Kroger ups ante in grocery fight

There’s a food fight brewing in Carytown, where Kroger is about to make a not-so-subtle push to lure customers from the Ukrop’s across the street.

The chain has new carts for bag boys to use when they shuttle customers’ bundles to their cars.

And the Carytown Kroger, which is regarded as one of the chain’s higher grossing stores by employees and commercial real estate brokers, is trying to take over the lease from CVS next door and knocking out the wall to expand. It would likely add an expanded prepared food section at that location.

“I can’t say a whole lot until the deal is done, but we have a tentative plan working toward that,” said Fenton Childers, Kroger’s real estate manager for the Mid-Atlantic.

Childers said that while he is not involved on the merchandise side, it seems likely that the grocer would expand its prepared food offerings and bring in some new items.

All this comes at a time when Ukrop’s has been looking for a potential acquirer for the company – including Harris Teeter and also private equity groups. (You can read a BizSense article about that here.)

In June Ukrop’s lost its number one ranking for local grocery stores to Food Lion, according to the trade magazine Food World. (You can read more about that in a Times-Dispatch story here. )

The conversion of the CVS should be completed in February of 2011, according to a store employee.  That would add an additional 18,000 to the 58,000 square foot store, according to figures from a 2001 architectural plan. The SunTrust Bank would remain in its location between Kroger and the converted CVS, and the bank will get an internal entrance to the expanded Kroger.

Even with the addition of CVS, the Carytown store will be 10,000 square feet smaller than the new 86,000 square-foot behemoth Kroger is building at The Corner at Short Pump, which should be open around July, according to Childers. That store will replace a 53,000 square foot store nearby at Brook Hollow, which Kroger inherited from another grocery chain.

By comparison, the new Kroger at Rutland Commons in Hanover County is 77,000 square feet.

Several employees at the Carytown Kroger have speculated that their store was also looking to add a fuel station. And indeed the company is adding stations around town. Kroger has also for years tried to buy the retail location on the corner of Cary Street and Nansemond, which might serve that purpose.

But that location was recently leased to the pet store Dogma.  And Childers said there simply isn’t room in the crowded parking lot.

“We’d love to have a fuel center at every center, but that is not in the plan for Carytown,” he said.

However, Childers said that Kroger is adding two fuel stations at the East Ridge store and also the downtown store on Lombardy and Broad, which will open in the first quarter of 2010.

Kroger is also taking a page directly from Ukrop’s playbook.

As of Friday, Kroger now has special beefier shopping carts to shuttle customers’ bundles from the store to their cars in the parking lot. According to an employee, the grocery store always offered that service but it was seldom used. But now the carts are sturdier, and employees are being encouraged to wheel groceries out into the parking lot.

It seems popular at several locations visited by this reporter.

As for why CVS is parting with the space, the drug store probably didn’t need two locations in the same area, and it already has a 24-hour location next to Ukrop’s on the north side of the street.

Rob Black,  a commercial real estate broker with CB Richard Ellis, said that CVS may have been holding on to that location to prevent a competitor from coming into the competitive Carytown market. But then Walgreen’s built a stand-alone center, so there is now no need to be as defensive.

“When that Walgreen’s finally opened up, it really just doubled occupancy costs,” Black said. “And Kroger is probably more than happy to have the extra space and get that store closer to their prototype,” he said, meaning a bigger floor plan.

“If they added prepared foods, which they don’t do that much with that location, well that would make prefect sense to me,” Black said.

Aaron Kremer is the BizSense editor. He covers the grocery industry for BizSense. Please send news tips to Editor@richmondbizsense.com.