Groceries fighting back!

Posted at July 12, 2008 // Retail

Over the July 4th weekend, I went and visited my folks. One of the first thing they asked me was what did I think of their new accessories around the house. This quickly launched a discussion about the nearby newly remodeled grocery store.

They live right behind a commercial area. They are within walking distance to a SuperTarget. Very close by are Super Wal-mart and a Kroger’s grocery store. The Kroger had a grand opening last week – for their new Marketplace.

Marketplace is a new format that Kroger has started to adopt in order to fight the retail giant – Wal-Mart. For those who are not familiar with the different retail formats, as they are not available everywhere, here is the lowdown:

• First of all, there are plain old Wal-Marts and Targets. These are general merchandise discount stores.
• Then, there are Supercenters, which have been adopted by both Wal-Mart and Target, include a full grocery store. For Wal-Mart, these are generally called Super Wal-mart or Wal-mart Supercenters. For Targets, they are branded as SuperTargets.
• Target has another store format called Target Greatland. Differ from the supercenters, which dedicate equal sized floor space to grocery (including produce, meat, deli, etc.) and general merchandise, a Target Greatland dedicate majority of the floor to general merchandise while still carrying a limited selection of grocery products.
• Finally, Wal-Mart has ventured into grocery more fully with its Neighborhood Market format. These are full grocery stores, with a limited offering of general merchandise.

So, as the discount stores enter the realm of groceries, the grocery stores are finally fighting back! Kroger began opening a new store format called Marketplace. Marketplace is still largely a grocery store. However, a significant amount of the floor space is dedicated to general merchandises, including home décor and furniture. (In fact, during my visit, I bought myself some side tables.) It appears to me that a Kroger Marketplace is the exact opposite of a Target Greatland. I would say Kroger Marketplaces are selling Target style products at Wal-Mart prices. Supposedly, this is Kroger’s attempt to fight Wal-Mart. The remodeling plan for a store generally depends on the proximity to a Wal-Mart Supercenter.

Kroger Marketplace. Photo credit: AP, Daylife.com

This was all very interesting, but it wasn’t going to change my life – until I found out that a Kroger store in my town is already being remodeled into a Marketplace! Currently, there is one Wal-Mart Supercenter in town. The Kroger closest to this Wal-Mart is the one currently being remodeled.

However, Wal-Mart is currently building a second store in my town. I am unsure of the store format for this new store. Rumors abound for a potentially new store format. This is actually possible, as my town historically has been a testing ground for new store formats. Target opened its second SuperTarget here (the same year as the first one opened). Wal-Mart built its first environmentally friendly store here. So, perhaps something new is at work. According to the official information, this store will be smaller than the existing Wal-Mart Supercenter and will carry a full line of grocery products. So, perhaps it’d be a Wal-Mart Neighborhood Market. It’s due to open spring of next year, so we’ll know soon.

Interestingly, Kroger has also announced plans to remodel the store nearest to this new Wal-Mart. The remodeling has not started yet, but the grand opening for the remodeled store is scheduled for sometime in 2009. This timeline is quite reasonable, as previous stores only took a few months to complete the remodeling.

Incidentally, my new apartment is within walking distance to this development. So, I will be able to keep an eye on what’s going on!