Baltimore-area grocery stores battle for shoppers

With new rivals moving in, consumers are mixing it up at the market
Baltimore Business Journal - by Gary Haber, Staff
Date: Friday, July 1, 2011, 6:00am EDT - Last Modified: Friday, July 1, 2011, 9:03am EDT

Nicholas Griner | Staff
Howard Klein of Kleinís ShopRite says heis refurbishing his store to compete with Wegmans.

The 50-year-old Homeland resident does the bulk of her grocery shopping at the Giant supermarket in the Rotunda shopping center in Hampden.
The store is close to Hofmann's home, and she's such a regular, she can navigate her shopping cart around the aisles without hesitation.

"I know where everything is, and I can get in and out fast," she said.

Still, Hofmann isn't above spreading her food dollars around. She'll drive to WegmansbizWatch in Hunt Valley for the wider selection of organic products and the store's open-air-market feel.

That kind of tenuous hold on shoppers' loyalty is keeping grocery retailers in Greater Baltimore on their toes. They're sprucing up their stores and expanding their offerings to attract new customers or hold onto the ones they have in an increasingly competitive market where shoppers can buy frozen lasagna as easily at WalmartbizWatch as they can at SafewaybizWatch.

Traditional grocers like Giant and Safeway are being squeezed from above and below. At the top, they are faced with losing customers to high-end retailers that offer a wider array of products and frills like wood-paneled floors, a mister that keeps the arugula looking garden-fresh and a salesperson at the cheese counter who can suggest what variety pairs best with your favorite bottle of Cabernet. They are also fending off challenges from nontraditional, mass merchants like Walmart and Target.

"You have price leaders taking the low end and going after more value-conscious shoppers," said Bob Summers, a supermarket industry analyst at Susquehanna FinancialbizWatch in Bala Cynwyd, Pa. "At the high end, they're getting squeezed out by retailers like Whole FoodsbizWatch and Wegmans."

Baltimore's grocery market is already competitive. No single retailer has more than a quarter of it. Giant has the largest share at 18.6 percent. (The top five Baltimore-area grocers)

As tough as the market already is, the stakes are about to become even higher as grocers jockey for customers in the wake of Superfresh's departure and the continued incursion of high-end grocers like Wegmans and Harris TeeterbizWatch. Superfresh, the region's 11th-largest grocer with a 2.9 percent market share, will exit the market in early July as part of its corporate parents' bankruptcy restructuring.

Meanwhile, Wegmans is opening additional Baltimore-area stores in Bel Air and Crofton, while Harris Teeter is opening a store at Baltimore's McHenry Row in early 2012.

Mrs. Green's Management Corp., an organic grocery chain from suburban New York, is entering the market for the first time by buying 10 Superfresh stores in the Baltimore-Washington area from Great Atlantic & Pacific Tea Co. in partnership with Village Super Markets Inc., a New Jersey operator of ShopRitebizWatch stores. The purchase includes Superfresh stores in downtown Baltimore, Hampden and Parkville.

Some stores, such as the ones in Hampden and downtown Baltimore, will become Mrs. Green's locations. Others will become ShopRite stores.

The arrival of Mrs. Green's and expansion of ShopRite is going to make Baltimore's rough-and-tumble grocery business even more hotly contested, said Jeremy Diamond, director of the Diamond GroupbizWatch.

These retailers have carved out a market niche Superfresh never could, said Diamond, who runs the Pikesville food industry consulting firm.

"Their prices were on the higher side," Diamond said. "They were never in the top three or four retailers in the area."

The Mrs. Green's stores and ShopRite stores arriving in Superfresh's wake will appeal to shoppers that Superfresh couldn't, Diamond said. Mrs. Green's will compete for consumers who want a wider selection of natural foods. ShopRite will grab customers looking for low prices.

Retailers aren't standing idle as new competitors emerge.

Klein's ShopRite, which faces the opening of a new Wegmans in September about two miles from one of its stores in Bel Air, is spending about $7 million to refurbish three of its stores in Harford County, said Howard Klein, the company's vice president.

"If you're standing still in this industry, you're likely to die," said Klein. Klein's ShopRite is not affiliated with Village Super Market, the New Jersey operator of ShopRites.

The upgrades Klein made include a 10,000-square-foot expansion of the store in the Festival at Bel Air shopping center, tripling the size of the produce section and adding a new sushi bar and takeout Chinese food department.

Bel-Garden Bi-Rite, an independent grocer, plans to spend between $300,000 and $400,000 to remodel its store in Baltimore's Gardenville neighborhood, co-owner Sandy Vary said. The store is about a mile and a half from Superfresh in Parkville, which will become a Mrs. Green's location.

"I think they'll grab a small portion of our business, which we can't afford to lose," Vary said.

To better compete with the organic grocer, Vary plans to offer a wider range of organic and gluten-free items. She's also planning on expanding the produce and meat departments to give them an updated look and adding freezers with frozen beef and poultry items like Bubba Burgers and frozen chicken wings.

But for some shoppers, price, not selection, drives where they shop. Tami Reese wants low prices over frills. Reese, a Salisbury resident, was shopping one recent afternoon at the Superfresh on Charles Street in downtown Baltimore to prepare dinner for her daughter who lives here.

Reese, 50, does most of her shopping at Food LionbizWatch, near her Salisbury home. But she goes to Walmart for canned vegetables, paper towels and other staples.

"The fancier the grocery store is, the higher the price is," she said.