The Basket Runneth Over
Aug 1, 2007 12:00 PM, By Jennifer Popovec
When you walk into the Kroger store at Dublin Plaza in Dublin, Ohio, you don't find your typical staid, antiseptic supermarket. There's no harsh fluorescent lighting, sterile white tile or plain metal shelving. Instead, the recently renovated store showcases a new décor featuring hardwood floors, wood casings and warmer lighting.
The merchandise mix is different too. Shoppers can browse through an expanded selection of organic and gourmet products, prepared foods and a larger produce department than you'll find at a typical Kroger.
“Kroger really upgraded the store, and I've noticed a big pick up in volume,” says Linda Swearingen, executive vice president of Columbus, Ohio-based Casto, which owns Dublin Plaza. (For good measure, Swearingen says she shops at the store herself.) “Over the long term, we're confident that the remodel will help us retain our tenants and upgrade the tenant mix.”
Kroger was the first tenant to sign onto Dublin Plaza when the 182,000-square-foot project was built 20 years ago. Landing a stable anchor enabled Casto to convince other tenants to come onto the project.
But times have changed. The grocery market has morphed, with conventional supermarkets facing well-documented pressure at the low end from supercenters and wholesale clubs, and at the high end from a crop of upscale grocers that have proliferated in the past decade. Over the years Dublin Plaza has fared well, but it was not immune to these trends.
Today, though, Dublin Plaza has gotten a new lease on life. Taking a lead from Kroger, Casto has updated the rest of the plaza with a more upscale look. It has added a new façade, lighting and parking lot to the project. And that, Swearingen says, has sent a clear message to tenants that Dublin Plaza will remain a fixture on the local retail scene.
“With the renovation, tenants and customers can look at the center and can see that the owner and the grocery anchor are committed,” Swearingen says. “It shows prospective tenants that the center has a long-term viability: that it will look good and have a lot of traffic.”
Across the country, similar stories are playing out. Conventional grocers, including the three biggest players, Kroger Inc., Safeway Inc. and Supervalu Inc., are increasingly going back to older stores and renovating and expanding them rather than building new stores. They are bringing in more prepared foods, wine selections and other new departments. The mainstream grocers are finding the moves help them compete with the proliferation of chains like Wild Oats and Whole Foods. It also helps distinguish them from Wal-Mart, Costco and Target, who in the past decade have gobbled up huge shares of the grocery market.
“All the major chains are reinvesting in their existing infrastructure,” says Joe Bona, president of the retail division of Colemanbrandworx, a global branding agency. The firm has created new prototypes for several grocery chains including Pathmark, Stop & Shop, Shaw's, Safeway Canada and Japan's Jusco.
For their part, Swearingen says, Casto and Kroger are looking to emulate what they've done at Dublin Plaza at other centers. “Over the last couple of years, we've spent more time with Kroger on renovations and expansions versus new development,” she says.
Meanwhile, Albertson's CEO Jeff Noddle recently announced that the chain has allocated $1.2 billion per year for remodels and will upgrade 100 stores this year, converting them into what it is calling its new “Premium Fresh” prototype.
