Ukrop’s loses No. 1 spot to Food Lion in sales survey

For the first time in more than 20 years, Ukrop's Super Markets Inc. no longer commands the dominant spot for local grocery sales as increasing competition has nibbled away at its market share.

The hometown grocer lost its No. 1 spot to North Carolina-based Food Lion LLC, according to a study released yesterday by Food World, a trade publication that tracks the grocery industry in the mid-Atlantic.

Food Lion commands a 19.34 percent market share among any retailer selling groceries, while Ukrop's had 17.58 percent of the area's $3.07 billion in local grocery sales.

Ukrop's had been the market leader since 1986.

"Market share is not our thing," said Robert S. Ukrop, chairman, president and CEO of the family-owned chain.

"We think there is enough business for us to continue to do what we do. We just have to be better at it," Ukrop said. "The fact that we have as much of a market share as we have as the little guy is amazing."

Ukrop's was named the market leader in last year's survey, but the revised numbers released yesterday show that Food Lion's share actually was three-tenths of 1 percent higher.

Food World publisher Jeff Metzger said the biggest challenge for Ukrop's is competition.

"Ukrop's leadership position has been endangered for several years now as 10 Wal-Marts and a significantly more aggressive Kroger have attacked the family-owned retailer on many fronts," Metzger said.

Also eating away at its market share are nontraditional grocery operators such as Wal-Mart Stores Inc., drugstore chains CVS Corp. and Walgreens, and 7-Eleven Inc.

Food Lion, with 52 area stores, has more than double the number of locations that Ukrop's has here. Food Lion also has remodeled most of its area stores.

Ukrop's isn't open on Sundays and doesn't sell beer or wine, both of which are factors in its declining market share, Metzger said. "Sundays are the busiest shopping day of the year, and Kroger has made a very targeted attempt to capture traffic on that day."

The market results are based on food sales for the 12 months that ended March 31.

While Food Lion took over the top spot, its share of the local grocery dollars dropped one-tenth of 1 percent from last year. Sales, however, grew about $20 million to $594.2 million. The chain added a Bloom store, its upscale brand, in New Kent County.

For Ukrop's, market share dropped from 19.06 percent a year ago, and grocery sales fell about $26 million. Ukrop's closed a store last year.

Wal-Mart's local market share stayed about even with last year's results despite the recession driving a jump in sales at Wal-Mart stores nationwide.

The Kroger Co. saw market share grow nearly 1 percentage point. Sales increased largely because it opened a store in Hanover County.

Ukrop acknowledges it's getting tougher to fight for customers as competition increases. Kroger and Food Lion, Ukrop said, also are more aggressive with marketing.

Other factors affecting Ukrop's share were Whole Foods and Trader Joe's, both of which entered the market last year. The Fresh Market opened a second location in Chesterfield County this year. All three are less than a mile from existing Ukrop's stores.

"Those three retailers, while not doing the same per-unit volumes as Ukrop's, compete for the same customer. Throw a new Kroger, Sam's Club and BJ's [Wholesale Club] into the mix, and you have even more pressure on the longtime market leader in a very over-stored battleground," Metzger said.

Food Lion has capitalized on the downturn in the economy.

"Low prices are of primary importance when it comes to the mass market," said David Urban, a professor of marketing and interim business school dean at Virginia Commonwealth University.

"This does not mean that consumers do not care about service anymore, but it means that the value equation is more heavily weighted on price than it used to be," he said.

Frankie Marshburn, director of operations for Food Lion, said its reputation has helped as consumers' attitudes have changed. "We continue to focus on price and value."

VCU's Urban believes Ukrop's can regain some of the shoppers it lost.

"If people are switching away from Ukrop's and toward competitors that are perceived to be less expensive, it's possible that the dip in market share may reverse if the economy gets better, because the company has such a strong history," he said. "However, there's no guarantee."

Contact Louis Llovio at (804) 649-6348 or .