Grocery solution depends on many factors

Lakeland-based Publix Super Markets Inc. still charms Florida developers with its attractive customer-base and overall corporate health, but other grocery chains are offering different kinds of allure. The best grocery store anchor for a shopping center depends on many factors, including market size, target customer base, area competition, credit rating, range of tenants and more.

Some other grocery chains that vie for Florida space are Winn Dixie Inc., Kash n' Karry -- soon to be Sweetbay Supermarket -- Albertsons Inc., Sav-A-Lot, Food Lion, the villainous mega-centers, and several growing chains focused on health foods, in addition to the rare independently-owned grocery store.

John Crossman, senior vice president at Trammell Crow Co. in Orlando, estimates that it takes about 10,000 people in a two-mile radius to support a neighborhood grocery store. "If your trade area is very big, it could be that Wal-Mart Supercenter is your best choice," Crossman says.

Supercenters usually serve communities within a radius of five to seven miles. In addition to size, deciding which chains to court for a shopping plaza depends in large part on the tastes and pocketbooks of the population.

Cost-conscious shoppers and those with limited incomes have made Wal-Mart and Target's foray into the grocery business a huge success. These shoppers also lean towards Winn Dixie and Food Lion based on price. Kash n' Karry marketed to this demographic throughout Florida, but has recently revamped its growth and product strategies.

Kash n' Karry has plans to eliminate 38 stores throughout central, eastern, and northern Florida, and will focus on the west coast market. The stores' new name will be Sweetbay Supermarket. In addition, the chain is revamping its offerings to include more healthy, organic and ethnic food selections. Kash n' Karry is owned by the Belgium-based Delhaize Group, as is Food Lion, Hannaford Bros. and Harveys.

Crossman says that one often-overlooked chain has a lot to offer.

"One of the best grocers in Florida is Sav-A-Lot," Crossman says.

He says that Sav-A-Lot typically attracts customers heavily focused on price ‹ even more so than Wal-Mart shoppers. A Sav-A-Lot store can be in close proximity with a Publix, because they cater to different markets.

"Sav-A-Lot is rapidly growing," Crossman says. "They serve their customers very well. They're financially well-suited and do a great job. They have a great relationship with Publix, because they don't compete for the same customer."

While lower income customers have several chains catering to their cost needs, middle- and upper-shoppers also have no lack of stores that want to fill their cupboards. Chains that offer extensive bakery departments, organic, gourmet and prepared foods -- such as sushi -- attract these shoppers.

"They're oriented more towards a higher income, product-oriented consumer compared with a price-oriented consumer," says Howard Sipzner, chief financial officer for Equity One Inc. in Miami.

Publix is one of those players, and it has been rapidly growing throughout the Southeast U.S. The company plans to open about 57 new stores this year, following its growth plans announced in 2001 to open 340 new stores within five years. In January, Publix purchased three former Kash n' Karry stores in Florida. Crossman says that Publix is often the easy answer and fits well in many environments.

"I believe that Publix could be the greatest retailer in the country," Crossman says. "They have the right blend of high level of customer service, quality of produce, and price sensitivity. They seem to understand their customer base better than any other retailer in the state."

Craig Sher, president of The Sembler Company in St. Petersburg, says that Publix tends to offer better service than some other chains, partly because it is an employee-owned company.

"The gaps have widened," Sher says. "Publix is the premier grocer in the state of Florida. They have the largest market share. Customers in the middle and upper income prefer Publix, and it's easier to develop a shopping center around that. The rest of the grocers are fighting for the rest of the market."

Michael Leeds, chief operating officer of RMC Property Group in Tampa, points out that Publix-anchored shopping centers tend to command higher rents and facilitate higher occupancy levels than its competitors, such as Winn Dixie and Albertsons.

Crossman says that if the property is located in a very high-end area and developer's credit is not an issue, the best choice might be a specialty grocer, such as a Wild Oats Markets or an independently owned store.

Sipzner says that in addition to the market and credit issues, an existing relationship with a chain also make a difference.

"We look at who's already competing in a market," Sipzner says. "And, we look at who we've done deals with recently. That, to some degree, drives how easy or difficult this one might be."

Sher predicts that the grocery store business will remain competitive in Florida for the next few years, and that the shelf life of some existing chains may be expiring.

"There may be a loser. I'm not sure there's room for all these competitors," Sher says.