Supermarkets Hold Share

June 06, 1994|By Jay Hancock | Jay Hancock,Sun Staff Writer

Baltimore's biggest supermarket chains are fighting back against "nontraditional" food sellers, hanging on to market share after being battered for several years by wholesale clubs and mass merchandisers, according to a newly published study.

Basics/Metro, SuperFresh, Valu Food and Mars all have gained slightly larger pieces of Baltimore's nonrestaurant food dollar, according to a widely followed annual survey to be published today by Food World, a Columbia trade paper, and Giant's market share is stabilizing after losses in recent years.

The gains, for the year ending March 31, came in spite of the fact that chains such as Wal-Mart Stores Inc. and BJ's Wholesale Club continue to open stores and increase competition for food sales.

The figures suggest that grocers' tactics of price-cutting and offering more prepared food and bigger packages are paying off against wholesale clubs and convenience stores.

They also indicate that, as the economy has improved, shoppers may be spending less at cut-rate food warehouses and more at traditional grocery stores.

"For the first time in a couple years, supermarkets basically moved up a tick," Food World publisher Jeff Metzger said. "The club stores and convenience stores were down the most. Particularly the club stores -- they really got socked."

Not all the big grocers saw market-share increases. Giant, which dominates the area, saw its piece of nonrestaurant food spending shrink slightly in Baltimore, from 23.5 percent of the $4.37 billion market to 22.72 percent, according to Food World.

But Giant's decline wasn't as great as in years past, Mr. Metzger said. And when measured just against other supermarket chains, Giant gained.

The Landover-based chain's share of Baltimore supermarket-only sales rose to 29.03 percent from 28.59.

The Baltimore area's five other top grocery chains also expanded their pieces of supermarket spending. Smaller chains lost shares.

None of the players won or lost huge pieces of business.

The biggest winner was No. 2 grocer Basics/Metro, which increased its piece of the Baltimore supermarket pie to 9.48 percent from 8.49 percent and its share of the nonrestaurant food-sales market from 6.98 percent to 7.42 percent.

The company, a unit of Harrisburg, Pa.-based Super Rite Foods Inc., has been replacing many of its Basics stores with larger Metro stores, which have extensive offerings of prepared food.

But Metro/Basics' share increased even though, at 17 stores, it had one fewer outlet than in the previous year. Metro/Basics President John Ryder said the chain is making "good strides" and will open three or four more stores next year.

Nongrocers such as Wal-Mart and BJ's also continue to set up new locations.

About a third of wholesale clubs' sales go to retail consumers who otherwise might be shopping in grocery stores, Mr. Metzger estimates.

Both clubs and discounters are strong on nonperishables such as cereal, candy and housewares.

Wal-Mart and BJ's each doubled their Baltimore-area stores to four during the year Food World measured. Yet BJ's "expanded entry into Baltimore has not produced the kind of volumes that they would expect," Mr. Metzger said.

Mr. Metzger estimates that BJ's four Baltimore stores are generating about $150 million in annual sales.

Industry leaders among club stores in other areas bring in more than $200 million, he said.

A BJ's spokeswoman disputed Mr. Metzger's assessment.

"Our plans in that area are right on target," said Susan Grieb, the spokeswoman. "What's testimony to that is our continued expansion in the Maryland area."

None of the nontraditional food sellers had very large pieces of the local market. The biggest was drug chain Rite Aid, with 5.97 percent of Baltimore's nonrestaurant food sales. Kmart had 3.0 percent; 7-Eleven, 2.71 percent; BJ's, 1.13 percent; Wal-Mart, 1.13 percent; and Sam's Club (a Wal-Mart division), 1.08 percent.

But added up, they have hurt supermarkets substantially.

Last year was the first time Food World measured nonsupermarket food sellers, so precise figures on clubs' and discounters' long-term effect on local grocers are unavailable. But Mr. Metzger estimates that Giant's 28.85 percent share of the combined Baltimore-Washington nonrestaurant food dollar was perhaps three points higher five years ago.

A year ago, Giant had 29.17 percent of the Baltimore-Washington nonrestaurant food market. Giant officials were unavailable for comment.

Among other Baltimore grocers, No. 3 SuperFresh increased its piece of Baltimore-area nonrestaurant food sales to 6.0 percent from 5.75 percent, largely by virtue of its new store in Baltimore's Hampden section, Mr. Metzger said.

But Safeway, Farm Fresh, Weis Markets, Klein's and Food Kart saw slight declines in their shares of the nonrestaurant food dollar.

Food World's survey is derived from interviews with retailers, brokers, manufacturers and other industry players.

Not all chains cooperate, and the ones that do don't always give out accurate figures. But supermarket executives say the survey is generally accurate and closely watched.

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