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Published: 4/13/2003

Aisles of cutthroat competition

BY JON CHAVEZ
BLADE BUSINESS WRITER
Heavy discounting, including doubling and tripling coupon values, have benefited shoppers. Heavy discounting, including doubling and tripling coupon values, have benefited shoppers.
HIRES / BLADE Enlarge

Kroger and Meijer stores rang up sizable jumps in their shares of the Toledo area grocery market in the past year, while Food Town and Farmer Jack had big drops.

The new industry figures provide firm evidence of why Food Town is about to disappear from the local market and may point to concerns over Farmer Jack's future. But they also show that the market leader, Kroger, knows how to rebound, gaining back much of what it lost two years ago.

``They are a very good operator,” Bill Stimmel, of Churchill's Super Markets Inc., said about Kroger. “They are consistent and they do a lot of the little things as well as many of the independents in the market.”

The Churchill's vice president of operations praised Kroger's customer service, cleanliness, and stock levels. “And I will also say that Kroger seems to think `out of the box' more than the other big-box chains in the area.''

More than $1 of every $3 spent on groceries in Lucas, Wood, and Fulton counties goes to Kroger, according to the newly released figures from Trade Dimensions International Inc., a Wilton, Conn., firm that compiles market share figures. Its report shows Kroger with 15 Toledo area stores and a 35.4 percent market share. That's up from 32.2 percent a year ago and 8 percent higher than five years ago.

Next is Food Town, with 20 stores in the three-county area and a 21.5 percent share. Food Town, long the No. 2 chain locally, recently closed 13 stores, all but one of which were in the area. The chain, which is to sell or close its remaining stores, slumped from a 24.4 percent share a year ago and is down even more from what it was five years ago.

Meijer, which has four metro Toledo stores and one in Bowling Green, snapped up a 17.9 percent share, a significant gain from its 14.1 percent a year ago and its highest portion since it entered the market. It could become No. 2 locally after Food Town exits. Farmer Jack, which entered the market in 2001 by buying three of the four Churchill's stores and then adding three stores, dropped to less than a 10 percent share from 12.4 percent a year ago, according to Trade Dimensions.

Giant Eagle, a Pittsburgh chain that has one store but is building another, dropped to a 1.7 percent share from its first-year bounce of 3.6 percent. The 33 other stores in the area, mostly independents like Save-A-Lot, Chief, Aldi, and IGA, showed a combined 13.8 percent share, about the same as a year earlier.

The battle for market share is intense. The chains have engaged in heavy discounting and price specials on staples such as milk, meat, and eggs and on popular items such as snacks and soft drinks, much to shoppers' benefit. Farmer Jack has perhaps been the leader in regularly offering double and sometimes triple value of manufacturer's coupons.

``I watch the ads, most definitely,'' said Kendra Pinkelman, a Toledoan who was loading groceries into a minivan last week at the Farmer Jack store on Laskey Road near Tremainsville Road in Toledo.

The now closed Food Town store on Sylvania Avenue at Douglas Road was the grocery nearest her house, but Ms. Pinkelman said she shopped at Kroger and then Farmer Jack for advertised bargains. If Giant Eagle expands in the market, she said, she'll watch for its advertised specials as well.

Said West Toledoan Danita Bond, who also had been a loyal Food Town shopper, ``Basically, I'm shopping where there are the best deals now. I'm an ad shopper. If it's better there [Kroger], then I'll go there.''

Toledoan Lisa Dye, another former Food Town shopper, now goes to Farmer Jack to buy meat and to Kroger for other items. ``Now we're waiting to see who will give us the best deals,'' she said. ``I'm just going to float for a while.''

Kroger has spent to bolster its No. 1 market share. Since 1998, it has added eight stores, expanded three, and remodeled seven others at a total cost of $50 million, said spokesman Dale Hollandsworth.

Still, the competition won't go away. Even as Food Town owner Spartan Stores Inc. of Grand Rapids, Mich., is giving up its effort to compete in the Toledo grocery market, Giant Eagle and independent groceries are reported to be interested in buying some of the area Food Towns. Spartan has closed 13 and said it will sell or close its remaining 26 Food Towns, with a few possibly to be converted to Pharm discount drugstores, which it owns. Pharms carry some grocery items.

How many of the Food Town sites will become groceries under another name is unclear, however. Spartan, which two weeks ago missed a self-imposed deadline for announcing disposition of the area groceries, said last week it had nothing new to report. A Spartan spokesman would not comment on the changes in market share.

But Giant Eagle, with its one store in Rossford and a second store to open soon in Sylvania Township, is expected to be looking for at least one more area store. A company spokesman said the market share numbers seemed “odd,” given that the company had one store whose sales numbers had grown steadily since it opened.

Among those benefiting from the recent Food Town closings in Toledo and its suburbs are Kroger and Farmer Jack, said a sales representative at the company that distributes Frito Lay Inc. products locally.

Sales have risen sharply at the Kroger store in the Miracle Mile shopping center on Laskey Road and at the Farmer Jack on Laskey near Tremainsville, he said, speaking only if his name was not used. Both appear to benefiting from the closing of three Food Town stores in the general vicinity.

Officials of Farmer Jack, a subsidiary of the Great Atlantic & Pacific Tea Co., did not return repeated calls last week seeking comment on the decline in the chain's market share.

Kroger's Mr. Hollandsworth said chains must be strong in trying to attract customers, particularly in the Toledo market, which he said is not for the timid.

``Any time you have a competitor like Giant Eagle come into your market, you have to be aggressive,'' he said.

Meijer spokesman John Zimmerman conceded the Toledo area is very competitive and said that to be successful requires good leadership.

Good quality at low prices is why the stores have done well, he said.

``In the grocery business, you have to be aware of what your competitor is doing, but more important, you have to be aware of what you're doing, right and wrong,'' he said.



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