Midwest Territory Expansion

Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. No non-grocery posts.
Romr123
Assistant Store Manager
Assistant Store Manager
Posts: 693
Joined: February 1st, 2021, 4:26 pm
Has thanked: 37 times
Been thanked: 56 times
Status: Offline

Midwest Territory Expansion

Post by Romr123 »

Was curious about thoughts on operators' expansion plans within the Midwest, and wonder how road networks affect them. The separate Schnucks thread got me to thinking about expansion--I was raised in St. Louis, and am currently in Detroit. Taking Schnucks: they have expanded reasonably successfully into Illinois, southeast into Evansville and south/west into Missouri where they can get trucks easily. Their gaps are Kansas City (where they tried to go in the '90s and left within 10 years, and where Hy-Vee and AWG are well entrenched), Memphis (enough said) and Louisville/Indianapolis (where they would face Kroger, plus WalMart/SuperTarget/Meijer and where Marsh's flame-out didn't really leave much of a gap). Meijer, on the other hand, is deliberate and enters one metro every 5 years or so...I think they're currently digesting Cleveland, and believe I saw their next market is Pittsburgh. They're pretty canny, though, and invested in Fresh Thyme out of Chicago, which gets them both into St. Louis and additional penetration with smaller stores into the Michigan/Indiana/Illinois markets. Living in Michigan, the only real criticism Meijer gets is store size/complexity, which Fresh Thyme can help them combat. Hy-Vee has expanded along I-35 and I-80, which results in them bypassing St. Louis.
Bakeragr
Produce Clerk
Produce Clerk
Posts: 62
Joined: April 25th, 2018, 7:02 am
Has thanked: 8 times
Been thanked: 5 times
Status: Offline

Re: Midwest Territory Expansion

Post by Bakeragr »

I live in Missouri, closer to St. Louis than Kansas City. I see Hy-Vee expanding more to fill in places in their existing footprint, and may eventually cover more of outstate Wisconsin, Illinois, Minnesota and Missouri. I do not see them entering St. Louis simply because Schnucks and to a greater extent Dierbergs already cater well to their type of shopper. Additionally, St. Louis would give Hy-Vee some pushback as they are non-union whereas Schnucks and Dierbergs are all UFCW stores. As a kid I remember picketers outside of Hy-Vee stores because they weren't union.

When I've been on vacation in Michigan, Indiana and Ohio, I 've really liked Meijer. I know they have more Illinois locations planned, but I see them expanding to Pittsburgh, Minneapolis and even Nashville before heading further west. We're too entrenched with Walmarts here in Missouri. We barely have any Costco locations!

Kroger has reentered St. Louis with their Ruler stores, which are like a knockoff Aldi, in the last 5 or so years. I'm sure they kicked the tires, but they should have acquired Shop 'n Save and returned fully to St. Louis, but I am guessing that they decided they had enough on their hands with the Roundy's acquisition. SNS would have cost some money and their concept was dead, so it would have taken a complete revamp. I kind of wonder how those stores are doing in Chicago and Wisconsin. My guess is the Wisconsin stores are doing better under Kroger, the Mariano's stores are likely getting less love and are becoming more downscale.

I think the Fresh Thyme stores are a mixed bag. I went into one in St. Louis and it didn't have anything I needed. I am not looking for "organic" foods and it didn't have the quirky, unique items that you can find at Trader Joe's or Whole Foods. It was however a clean, nice-looking store. I think they've since closed some of them in Nebraska and Iowa. I'm sure Meijer has gleaned some good sales research from them to use in their own stores, however.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: Midwest Territory Expansion

Post by storewanderer »

Generally speaking Kroger doesn't seem to like to buy distressed operations. Shop N Save was obviously quite distressed. It was performing poorly, was in a market that isn't growing much, didn't seem to have a great reputation, and had been run by an owner that was terrible at driving sales to stores in its final years of operation. I saw nothing really wrong with the Shop N Save store itself (large, clean, bright) but there was nothing about it that made you want to shop there either. It was just sort of there. Fresh stuff looked okay... there was just something lacking with the store, similar to how when Supervalu was running Albertsons. The main difference was Shop N Save pricing was rather fair and the store was well maintained, while when Supervalu ran Albertsons the pricing was horrible and stores were not maintained well.

