By Randy Tucker
Enquirer staff writer
Bob and Linda Fultz consider themselves loyal Kroger shoppers. But that hasn't stopped them from taking some of their food dollars to other stores.
Harry Murray of Bond Hill says he's a Kroger fan because of the selection of hard-to-find low-salt and low-sugar items. Grocery aisles are becoming more competitive, forcing stores to work harder to keep customers.
Photos by MEGGAN BOOKER/The Enquirer
Cathy Davis of Crittenden unloads groceries at the Wal-Mart in Dry Ridge. "We save a ton of money," she said of shopping at the supercenter for her family and 100 kids at two New Discovery Education Centers.
"We still do most of our shopping at Kroger," said Bob Fultz as he loaded his car trunk with groceries from the Kroger store in Hyde Park Plaza recently. "But we find we don't come here as often as we used to.
"Last night, I was downtown and picked up a bag of charcoal and a pint of Ben & Jerry's ice cream from Walgreens on my way home. I remember when I'd have to run out to the grocery store to get those items."
Grocery shoppers in Greater Cincinnati and Northern Kentucky are learning they have more options than ever for where to buy food. Discount stores, warehouse stores, convenience stores, drugstores, dollar stores, even online retailers are expanding food offerings.
At the same time, Wal-Mart plans to build supercenters in 10 more neighborhoods over the next 18 months - joining the ones in Aurora and Dry Ridge.
Cincinnati-based Kroger, the region's top grocer, is adding six new stores.
Stores are getting bigger, too, and they're selling everything from grapes to gardening tools.
As competition increases, the pressure on price also is growing. Traditional grocers are countering with price drops where they can, even as they try to convince shoppers that a bigger selection and more personal service may be worth a slightly higher price.
Stan Eichelbaum, a Cincinnati-based national retail consultant, says the region is already home to a highly competitive marketplace, and consumers will see "a severity of competition" they haven't seen here before.
"It will not only be a wake-up call, it will be a matter of survival and will force all players in the market into restructuring and reworking," he said.
Kroger and other supermarket chains are facing an increasingly competitive marketplace, forcing them to work harder to maintain customer loyalty.
"There are so many options now for consumers to buy food that their loyalty to their local supermarket chain has steadily eroded," said Mark Hugh Sam, an analyst who follows Kroger for Morningstar Inc. in Chicago.
"It's true that Wal-Mart has gobbled up market share by the handfuls from supermarket chains across the country. But Wal-Mart isn't the only factor."
In Cincinnati and Northern Kentucky, shoppers can pick up basic groceries everywhere from convenience stores such as United Dairy Farmers to CVS or Walgreens drug stores to warehouse clubs and no-frills, limited-inventory stores such as Sav-A-Lot.
While supermarkets remain the primary grocery outlet for 72 percent of shoppers, according to a recent survey from the Food Marketing Institute, that number has declined from 81 percent in 2002.
At the same time, patronage at discount stores, supercenters and other retail channels that sell food has continued to increase, with supercenters leading the way - 21 percent said supercenters were their primary destination for buying groceries, up from 15 percent in 2002.
The survey was based on random telephone interviews in January with 500 adult and young adult grocery shoppers. The survey has a margin of error of plus or minus 4.4 percentage points.
Cathy Davis of Crittenden shops at the Wal-Mart Supercenter in Dry Ridge. She said she saves so much money on food and other items that, "I'd be stupid to shop anywhere else."
Davis' grocery bills are already higher than most because, in addition to her family, she regularly buys groceries for the nearly 100 kids who attend the two New Discovery Educational Centers she operates in the area.
"Between home and the two centers, we save a ton of money," she said.
Big stores, more stuff
Wal-Mart's impending building boom here has put pressure on conventional grocers to increase their size so they have room to sell general merchandise, which carries a higher profit margin.
Combining a wide selection of general merchandise and services, including gardening centers, photo labs and pharmacies, with meat, produce and other groceries is what distinguishes supercenters from traditional grocers.
But Kroger recently built its biggest store ever, in Anderson Township at the Anderson Towne Centre, and the 104,000-square-foot store features a Fred Meyer Jewelry Store, a Starbucks, a drive-up pharmacy window and a photo lab.
There's also an adjacent fuel center, a major revenue generator for Kroger, which now operates more fuel centers than any other retailer except Wal-Mart.
