earlier — for its fiscal second quarter ended April 1. The chain operates 206 stores in eight states, including this one in Amelia Island, FL. (Photo by Chip Carter)Food, Harveys Supermarkets, Reid’s, Hannaford Bros. Co. and Sweetbay Supermarkets, placed 11th. Charlotte, NC’s Ruddick Corp. (now Harris Teeter Supermarkets) placed 80th. Asheville, NC’s Ingles Markets, which operates 201 supermarkets in Alabama, Georgia, North Carolina, South Carolina, Tennessee and Virginia, finished 95th.

Whole Foods Market opened a new 34,000-square-foot store in Greensboro, NC, April 12, giving the chain 10 North Carolina locations and two in South Carolina. Days later, Trader Joe’s began construction on a new store in Winston-Salem, NC, its seventh in the state to go with a pair in South Carolina.

Rumors continue to swirl in North Carolina about Publix Super Markets, headquartered in Lakeland, FL, coming to the Tarheel State. Already a major player and growing in South Carolina, the company just announced plans for two new stores in Fort Mill, SC, a bustling suburb of Charlotte, NC.

Publix looked into at least 10 sites in North Carolina in 1993-1994, but a red-hot real estate market led the grocer to withdraw in mid-1994 and instead focus on expanding in South Carolina and Georgia, where it opened a distribution center near Atlanta that same year.

Earlier this year, published reports said a Lakeland, FL, realtor requested the rezoning of 3.5 acres in York County, NC, without naming a client. The Charlotte Business Journal reported that local real estate and government sources confirmed the York County rezoning request was for a Publix store, and that the chain was expected to reveal plans for at least one more North Carolina location shortly.

Publix appears to have carved the Gordian Knot completely in half with the Fort Mill locations, which will draw Charlotte shoppers and still maintain the company’s claims that it has no designs on North Carolina — yet.

Publix Director of Media and Community Relations Maria Brous told The Produce News earlier, “Yes, the rumor mill is at it again, but [there is] no new news to report. We are still focusing our efforts on our five states — Florida, Georgia, Alabama, South Carolina and Tennessee. We do have two stores opening in South Carolina that are close to the North Carolina border, the same two mentioned last year [in an earlier Produce News article] but for whatever reason, they have seemed to gain attention

2 / 4 again this year. All is the same.”

Publix is privately owned and operated by its 142,000 employees, with 1,023 stores in five states. The company’s 2009 sales were $24.3 billion.

Meanwhile, Mauldin, SC-based BI-LO made an aggressive move in December acquiring Jacksonville, FL-based Winn-Dixie, a company twice its size. Winn-Dixie has had a checkered past for the last decade, as pressure from Southeastern powerhouse Publix pushed it into bankruptcy in 2005. Though the chain emerged 18 months later, it was never able to regain the momentum it had before Publix’ attack plan of building upscale markets near existing Winn-Dixie locations pushed it to and beyond the brink.

BI-LO itself went through Chapter 11 restructuring, filing in March 2009 due to a credit crisis before emerging in May 2010. The company fended off acquisition attempts from several larger chains and remained a Supermarket News Top 75 retailer even before purchasing Winn-Dixie — which placed 53rd on the Stores list — for $530 million. As of March, the company operated 207 supermarkets under the BI-LO brand in South Carolina, North Carolina, Georgia and Tennessee, and 485 stores under the Winn-Dixie brand in Florida, Alabama, Louisiana, Georgia and Mississippi. The combined company employs approximately 63,000 people and will certainly move up in the Supermarket News’ and Stores’ 2012 rankings.

The bad news for the Palmetto State is that BI-LO, still owned by Dallas, TX private equity firm Lone Star Funds, which provided funding for the bankruptcy recovery, plans to move its headquarters to Winn-Dixie’s home base of Jacksonville.

In North Carolina, these are flush times for Harris Teeter, which has made several positioning moves of late and racked up some impressive victories. For its second fiscal quarter, which ended April 1, Harris Teeter recorded net income of $30.3 million, or 62 cents per diluted share, on sales of $1.12 billion. Net income for the same period last year was $26.2 million — 54 cents per diluted share — on sales of $1.05 billion, an increase of 6.7 percent. Sales at stores in operation for at least a year increased 3.9 percent. Overall, Harris Teeter’s operating profit increased 10 percent to $52.5 million.

Harris Teeter was previously a subsidiary of holding company Ruddick Corp., which until recently also owned thread manufacturer American & Efird. After Ruddick sold its thread operation late last year, the decision was made to focus solely on grocery operations and the company name was changed to Harris Teeter Supermarkets last month.

“Our pricing and promotional strategies continue to be effective in driving unit sales, customer visits and increasing market share,” Chairman and Chief Executive Officer Thomas Dickson said in a written statement.

So far this fiscal year, Harris Teeter has opened three stores and now operates 206 stores in eight Southeastern states.

At the other end of the spectrum is Delhaize’s Food Lion, which fared poorly in a recent Consumer Reports survey. In a ranking of America’s least-favorite supermarket, Food Lion came in eighth on a list of 12. Consumers had concerns about the chain’s cleanliness, service, food quality and prices.

Food Lion countered the low ratings with a new brand strategy rolling out in 268 stores in North Carolina, Virginia and West Virginia.

3 / 4

“As part of our new strategy, we are committed to being recognized as a price leader, making our stores easier to shop, offering the greatest value in store brands and providing fresh produce,” said President Cathy Green Burns in a written statement. “We believe our new brand strategy enables us to better serve our customers in these markets.”

The new strategy involves lowering prices on 6,000 items in the chain’s test areas, and promising higher-quality store brand products and produce.