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Area grocery industry seeing sales growth during pandemic

Grocery and convenience stores in Charlottesville and Albemarle County saw an 11% increase in sales during the pandemic, according to a recent report by an industry trade publication. The growth occurred even as the local grocery scene became oversaturated, according to an industry expert.

Food World’s annual retail market study ranked 18 companies totaling 47 stores in the city and county. Overall, the stores generated $639.9 million in sales between April 2020 and March 2021, an increase of $62.9 million from the prior year.

Jeffrey Metzger, publisher of Food World, said the pandemic created “unprecedented sales opportunities” for all retailers selling food.

“Looking at the broad picture, supermarkets, club stores and mass merchants gained the most,” he said. “Convenience stores and drug chains also gained but at a slower clip than some of their other retail channel competitors.”

Kroger and Harris Teeter continue to dominate the local market, with three locations each and 21.6% and 11.5% of the local market, respectively. Kroger had $138.4 million in sales over the year, while Harris Teeter had $73.7 million.

Representatives from Kroger did not respond to questions by press time.

New stores Aldi, which opened in May in Albemarle Square, and Lidl, which officially opens Wednesday in the 29th Place shopping center, are not included in the study. Wawa, which opened two locations in June, is also not included.

According to a news release, a ribbon-cutting ceremony for Lidl with community leaders will be held between 7 and 7:30 a.m. Wednesday at 750 29th Place Court. The store will be open from 8 a.m. to 9 p.m. seven days a week.

Metzger said smaller chain stores such as Lidl and Aldi are opening more new stores throughout the region than are larger chain stores.

“In terms of market impact, it’s kind of a bunch of paper cuts, but they do affect everybody, and they do take share and inhibit the growth of the existing players,” he said.

Wegmans came in third in the area, with about 11.1% of the market and $71.4 million in sales, followed by Food Lion, which has six stores in the area, with 10.2% of the market and $65.6 million in sales.

Accounting for inflation, sales in the area have increased 44.9% since the 2011 report. In the last 10 years, Food Lion and CVS have opened more stores, Giant has closed one store, Wegmans, Trader Joe’s and Costco have opened and The Fresh Market has opened and then later closed.

To be included in the study, supermarkets must operate at least two stores, though not necessarily within the market region. Sales information about grocery, health and beauty care-related items sold straight from Amazon are not included in the study because Food World cannot get accurate data, Metzger said.

Metzger said nearly every chain’s e-commerce business doubled during the pandemic.

“I think it will continue to be solid — I think they will dip down from peak pandemic level, but clearly the growth of e-commerce is here to stay,” he said.

The Charlottesville area is over-stored, he said, not necessarily from a consumer point of view, but from the industry’s point of view.

“You’ve got such a diversity of retail and styles that it makes it challenging to consider new stores, or do much more than holding on to what you have,” Metzger said. “So, where have we seen the capital investment going? … Some brick and mortar investment on improving stores, but almost overwhelmingly on developing their e-commerce platforms further.”

In this next year, Metzger said, the industry is still seeing growth from 2019, but not at the level that occurred in 2020.

“Retailers feel comfortable that they’ve established certain protocols, whether it’s health and safety related when shopping in the stores, whether it’s ramping up their e-commerce initiatives and platforms, they feel good about that,” he said. “What they’re worried about is this continuing labor shortage, which is affecting any business that’s labor intensive.”

Source: www.dailyprogress.com

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