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Ripe for growth: Bonsack story will be Kroger's largest in the region(Roanoke Times, The (Roanoke, VA) (KRT) Via Acquire Media NewsEdge) Jul. 20--The region's grocery options are as abundant as a summer fruit basket. The assortment has become even more diverse in the past several years, with the advent of new names to the local supermarket spread, including The Fresh Market, Ukrop's Super Market and Save-A-Lot. These retailers are eating up market share in the Roanoke and New River valleys. Still, a mainstay in the national and local grocery world is holding its own and gearing up to open its largest store in the region this week. Kroger will open its doors Thursday off U.S. 460, in the Bonsack area, as part of a retail center named Kroger Square at Bonsack. This brick building with tan trim, spreading 84,000 square feet, will house the grocer's latest bells and whistles, from energy-saving designs to self checkout kiosks and an in-store dining area. Kroger, however, has chosen what some may consider an inopportune time for a new mega-store. Twenty-seven percent of consumers cut back their grocery spending in July because of high fuel prices, compared with the previous year, based on a monthly survey by BIGresearch. Last July, only 16.2 percent of consumers reported spending less on their grocery purchases, according to the same report. People are slashing grocery budgets so they can afford to pump gasoline into their vehicles and cover the cost of other ever-rising expenses, including energy bills and food. Kroger is viewed by some retail experts as a middle market player, falling somewhere between high-end concepts and Wal-Mart, though its prices still can't compete with the giant discounter. Kroger officials are confident that a new Roanoke County store is worth the $20 million investment in a region where the grocer has built a long history. Kroger planted its first Roanoke Valley location in 1929. It now has 18 stores in the Roanoke and New River valleys, trailing only Food Lion. Kroger targets Bonsack The Bonsack area was ripe for a larger Kroger presence, the grocer says. It was time to replace a weathered Kroger store at a strip center on Orange Avenue in Roanoke. Building a new location about a mile away was the logical solution. "The store we had currently was not what we wanted as a store in the future," said Penny Goddin, vice president of merchandising for Kroger's Mid-Atlantic region, based in Roanoke. "It was more economical for us to build a large facility to serve our needs." Plus, this part of Roanoke County is growing, population-wise, she said, noting some home construction under way in the area. The Orange Avenue store will close on Wednesday evening, in time for the new Kroger opening the next day. All 65 employees from the Orange Avenue Kroger will transfer to the Bonsack location, which will employ 225 total, including part-time workers, the grocer said. Kroger last constructed a store in the Roanoke Valley in 2005, at Cave Spring Corners in Southwest Roanoke County. The new Bonsack location is 40 percent larger than the Cave Spring Corners store, which measures 60,000 square feet. Kroger also has some store remodels in the works in Vinton and Blacksburg. When complete, both stores will measure about 83,000 square feet, slightly smaller than the Bonsack location, Goddin said. Right now, the grocery chain doesn't have immediate plans to construct additional stores in the Roanoke Valley, because "the valley hasn't grown much," Goddin said. "We always look at updating or replacing our existing stores." As far as the new Bonsack location, don't expect it to look too different from other Krogers in the area, except for a few new features. They include a seating area, designed like a cafe, and situated near the deli and prepared foods area. Also, a new kitchen section will sell cooking gadgets, small appliances, diningware and coffee makers. Other notable additions are in-store chefs, a wine area with its own wine consultant and organic produce. There will be eight self-checkout lanes, alongside nine full-service cash registers. A fuel center, situated in front of the store, opened earlier this month. It's Kroger's fifth gasoline center in the Roanoke Valley. Similar to recent trends in retail design, this store has some energy efficient qualities, such as 122 skylights, automatic lights, automatic restroom sinks and toilets and a master computer that regulates heating, air conditioning and refrigeration. Cutting back on energy usage helps the grocer to keep its prices low, Goddin said. And though its prices aren't as low as Wal-Mart's, some retail experts say it's clear that Kroger is making a push to compete on value at some level with the discount retail chain. About five years ago, Kroger, which is based in Cincinnati, refocused its pricing