DFW 2016 Market Share Numbers

[architect]

Earlier today, the Dallas Morning News just released a survey of the market shares for each DFW grocer this year, and the changes in these numbers since 2015. There are some interesting findings in the survey.

In the first full year of operations for the combined Albertsons, Tom Thumb's market share has dropped slightly, while Albertsons and Market Street have remained constant. Personally, I'm guessing that Tom Thumb's market share drop can mostly be attributed to the shift among higher-end customers (Tom Thumb's primary target shopper) towards natural and specialty grocers, such as Sprouts, Whole Foods and Trader Joes. However, since Albertsons took over, many former Tom Thumb customers in the area have also complained about deteriorating conditions in the stores, primarily revolving around expired products, poor staffing, high prices and gimmicky sales. For the Albertsons namesake stores, the lack of a market share decline is likely due to the fact that most of these stores have already fallen so far (with so many store closures in recent years) that the remaining stores are surviving on moderate traffic alone, with a few high-traffic locations to boost the chain (such as the successful Casa Linda store). For Market Street, no new stores have been added, and the existing locations have received little marketing, so a steady market share is to be expected.

One statistic which did surprise me was Kroger's slight decline in both market share and store count. In 2015, the only Kroger which closed in DFW to my knowledge was a 1980's-build store in a declining part of Lewisville, but a new store was opened in Plano (a former Tom Thumb turned Minyard Sun Fresh), which should offset this closure. Unless if the DMN changed the definition for their survey area, this data may be incorrect. I am curious if the market share decline this year could simply be explained by the "new store" effect of many new locations opening in recent years, causing traffic and sales to spike at these new stores over the past couple of years, and just now normalizing?

Overall, the biggest winners this year were Aldi, Sam's Club, Sprouts, Trader Joes, WinCo and Whole Foods, while this biggest looser (with a 0.6 market share drop) is Walmart.

DMN Article: http://www.dallasnews.com/business/reta ... tition.ece

[pseudo3d]

I am concerned about Market Street, but they did expand with new acquisitions this year, and completed some Market Street remodels in North Texas earlier this year, so it's not terribly upsetting. However, it is perhaps the more powerful weapon in the Albertsons North Texas arsenal and it's being underused (Amigos even more so). Kroger does close stores sometimes...there was a store in Fort Worth that closed in 2012 just after 16 years. It doesn't seem like a bad neighborhood, considering the Albertsons next to it still keeps humming as well as a Home Depot to the Kroger catty-corner. Sure the Albertsons nearby had a better location (I-620 and I-30) but it still strikes me as very odd for Kroger to fold like that. (And no, it didn't relocate--the nearest Kroger is four and a half miles away, and that's a Greenhouse).

[architect]

I am concerned about Market Street, but they did expand with new acquisitions this year, and completed some Market Street remodels in North Texas earlier this year, so it's not terribly upsetting. However, it is perhaps the more powerful weapon in the Albertsons North Texas arsenal and it's being underused (Amigos even more so). Kroger does close stores sometimes...there was a store in Fort Worth that closed in 2012 just after 16 years. It doesn't seem like a bad neighborhood, considering the Albertsons next to it still keeps humming as well as a Home Depot to the Kroger catty-corner. Sure the Albertsons nearby had a better location (I-620 and I-30) but it still strikes me as very odd for Kroger to fold like that. (And no, it didn't relocate--the nearest Kroger is four and a half miles away, and that's a Greenhouse).

I too am concerned about the future of Market Street in DFW. Since Albertsons took over the reins at United, there has been essentially no further development of the brand in DFW (there may have been one store constructed since this time; I can't remember for sure), with almost no marketing whatsoever. With the acquisition of Tom Thumb, Albertsons has had the opportunity to better integrate these two brands which often cater to similar demographics, possibly through the introduction of the Market Street brand to Dallas proper. Instead, it seems like Tom Thumb is getting the most attention as far as new store development/renovation goes, while both the Tom Thumb and Albertsons banners are receiving marketing attention. Clearly, Market Street is the strongest performing and best received Albertsons banner in DFW. Locally, most Market Street stores have built a loyal and passionate shopper base, very similar to HEB's in many other parts of the state. Yet Albertsons seems unwilling to expand it further, which could prove to be their undoing in the market.

