ST LOUIS — The retail grocery scene in St. Louis is similar to the anatomy of a world war.
Superpowers such as Wal-Mart and Supervalu seem at first to overshadow the rest of the players, but strong regional companies such as Schnucks, and Dierbergs maintain their status despite a barrage of competition from discount operators such as Aldi.
And then there are the small but steady combatants, such as Straub’s Markets, which has only four stores in the metro area. Straubs’ 110-year reputation of offering high-end meats and produce to a slightly upscale clientele seems to have insulated them, giving it a Switzerland-type atmosphere of status quo despite the grocery wars raging around them.
Greg Lehr, produce buyer and category specialist for Straub’s, said for 2011 the weather has been more of a problem than the economy.
From South America to the Pacific Northwest, growers have struggled with droughts, freezes, untimely rains and uncooperative temperatures.
“Some of our prices have been up because supplies have been down,” Lehr said. “Last week (at the end of July) watermelon was at record prices, and we are seeing a similar situation with cantaloupe and grapes.
“We have taken a hit in margins because of supplies because it’s been so volatile.”
Lehr said Straub’s doesn’t compete head-to-head with big-box or discount stores as do other regional chains, which means they are on more solid footing.
Schnucks Markets is at the other end of the regional chain spectrum.
Schnucks fresh-cut line
With 105 stores in five states, the Shelby Report shows Schnucks as the front runner for market share among local and regional chains with 16.8% of the metro area’s grocery business.
The Shelby Report shows Kroger with 6.8% of the market and Dierbergs with 5.5% as of July.
The Peace of Mind pricing program is at the heart of Schnucks battle plan in the St. Louis grocery war, according to Mike O’Brien, vice president of produce and floral. The campaign is the chain’s promise to customers who responded to surveys by saying that everyday low prices were their top desire.
“When you are in an economy like we’ve been in and still are in, you need to do everything you can to keep customers,” O’Brien said. “That’s what Peace of Mind is about. Bananas are our No. 1 item there.”
In addition to including bananas and other fresh produce in its Peace of Mind program, Schnucks has launched a line of in-house fresh-cut fruit and vegetable products to keep and attract customers. O’Brien said the fresh-cut items target Gen X and Gen Y moms by saving them at-home labor.
“The fresh-cut program started earlier this year, and we just finished the roll out of it in June,” O’Brien said. “We had to add a little staff because of the extra labor and food safety issues, but it is paying off for us.”
O’Brien said staples that traditionally attracted consumers to Schnucks are still in place, including a focus on seasonal farm fresh produce from area growers.
He said peaches from Eckerts Orchard just across the Mississippi River in Illinois have come in strong this summer and are selling well.
Dierbergs’ locally grown
A commitment to fresh local produce is a key element in another local chain’s strategy for the St. Louis grocery war. Blackboards outside the entrances to Dierbergs 23 stores in the metro area are updated daily with brightly colored fluorescent chalk, proclaiming the number of local fresh produce items available.
The local chain also is upgrading and renovating stores to be more appealing. A $5.8 million upgrade at the 74,000-square-foot Des Peres Dierbergs is in the works, with plans having been filed June 30 in St. Louis County Circuit Court for a 6.1-acre transportation district there. Establishing the district would allow Dierbergs to widen a road and add traffic signals that would make the store more easily accessible.
No matter what the local and regional chains do, though, they are all facing insurgence from large national entities.
Wal-Mart’s grip on the St. Louis retail grocery market is tight, with a 36% share.
It is followed by Supervalu’s 21.3% share.
Target is moving to increase its grocery business in the St. Louis area with its PFresh format. The PFresh stores are midsized and include 40% more food than traditional Targets, including a fresh produce aisle that touts both locally grown and convenient fresh-cut products.
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