Roundys was a distressed operation financially, but they still had very high market share in WI and had the well liked Mariano's concept in IL. Quite a few well located stores also. They had a good number of high volume stores. It made sense for Kroger to buy it because just streamlining its operation helped the finances with efficiencies and improvements from coming into being part of Kroger. I would even consider rebranding Pick N Save and Copps to Kroger- not clear how much value those two names have. Mariano's- has value as long as it is handled properly (not clear that is the case).

Fresh Thyme can be useful for produce, drinks, bakery items (loose store made cookies are great, if those are still a thing).
User avatar
retailfanmitchell019
Assistant Store Manager
Assistant Store Manager
Posts: 891
Joined: November 10th, 2019, 11:17 am
Location: 760 area code
Has thanked: 39 times
Been thanked: 57 times
Contact:
Status: Offline

Re: Midwest Territory Expansion

Post by retailfanmitchell019 »

At this point, Meijer is likely to enter the Twin Cities. What area should they enter next? There isn't much room for Meijer in Pittsburgh, due to Giant Eagle's dominance. Wegmans might also be pushing west later on into Meijer territory. That will be interesting.
As for Hy-Vee, I could see them expanding to areas like Tulsa, Fargo, and Wichita over the next few years. Hy-Vee should try and penetrate Chicago, maybe Denver in the next 5-10 years.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: Midwest Territory Expansion

Post by storewanderer »

retailfanmitchell019 wrote: February 6th, 2021, 4:27 pm At this point, Meijer is likely to enter the Twin Cities. What area should they enter next? There isn't much room for Meijer in Pittsburgh, due to Giant Eagle's dominance. Wegmans might also be pushing west later on into Meijer territory. That will be interesting.
As for Hy-Vee, I could see them expanding to areas like Tulsa, Fargo, and Wichita over the next few years. Hy-Vee should try and penetrate Chicago, maybe Denver in the next 5-10 years.
I think Hy-Vee would do very well in Tulsa, Oklahoma City, and Wichita. Denver/Colorado Springs is a toss up but it is growing and I think they would potentially do well there. For some reason I am just not sure how Hy-Vee would do in Chicago. I'm not sure why, but I kind of think they may not do real well there. Hy-Vee is a real meat and potato type of store. Chicago stores tend to have a much more diverse product mix to cater to various ethnic groups who seem very picky with what they are cooking (polish, Italian, etc.). They could adjust their mix, which they already do to some degree from market to market, but I think there are other markets they could go into without having to adjust that drastically.

Meijer would roll over Giant Eagle in Pittsburgh. Giant Eagle is nothing to be afraid of- very high priced and just okay on quality. Their upscale format in Indianapolis is quite nice though, as are their large format Get Go convenience stores.

I don't think Meijer and Wegman's are really targeting the same segment of the market. Wegman's is pushing on fresh perimeter departments. Meijer is very strong on center store but perimeter is just sort of there. If anything you could put the two next to one another and you'd have people shopping Wegman's for fresh products and Meijer for everything else.
Romr123
Assistant Store Manager
Assistant Store Manager
Posts: 693
Joined: February 1st, 2021, 4:26 pm
Has thanked: 37 times
Been thanked: 56 times
Status: Offline

Re: Midwest Territory Expansion

Post by Romr123 »

Tulsa (especially) and OKC would both LOVE to get Hy-Vee (only thing they'd like better would be HEB). Neither has Dillon/Kroger; really all they have is WM and various AWG banners. Tulsa had some nice stores in the '80s (Skaggs Albertsons, McCartney Foods); Safeway put in a concept store in about '84 in Broken Arrow, but the supermarket selection has done nothing but go downhill since then. Interestingly, Ree Drummond (The Pioneer Woman) started off her cooking show years ago with local AWG labels, and only later on started working with WM.

-Agreed that Hy-Vee wouldn't be a great match for greater Chicagoland, although they might have some success dipping their toe in in the former-Eagle areas in the far western/southwestern suburbs.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: Midwest Territory Expansion

Post by storewanderer »

Full disclaimer is I think Hy-Vee is probably the best grocery operator in the US, though it slips under the radar as folks praise Publix and Wegmans and I think that is more because of the geography of the chains than anything else. Wegman's is absolutely excellent, but there is something I just prefer about Hy-Vee. I think Hy-Vee has more to offer.

