BIZ: Bagging Market Share

Stroll into Dorignac’s Food Center almost any afternoon of the week and you’ll see a familiar scene: piles of groceries rolling on the checkout counters, shoppers and carts jamming the aisles. Activity at the Metairie market is so heavy that you might guess the store is even busier than it was in the days before Katrina. Your guess would be right.

BIZ: Bagging Market ShareSuch is life for the lucky local grocers who were able to get their stores up and running at full capacity relatively soon after the disaster. With many New Orleans grocery stores still out of commission more than a year later, surviving retailers have enjoyed the growing demand of a returning population.

“I’d say business is the best it’s ever been,” says Christie Andras, Dorignac’s marketing director.

While grocers appreciate the boom, many consumers are aggravated by the ongoing inconvenience of needing to drive farther than they used to for groceries. Many who now frequent Metairie supermarkets, for instance, were formerly regulars at Winn-Dixie, Robért Fresh Market or Lakeview Fine Foods in neighboring Mid-City and Lakeview. Some shoppers today travel even farther for bread, milk and other staples – driving from eastern New Orleans and other areas where basic retail services are still lacking.

The forced changes in grocery-shopping habits, along with other factors, have produced marked shifts in competitive positions among major retailers in the local area. One of the most notable changes is that the nation’s No. 1 grocery retailer, Wal-Mart, also has taken the lead in the local market.

Figures from Gainesville, Ga.-based trade publication The Shelby Report show that Wal-Mart has soundly knocked previous market leader Winn-Dixie out of first place on local shoppers’ lists. Through the first three quarters of 2006, Wal-Mart’s 11 area supercenters held a 38 percent market share in metropolitan New Orleans. Winn-Dixie, which in past years has held sway in the local market, now claims just over 20 percent of the business, according to The Shelby Report.

Katrina and the resulting flood knocked more than 40 of Winn-Dixie’s regional stores out of commission in 2005, though many came back on line within a few months. Today, the Jacksonville, Fla., company operates 34 local stores and will open six more as repairs are completed.

The Katrina debacle came behind Winn-Dixie’s own financial storms that sent it into bankruptcy in February 2005. To stay afloat, the company undertook a restructuring that closed more than 300 stores in other states and cut 22,000 jobs. However, after emerging recently from bankruptcy, Winn-Dixie appears poised to solidify its local footprint. The company is scouting new locations in and around New Orleans.

The main culprit behind the financial turmoil at Winn-Dixie and many other grocery chains was the world’s largest retailer, Wal-Mart. The giant discounter has plowed deeper and deeper into the grocery business during the past few decades, burying some smaller competitors along the way. Like Winn-Dixie, major grocer A&P had to make serious adjustments to its cost structure in order to compete.

Montvale, N.J.-based A&P, through its Sav-A-Center markets, has managed to hold on to its third-place market share in post-Katrina New Orleans. Sav-A-Center claimed almost 19 percent of local business through the first three quarters of 2006, according to The Shelby Report.

The reopening of storm-damaged Winn-Dixie, Sav-A-Center and other groceries is helping to boost the pace of recovery in some heavily damaged areas. The return of another significant local grocer could kick the action up a few more notches.

Marc Robért, owner of Robért Fresh Market, has been grappling with the myriad insurance, real estate and construction details necessary to get three more of his damaged supermarkets back in business. Robért, who reopened his West Esplanade store in Metairie a few months ago, says the Fresh Market at Robert E. Lee and West End boulevards in Lakeview will be next. He’s hoping to complete major renovations in time for a March opening.

At the same time, he’s deep into the details of a brand new store he plans at the corner of Carrollton and Claiborne avenues in New Orleans, next door to a new Walgreens pharmacy. Robért and Walgreens agreed on a configuration of the site after lengthy negotiations with neighborhood groups. Walgreens became Robért’s landlord at the site when the drug store company bought the property last year. Robért says work will begin soon to bring back his grocery and put a new Walgreens at the site. Soon thereafter, he hopes to bring back his store at St. Claude and Elysian Fields avenues.

Robért faces a steep climb to get back into position as the largest locally owned grocer in the area. Among others he must square off with is Whole Foods Market, the Austin, Texas-based retailer that opened its second local store just months before Hurricane Katrina. Through a phased re-opening of the damaged Metairie store, Whole Foods managed to grab 2.3 percent of local grocery business as of Sept. 30, 2006, edging out locally owned competitors Rouse Enterprises and Breaux Mart.  
Whole Foods’ organically grown and higher-end products generally carry higher price tags than the average local shopper tolerates, but post-Katrina grocery-buying patterns have shifted. Many shoppers have become enamored of Whole Foods’ wide selection, including their substantial prepared-food offerings. Only when a number of supermarkets in other key areas finally return to business – bringing back full-scale price competition – will local grocery shoppers’ loyalties again be put to the test.

How they stack up
1. Wal-Mart Supercenter     11    38.02
2. Winn Dixie     25    20.32
3. A&P (Sav-A-Center)    18    18.57
4. Whole Foods       2      2.29
5. Rouse Enterprises       3      2.03
6. Breaux Mart       3      1.83
7. Wal-Mart Neighborhood       1      1.63
8. Save-A-Lot       4       1.31
9. Franks SuperValue        2        .48
10. Robért Fresh Market      1        .33
11. All others     36    13.19
Percentages are averages from the first nine months of 2006.
Source: The Shelby Report, Shelby Publishing Co.

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