Taking Stock

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With Four Stores Open, Publix Is Off To Quick Start In Richmond; More Units To Debut Later This Year

We’re still in the early innings of what will become the fiercest of all grocery battles on the East Coast, but it’s already clear in the first six weeks of making its Richmond debut that Publix intends to become a primetime player in its northernmost marketing area.

I was a bit skeptical about how the Lakeland, FL-based juggernaut would fare in a new market that is significantly overstored (even with the departure of Martin’s) and offers so many different retailing operating styles that it’s been a challenge for all retailers to gain market share over the past year (Wegmans, which entered the market in 2016 is the exception).

On paper, you might not think that a service-oriented grocer with not especially low prices operating out of a modest footprint (49,000-60,000 square feet) could find a sweet spot in a market where discounters Wal-Mart/Neighborhood Market, Aldi and now Lidl have carved out a solid niche; a conventional operator such as Kroger (Marketplace) has been adding locations and expanding others in recent years; and upscale merchants such as Wegmans and Whole Foods are also posting strong per-store average volumes. Throw in Food Lion (struggling, but with more than 40 stores in the market) and the penetration of the alternate channel retailers – Target, CVS, Walgreens, Costco, Sam’s Club, BJ’s, Wawa and 7-Eleven – you’ve got a cluster. And as the new kid on the block, that ain’t necessarily a good thing.

However, Publix has seemed to overcome that in the early going by providing Richmond consumers with a shopping experience that would remind many of the halcyon days of Ukrop’s. Thus far Publix’s strategy of keeping the 10 Martin’s stores it purchased from Ahold Delhaize closed for about a year (or longer), has proved to be a wise move. While Publix may have only paid an estimated $3 million a store, it has spent at least that much on remodeling the three former Martin’s units open thus far (the first area store in Glen Allen, VA was built from the ground up). All four units offer sharp store design and they are well staffed. Associate training is also excellent. As one of our readers noted: “They have seemed to create a totally new shopping image – the staff is courteous and informed. Perhaps one of the reasons Publix waited so long to reopen was to remove the taint of the entire Martin’s experience in Richmond.”

Now that former Martin’s stores (and former Ukrop’s units, too) have opened on Staples Mills Road, S. Laburnum Avenue and most recently on John Rolfe Parkway, it’s obvious that Publix has prepared well for what will remain a big challenge for the employee-owned chain. It is still the last merchant to arrive in an overheated market; it’s division headquarters in Charlotte is nearly 300 miles away and its closest distribution center in Dacula, GA is 500 miles from Richmond.

As noted earlier, there is more competition that has recently arrived with four new Lidl discount units now open (and about six more to come in the next 12 months), a new Wal-Mart SuperCenter on Nine Mile Road as well as a new Whole Foods slated for W. Broad Street.

There have been some market corrections, too. Kroger canceled plans to build a new store in Colonial Heights and a larger replacement store in Mechanicsville (another new store planned for Charlottesville has also been scrapped). Additionally, Wal-Mart will not go forward with a proposed Neighborhood Market on Laburnum Avenue near Mechanicsville Turnpike and Food Lion, which has closed a handful of stores over the past few years, has relocated its store from the Ashland Junction shopping center to the larger former Martin’s unit in the Ashland Hanover shopping center about half a mile away.

Before the end of the fall, Publix is slated to open four more remodeled stores – Brook Road in western Henrico County is likely next to open; Pump Road in Short Pump; Hull Street. Road in Chesterfield County; and a former Martin’s store in Colonial Heights. There’s also a chance that three of the last-to-be-closed Martin’s stores that Publix had agree to acquire – Three Chopt Road; West Broad Street; and Carytown – could open before the end of the year.

Additionally, we’ve learned that Publix has acquired the former Martin’s store on Forest Hill Avenue in the city of Richmond for $12.5 million. That store was also originally a Ukrop’s supermarket and the Ukrop family sold the property to Publix. It was among the last of the Martin’s stores to close when it shut its doors early last month.

The lines of battle can be clearly seen. All the long-time retailers, upstart merchants and new operators are now in the ring and fighting ferociously to stake their claims in a metro market whose population is 1.26 million and food and where drug sales reached $3.7 billion last year.

I smell blood.