A look at North Texas grocers: Stores fruitful despite intense competition

Written by

Maria Halkias

Connect with Maria Halkias

Dallas-area grocers suddenly have lots of new competition, but most are still growing thanks to all your new neighbors.

With one resident added to the market every four minutes, grocery retailers have to keep building new stores to preserve their share of the estimated $16 billion-plus North Texas annual grocery receipts.

“Anyone trying to have a national footprint has to be in Dallas and in Texas,” said Jacqueline Martinez, a partner at Dallas-based consulting firm Oliver Wyman. “The reason is that the basket here is still growing and that’s not true in every U.S. market.”

It’s been a tough year, with startups trying to pull shoppers to order online, and other options for food delivery, ranging from meal kit subscriptions to on-demand grocery apps. Grocers have responded by adding beer bars with multiple taps and seating to preparing fresh meals in new single-serving packages. They’re also still doing what they do best, build impressive new stores closer to rooftops.

Construction has picked up with 20 grocery stores opening in D-FW in 2016 from Aldi, Kroger, Sprouts Farmers Market, Trader Joe’s, Whole Foods Market, Wal-Mart and WinCo Foods.

However, with young families looking for ways to carve out more time in their day, grocery stores are not counting only on brick-and-mortar to maintain market share. They are resurrecting online options to make it easier for customers to shop without spending a lot of time in the store.

Since 2013, the percentage of shoppers that say they have bought groceries from Amazon in the past 30 days has gone up 25 percent and Amazon now captures nearly half of all online grocery trips, according to food industry analyst Bill Bishop.

WINNERS AND LOSERS

Most D-FW grocery stores saw gains in the past year or very slight declines in market share, according to the 2016 annual report published by Metro Market Studies.

But there was one notable exception.

Wal-Mart, the largest grocer in D-FW, captured  27.8 percent of DF-W grocery receipts in this year’s report down from 28.4 percent the previous year. The market share data provided to The Dallas Morning News is as of March of each year.

No. 2 in the market Kroger saw its share of 13.2 percent decline by 0.1 percentage points. Costco, Fiesta Mart, Brookshire, Tom Thumb and Target also had slight declines.

Market share increases were posted by Aldi, Sam’s Club, Sprouts Farmers Market, Trader Joe’s, WinCo Foods and Whole Foods Market.

H-E-B/Central Market and Albertsons, which acquired Safeway and the local Tom Thumb chain last year, had market share that were unchanged from the prior year.  

While the local grocery market looks rosy, two well-known names are disappearing.  One of the oldest grocery stores in Dallas, Minyard Food Stores, and the short-lived newcomer, The Fresh Market are no more.

Houston-based Fiesta Mart bought the Minyard stores and is converting them to its banner starting in August. The Fresh Market exited Texas in May closing four stores in Dallas, Fort Worth and Southlake open only since 2015.

ONLINE RUSH

Traditional grocery stores, which had tried online shopping services early in the late 1990s and early 2000s with little success, are returning to the idea but this time it seems to be gaining traction.  

So much so that big online players like Amazon and Google are into the online grocery business.

Amazon has partnered in Dallas with Sprouts Farmers Market, using existing supermarkets to fill fresh food orders.

Google Express and Shipt are here delivering from Central Market, Kroger, Costco, Whole Foods and PetSmart. Instacart, which is already in Austin and San Antonio, is coming soon.

Kroger and Wal-Mart each have designated several North Texas stores for their own online grocery services that offer curbside pickup.

By this fall, Kroger expects to have 20 North Texas stores operating its ClickList service, in which consumers order online and pick up in store.  

DIFFERENT STRATEGIES

Market share status quo can be deceiving in a growing market like D-FW.  Opening new stores is the easiest way to maintain market share, but that may not be the strategy every company wants to take. Wal-Mart has opened five Neighborhood Markets in North Texas this year, while closing four others.

Dallas-Fort Worth is the largest market for both Central Market, which has five of its nine stores here, and for Whole Foods, which has 12 stores here and three more in the works.

Whole Foods gained share and it’s been opening stores, she said. But a retailer like a Central Market, Martinez said, could have a stagnant market share, but is happy with the growth in sales per store.

Central Market spokeswoman Mabrie Jackson said the company is seeing growth from both existing customers and people moving into the market. Regarding new stores, Jackson said, “Central Market continues to be our primary growth format in North Texas, and we continue to evaluate opportunities to expand our operations.”

There’s still no timetable for bringing its H-E-B supermarkets to the Dallas area, she said.

Meanwhile, Whole Foods has been opening stores in D-FW at a rapid clip. Most recently, it opened a store in April in Richardson’s CityLine development. The store has 16 beer taps, indoor and outdoor seating for 150.  An upstairs balcony has 100 more seats.  

“We don’t do any two stores the same, and that allows us to be very innovative,” said Mark Dixon, president of the Southwest division for Whole Foods Market.

The Tap Room inside Whole Foods Market in Richardson's CityLine development. 

DMN Staff photo

STILL LOOKING FOR VALUE

Dixon and others see grocery stores that have more prepared foods as a trend that will continue to build. In fact, there’s even a new name for these hybrid stores that include bars, restaurants and groceries.

Call them “grocerants.” Whole Foods has built several in recent years and plans on more.

Even with all the bells and whistles added to traditional groceries, consumers still are shopping for value.

That could be seen in the success of Sprouts Farmers Market, which has 21 stores in the market, and posted one of the largest local market share increases.

Pre-made meals offered at Sprouts Farmers Market in Allen, TX June 29, 2016. (Nathan Hunsinger/The Dallas Morning News) 

Staff Photographer

By comparison to the range of offerings in grocerants, Sprouts can seem sparse. Sprouts’ newest store in Allen is the only store in the chain with a salad bar, but future stores will have them, said Sprouts spokeswoman Donna Egan.

It also has grab-and-go packaged individual meals, a fresh juice and coffee bar, and a hot food assortment in the deli including breakfast.

But when asked why she shopped at Sprouts’ new Allen store, Kathleen Vasal, 49, didn’t mention any of that.

Instead, the mother of three sons in high school and college, noted the bulk bins and the private label that offered good values.

“I come here for the prices,” Vasal said. “We don’t like fast food, so I cook a lot.”