Giant looks to new markets in Del., Pa.

RETAIL & MARKETING

May 19, 1994|By Jay Hancock | Jay Hancock,Sun Staff Writer

Giant Food Inc. launched a Delaware Valley supermarket war last month by opening its 158th store, a shiny, upscale mart in Bear, Del., near Wilmington.

Landover-based Giant has grown into the country's 12th-biggest grocery chain by flooding the Baltimore-Washington area with its stores and getting local consumers to buy more food in them than anywhere else.

But fish gotta swim, and publicly traded corporations gotta get bigger. Giant can't build many more Baltimore-Washington stores without hurting itself.

And supermarket chains usually don't leapfrog across the country into faraway cities. They like to expand like a pool of water, edging out at the margins into familiar places within easy trucking distance of warehouses.

Giant could have gone south, to Richmond, Va. But an outsider, Norfolk, Va.-based Farm Fresh Inc., broke into that market several years ago and is growing quickly there, heating up the competition.

Wilmington and Philadelphia, by contrast, have had a relatively settled supermarket scene. Acme, ShopRite and Pathmark have been in the region for years, and nobody has successfully challenged their shares. Acme is the big player, with 35 percent of Philadelphia's supermarket dollars.

Giant could change that, one industry insider believes.

Its clean, new stores with gourmet food and freestanding seafood, bakery and deli counters should play well in Wilmington and Philadelphia, said Jeff Metzger, publisher of Food World, a regional supermarket trade newspaper.

The territory is familiar-looking, for one thing. Incomes and other demographic factors in the Delaware Valley are similar to those in Baltimore-Washington.

Plus, "generally, the service and the cleanliness at the Giant stores are superior to what the competition has presently," Mr. Metzger said. Acme stores are "aging," he added, and their merchandising "vanilla."

That doesn't mean it will be easy for Giant. Acme is "a supreme defender of its turf," Mr. Metzger said.

And store sites, particularly in Philadelphia, are hard to come by. Zoning restrictions are tough. Decent locations will cost Giant top dollar, driving up its expenses.

For the record, Giant officials say only that they plan a second store outside Wilmington and that they're "looking" at Philadelphia and southern New Jersey.

But grocery chains can't make money with just a store or three in a city. They have to set up in a big way to extract the most value from local advertising and truck-route expenditures. And a Wilmington-only expansion isn't going to add much to the $3.57 billion in sales Giant already has.

Mr. Metzger reports that Giant wants to "aggressively" expand in Wilmington and Philadelphia.

Acme Markets Inc., based in Malvern, Pa., says its bunkers are manned. "We need to protect our business, and we will," said Acme spokesman Edwin Spragg.

He denies Giant's stores are better.

"They have a newer store, and that's all," Mr. Spragg said. "We have comparable stores -- maybe four or five years old -- in the areas they're opening in."

Giant isn't taking anything for granted, either.

"We're not cocky," said Pete Manos, the company's president. "We realize we've got to fight for every dollar we get up there. But we just feel we've got a better mousetrap."

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