As far as Kroger closing stores goes, the Fort Worth store you mentioned is actually in a transitional location. South of I-30, many of the neighborhoods in this area are in a state of flux, ranging from rapidly aging to downright ghetto (especially around many of the apartment complexes). This transition area stretches almost all the way from downtown Fort Worth to the Arlington city limit to the east. Arlington has ample shopping options, so residents would have little need to come this direction. Likewise, to the north, most of shopping tends to cluster around the Mid Cities and North Richland Hills, so residents rarely have a need to travel south on 820 past 121, especially for a run of the mill grocery store. Honestly, I am surprised that Albertsons has even been able to survive in this area (granted, they do have a much better location considering their visibility from 820), just considering the demographics. Side note, there is also a Minyard (soon to be Fiesta) in an old Safeway building at Meadowbrook Dr to the south ofthis area.

In many ways, the Lewisville store closure in 2015 can be attributed to similar demographic trends in its trade area. This particular store was located at Business 121 and Bellaire Blvd, and is mostly surrounded by aging neighborhoods and seedy apartments. With plenty of newer and larger Kroger stores available to serve the middle/upper class markets surrounding the area in Flower Mound and Highland Village, along with a new Marketplace to the east in Castle Hills, this store was essentially just left with a lower-class customer base which could not support the store on their own sales alone. When refrigeration problems crept up which were going to be expensive to repair, the decision was made to simply close the store rather than investing more money into it, and taking a risk that the area would not deteriorate any further.

[arizonaguy]

I am concerned about Market Street, but they did expand with new acquisitions this year, and completed some Market Street remodels in North Texas earlier this year, so it's not terribly upsetting. However, it is perhaps the more powerful weapon in the Albertsons North Texas arsenal and it's being underused (Amigos even more so). Kroger does close stores sometimes...there was a store in Fort Worth that closed in 2012 just after 16 years. It doesn't seem like a bad neighborhood, considering the Albertsons next to it still keeps humming as well as a Home Depot to the Kroger catty-corner. Sure the Albertsons nearby had a better location (I-620 and I-30) but it still strikes me as very odd for Kroger to fold like that. (And no, it didn't relocate--the nearest Kroger is four and a half miles away, and that's a Greenhouse).

I too am concerned about the future of Market Street in DFW. Since Albertsons took over the reins at United, there has been essentially no further development of the brand in DFW (there may have been one store constructed since this time; I can't remember for sure), with almost no marketing whatsoever. With the acquisition of Tom Thumb, Albertsons has had the opportunity to better integrate these two brands which often cater to similar demographics, possibly through the introduction of the Market Street brand to Dallas proper. Instead, it seems like Tom Thumb is getting the most attention as far as new store development/renovation goes, while both the Tom Thumb and Albertsons banners are receiving marketing attention. Clearly, Market Street is the strongest performing and best received Albertsons banner in DFW. Locally, most Market Street stores have built a loyal and passionate shopper base, very similar to HEB's in many other parts of the state. Yet Albertsons seems unwilling to expand it further, which could prove to be their undoing in the market.

As far as Kroger closing stores goes, the Fort Worth store you mentioned is actually in a transitional location. South of I-30, many of the neighborhoods in this area are in a state of flux, ranging from rapidly aging to downright ghetto (especially around many of the apartment complexes). This transition area stretches almost all the way from downtown Fort Worth to the Arlington city limit to the east. Arlington has ample shopping options, so residents would have little need to come this direction. Likewise, to the north, most of shopping tends to cluster around the Mid Cities and North Richland Hills, so residents rarely have a need to travel south on 820 past 121, especially for a run of the mill grocery store. Honestly, I am surprised that Albertsons has even been able to survive in this area (granted, they do have a much better location considering their visibility from 820), just considering the demographics. Side note, there is also a Minyard (soon to be Fiesta) in an old Safeway building at Meadowbrook Dr to the south ofthis area.

