As vibrant as the supermarket sector has remained throughout the recession, not a single grocery operator will tell you that gaining, or maintaining, market share has been a snap.
Even the most successful supermarket retailers have had to continue to reinvest in their stores and their markets in order to keep their footing on a slippery economic slope.
Price Chopper is no exception. The locally owned group of 49 stores in the Kansas City metro area has forged tactical alliances and invested millions to maintain its No. 1 position in the communities that make up Kansas City.
According to Pete Ciacco, president of Price Chopper Enterprises, LLC, the grocer’s commitment to the market was never in question, even during the downturn.
“As a locally owned company, Price Chopper is committed to reinvesting in our communities,” Ciacco said. “Reinvesting in communities that have supported us over the last 33 years is an easy decision.”
The process, however, has been anything but easy. Several of Price Chopper’s most key projects were the result of a complex market strategy that allowed the grocer to achieve significant savings and logistical advantages.
Steering the market strategy is Tri-Land Properties Inc., Westchester, Ill., a real estate company that leverages economies of scale to maximize market entry or expansion. Tri-Land’s approach is to purchase several shopping centers in one market and establish strategic partnerships toward streamlining the projects and securing supplemental funding.
In Kansas City, Tri-Land implemented a tactic that it has employed for decades in markets such as Chicago, Minneapolis and Indianapolis. It involves upfront analysis to reveal a whole-market picture, followed by multiple acquisitions and a blueprint for maximizing that multiplicity.
“We entered Kansas City in 2004 with one acquisition — Cherokee South Plaza, in Overland Park — and layered an additional three-property purchase two years later,” said Richard Dube, president, Tri-Land Properties Inc.
Brywood Centre (Kansas City, Mo.), 10 Quivira Shopping Center (Shawnee) and Devonshire Village (Olathe) — along with Cherokee South — comprised Tri-Land’s acquisition foothold in the market. But the multiple purchases were just the beginning.
“Market leverage begins with the strategic acquisitions, and the next step is to establish the right relationships,” Dube said. Tri-Land’s first major alliance was David Frantze, an attorney with Stinson Morrison Hecker, who navigated the complexities that make up the real estate landscape in Kansas City. Frantze’s familiarity with the market and its players allowed Tri-Land to obtain Tax Increment Financing (TIF) for the Cherokee South and Brywood redevelopments.
The other major alliances — architects, engineers and general contractors — were just as paramount to Tri-Land’s market entry. “We’ve spent $25 million so far on the projects in Kansas City and will spend another $15 million to $20 million,” Dube said. “So having the right architects has helped us to understand how to get the projects permitted, designed and built.” Dube added that Tri-Land > has been able to achieve economies of scale by using the same general contractor whenever TIF criteria will allow.
For Price Chopper, the process has been a boon. An anchor tenant in the Brywood Centre, Tri-Land’s investment in redeveloping the exterior facades and common areas of the shopping center allowed the grocer the opportunity to expand and renovate its store with far less of its own money.
“We appreciate Tri-Land’s efforts to reinvest in an area that is so important to us,” Ciacco said. “We are proud of what we have been able to accomplish together.”
The first phase of Brywood Centre’s redevelopment is 80% complete, with two more phases slated for completion in 2012 and 2013.