Homeland has done some decent remodels in OKC in the past 10 years, finally. But it is still Homeland and that chain seems to have some serious inconsistencies and freshness challenges. Tulsa has a bit more variety. Both markets really lost something when they lost Albertsons. Homeland though, is better after the remodels that have been done... Tulsa most of the former Albertsons went to a different operator who did not make it (horrible operator, perhaps one of the worst I've ever seen).
pseudo3d
Posts: 3851
Joined: November 12th, 2015, 7:01 pm
Has thanked: 5 times
Been thanked: 77 times
Status: Offline

Re: Midwest Territory Expansion

Post by pseudo3d »

I had originally written a long-ish post that described my opinions on each chain, so here it is the best it is as I can recreate it:

- Schnucks: I can see why Schnucks does not want to be another feather in the cap of Albertsons or Kroger, but the pharmacy sell-off looks really bad. Most chains that exit pharmacy are either on their way down (Marsh), evolving in what the type of store they want to be (Target), or only really dabbled in it to begin with (Stater Bros.). Meanwhile, unlike other chains that have pharmacies and are expanding (Rouses), Schnucks doesn't really seem to be doing anything.
- Hy-Vee: Definitely the kingpin of flyover country. Their Minneapolis-St. Paul expansion has (combined with SuperValu/UNFI's lack of action) done a lot of harm to Cub Foods, and I expect to see UNFI give up on Cub Foods and sell as many of the corporate-owned locations they can get away with to them. If they enter St. Louis they can probably put the hurt on Schnucks. Chicago would be a hard sell with Meijer, Mariano's, Jewel, and others, and Milwaukee only if Kroger cut the entire Roundy's division loose...which even if they did (and IF they did, it would be if Kroger exposes itself as not doing as well as it was believed to do, a major scandal in itself--yet all we have currently is just a few suspiciously-worded closures) Hy-Vee hasn't been known to pick up stores through acquisitions.
- Meijer: I don't see Meijer doing anything with any new markets to the west. Maybe Pittsburgh, maybe Knoxville. Minneapolis-St. Paul's action last summer and subsequent decisions may make it unfeasible for new competition, not to mention Hy-Vee's better hold there.
- Albertsons: Albertsons' last outing in this part of the country vis-a-vis the Great Plains Division was largely through acquisitions that didn't really mesh with their main base (Super One Foods, Smitty's-MO). The Jewel-Osco division doesn't seem like it will do much in terms of new frontiers (even the attempted buyout of Strack & Van Til while their parent company was in bankruptcy was basically an extended market of Chicagoland). Buying out HAC (Homeland) would probably be their best bet, but the two main hurdles would be the fact that HAC is employee-owned and it would saddle them with a bunch of dated stores (plus some Piggly Wiggly and Food World stores that used to be owned by Bruno's out in Georgia). The other problem with that is that Albertsons hasn't really been making much progress in D-FW either, and despite United/Market Street and Tom Thumb, still can't gain much ground against Kroger and Walmart. Organic expansion also is not going to happen either, it looks like that Durant, OK store was quietly scrapped.

I guess if HAC became feasible for a good price, maybe, but they really need to focus on the rest of the Southern Division's problems.

- Kroger: Kroger's got a lot of stores in the Dillons division but it hasn't really expanded out from there in years. They aren't even Kansas City (that's Hy-Vee territory). They haven't really expanded, though, the last expansion of note was picking up Baker's in Omaha from Fleming. They also don't seem to have competition in the markets where they do operate. If Hy-Vee went on the offensive, would Kroger react or just run the stores into the ground?

Moreover, Kroger's got the same problem Albertsons does--they just aren't much to get excited over.

