Between Harris Teeter, Food Lion, Walmart, Target, and Family Dollar, North Carolina has a lot of competitors in the grocery business. Now, add one more. Publix, the upscale Southern supermarket chain broke ground Thursday on a new store in Ballantyne, its first in North Carolina. The move is the latest volley in a supermarket war.
Charlotte is Harris Teeter country; the company is headquartered in Matthews and has a lock on the upscale market here, according to Andrew Jenkins of market research firm Karnes.
“They’ve been the only game in town for a long time,” he says.”
While Charlotte is Harris Teeter’s stronghold, the chain is relatively small, with only about 200 stores. Publix has over a thousand, and ranks as one of the top ten largest.
“We don’t have a lot of people who look at this market and say they can win this one, but [Publix leaders] obviously think they have a good chance to compete and possibly win,” says Jenkins.
Publix has been inching closer, testing the border. The company opened two stores in Fort Mill Rock Hill and Indian Land last year. But yesterday, was a shot across the bow. It may be the perfect time to strike.
Harris Teeter has been exploring a sale, and both that chain and Food Lion—the other main competitor—have suffered from flat sales recently. Two other titans are wreaking havoc on them, super stores Walmart and Target, which entered the grocery business about five years ago, according to Eben Jose, a market analyst at research firm IBISWorld.
“They’re able to source food at much lower prices from wholesalers, which makes it more difficult for Harris Teeter and Food Lion to compete on prices, which means their profit margins are falling and they’re underperforming,” Jose says.
Jose says Publix may be able to mitigate that problem with a much more extensive line of branded products that can sell for less.
Charlotte is the prize. It’s a fast-growing and wealthy market, with resources to be tapped.
“It’s a great market for us, a great growth opportunity,” says Dwaine Stevens, a spokesman for Publix. “We hadn’t opened up a new division in over twenty years.”
And, the location could have even more strategic importance. Because another foe resides to the north, a supermarket force that casts its shadow from New York to Virginia. Wegmans. With its oyster bars, cheese-tastings, and store-made pizza, Wegmans is an evolving threat.
“Wegmans, which is the most successful privately -held retailer in the eastern half of the U.S., is also moving south,” says Burt Flickinger, managing director of the Strategic Resource Group, a supermarket consulting firm. “People will drive hundreds of miles to go to a Wegmans.”
Flickinger says Publix wants to cut Wegmans off at the pass in North Carolina. But there is one more wild card in this conflict. Kroger, the second largest grocery behind Walmart, fought Publix to a standstill in Atlanta. Now, Flickinger says, he could see them ponying up to buy Harris Teeter, and entering the fight in Charlotte.
3/29/13 - This article has been corrected. It originally misidentified a Publix location as Rock Hill, S.C.