ST. LOUIS — For decades, the retail grocery market in this city has been dominated by three chains. These days, however, a certain worldwide retail super giant has Schnuck Markets Inc., Dierbergs Markets Inc. and Shop ’n Save looking warily over their shoulders.
“Super Wal-Mart,” Mike O’Brien, vice president of produce for Schnucks, said, letting the words hang in the air for a moment. “They’ve been surrounding us for years. Now they’re coming into the city.
“We regard them as a major competitor.”
Indeed, any area grocer has good reason to beware the movement and expansion of Wal-Mart’s Supercenters into the area. The Bentonville, Ark.-based chain now has eight supercenters in the area, with several more in the works, according to the company’s Web site. And, O’Brien was right when he said they were working closer and closer in to the central downtown area. Three Wal-Mart stores are closer than 10 miles from downtown, and two supercenters are within a 10-mile radius.
“There are eight Super Wal-Marts, with three more on the way,” said Greg Duello, category manager for produce at Dierbergs. “There were always supercenters, but they were on the outskirts. Now,they’ve moved into the inner circle, closer to the major metro area.
“Anything they take hurts.”
Still, the traditional “big three” hold a major presence in the area. Schnucks now has 67 stores in the St. Louis area, 105 overall in seven states, O’Brien said. That’s nearly a 30% market share for the area. Dierbergs, which has its headquarters based in the suburb of Chesterfield, has 23 area stores for a 12% market share. Shop ’n Save, which is owned by Eden Prairie, Minn.-based Supervalu Inc., has 38 stores and 18% of the market.
Those traditional powers don’t intend on just rolling over for Super Wal-Mart.
“We’ve reduced pricing,” Duello said. “We recently had a big ad campaign where we reduced prices on 4,700 items. We’re just trying to keep people, just trying to do what we do better, capitalize on our strengths, which has always revolved around customer service.”
There also appears to be room for the smaller retailers. A prime example is the sparkling new supermarket put in by William A. Straub in the suburb of Ellisville. The store, which includes a wine-tasting room, culinary school and two-level Internet café, opened in December. It is three times larger than the next largest of the Straub’s four other area locations.
“It’s been a slow build,” said Marvin McDonald, produce category specialist for Straub’s, of the new store’s progress the last six months. “A lot of people who have migrated out here don’t know Straub’s yet. We ran a focus-group study back on June 23 and found people like coming to Straub’s because it’s an event. It’s not thought of as something they have to do.
“But, all of our focus has been getting this off the ground.”
At least one area produce industry veteran thinks there will always be room for the little guy.
“Schnucks, Dierbergs and Shop ’n Save have always had a presence on the higher end,” said Charles Gallagher Sr., chairman of the board of United Fruit & Produce Co. “And they’ve been successful at keeping Wal-Mart out of a lot of areas, at least so far. Every sale Wal-Mart takes away is going to be felt.
“But there are some favorable trends toward smaller stores. Wal-Mart’s food items aren’t what that store’s all about. It’s in the other items. And, in this economy, people don’t have the money to spend, so why be tempted?”