strategy, because Wal-Mart was slashing its grocery costs rapidly, said Jon Springer, associate editor of Supermarket News, a trade publication. "What Kroger was able to do was to kind of lower prices to where they feel they were in a range of Wal-Mart," Springer said. "That was close enough to Wal-Mart so that their shoppers wouldn't be abandoning them for lower prices." The appeal has worked for Jean Kleba of Blue Ridge and perhaps other local consumers. Though Kleba shops at Wal-Mart for general products, such as canned goods, because of the retailer's low prices, she buys specialty items and produce at Kroger. While loading groceries into her vehicle recently at a Kroger near Towne Square Shopping Center in Roanoke, she said she hunts out deals with the grocer's plus-card savings. "I'm anxious for the new one [Bonsack Kroger] to open," she said. But Brenda Vess, who lives in Bonsack, admitted that she doesn't always expect to find the lowest prices on food at Kroger. She frequents Kroger's Daleville store because of its variety of name-brand items. "I can't say Kroger is that cheap," said Vess, a mother of two, while pumping gas at the new Kroger fuel center in Bonsack. "I've been waiting on this [new store], so it can be closer" to her home. Kroger's stores locally don't look like a discount retailer. Gourmet cakes line the dessert counters, and olive bars are new additions to some stores. A wine expert is available at some outlets to chat with customers about selections. Some local Krogers have been stepping up efforts to carry grocery bags to shopper's vehicles for them, a practice for which competitor Ukrop's is known. At the Bonsack location, fancy tan and maroon markers hang above the grocery aisles, which are split in the middle to make it easier for shoppers to maneuver the store, grocers say. Kroger is "definitely not a discount player," Springer said. "But they're not going to be at the top of the market, in terms of upscale. What they want to grab is the broadest variety of shoppers." Food selection grows, prices build More players in the Roanoke Valley have broadened the local food selection. The Fresh Market, a specialty grocer whose outlets are designed to resemble European markets, opened in 2005 at Towers Shopping Center in Roanoke. This high-end grocer stocks its stores with meat, produce, breads, desserts and some dry goods, though its selection isn't as extensive as what large grocery stores sell. Almost two years later, Richmond-based Ukrop's debuted in Roanoke as a full food store with additional perks, including an in-store dining cafe, a Starbucks kiosk and an underground parking garage. Earlier this year, Save-A-Lot, a discount grocery chain that claims its prices are 40 percent lower than conventional stores, landed in Roanoke. "Competition is everywhere," Kroger's Goddin said. "We compete against those retailers in other markets where we do business. Yes, you see some impact, but it's the customers' choice as to where they want to shop." The competition for consumers' grocery dollars is building nationwide, however, as people foot prices for gasoline, energy and real estate costs. Food costs are up, as well, as a result of the higher-priced fuel used to transport goods and the demand for corn for ethanol production as an energy source. In the midst of these increases, Goddin said Kroger is trying to "maintain expenses." "It's no secret that inflation and the cost of products have increased," Goddin added. "Everybody is feeling people cutting back a little bit ... We have been very stable. People tend to want to cut back on going out to eat and buy more groceries and eat at home." Consumers are turning to store-brand or generic products, rather than buying brand names. A July survey by BIGresearch found that 35.6 percent of shoppers are buying store brands, compared with 23.1 percent last year. "They're really trying to scale down," said Pam Goodfellow, a senior analyst at BIGresearch. "You can't just stop buying food. It's trying to creatively find ways to stretch the dollars a bit further." Gasoline prices are denting consumers' budgets more than any other expense, she added. "You've got to buy gas to get places," she said. "It's constantly on everybody's minds." That's one reason why Williams Evans of Moneta said Wal-Mart is his best bet for groceries and most everything else on his list. He usually buys groceries at a Wal-Mart in Bedford, though he made a trip to the Bonsack Wal-Mart recently to shop at an adjacent Lowe's home improvement store. "You can get pretty much what you're looking for at Wal-Mart," Evans said. "And save gas," chimed in Susan Gamble, also of Moneta, who was shopping with Evans. To see more of The Roanoke Times, or to subscribe to the newspaper, go to http://www.roanoke.com/. Copyright (c) 2008, The Roanoke Times, Va. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |