Feeding Frenzy: Is It Grocery Store Glut or Matter of Convenience?

By Caroline Fossi, The Post and Courier, Charleston, S.C.

May 22–Back when James Laird was growing up in Mount Pleasant, there were only a handful of places to shop for groceries.

Today, the contractor can pick from more than a dozen big supermarkets in town, though he usually shops at the Bi-Lo on Shelmore Boulevard because it’s close to work and home.

“You won’t get hungry in Mount Pleasant,” he quipped after a quick trip to the store last week to pick up some seafood breading.

Laird has a point. The fast-growing town east of the Cooper River is the only place in the Lowcountry boasting all the major regional supermarket chains, including Bi-Lo, Food Lion, Harris Teeter, Piggly Wiggly and Publix, as well as the organic havens of Earth Fare and Whole Foods. That’s not to mention smaller, independent grocers such as Boone Hall Farms, a boutique roadside market that opened last month on U.S. Highway 17.

The feeding frenzy is sure to intensify next year when the town’s first Wal-Mart Supercenter, complete with a full-blown grocery section, opens off U.S. Highway 17 North in the new Market at Oakland shopping center. The big-box discount retailer also hopes to add a grocery department to its existing Mount Pleasant store a few miles south in Wando Crossing.

Among other developments in the Mount Pleasant grocery scene:

–Publix is building a third East Cooper store. It’s expected to open late this year.

–Discount retailer Target is expanding its grocery department and adding a wine selection as part of a companywide plan to beef up food and beverage offerings.

–Piggly Wiggly and Harris Teeter reportedly are scouting for additional locations in the area.

–Costco, a discount warehouse chain that already sells groceries and other wares at its West Ashley store, is rumored to be sniffing around town for a site.

Once the new Wal-Mart and Publix open, there will be eight grocery retailers operating 16 stores in the town of about 59,000 residents. That translates to roughly one supermarket for every 3,700 people. In 2000, that food-to-folks ratio was about one grocery store for every 4,500 residents.

Some residents say the growing supermarket stock just makes grocery shopping more convenient.

“They’re all busy,” said Julie Cook while shopping at the Publix off Anna Knapp Boulevard last week. “The town’s growing pretty fast.”

Others wonder if the area needs so many food peddlers.

“We do hear, ‘Oh, my gosh, another grocery store?’ ” Town Administrator Mac Burdette said. He’s heard similar comments about banks and drugstores.

Burdette said it’s not the local government’s job to pick what types of shops locate within the town. Mount Pleasant welcomes new businesses, and the jobs and tax revenue they generate, as long as they meet zoning requirements and “socially acceptable criteria,” he said.

Grocers probably keep building in Mount Pleasant because they think there are plenty of customers to go around, Burdette said. “I’m not sure that we have too many (grocery stores),” he said. “The bottom line is, the market’s supposed to dictate that.”

The main draw, observers say, is the booming and relatively affluent population base.

From 2000 to 2005, Mount Pleasant grew about 24 percent to become the state’s fourth- largest municipality. And with an annual growth rate of about 4 percent, it continues to add about 3,000 residents a year.

Many of those residents are well off, too. In 1999, the most recent data available from the U.S. Census Bureau, the town’s annual per capita income was almost $31,000, among the 10 highest in the state. By comparison, the state average at that time was about $19,000. The town also draws affluent shoppers (both residents and tourists) from the nearby Isle of Palms and Sullivan’s Island, as well as people from outlying areas such as Awendaw, Cainhoy and Daniel Island.

Despite those tempting statistics, some industry experts question just how many more grocery stores the town can support.

Consumer behavior expert Britt Beemer, chairman of Charleston-based America’s Research Group, said it’s likely that not every grocery store in East Cooper is profitable.

“Some could be losing their shirts,” Beemer said.

Any poorly performing stores may stay open because they want to maintain a presence throughout the Lowcountry to build brand recognition and “critical mass,” he said.

But as more supermarkets enter the fold, Beemer predicted there would be a fallout. “There is something called survival of the fittest,” he said.