In short, I think most of the operators from Minnesota to Oklahoma are sitting ducks for Hy-Vee, which is also the only one to actually expand to new markets.
buckguy
Store Manager
Store Manager
Posts: 1003
Joined: January 31st, 2017, 10:54 am
Has thanked: 3 times
Been thanked: 61 times
Status: Offline

Re: Midwest Territory Expansion

Post by buckguy »

Pharmacies are getting phased out of supers. In DC, I could see Giant keeping them (they usually seem to have a fair number of customers and have a large footprint that was established in the 70s), but not Safeway. Wegman's skipping them and Shop-Rite getting rid of them in some places is a sign that strong operators are beginning to question their value. We're just going to see more of this.

Supers also seem not to be doing much with gas stations recently---probably another trend to watch.

Chicago is a large, expensive market to enter and new entrants in the past have mostly been in the distant past (50s and 60s). There used to be subregion operators and Marianos seems like a variation on that. Heinen's from Cleveland has been quietly doing this, as well.

Milwaukee and even NW Indiana are sufficiently parochial that Chicago chains have always done poorly in those places. Jewel has left Milwaukee at least once. Neither they (nor National or Kroger) ever had a lot of stores in the Gary-Hammond area.

Giant Eagle may be complacent in Pittsburgh, but that doesn't mean they won't make a strong effort if someone enters the market.

Wegman's seems committed to the East Coast for the foreseeable future, with a fairly large number of stores in the queue and plenty of options for filling-in existing markets like Boston, NYC, Philadelphia, Baltimore, and DC. They go occasionally
for surprises like the Woodmore store but mostly they seem very methodical in their approach---looking for the right demographics and staying close to the same footprint.
pseudo3d
Posts: 3851
Joined: November 12th, 2015, 7:01 pm
Has thanked: 5 times
Been thanked: 77 times
Status: Offline

Re: Midwest Territory Expansion

Post by pseudo3d »

buckguy wrote: February 8th, 2021, 5:12 am Pharmacies are getting phased out of supers. In DC, I could see Giant keeping them (they usually seem to have a fair number of customers and have a large footprint that was established in the 70s), but not Safeway. Wegman's skipping them and Shop-Rite getting rid of them in some places is a sign that strong operators are beginning to question their value. We're just going to see more of this.

Supers also seem not to be doing much with gas stations recently---probably another trend to watch.

Chicago is a large, expensive market to enter and new entrants in the past have mostly been in the distant past (50s and 60s). There used to be subregion operators and Marianos seems like a variation on that. Heinen's from Cleveland has been quietly doing this, as well.

Milwaukee and even NW Indiana are sufficiently parochial that Chicago chains have always done poorly in those places. Jewel has left Milwaukee at least once. Neither they (nor National or Kroger) ever had a lot of stores in the Gary-Hammond area.

Giant Eagle may be complacent in Pittsburgh, but that doesn't mean they won't make a strong effort if someone enters the market.

Wegman's seems committed to the East Coast for the foreseeable future, with a fairly large number of stores in the queue and plenty of options for filling-in existing markets like Boston, NYC, Philadelphia, Baltimore, and DC. They go occasionally
for surprises like the Woodmore store but mostly they seem very methodical in their approach---looking for the right demographics and staying close to the same footprint.
Wegmans has an idea of what to do with their stores, and their newer prototypes suggest as much. ShopRite is a co-op, so I have no real idea of the chain, and from what I hear it varies a lot between operators. Plus, Schnucks was a big enough operator that they could make pharmacies profitable...it wasn't like smaller chains that struggle with it.

In my other post that got wiped, I mentioned that Jewel WAS in Milwaukee, but that expansion happened in 1998 (pre-Albertsons) with buying Cub Foods out of the market (Jewel had previously left in the 1970s), and then converting them over three days with full remodeling later. It was killed in 2007 (less than a decade later) under SuperValu ownership and sold off in pieces, and anecdotally, was never liked because of anti-Chicago sentiment in Milwaukee.

Jumping on S&VT was an opportunity as they were the stalking-horse bidder, but when it came to questions regarding the FTC and anti-competition, they rolled over and completely abandoned it. Since then, the Jewel-Osco division has had no interest in expanding anywhere.

Hy-Vee's expansion does seem to be opportunistic, so far they seem to pick fights they can win (Minneapolis). Even Milwaukee or Wichita would be challenging as those are entrenched Kroger-owned markets.
Post Reply