In many ways, the Lewisville store closure in 2015 can be attributed to similar demographic trends in its trade area. This particular store was located at Business 121 and Bellaire Blvd, and is mostly surrounded by aging neighborhoods and seedy apartments. With plenty of newer and larger Kroger stores available to serve the middle/upper class markets surrounding the area in Flower Mound and Highland Village, along with a new Marketplace to the east in Castle Hills, this store was essentially just left with a lower-class customer base which could not support the store on their own sales alone. When refrigeration problems crept up which were going to be expensive to repair, the decision was made to simply close the store rather than investing more money into it, and taking a risk that the area would not deteriorate any further.

It's interesting that Kroger doesn't try to compete in "transitional" areas in Dallas/ Ft. Worth. In Phoenix / Tucson there are numerous Fry's stores (built by Dillons / Kroger in the 1980s or Smitty's in the 1970s) that are still open and still do great business. They've been able to tweek the product mix to more Hispanic and value oriented product lines. They've also benefited from the fact that Albertsons, Bashas', and Safeway have abandoned these areas as well and the Walmarts in these areas are, for lack of a better word, downright scary (especially at night). Kroger did close 3 stores in "transitional" areas a few years back that were within 1 mile of another Fry's store, but they really haven't abandoned any area.

[storewanderer]

Fry's operates in some pretty tough neighborhoods, so does Food 4 Less. I think this is an example of the different cultures and different divisions. Frys looked at these stores in bad areas 10-15 years ago and said we can either try and make this store work or we can close it like all the other chains, that does no favors to the area but it gets this problem store off our back. Frys took the route that took a little more work but it seems to have worked out. Most of those Frys like you point out are older stores, smaller in size, likely had really cheap rent since reuse of the space had spotty chances at best... it is also easier to keep smaller stores secure.

I think the Texas Division runs some stores in some rough areas too based on some greenhouses I've seen there. So I wouldn't conclude that the Texas Division is outright running from questionable areas (that's something I'd accuse Ralphs of).

I am guessing the case of a 16 year old store at the edge of a questionable area you had a few factors: first it is a new store, so, higher lease costs just since it is new. Then you have the issue of the store being a large size since it is a new store. Then you have the issue of it sounding like a neighborhood with a good bit of other retail activity so potential re-use of the space may be attractive to the landlord and they may not be willing to go lower on rent just to keep Kroger open there.

I am guessing the United Division is busy spending its "allowance" from Boise on the remodels of stores in its core territory, such as the former Albertsons LLC Stores they were handed, those IGAs they recently bought, etc. It may well be had United been left on its own they would have continued to spend in DFW but now they are no longer in a position to do that. The fringe DFW Market is not core territory for them, fringe DFW seems to have been deemed core territory for Tom Thumb. If the Market Streets in DFW Suburbs are really doing better volume and better sales per square foot than the Tom Thumbs, why would the company be selecting Tom Thumb as the format going forward for DFW? Any ideas why they would do this. Sure, Tom Thumb has the higher store count. I guess Tom Thumb is more productive than Albertsons is in DFW. But if the Market Street format has the higher per store volumes, and I assume higher profitability and higher sales per square foot, and appears to have a lot better like from the customers...

[pseudo3d]

Fry's operates in some pretty tough neighborhoods, so does Food 4 Less. I think this is an example of the different cultures and different divisions. Frys looked at these stores in bad areas 10-15 years ago and said we can either try and make this store work or we can close it like all the other chains, that does no favors to the area but it gets this problem store off our back. Frys took the route that took a little more work but it seems to have worked out. Most of those Frys like you point out are older stores, smaller in size, likely had really cheap rent since reuse of the space had spotty chances at best... it is also easier to keep smaller stores secure.

