Supermarket Roundup

Nash Finch (319-393-1880) opened a 60,000 sq.ft. Econofoods supermarket to replace an older store in Marshalltown, IA. The store is a "Fresh Place" concept store that offers fresh produce, expanded deli and bakery items, free in-store childcare, natural and organic foods, full meat and seafood departments, signature, specialty and ethnic products and a pharmacy.

Hannaford Bros. (207-883-2911) plans to close its eight stores in Charlotte, NC and to pull out of the southeast altogether in hopes of garnering Federal Trade Commission approval for a possible merger with Food Lion’s parent company, Delhaize America. The FTC forced Delhaize to scale back its plans to buy Hannaford Bros. company stores. Hannaford Bros. intends to sell 38 stores and to close an additional 13 units in VA, SC and NC, including those in Charlotte. Lowe’s Foods will buy 13 of the 38 Hannaford stores, pending government approval of the Delhaize-Hannaford deal. The stores range in size from 47,000 sq.ft. to 55,000 sq.ft., and the transfer of operations should be complete during the Summer. Kroger hopes to buy the 20 Hannaford stores in the Richmond and Hampton Roads, VA market as part of the company’s expansion plan in the East. The sale could be completed by the end of July, and Kroger plans to have each of the stores opened under its banner within 10 days of the sale. However, Marketplace Holdings, Inc., the parent company of five Community Pride and three Rack & Sack supermarkets in the Richmond market area, has complained to the FTC and to U.S. Representative Thomas Bliley, chairman of the House of Representatives’ Commerce Committee, that his company was not given a fair chance in the bidding process.

Kroger Co. had its plans to acquire 74 Winn-Dixie stores in OK and TX nixed by Federal Trade Commission regulators. The FTC ruled that the acquisition would have given Kroger an anti-competitive edge in the Fort Worth market. The acquisition, the cost of which had been approximated at $350 million, would have given Kroger a market share of approximately 33% in the region, surpassing the 28% share currently held by the leader in the market, Albertson’s. The FTC ruled that the acquisition would cause "competitive harm to consumers." Supermarkets analyst Meredith Adler of Lehman Bros. said the FTC has gotten much tougher recently about these kinds of transactions. Industry analysts considered the proposed acquisition to be a continuation of the trend in the supermarket industry toward consolidating purchasing power, so that large grocers can better compete with superstore retailers like Wal*Mart, Target and others on pricing. "(The FTC is) acting like Wal*Mart doesn’t exist" Adler said. But FTC Bureau of Competition director Richard Parker said that, "we have taken all that into consideration in making our decision." To garner FTC approval, Kroger would have to divest ownership of some of the stores it would acquire in the Fort Worth market. "The percentages are a starting point," said Parker. "That creates the presumption of a problem. Then you look beyond that to competitive interaction, how these stores compete and if the consumers in your town would be injured."

Pathmark (732-499-3205) is asking bondholders to accept equity in exchange for $1 billion in debt to free the supermarket chain to lower prices and increase its competitive strength. If the deal is accepted, Pathmark, which holds a 15% market share in the metro NJ/NY market, would briefly enter Chapter 11 bankruptcy protection to make the swap and then emerge as a public company. The plan eliminates $80 million in interest payments per year.

Foodtown Supermarkets of Kentucky, Inc. (606-269-4387), the parent company of Slone’s Signature Markets and Big Valu Discount Foods, has filed for Chapter 11 bankruptcy protection. The company, which operates three units in Lexington, KY, and one each in Versailles, Danville, Lawrenceville, Morehead, Grayson, Olive Hill and Irvine, plans to close some of those supermarkets in the coming months. The company suffered from the increasing competition it faced from larger retailers like Wal*Mart and Meijer and Kroger. Future plans call for a retooling of its supermarket offerings to focus on fresh foods and convenience, which is more difficult for its larger competitors to offer.

Fresh Market plans to open an 18,400 sq.ft. specialty market at Old Alabama Square, located at the intersection of Old Alabama and Haynes Bridge in Alpharetta, GA, the company’s first in the area. The company operates 26 stores in six states, and the Fresh Market concept offers "upscale grocery boutique" items such as free-range chicken, meats and fish, pick-and-pack spices, coffees, chocolates and an extended line of olive oils, wine and beer.

Widmer’s Super Market (651-698-0713) purchased the 13,000 sq.ft. Knowlan’s Supermarket located on Randolph Avenue in St. Paul, MN. The store no longer fits with Knowlan’s plans to expand its large supermarket Festival Foods chain, which typically measure 50,000 sq.ft. to 55,000 sq.ft.

Stater Bros. (909-783-5000) opened a 43,235 sq.ft. supermarket located at the intersection of 40th Street and Waterman Avenue in San Bernardino, CA. The new store replaces the company’s recently-closed location directly across the street from it. The company currently operates 155 supermarkets in CA.

Gelson’s Markets (818-906-5700) is developing a 31,000 sq.ft. specialty market at Monarch Bay Plaza in Dana Point, CA. The company currently operates 13 locations in southern CA, and negotiations for additional sites are presently under way.