The Fresh Market to close 15 stores

The Fresh Market announced yesterday that it plans to close 15 stores in nine states. None of the closings are in Pennsylvania, New Jersey or Delaware.

The closings are expected to take place in the next two to four weeks. Four of the stores are in Illinois, two in Georgia, two in Virginia, and one each in Indiana, Kentucky, North Carolina, New Hampshire and Tennessee.

There are currently five Fresh Market stores in Pennsylvania, two in New Jersey and one in Delaware.

"Over the last eight months, our company has been executing a turnaround plan, and we've seen great progress," said CEO Larry Appel. "However, for a variety of reasons unique to each retail location, that progress is not evenly distributed and, as a result, we have decided to close these long-term under-performing stores."

The Fresh Market, which currently operates 176 stores in 24 states, has had several stores closings in recent years as competition - both online and brick-and-mortar - has adversely impacted sales.

Lidl expands delivery via Shipt

Shipt announced last month that it has begun to offer online grocery delivery services for Lidl stores in Northern Virginia. The company said that fresh foods, household essentials and other grocery items ordered through its online marketplace can be delivered from Lidl stores in Ashburn, Fredericksburg, Manassas and Woodbridge in as soon as an hour.

In addition to the Northern Virginia communities, Lidl offers Shipt delivery in select South Carolina, North Carolina and Virginia markets.

Shipt, a wholly-owned subsidiary of Target Corp., offers delivery services to several grocery retailers.

Grocery store openings fell sharply in 2017

According to an annual "Grocery Tracker" report from JLL, grocery store openings dropped 28.8% in 2017 compared to the previous year. The report states that the decline reflects chains' efforts to reexamine their current footprints and rethink strategies to deal with new online and brick-and-mortar competition.

JLL said that California led the way in 2017 with 1.6 million square feet of new grocery store space. Virginia and North Carolina combined for 2.7 million square feet of new space, and Texas was described as "still one of the hottest states for grocery expansion."

Sprouts, Grocery Outlet, Aldi and Lidl were mentioned as notable chains that are expanding.

JLL's report said that investment in grocery-anchored centers grew 5.3% in 2017, and the company expects supermarkets to retain high interest as anchor tenants for shopping centers.

"It (grocery-anchored centers) was one of the only retail sectors to see growth in a year of low transaction volume," the study said. "Grocery-anchored centers remain a safe bet for investors, as overall transaction volume for retail has been down, indicating the asset remains a stable sector."

The study mentioned that the increase in smaller footprint stores is a clear trend - for more compact formats like Aldi and Trader Joe's, as well as for traditional supermarket chains and mass merchants like Walmart and Target.

"The grocers that can deliver the right in-store experience, combined with the right online pickup or fulfillment plan... are the ones that will thrive, whether their stores are 15,000 square feet with limited products or take up a footprint four times as large," said James Cook, JLL director of retail research.

Lidl shifting strategy, may consider leasing, smaller stores

Lidl announced earlier this month that it is changing its real estate strategy and may now consider leasing sites, and opening stores in the 10,000 to 21,000 square foot range. Up until now the company has said it would only purchase properties where it would construct 36,000 square foot stores.

William Harwood, Lidl's director of communications, said the change in strategy is an effort to "accelerate our site acquisition along the East Coast." Harwood also noted that Lidl is looking for opportunities in urban areas where larger sites are harder to find.

Harwood claimed that Lidl is "very pleased with how customers have taken to the 47 stores we have opened over the past six months."

However, industry analysts speculate that Lidl's shift in real estate strategy may be due to disappointing results.

A report released by inMarket showed that the first Lidl stores opened in June with a 2.6% share of customer visits in the markets in which it was operating. Its share slid to 2.3% in July and 1.7% in August before rebounding in September to 1.9%. inMarket's chief marketing officer said that he will have a better feeling for the discount grocer's future once holiday traffic is analyzed.

Lidl recently backed out of planned deals in New Jersey, Pennsylvania, Virginia and Ohio.

Walmart reacting to Lidl with aggressive pricing

Reports state that Walmart is reacting "quickly and aggressively" to Lidl's entry into the U.S. market. According to its website, Lidl now has 21 stores open in three states - North Carolina, South Carolina and Virginia - with plans in the next year for as many as 100 more in states from New Jersey to Georgia.

