Metro Detroit's Changing Grocery Business
Written by Bryan Weiss, Esq., Associate Broker
Image of Kroger-anchored Country Creek Commons located in Oakland Township, Michigan.
While the Metro Detroit grocery category has been stagnant since 2007, the region's grocery business has changed significantly over the past year. Kroger, the dominant chain, has changed its position in the market, and there have been a few aggressive new grocery chains looking to fill voids in the market.
Prior to 2007, there were two dominant grocers in Metro Detroit: Kroger and Farmer Jack (owned by Great Atlantic & Pacific Tea Co.). In 2007, Farmer Jack left the Michigan market. Kroger purchased 20 of the local Farmer Jack stores, and Farmer Jack closed its remaining stores. This occurrence increased Kroger’s stronghold on the Metro Detroit grocery category by increasing its store count and removing its major competitor in the market. Outside of the big box chains like Walmart and Meijer, the only significant competition remaining was from a handful of regional independent grocers. Among them were Busch’s Fresh Food Market, Hiller’s Market, Hollywood Market, Papa Joe’s Gourmet Market & Catering and Plum Market. Whole Foods and Trader Joe’s also have a presence in the Metro Detroit market but are specialty grocers that do not compete on a grand scale. Whole Foods and Trader Joe’s have five and six locations, respectively, in Metro Detroit. In addition to the aforementioned activity, many small independent fruit markets took advantage of the former Farmer Jack stores and opened in some of the better locations. After the dust settled on the Farmer Jack stores, the grocery category had been quiet - until recently.
Over the past year, Kroger acquired one of its largest local competitors and is expanding its physical store footprint. In July 2015, Kroger purchased the seven-store Hiller’s Market chain. Kroger closed one of the seven stores because it was located directly across the street from an existing Kroger store with a fuel station, but the remaining six Hiller’s Market stores were converted to Kroger. In an attempt to fend off the big box grocers like Meijer and Walmart, Kroger is expanding its stores where possible and relocating others in order to increase the store size. The traditional 60,000 square foot store is moving to the 90,000 or even the 123,000 square foot Kroger Marketplace.
In addition, a few new grocery chains have come to Metro Detroit to get some of the market share. Fresh Thyme Farmers Market has opened four stores in Michigan over the past six months and is planning to open at least four more stores in Metro Detroit in 2016. Fresh Thyme has a 28,000 square foot footprint. Lucky’s Market has already opened one location in Ann Arbor (a second location is coming soon to Traverse City), and there are rumors it is looking for additional Michigan locations for the near future. Lucky’s Market has a 25,000 – 30,000 square foot store footprint. Earth Fare opened a Portage location in February with a similar footprint. The smaller stores recognize the void of smaller grocers due to the lack of competition in Metro Detroit and the preference of many consumers for the convenience of shopping in smaller stores.
As I hear of other grocers like Hy-Vee and Mrs. Green’s expanding in the Midwest, I expect they (and others) will be considering the Metro Detroit market soon.
Bryan Weiss, Esq. | Associate Broker
Mid-America Real Estate-Michigan, Inc.
38500 Woodward Avenue, Suite 100 | Bloomfield Hills, MI 48304
Phone: 248.855.6800 | Fax: 248.385.5034
firstname.lastname@example.org | www.midamericagrp.com