The grocery industry in the Richmond region remained much the same in the past year as it has for the last couple of years, with two national chains holding the top spots for local market share.
Walmart was able to maintain its dominance again as the area’s grocery sales leader, extending its slight lead over Kroger, while market newcomer Publix Super Markets is slowly adding market share.
Walmart, the world’s largest retailer, captured the No. 1 share of the region’s grocery market based on overall sales for the second consecutive year, according to the annual survey by Food World, a Maryland-based industry publication. It held the top spots in 2016 and 2017 as well.
The annual rankings, released Monday, provide a good barometer of how retailers vying for a piece of the area’s highly competitive $3.44 billion grocery business are doing. The results are for the 12 months that ended March 31.
Walmart had a 17.01% market share — down slightly from last year’s 17.24% share — but the chain increased its area grocery sales by nearly $19 million despite closing one of its smaller grocery-only Neighborhood Market format stores last year.
Kroger, the nation’s largest traditional supermarket chain, remained in the No. 2 spot with a 16.16% market share. Its market share fell from 16.85% a year ago, but year-over-year sales at its 18 area stores rose $1 million.
In the third spot was Food Lion, which increased sales by $8.2 million, but its market share slipped slightly to 14.24% from 14.64% a year ago.
Publix, the Florida-based grocer that entered the Richmond market in 2017, increased its sales by $28.8 million as it opened two stores in the past year. The chain moved up one spot to No. 7 with a 4.68% market share with its 13 area stores.
Nontraditional grocery retailers, including drugstore chains CVS and Walgreens and convenience store retailers Wawa and 7-Eleven, continued last year to eat away at the market share of others. These operators, including Walmart and Target, now control nearly 53% of the local food dollars.
“The Richmond market is one where little ground was made by anybody because of overstoring,” said Jeffrey W. Metzger, Food World’s publisher.
“Richmond is still very competitive,” he said. “The real activity in the marketplace came from adding two new Publix stores and a new Whole Foods store.”
The market-share numbers are based on sales of grocery-related items at any retailer selling groceries.
Food sales generally were flat for most retailers during Food World’s report for the 12 months that ended March 31.
But that changed in March when retailers saw a big surge as the coronavirus pandemic sparked panic buying and hoarding while restaurants and schools were closed, forcing more people to eat at home, Metzger said. Sales continued to be strong in April and May, he said.
“If we did the market study that ended June 1, the sales numbers would have been a lot higher,” he said.
Without the surge in March, for instance, Kroger’s sales would have been down for the 12-month reporting period, he said. “Walmart was flat, but they were up because of March. Kroger was going downward until March. Food Lion also was flat but made up a bit in March.”
Can chains maintain the higher level of sales as restaurants reopen and schools go back to the classroom in the fall, Metzger wondered. “That will certainly cut into the increased volume,” he said.
“Retailers are facing challenges going forward. We will see how that will reflect next year,” he said.
Walmart maintained its top spot — and expanded its lead over Kroger — based on better comparable store sales and increasing sales, Metzger said.
Walmart’s local grocery sales rose a solid 3%, generating $634.4 million at its 18 stores, the Food World report shows.
Brent Rains, Walmart’s regional general manager, said the chain’s investments in grocery pickup services, expanded self-checkout and upgraded stores has been recognized by customers.
“That said, we know our work is not done,” Rains said. “In the coming year, we will continue to improve the store, pickup and online experience for our shoppers so we can retain their trust.”
Kroger’s market share slipped as it got hit from various sides, Metzger said.
The chain tries to compete with Walmart on price. Some of Kroger’s physical store conditions are starting to show some signs of age, he said.
Publix also added two stores during the reporting period while Whole Foods added a second area location. “The openings of direct competitors like Publix and Whole Foods directly impacted Kroger more than anybody else,” he said.
Kroger’s sales at its 18 area supermarkets rose 0.16% to $602.7 million.
“We are extremely grateful to our customers for choosing us in a competitive grocery market and we remain committed to our customers and our community partners in the Richmond region,” said Allison McGee, corporate affairs manager for Kroger’s Mid-Atlantic division, which operates the local stores.
Metzger said Kroger needs to be mindful of Publix’s expansion plans in the Richmond region.
Publix, the nation’s fifth-largest grocery chain, continues to make sales gains as it opens new stores here.
Sales at the chain’s 13 area stores rose 19.7% to $174.6 million, the Food World report shows. It opened two stores in the 2019-20 reporting period.
The chain continues its expansion this year: It already opened a new store on Charter Colony Parkway at Midlothian Turnpike in Chesterfield County this month and has plans for two more to open later this year — in the redeveloped Huguenot Village shopping center in Chesterfield and the Carytown Exchange development in Richmond.
By the end of the year, Publix should have 16 area locations.
The chain is very disciplined in its expansion plans, Metzger said.
“They have a model. They stick with it, and they don’t deviate from it despite very intensive competition in Richmond,” he said. “We think they have the potential for more business in Richmond and they could be doing better in our opinion. They have some good locations. They are pretty fearless and are extremely profitable. And they have a plan they are executing.”
Maria Brous, the chain’s director of communications, said market share is one gauge of accomplishment. “While market share is one indicator, we also recognize that our market saturation is less than other retailers, and we continue to open new stores in the market to best serve our customers.”
Todd Jones, who has been the supermarket chain’s CEO since May 2016, told the Richmond Times-Dispatch in August that he was pleased with how Publix has performed in the Richmond area since opening its local store in July 2017.
“The community has been very receptive, so Richmond is extremely important to Publix Super Markets for our growth and for our company and for our associates and for the community,” said Jones, who started as a Publix store clerk in 1980 and rose to the top ranks of the company. “I think our brand has resonated well. We are doing well because of our associates doing the right thing and supporting that brand in the hearts and minds of our customers.”
Other retailers continue to nibble away at the market share of others.
Walgreens increased sales by 33.2%, or by $49.1 million, in the 2019-20 reporting period as the drugstore chain added nine stores, mostly by picking up some Rite Aid locations, Metzger said.
“Drugstore chains are trying to sell more food and beverage,” he said
Walgreens is ranked No. 6 while the market share at CVS is fourth.
Traditional grocery chain Food Lion remains a solid third, and Wegmans was ranked No. 10.
Sales at North Carolina-based Food Lion’s 48 area stores rose 1.6% to $531 million, according to Food World.
Food Lion is “holding its own” because the chain made improvements to its operations and remodeled stores in 2018 and 2019, Metzger said.
New York-based Wegmans, which entered the Richmond market four years ago, saw sales at its two area stores increase $4.4 million. Those two stores generate the most sales per-store in the region, Metzger said.
“They had a very solid year. Volumes were up, and they got a big boost in March,” he said.
But Wegmans, like other full-service stores, has some challenges ahead amid the coronavirus. For instance, Wegmans is known for offering hot and cold food bars and other food service areas, but the chain has had to close those during the pandemic.
“What is a retailer well-known for their whole theater of food presentation going to do if they can’t showcase the whole package?” Metzger asked about Wegmans’ operations.
No-frills German grocery retailer Aldi increased local sales at its 11 stores by $1.9 million to $72.4 million in the latest reporting period. The chain ranked No. 13 with a 1.94% market share, down from 1.97% market share the year before.
Lidl, the other Germany-based grocery chain that entered the Richmond market in 2017, saw sales at its six area locations increase $1.1 million to $37.4 million in the most recent survey. Lidl was ranked No. 18 with a 1% market share, compared with a ranking of No. 19 a year ago.