Since its first U.S. stores opened in June, Lidl has been hailed as the low price leader along with rival Aldi. But according to Rupesh Parikh, an analyst at Oppenheimer & Co., "Walmart is being really aggressive in terms of watching what Lidl, and presumably Aldi, are doing, and you can tell they are in a fight and not willing to give up customers."

"We found Walmart prices on like-for-like items were very compettive with both Lidl and Aldi," Parikh said.

Parikh also reported that several other retailers in current Lidl markets were reacting with lower prices, including Food Lion, Family Dollar, Dollar General and Target. The most aggressive pricing by all the food retailers has been in the private label category, which Parikh believes could lead to higher margins on other products in order to keep overall profits from falling.

Lidl's next U.S. market is likely to be Texas, where the German company recently opened a number of offices.

Lidl stores open in three states

The first Lidl stores in the U.S. opened earlier this month in North Carolina, South Carolina and Virginia. At 36,000 square feet, reports say the stores look more like car dealerships than grocery stores, with floor-to-ceiling glass covering much of the exterior.

The selections are nearly all private brands, with the packages made specifically for the U.S. market and closely resembling the national brands they are designed to replace.

According to an analysis conducted by RBC of Lidl's sales flier versus fliers of competitors, Lidl's promotional prices were 12% to 30% lower than all others - including Kroger, Sprouts Farmers Market, Publix, Food Lion and Save-A-Lot - with one exception. Lidl's and Aldi's prices were about the same.

A supplier representative told Supermarket News that Lidl appeared more concerned with quality compared to some competitors, and that the pricing was supported by a more efficient process than other buyers.

More to come as Lidl stores continue to open.

First 20 Lidl stores coming this summer

Lidl revealed this morning that it plans to open 20 stores this summer, with the earliest openings coming in June. The company didn't specify which stores would open next month, but did release a list of the first 20. They are in North Carolina (9), Virginia (9) and South Carolina (2).

All 20 stores will be serviced from Lidl's new distribution centers in Virginia and North Carolina. A distribution center in Maryland is still under construction.

According to Lidl US CEO Brendan Proctor, an additional 80 stores in markets from New Jersey to Georgia will open by the summer of 2018.

"People want a good quality product, they want it at a good price and they don't want to spend all day in a store - they want to get back to living," Proctor said. "That's what our model is about. That's our strength."

When asked about some reported skepticism about Lidl's real estate choices, Proctor deflected the question and touted the company's ability to adapt and the quality of its offerings.

As for the store's product mix, Proctor said they will source about 85% of products from the U.S. EVP and Chief Commercial Officer Boudewijn Tiktak added that around 90% of the selection will be private brand.

All Lidl stores will have bakeries but no service deli or meat departments.

Lidl to begin opening stores this summer

Lidl announced last month that it would open the first 20 of its U.S. stores this summer rather than waiting for 2018. It had been previously thought that the company would open about 100 stores in the first quarter of next year.

Lidl has been aggressively purchasing property in Eastern states from New Jersey to Georgia, and it has been reported that they now have real estate representatives in Texas. The stores to open this summer are reportedly planned for Virginia, North Carolina and South Carolina.

Schwarz Group, one of Europe's largest retailers and the parent to Lidl, established its U.S. headquarters in Arlington, VA and is building distribution centers in Maryland, Virginia and North Carolina. Its strategy so far has been to purchase ground so that its 36,000 square foot stores will be in direct competition to traditional supermarkets as well as small-format and discount grocery retailers.

"We are thrilled to introduce residents across the East Coast to a unique shopping experience," said a company representative. "Grocery shopping involves too much compromise. Customers are being forced to choose between quality, price and convenience, and this is a compromise they shouldn't have to make. At Lidl, we are committed to delivering outstanding quality goods to our customers at market leading prices."

Wawa signs leases, plans to enter Florida market

According to the Orlando Business Journal, Wawa has signed "more than 10" leases in the Orlando, Florida market, and the retailer has indicated it will open as many as 100 stores in the state.

According to a Wawa regional real estate manager, site work on the first set of stores will begin in the next month or two, with openings taking place next summer.

Currently Wawa has 588 stores in Pennsylvania, New Jersey, Delaware, Maryland and Virginia. Fuel is offered at 298 of these locations (that's more than half for those keeping score).

I have previously written about Walmart's entry into the convenience store/gas arena and their roll-out of up to 350 stores per year, but I doubt the Greater Philadelphia area is high on their list because of Wawa's domination here. It'll be interesting to see, however, if the Big Ws battle it out in the Sunshine state!