I think the Texas Division runs some stores in some rough areas too based on some greenhouses I've seen there. So I wouldn't conclude that the Texas Division is outright running from questionable areas (that's something I'd accuse Ralphs of).

I am guessing the case of a 16 year old store at the edge of a questionable area you had a few factors: first it is a new store, so, higher lease costs just since it is new. Then you have the issue of the store being a large size since it is a new store. Then you have the issue of it sounding like a neighborhood with a good bit of other retail activity so potential re-use of the space may be attractive to the landlord and they may not be willing to go lower on rent just to keep Kroger open there.

I am guessing the United Division is busy spending its "allowance" from Boise on the remodels of stores in its core territory, such as the former Albertsons LLC Stores they were handed, those IGAs they recently bought, etc. It may well be had United been left on its own they would have continued to spend in DFW but now they are no longer in a position to do that. The fringe DFW Market is not core territory for them, fringe DFW seems to have been deemed core territory for Tom Thumb. If the Market Streets in DFW Suburbs are really doing better volume and better sales per square foot than the Tom Thumbs, why would the company be selecting Tom Thumb as the format going forward for DFW? Any ideas why they would do this. Sure, Tom Thumb has the higher store count. I guess Tom Thumb is more productive than Albertsons is in DFW. But if the Market Street format has the higher per store volumes, and I assume higher profitability and higher sales per square foot, and appears to have a lot better like from the customers...

Kroger does have a knack for running stores in all manners of neighborhoods (especially nice ones), but they'll close areas that do look bad (I believe they closed two in Greenspoint--an aging Greenhouse and an Albertsons that had been in the wrong location demographic-wise, plus a store in Gulfton but not before converting it to a Hispanic format). Much of the older Kroger stores in Houston have been closed or replaced, I'd say, so maybe "Kroger operates in rough neighborhoods" isn't quite as true. I actually know of a small handful of Greenhouse stores, and only two operating with the smallest, oldest Greenhouse model (the one that looks like a square from aerials).

You may be right about the Tom Thumb switch (the last Market Street in DFW, around the time of the purchase by Albertsons, though not Safeway), though Tom Thumb is building in very urban areas, while Market Street preferred to build on the suburbs. Additionally, United did build a new-build United in Brownwood, about 150 miles southwest of Dallas and over 200 miles southeast of Lubbock, opening almost a full year ago.

[architect]

Fry's operates in some pretty tough neighborhoods, so does Food 4 Less. I think this is an example of the different cultures and different divisions. Frys looked at these stores in bad areas 10-15 years ago and said we can either try and make this store work or we can close it like all the other chains, that does no favors to the area but it gets this problem store off our back. Frys took the route that took a little more work but it seems to have worked out. Most of those Frys like you point out are older stores, smaller in size, likely had really cheap rent since reuse of the space had spotty chances at best... it is also easier to keep smaller stores secure.

I think the Texas Division runs some stores in some rough areas too based on some greenhouses I've seen there. So I wouldn't conclude that the Texas Division is outright running from questionable areas (that's something I'd accuse Ralphs of).

I am guessing the case of a 16 year old store at the edge of a questionable area you had a few factors: first it is a new store, so, higher lease costs just since it is new. Then you have the issue of the store being a large size since it is a new store. Then you have the issue of it sounding like a neighborhood with a good bit of other retail activity so potential re-use of the space may be attractive to the landlord and they may not be willing to go lower on rent just to keep Kroger open there.

