Grocery Store Wars in Hampton Roads: Can They All Survive in a Crowded Market?
April 18, 2018
The grocery store industry in Hampton Roads is expanding and the fierce competition shows no signs of slowing down—that's according to experts at Old Dominion University.
Recently, Minneapolis-based wholesaler and retailer Supervalu sold 21 of its Farm Fresh stores in Hampton Roads to competitors for about $43 million. Harris Teeter, Kroger and Food Lion snatched up these stores with an expectation that some will be closing and others will be rebranded as part of an expansion. Aldi, Lidl, and Wegmans are also building new stores in the region.
Economist Bob McNab, who serves as the director of the Dragas Center for Economic Analysis and Policy, said as the competition continues to grow, there will be winners and losers.
"Most likely, some of grocery stores will not survive," McNab said. "What we are seeing is the natural outcome of competition where strong firms tend to get stronger and weaker firms tend to disappear."
McNab said the grocery store wars are simply a sign of the times. Gone are the days when customers have limited options in one store.
"If you look at where we were 20 years ago, there were traditional grocery stores and department stores and the two didn't cross," he said. "What's happened over time, is that we've seen the categories become blurred. You now have the one-stop super Walmart experience that allows customers to shop for groceries, clothing, computers, and other items."
Hampton Roads has over 1.7 million people and experts say the region has become very attractive to local and outside investors.
"Apparently from the grocery stores' perspective, this is a place where you can survive or else companies wouldn't be coming here," McNab said. "Stores go where the people are."
Andy Hansz, director of Old Dominion's E.V. Williams Center for Real Estate, said it won't just be a battle between brick-and-mortars but there will also be a war online.
"Amazon is another competitor rearing its head in the war," he said. "Last June, when Amazon announced they were going to buy Whole Foods that changed everything in the grocery store industry."
Hansz said overtime there will be a lot of moves on the chessboard as stores try to compete with restaurant services, brand differentiation, delivery options and more.
"I think whoever is going to win, is going to be the best at the 'omnichannel' approach," he said. "Customers will have more choices."
Hansz continued, "I think Amazon proved this model when they went from an online retailer and groceries to a brick-and-mortar retailer and groceries. The competition is not just going to be on one channel; the grocery wars battles will be held on several fronts."