News Article | 1/12/2011

Kroger Marketplace opens today in Alliance

Before there was a Walmart Supercenter or a SuperTarget, there was Fred Meyer — a chain that built two-story hyper-marts in the Northwest offering not only wide selections of groceries but also furniture, apparel, gardening supplies and hunting licenses.


Kroger bought Fred Meyer in 1998 and today is bringing a modified version of the humongous stores to far north Fort Worth, where it will become the first major food retailer in the Alliance corridor.


Shoppers will find larger selections of produce, deli items, organic products, wine, beer and other foodstuffs at the 123,000-square-foot Kroger Marketplace off Heritage Trail and Interstate 35W near Alliance Airport.


They will also find nontraditional goods like $2,500 loose diamonds, living room couches, bedding and such baby items as cribs, strollers and car seats. But there will be no clothes, shoes or electronics that a Fred Meyer store would carry.


The Alliance store won’t home-deliver groceries, but it has arranged with a local service to transport sofas and other large furniture pieces, spokesman Gary Huddleston said.


“The margin is so high on general merchandise,” noted Al Meyers, a Dallas-based consultant with Kantar Retail. “The challenge is to get the shopper for food to cross over and try some of the other merchandise. But it’s a powerful combination.”


The same Marketplace format is planned for Mansfield by year’s end at Texas 360 and Main Street. Earlier, Kroger opened one in Frisco and another is planned for Little Elm. All of the sites are in high-growth corners of the Metroplex, which Kroger is trying to tap to outpace big-box rivals.


“With the Dallas-Fort Worth area topping the nation in population growth last year, the Marketplace format presents us with an opportunity to provide expanding neighborhoods with a unique store that meets their grocery needs and more,” said Bill Breetz, Kroger’s Houston-based division president who has been known to describe the selection as ranging from “carrots to karats.”


The Alliance corridor continues to defy most parts of the U.S. with its rapid growth, said Charles Wetzel, chief executive of the Buxton Group, which advises retailers on site selection. “Depending on the actual drive time around the Heritage Trail corridor — eight to 10 minutes — the household growth rates range from 82 to 87 percent from 2007 to 2010.”


This expansion puts nimble retailers in an envious spot due to a shortage of key stores in the locales, Wetzel added.


“There is a ‘first mover’ advantage to set up in a new area before a Walmart or Target supercenter gets there,” Meyers said.


As big-box general merchandise retailers move more aggressively into groceries, Kroger is striking back.


“We are in a world where discount department stores like Target and Walmart add food as a way to drive greater traffic and attract more repeat visitors,” said supermarket consultant Jim Hertel of Willard Bishop. “Here you’ve got a traditional food store going the other direction.


“It would not be the first move I would make if I were them,” Hertel said. “But there must be something attractive about them because Kroger has taken this concept and moved it across different markets.”


None of the Kroger officials interviewed would discuss the profitability of the format, which has been introduced in eight states.


When Gary Heintzman, a regional supervisor for Fred Meyer Jewelry, was asked, he replied by saying only, “They definitely want us here.”


Fred Meyer Jewelry has 300 outlets, located both in supermarkets and malls, Heintzman said.


Huddleston said the new Alliance-area store is the 47th Marketplace nationwide and will employ 366 workers, 70 percent of whom will be part-time.


The spokesman would not address construction costs in the Alliance Town Center development. In 2009, Kroger said that a typical Marketplace store averaging 117,000 square feet required an investment of $18 million, compared with $30 million for a Fred Meyer.


First for a Kroger, but following a Tom Thumb store in Hurst, are three “TV Karts” — shopping buggies with a locking bottom compartment in which a toddler can be seat-belted in front of a video screen displaying Disney programming. Another screen aimed at the shopper shows a paid advertisement, said Jake Dreyer, service manager for Cabco, which supplies the carts to Kroger.


The new format for the Fort Worth market adds a weapon to the chain’s arsenal as it confronts new rivals — limited-assortment Aldi stores last year and natural food retailer Sprouts this year — in what already had been a hyper-competitive market.


“While, like many, they have some execution and perishable department opportunities, their stores are clean and well-merchandised,” Vic Gallese, an independent retail consultant in Fort Worth, said of Kroger. “Their ads are compelling, their pricing is sharp and their private label products are quality.


“They are clearly a step ahead of the other traditional grocery chains in our marketplace today.”