I am guessing the United Division is busy spending its "allowance" from Boise on the remodels of stores in its core territory, such as the former Albertsons LLC Stores they were handed, those IGAs they recently bought, etc. It may well be had United been left on its own they would have continued to spend in DFW but now they are no longer in a position to do that. The fringe DFW Market is not core territory for them, fringe DFW seems to have been deemed core territory for Tom Thumb. If the Market Streets in DFW Suburbs are really doing better volume and better sales per square foot than the Tom Thumbs, why would the company be selecting Tom Thumb as the format going forward for DFW? Any ideas why they would do this. Sure, Tom Thumb has the higher store count. I guess Tom Thumb is more productive than Albertsons is in DFW. But if the Market Street format has the higher per store volumes, and I assume higher profitability and higher sales per square foot, and appears to have a lot better like from the customers...

Kroger does have a knack for running stores in all manners of neighborhoods (especially nice ones), but they'll close areas that do look bad (I believe they closed two in Greenspoint--an aging Greenhouse and an Albertsons that had been in the wrong location demographic-wise, plus a store in Gulfton but not before converting it to a Hispanic format). Much of the older Kroger stores in Houston have been closed or replaced, I'd say, so maybe "Kroger operates in rough neighborhoods" isn't quite as true. I actually know of a small handful of Greenhouse stores, and only two operating with the smallest, oldest Greenhouse model (the one that looks like a square from aerials).

You may be right about the Tom Thumb switch (the last Market Street in DFW, around the time of the purchase by Albertsons, though not Safeway), though Tom Thumb is building in very urban areas, while Market Street preferred to build on the suburbs. Additionally, United did build a new-build United in Brownwood, about 150 miles southwest of Dallas and over 200 miles southeast of Lubbock, opening almost a full year ago.

Overall, the decision to close a store for Kroger seems to be based largely around two factors: crime and demographics, with the condition of the store in question also a factor. In the case of the Greenspoint and Gulfton Greenhouses, both stores are in noted high-crime areas dominated by apartments, which create little chance for revitalization in the near future. As a result, any currently-operating store would likely be outdated by the time that these areas turned around. On the other hand, stores which are located in low-end, but stable areas are often retained, as Kroger is able to market specifically to local demographics. As far as the other Greenspoint store goes, the location is simply terrible. Albertsons should have known that locating a store at a secondary tollway exit with little surrounding retail, and in an aging area to boot would not have worked out well.

Side note, Kroger has been known for moving out of certain areas and then later returning after conditions improve (the Deep Ellum area in Dallas is a great example). It will be interesting to watch for this trend in other places.

[pseudo3d]

The slight drop may have been from that Tom Thumb that closed in Arlington last year.

Overall, Walmart is definitely most at risk with WinCo taking direct aim at them if they offer a superior product at a comparable cost (that and ALDI, who now have some 50 stores in the area). They lost 3 Walmart Neighborhood Markets in the Dallas area and even the remaining Neighborhood Markets are at risk, at least two I know have been replaced with Supercenters.

All Albertsons has to do is not screw up again and regularly cycle new stores with old ones in transitional areas, and Kroger doing the same. Albertsons can even gain a leg up on that if they use Amigos and Market Street to full advantage.

It also demonstrates just how incredibly difficult it would be for H-E-B to gain a meaningful market share. They could pump 40 more stores into the market and still have half as much market share Kroger and Albertsons/Tom Thumb/Market Street do. In a way, I feel like DFW is much like SoCal is with a large focus on non-traditional grocers compared to Houston, which H-E-B conquered (though not necessarily on its own). 10 Trader Joe's vs. 5 and also about half as many ALDI stores as Dallas as well.

[storewanderer]

WinCo undercuts Wal Mart big time (then again so does Kroger). Yet in my area both WinCo and Wal Mart are running extremely busy stores. The more of these low price stores you have around, the worse it shines the light on the extremely high prices at certain other chains. You may have had someone who hated Wal Mart so they just went to Safeway knowing full well they paid more but did not care because they did not like Wal Mart. Now WinCo has opened and if they can tolerate it they may shift their shopping there after they see it is so drastically cheaper. Any additional "cheap" options are very bad news for these significantly overpriced chains. Now with Kroger who has gotten their pricing down to levels much closer (often even less on sale) to Wal Mart and WinCo they have a much better chance of at least keeping some of that WinCo customer's business. Depending on the exact location, WinCo also has a significant impact on Safeway-owned stores if they are nearby (within a couple miles) but not so much if they are any more distance. WinCo has absolutely steamrolled over Albertsons in so many places in the northwest... that damage was done a couple decades ago now.

