Wednesday, May 13, 2015

Shakeout Afoot for Richmond's Grocery Stores?

Merger proposed between the owners of Martin's and Food Lion.

Posted By on Wed, May 13, 2015 at 12:09 PM

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Richmond’s fast-expanding grocery store market could undergo a shakeout if the proposed merger of the owners of Martin’s and Food Lion goes through.

Together, the two chains have 70 stores in the region. These include 47 for Food Lion, which is owned by Belgium’s Delhaize Group, and 23 Martin’s Food Markets, owned by Royal Ahold, N.V., of the Netherlands.

European newspapers reported the talks yesterday and say that a combined company might be worth $25.79 billion.

Richmond has been through a major grocery-store race as Martin’s upgrades, along with Kroger, in part to be ready when high-end Wegmans comes in with stores in Henrico and Chesterfield counties within a couple of years.

Add to the mix Aldi’s, a budget-conscious, no-frills chain that's also opening stores in the area, with such higher-end choices as Whole Foods and Fresh Market.

Jeffrey W. Metzger, publish of Food World, a trade journal, has said for years that the Richmond market has been “overstored,” meaning there are too many groceries for a market his size.

The shakeout hasn’t happened so far, but if Martin’s and Food Lion merge, you can bet there will be shutdowns -- it's inevitable. Look at what happens when banks merge. Branches shut down.

Martin’s bought Ukrop’s, a venerable local chain, in 2010 and has tried to keep up with the Ukrop’s brand identity with service and community outreach. Food Lion, taking space in the lower-middle tier, emphasizes low prices and convenience.

Delhaize and Royal Ahold have talked about merging before, but it didn’t happen. If this time it does, expect Richmond’s booming food to get a lot more interesting.

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