Between Wegmans and Kroger, Publix heads into an all-out grocery war in Virginia

Jul 15, 2016, 2:43pm EDT Updated Jul 15, 2016, 3:34pm EDT

Ashley Gurbal KritzerSenior ReporterTampa Bay Business Journal

Publix Super Markets Inc.'s expansion in Virginia brings it into one of its most cutthroat markets yet.

The Lakeland grocer this week confirmed plans to buy 10 Martin's Food Markets Stores in the greater Richmond area, pending approval of a merger between Martin's parent company and Delhaize Group.

 

The interior of a Wegmans Food Markets store. Publix will face off against Wegmans for… more

"Those are well-located stores that had performed well," said David Crawford, assistant vice president of retail services with CBRE Group Inc. in Richmond. "That’s definitely going to get them a foothold in the market."

Even with those prime sites, the Richmond market will be a challenge. Wegmans Food Markets, based in upstate New York, opened a store there in May; another Wegmans location will open in August.

Publix has never before gone head-to-head with Wegmans, known for its massive stores with a large prepared food selection and in-store cafes and restaurants. Wegmans is in the planning stages of a store in Cary, North Carolina — where Publix is also expanding — but the Virginia stores are already open or close to opening.

But it isn't just Wegmans that Publix will face in Richmond: Aldi, Trader Joe'sand Kroger all have a presence in the market. Lidl, a new-to-the-U.S. German discount grocer, has confirmed a location in Richmond, too.

In North Carolina — where Publix is aggressively expanding and Wegmans has planned its first location — Publix has built some upscale stores that carry some of the same features as Wegmans, like the prepared foods section and in-store cafes.

"We will provide a clean store environment that presents a pleasant shopping experience for our customers," a Publix spokesman wrote in an email Friday. "The same experience our customers in other states have come to know us for. The Virginia market is very competitive, but we welcome competition because the customer always wins."

Richmond, known for its up-and-coming foodie scene, has a white-collar employment base that includes Capital One's headquarters, Virginia Commonwealth University and the VCU health system.

"It's an enticing market," said Connie Jordan Nielsen, a senior vice president with Cushman & Wakefield | Thalhimer. "Richmond is highly educated, with great income levels and a reasonable cost of living."

Because of that dynamic, both Publix and Wegmans likely see a void of upscale, service-oriented grocery stores in the area, Crawford said.

"They’re probably recognizing the customer service segment of the food market is underserved," he said. "Historically our market leaders have been Food Lion, Martin’s, and Walmart Neighborhood Market's made a pretty big push, too."

Nielsen, who has represented the landlords in deals with both Wegmans and Publix, said Kroger will be a big competitor with both newcomers.

Publix competes directly with Kroger in the metro Atlanta area and with its Harris Teeter banner in the Carolinas.

"Kroger in this market has done a fantastic job," Nielsen said. "They are very well thought of in the Richmond market."

But Crawford said he's seen a ton of buzz around Publix's plans for the 10 Martin's stores.

"The market’s pretty excited to have them coming in," Crawford said, "everything from their sandwiches to customer service to store layouts."