WinCo will have distribution in Denton, TX next year. WinCo has demonstrated historically they will locate stores quite a ways from distribution (like 10 hours away...) so this opens up quite a wide expansion area.

WinCo also pushes Wal Mart's pricing down and really erodes their grocery profitability. At the Wal Mart Supercenter I go to which competes with a WinCo, I notice many items throughout the grocery area, specifically perishable produce/dairy, cost 20-50% less than they do at another Wal Mart Supercenter I visit sometimes which competes only with a Safeway and Save Mart.

I agree with you about how this is going to be more difficult for HEB than Houston was... this is more reason why they need to move now and get these Minyards they bought upgraded and re-opened ASAP. I am looking forward to HEB vs. WinCo. Maybe WinCo will go to Houston at some point. It appears for now WinCo is focusing on building in Oklahoma.

[pseudo3d]

WinCo undercuts Wal Mart big time (then again so does Kroger). Yet in my area both WinCo and Wal Mart are running extremely busy stores. The more of these low price stores you have around, the worse it shines the light on the extremely high prices at certain other chains. You may have had someone who hated Wal Mart so they just went to Safeway knowing full well they paid more but did not care because they did not like Wal Mart. Now WinCo has opened and if they can tolerate it they may shift their shopping there after they see it is so drastically cheaper. Any additional "cheap" options are very bad news for these significantly overpriced chains. Now with Kroger who has gotten their pricing down to levels much closer (often even less on sale) to Wal Mart and WinCo they have a much better chance of at least keeping some of that WinCo customer's business. Depending on the exact location, WinCo also has a significant impact on Safeway-owned stores if they are nearby (within a couple miles) but not so much if they are any more distance. WinCo has absolutely steamrolled over Albertsons in so many places in the northwest... that damage was done a couple decades ago now.

WinCo will have distribution in Denton, TX next year. WinCo has demonstrated historically they will locate stores quite a ways from distribution (like 10 hours away...) so this opens up quite a wide expansion area.

WinCo also pushes Wal Mart's pricing down and really erodes their grocery profitability. At the Wal Mart Supercenter I go to which competes with a WinCo, I notice many items throughout the grocery area, specifically perishable produce/dairy, cost 20-50% less than they do at another Wal Mart Supercenter I visit sometimes which competes only with a Safeway and Save Mart.

I agree with you about how this is going to be more difficult for HEB than Houston was... this is more reason why they need to move now and get these Minyards they bought upgraded and re-opened ASAP. I am looking forward to HEB vs. WinCo. Maybe WinCo will go to Houston at some point. It appears for now WinCo is focusing on building in Oklahoma.

Since WinCo tends to spread out, I think it will also choose to "attack" underserved markets. Waco is a great example, it's dominated by H-E-B with only an ALDI and a Brookshire's on the south fringes of town to go to if you didn't want Walmart, and with so much redevelopment going on in the city right now (a lot of aging housing stock near the Interstate is being demolished), it could really compete head to head with H-E-B without much risk or effort. Same with College Station, as my grocery store of choice is tending to become Kroger (despite the fact that Kroger's produce section is comparatively quite small) because of H-E-B's disgustingly overcrowded store (and they keep a former Albertsons dark a few miles northeast even though it could easily be quite popular and profitable as an H-E-B) and Walmart's lack of selection/overpricing in what I actually would want (especially dairy, which is often at least 50% MORE than its competitors).

I feel like H-E-B's purchase of the former Minyard stores is almost solely to say "screw you" to Albertsons without realizing how much they jeopardized their own potential market entrance.