Fry's Marketplace expansion in Arizona

[pseudo3d]

I don't know how many stores Albertsons/Safeway has in Arizona (a distinct 2nd place, I imagine), but this sudden push to add new Marketplace stores (presumably replacing or expanding smaller Fry's stores) indicates that Kroger sees Albertsons as a legitimate threat. Props to Albertsons for actually getting Kroger to react, and props to Kroger for not being cocky and overconfident.

[klkla]

I don't see Frys move as a reaction or defensive play at all. It's a huge offensive move because they see weakness in Albertsons/Safeway, not strength. How many stores have Albertsons and Safeway built in the last ten years? How many have they announced they will be building in the next two years?

[arizonaguy]

I don't know how many stores Albertsons/Safeway has in Arizona (a distinct 2nd place, I imagine), but this sudden push to add new Marketplace stores (presumably replacing or expanding smaller Fry's stores) indicates that Kroger sees Albertsons as a legitimate threat. Props to Albertsons for actually getting Kroger to react, and props to Kroger for not being cocky and overconfident.

Albertsons/Safeway is #1 in store count in the state.

There are currently, I believe, 109 Safeway stores and 35 Albertsons stores in Arizona. At their highest points, I believe Safeway had 115 - 116 stores in the state and Albertsons had 60. Safeway stopped opening new stores around 2009/2010 and Albertsons newest store opened in, I believe, 2002/2003.

I believe Fry's is the store count leader in Phoenix while Albertsons/Safeway is the store count leader in Tucson. However, I believe Fry's beats Albertsons/Safeway in volume and most of Fry's newest stores are 75,000 - 124,000 square feet in size whereas Albertsons/Safeway stores probably top out at about 75,000 square feet (most are 50,000 - 65,000 square feet).

I think Kroger is reacting to a combination of things:

1.) Sprouts and WinCo. In Surprise, around the time WinCo opened, Kroger converted a Marketplace store to the standard Food and Drug format and added a large bulk foods department. It has been adding bulk foods into several of its other stores as well. Remember, Sprouts is headquartered in Phoenix and has approximately 24 stores throughout the metro area.

2.) Albertsons/Safeway. There are certain places like central and north Phoenix, east and west Tucson, Scottsdale, and many of the newest developments around both Phoenix and Tucson where Fry's doesn't have much of a presence but Safeway (and/or Albertsons does). Kroger has been filling in many of these holes, and with some of these newest stores more will be filled in, but they still exist.

3.) Walmart isn't as strong as it once was. Their Neighborhood Market stores are almost always fairly "dead" and their Supercenters don't seem to be doing the grocery volume that they were a few years ago.

Kroger is playing catch up from the 2000s when relatively few new stores were built (especially from 2003 - 2010). I believe that they spent most of the 2000s digesting the combination of Fry's, Smith's, and Fred Meyer Marketplace/Smitty's. The vast majority of Fry's stores were built between 1980 - 1995 with a smaller number between 1995 - 2003, and an even smaller number from 1970 - 1980 (all ex-Smitty's stores) and 2003 - 2015 (a handful of larger stores and Marketplaces). What this means is that Fry's has a very large percentage of stores in "marginal" neighborhoods that were solidly middle class in the 1980s and 1990s but have deteriorated to solidly working class neighborhoods since then as newer developments have been built. Albertsons/Safeway has closed all but a small handful of stores in these types of neighborhoods but instead has a higher percentage of stores in the newer middle class areas.

One thing Kroger has always had in Arizona since I moved there in 2000 is a HUGE marketing budget. Fry's sponsors virtually everything going on around town and easily has the most radio and TV ads of any supermarket chain in the area. It's almost impossible to go anywhere without hearing about Fry's. Albertsons really started to step up its marketing around 2011/2012 or so (before that they hardly advertised at all outside of the weekly circular) and they (along with Safeway now) are the official grocery sponsor of the Arizona Cardinals NFL team.

[arizonaguy]

They've made significant progress at the first of the new Marketplaces to open (13th St. and Bell Rd.).

Photos below: