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2009-07-16
Richmond,VA. Wal-Mart Eats Into Ukrop's Market Share

Another long-standing family-owned food retailer is starving for sales -- thanks to Wal-Mart. On February 19, 2009, Sprawl-Busters reported that Bruno's supermarkets, a chain store founded in Alabama in 1933, was seeking permission from U.S. Bankruptcy Court in Birmingham to close 10 of its stores. "It is never an easy decision to close stores or reduce positions," said a spokesman at Bruno's, "but we believe this is a necessary step that will enable Bruno's to be a more focused and competitive business across the region we serve. We owe this to our customers and others who depend on us to operate efficiently, effectively and profitably." On July 14, 2009, we reported that Basha's, an Arizona-based grocery chain store also had filed for bankruptcy, the first time since the store was founded near Chandler, Arizona in 1932. Basha's claims to be the 12th largest employer in the state. This week, a third grocer tilted towards oblivion. According to the Richmond Times-Dispatch, the Virginia-based Ukrop's Super Markets Inc. is searching for potential buyers for the 28-store chain. The family-owned chain issued a prospectus for the company, and competitors like Harris Teeter, Supervalu and Royal Ahold were looking over the deal. 25 of Ukrop's stores are in the metro Richmond area. The first Ukrop's opened in 1937. One of the major factors changing Ukrop's outlook has been the construction of 10 Wal-Mart superstores in the Richmond area. Until this year, Ukrop's held the most market share for grocery sales in the Richmond trade area. Ukrop's had been the lead for the past 23 years. By 2001, Ukrop's controlled nearly 24% of the supermarket and drug store business. But by this year, grocery chain Food Lion controlled 19% of the market's to Ukrop's 17.5%. One of the major new players is Wal-Mart, which has taken 12% out of the share of the area's other markets. Kroger comes in behind Wal-Mart at 11%. "Market share is not our thing," the chairman of Ukrop's told the Dispatch. "We think there is enough business for us to continue to do what we do. We just have to be better at it. The fact that we have as much of a market share as we have as the little guy is amazing." But the picture is getting worse by the day. According to the publisher of Food World, which tracks market share in this area, "Ukrop's leadership position has been endangered for several years now as 10 Wal-Marts and a significantly more aggressive Kroger have attacked the family-owned retailer on many fronts."

What you can do: Ukrop's employs roughly 5,600 workers.Wal-Mart now has 71 superstores in Virginia, plus 18 discount stores. Wal-Mart has 39,871 employees in Virginia, or more than seven times the number of Ukrop's workers. All the family-owned grocery chains this year -- Bruno's, Basha's and Ukrop's, were started in the 1930s, three decades before Sam Walton opened his first Wal-Mart. The supermarket movement at Wal-Mart has cannibalized the sales of other grocers, forcing them into bankruptcy, or to seek a buyer to prevent bankruptcy. Local officials, who are often economically illiterate, think that Wal-Mart adds 'new' jobs to the local economy. But as these three grocery chains demonstrate, when a Wal-Mart superstore opens, local grocery stores close. The net job growth following the opening of a Wal-Mart superstore is negligible. As the industry analyst Retail Forward reported in 2003, for every one Wal-Mart superstore that opens, two area grocery stores close. Wal-Mart is a form of economic displacement, not economic growth. Readers are urged to email Ukrop's at helpline@ukrops.com with the following message: "Dear Ukrop's, your chain says it was founded on the golden rule - treat others as you yourself would like to be treated. But Wal-Mart is after your gold, and they don't play by the same rules. Twenty five years after Joe Ukrop founded your company, Wal-Mart opened its first store. Today, Wal-Mart has 71 superstores in Virginia -- two and a half time as many as Ukrop's. The Richmond area is clearly over-stored. Too many grocery stores chasing too few people. It would be helpful if your company told consumers the impact that Wal-Mart's saturation strategy has had on your stores. A good portion of Wal-Mart's 12% of grocery and drugstore sales have been captured from Ukrop's. That's helped to knock you out as the leading market share company -- and even forced you to begin searching for a buyer. Let city and town officials in Virginia know that this is what happens when large companies build more stores than are needed. Tell the truth about what Wal-Mart did to you by over-building -- while you still have a company to write about."










 
 
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