Clovis News

Big-box stores raise heat on Valley supermarkets

Local supermarkets face beefed-up competition from Valley Walmart and Target stores planning to expand their grocery sections, including some bringing in fresh produce for the first time.

The expansions are the latest challenge to traditional grocery stores already battling for food dollars.

Experts say they may suffer, perhaps a few stores will close, but one thing is certain -- local supermarkets will have to continue to adjust to survive.

"It's more death by a thousand cuts -- a supercenter opens down the block, a warehouse club like Sam's Club or Costco opens down the block," said Jim Prevor, founder and editor of Perishablepundit.com, a produce industry blog. "None of them by themselves is significant, but the cumulative impact of all these things pushes a lot of grocers out of business."

Save Mart just last week announced it was closing two Fresno County stores, citing competition and the economy.

"It's certainly much, much more competitive," Tom Anderson said of the Fresno-area grocery business. Anderson is a partner in Fresno-based Commercial Retail Associates and negotiates leases between grocers and landlords.

"The market is only so large," he said. "There are a fixed number of people. There's a fixed budget that they allocate or spend on food items."

In the Valley, traditional grocery stores such as Vons, Save Mart and independents already compete with Hispanic-grocery stores like Vallarta, discounters like Foods Co., warehouse clubs like Costco, and specialty grocers like Whole Foods. Even drugstores are increasingly selling food.

And in coming years, Anderson said, he expects to see others enter the Fresno market -- specialty grocers like Sunflower Farmers Market and Sprouts Farmers Market, both Arizona-based companies with an emphasis on organic and natural products.

The Valley already has a few big-box stores with expanded food options, including Walmart Supercenters, a Target Greatland in Visalia and a SuperTarget in Tulare. Some of the traditional Targets also have sizable food sections.

But the remodels coming in the next year or so will expand that even further. The stores will sell fresh produce and fresh baked goods delivered daily, and offer 40% more food than a regular store, according to Target officials.

"When you walk in, you'll definitely be able to see that it has changed because it has a very prominent fresh foods section right in the middle of our new layout," said Target spokeswoman Sarah Bakken.

A similar project is under way at the Walmart at Herndon and Ingram avenues in Fresno.

And Walmart completed an expansion of its grocery section to stores in Clovis and Selma in August.

Now, shoppers are greeted with large displays of produce. Eleven aisles of food at the Clovis store dominate the east wall, including four aisles of freezer and cooler cases.

Representatives from Walmart and Target said customers requested more food options and the ability to do all their shopping in one store.

"You may not go to that store more than once every three weeks," said Prevor, the produce-industry expert. "But if you're going to use it to pick up your milk, you're probably going to go twice a week."

And while shoppers are there, he said, retailers hope they pick up something extra -- a toy for their kids or some needed towels.

That change will hurt some traditional grocery stores.

Said Anderson, "You'll see older stores that have too much competition close."

Some already have reached the breaking point, perhaps because of competition from existing big-box stores.

Last week, Save Mart announced it will close stores in Kerman and Sanger on Oct. 16.

The Sanger store competed with a Walmart Supercenter barely a mile away. The Kerman store's only in-town competition is a family-owned grocery store, but surveys show that about half of residents leave town for grocery shopping.

Overall, however, experts say the traditional grocery store format will survive.

In part, that's because big-box stores aren't always cheaper, and shoppers know it.

Outside the Target at Blackstone and Bullard avenues, Mary Wright of Fresno was asked whether she would consider doing all of her grocery shopping there: "If it was about the same price or cheaper, then yes."

But Wright said a gallon of milk at Target costs more than $3. She can get it for less than $2 at Food Maxx.

Amber Sargent of Fresno buys cereal at Target because it's inexpensive. Cheerios was on sale last week at two for $5. But with a 4-year-old and a 6-year-old to feed, she'll shop other stores like WinCo for better prices. And her produce comes from the farmers market because Sargent wants to buy local.

In the meantime, traditional supermarkets continue to do what they do best: offer a wide selection, said Dave Heylen, a spokesman for the California Grocers Association.

Officials for Save Mart and Vons declined to comment or didn't return calls.

Those companies have worked to keep shoppers, Anderson said. Vons has remodeled and upgraded many of its stores and launched a low-price program during the recession. Save Mart's new stores are designed with some customer-friendly features, like the Clovis Avenue and Kings Canyon Road store that opened in 2008 with an expanded deli and bakery.

Save Mart also cut back on expenses by making its new stores more energy efficient.

And some customers simply don't want to shop at a Target or Walmart -- or at least won't buy certain products there, Prevor said.

"They may not be willing to buy a prepared food item at the deli," he said. "They might feel the fish department or the meat department or the produce is not as good as some other venue."

Many who turned to big-box stores during the recession will probably return to their regular shopping habits as the economy rebounds, he said.

Heylen agreed.

"This isn't the first time a new format has entered a particular market," he said. "Some grocers will not be able to adapt and may close up shop, but the majority of them have faced these things over and over, and they will adjust."

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