In any case, Mount Pleasant isn’t the only place with an abundance of grocery stores.

The Sunbelt, in general, has a highly competitive retail food market, said Jon Wilken, former chief executive of the Mauldin-based Bi-Lo grocery chain. While most major metro areas typically have two to three strong grocery players, the Southeast has about half a dozen in some of the larger markets, he said.

“That’s almost unprecedented,” said Wilken, who now works in real estate development and other ventures.

What’s more, the South is Wal-Mart’s birthplace and stronghold. The world’s biggest retailer is now the top grocery seller in South Carolina, raking in almost a third of all grocery sales, according to the Shelby Report, a supermarket trade magazine.

Traditional grocery stores often lose customers when a supercenter opens nearby, as shoppers are drawn by the retail giant’s low prices and one-stop shopping, Wilken said.

“It really puts the crunch on the typical supermarket operator,” he said.

Bentonville, Ark.-based Wal-Mart Stores Inc. decided to build a supercenter in Mount Pleasant to meet demand, spokeswoman Tara Stewart said. Its existing store draws shoppers from the town and surrounding areas.

“It really made the case to support a new store,” Stewart said.

Construction will take about a year and will start once Wal-Mart obtains all of its building permits.

Mount Pleasant’s grocery market is heating up at a time when the business is tougher than ever. Supermarkets for years have operated on thin profit margins, averaging about a penny on the dollar. Today, the competition includes not just other grocery stores, but also pharmacies, convenience stores and other businesses that have added food to their product mix. Restaurants are taking a bite out of supermarkets’ bottom lines, too, as busy time-pressed families are eating out more.

To thrive, industry experts say, traditional grocery chains must offer top-quality products and services, as well as clean, attractive stores. Another competitive tactic is to become a niche player, such as Earth Fare or Whole Foods.

Despite the challenges, grocery operators in Mount Pleasant are optimistic about their prospects.

Earth Fare’s store there has succeeded because it caters to a different clientele than that of the broad-based supermarkets, said Troy DeGroff, spokesman for the Asheville, N.C.-based chain, which operates more than a dozen stores in the Carolinas and Georgia.

DeGroff acknowledged that the chain’s store near Mount Pleasant Towne Centre took a hit when its main competitor, Whole Foods, opened nearby in 2003. But Earth Fare has bounced back since then, he said, noting that the location is one of the company’s top performers for wine and cheese sales.

Other grocers, including Bi-Lo, Piggly Wiggly and Publix, said the town’s steady population growth is sufficient to keep their stores profitable. “We’ve just been quietly growing with the community,” said Publix spokeswoman Brenda Reid.

Operating in Mount Pleasant since 1993, Lakeland, Fla.-based Publix is adding its third store in the town. The 39,000-square-foot supermarket is off Ben Sawyer Boulevard, not far from an existing Bi-Lo. It’s scheduled to open late this year, Reid said.

Officials from Charleston-based Piggly Wiggly Carolina Co. Inc. say they’re also committed to the East Cooper market and have the advantage of being a hometown operation.

The company closed its Wando Crossing location last year, mainly because traffic patterns had changed over the years, making that store less accessible. With two locations in Mount Pleasant now, Piggly Wiggly is actively seeking additional sites, said Christopher Ibsen, the company’s director of real estate.

“Like any other business, our activity is dictated by supply and demand,” he said.

If predictions hold true, Mount Pleasant should continue to see an influx of new residents and rising household incomes, he added. “All of that adds up to a need for bread and peanut butter and milk,” Ibsen said.

FOOD FIGHT: Within a year, Mount Pleasant is will be home to 16 supermarkets, an average of about one store for every 3,700 residents. A rundown of the players:

Bi-Lo (3 stores)

Earth Fare (1 store)

Food Lion (3 stores)

Harris Teeter (2 stores)

Piggly Wiggly (2 stores)

Publix (2 existing stores; 1 under construction)

Whole Foods (1 store)

Wal-Mart Supercenter (Expected to open next year)

Note: Does not include independent grocers or other competitors, such as pharmacies and convenience stores.

Sources: Companies

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