"The stores we're building today are larger on average than they were 10 years ago as part of our effort to meet the increasingly diverse needs of our customers," said Gary Rhodes, Kroger's corporate spokesman. "It's all about offering them more product variety, better value and service in a convenient location."
But don't look for Kroger to become the next Wal-Mart.
Kroger stores have grown by a modest 10,000 square feet on average over the past 10 years, to between 65,000 square feet and 70,000 square feet, Rhodes said.
That compares with supercenters such as Wal-Mart, bigg's and Meijer, whose average store size ranges from 150,000 square feet to more than 200,000 square feet.
Kroger wants to keep its stores at a manageable and easy-to-navigate size because, unlike the supercenters, its focus and the backbone of its business is still food.
Selling food in a format in which items are easy to find gives Kroger a competitive edge, Kroger officials say.
"There is a supercenter customer out there," said Bob Hodge, Kroger president of the Cincinnati-Dayton marketing area. "Our customer has different expectations, and there's no comparison when it comes to the service and selection we provide."
Still, traditional grocers are losing ground. Thriftway, once the No. 2 player in the region, is closing its doors here after struggling to compete with Kroger and the supercenters. The 21-store Thriftway had fallen to fourth place in the market by last year.
Since then, Kroger has snapped up eight Thriftway stores, and Erlanger-based Remke Markets has grabbed one. Milford-based bigg's is rumored to be close to a deal to buy the Thriftway store in the Hyde Park Plaza, and insiders say Kroger may have its eye on at least two more Thriftway locations.
Kroger also is building six new stores in the area this year, though that's about the same as each of the past several years.
The grocers are scrambling to build more stores - and grab more shoppers - before Wal-Mart comes to town.
Prices draw many
While there are many reasons people shop at certain stores, price is always at or near the top of the list.
According to a recent Enquirer/WCPO-TV survey, about two out of five Cincinnati-area respondents - or 39 percent - said price is the most important factor when they choose a grocery store.
Wal-Mart, considered the biggest threat to the grocery industry, sells food at prices 20 percent to 30 percent less than conventional grocers.
Jim Crutcher of Crittenden, who was shopping at the Wal-Mart Supercenter in Dry Ridge, described the store as the "greatest thing that ever happened to low-income people."
"I'm disabled, and I live on a fixed income, but I just bought a 27-inch, flat-screen TV," Crutcher said. "I wasn't really in the market for a TV. I just came here to pick up a few groceries. But the price was so low I couldn't pass it up. That's the thing about Wal-Mart. It lets you stretch a dollar so you can afford things you otherwise couldn't."
In addition to Wal-Mart, other food sellers that emphasize low prices also have seen their business grow here.
Meijer, with its "Lower Prices" motto, has seen its market share grow from 4.9 percent to 12.7 percent over the last five years as it climbed from fourth to second in the marketplace, according to Trade Dimensions International Inc.
And bigg's, which recently opened a new store in Delhi Township, said it is No. 3 in the market and growing because of its "True Minimum Price" campaign.
Kroger and other supermarket chains say they're working to narrow those price gaps in a variety of ways, but they acknowledge their prices may never be as low as the supercenters' because they can't afford to sell food as cheaply.
Instead, Kroger and the other supermarket chains are emphasizing such things as clean stores, fresh produce, full-service meat departments and convenient locations.
They've set up frequent-shopper programs to increase customer loyalty and, on selected items, match the deeper discounts supercenters offer.
And, they say, they carry a better selection of products, including hard-to-find specialty items, than Wal-Mart, which stocks only the most popular grocery items.
Selection is the main reason Harry Murray of Bond Hill shops at Kroger.
"I have diabetes and high blood pressure, so I buy a lot of low-salt and low-sugar items, like lactose-free milk and no-sugar-added ice cream," he said. "That's why I shop at Kroger - because it's hard to find those items anywhere else."
Fort Mitchell resident Sandy Gronick, on the other hand, can't wait for Wal-Mart to finish its supercenter there in August or September.
"I definitely shop on price," said Gronick, who now shops at Kroger or bigg's. "If Wal-Mart's prices are as cheap as people say they are, I'll be the first one in line when they open up here," said Gronick, "I have four kids, and the thing that matters first and foremost to me is saving money at the register."
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