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VOL. 129 | NO. 167 | Wednesday, August 27, 2014

Changing Landscape

‘High-end’ grocery chain eyes Memphis market

By Amos Maki

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A “high-end” grocery store chain not currently serving the Memphis market has leased the shuttered former Kroger store at 9050 U.S. 64 in Lakeland and should open in the spring, according to a Lakeland official.

As news of a “high-end” grocery store chain possibly moving into a shuttered former Kroger in Lakeland and former Schnucks in Germantown, Kroger continues ramping up market improvements.

(Daily News/Andrew J. Breig)

The still-unidentified grocery chain, which is also eyeing the old Schnucks store at The Shops of Forest Hill at Poplar Avenue and Forest Hill-Irene Road in Germantown, signed a lease for the former Lakeland Kroger store with owner Garfunkel Development Corp., which is currently making improvements to the site to prepare it for the new grocer, said Jim Atkinson, director of planning and administration for Lakeland.

“Right now, (Garfunkel) is preparing the space for the company to come in and do their own thing,” said Atkinson, who declined to identify the grocer, citing a confidentiality agreement. “We believe it is a home-run tenant. We heard who it was by accident and we can’t let that out yet.”

Atkinson said an announcement could be made in the fall and developers are expecting an early spring opening date.

“We’re pushing them to do it is as soon as possible,” said Atkinson, referring to the announcement. “This is great news for Lakeland.”

A real estate source with knowledge of the two sites said the new grocer was Sprouts Farmers Market. Sprouts, along with chains like Trader Joe’s and Publix, does not currently have a presence in the Memphis market.

Phoenix-based Sprouts replicates the look and feel of an indoor farmers market and specializes in fresh, healthy food. Recently named one of the top five supermarket chains by Consumer Reports, Sprouts employs more than 17,000 team members and operates more than 180 stores in 10 states.

Anne Brand, marketing director for Boyle Investment Co., the owner of The Shops at Forest Hill, said the Memphis-based company was “not at liberty to discuss” a possible new grocery tenant for the space formerly occupied by Schnucks.

The pending entrance of a new upscale grocery store chain in the Memphis market is the latest sign of the massive amount of activity in the grocery sector in the Memphis area, where the retailers, led by market leader Kroger, have invested heavily in repositioning existing stores or opened new locations.

“We’ve been saying for a while that grocery is the most active segment in the market right now,” said Brian Whaley of CB Richard Ellis Memphis. “The combination of Kroger renovating and expanding their stores with what Fresh Market and Whole Foods are doing is fueling the activity, but Kroger is leading all of that.”

Kroger has invested a little over $50 million in the Memphis area over the last three years and will invest north of an additional $50 million over the next three years.

“We make the investment because our customers all over the greater Memphis area deserve the best shopping experience Kroger can provide, which includes clean new stores, great variety and the latest amenities we have to offer,” said Joe Bell, manager of marketing and public affairs for Kroger Delta Division.  

Most recently, Kroger announced it will temporarily close its store at 7735 Farmington Road in Germantown in September to renovate and expand it. After the seven- to eight-month renovation of that store is finished and it has been expanded from 60,000 to 100,000 square feet, Kroger is expected to close its nearby Exeter store sometime in 2015. 

Kroger produce clerk Montero Rivers, and backup produce manager Bernard Martin, right, stock bananas at the Union Avenue store.

(Daily News/Andrew J. Breig)

Kroger has rebuilt the store on U.S. 64 near Wolfchase Galleria and improved stores in Bartlett, Cordova, Whitehaven and DeSoto County. In addition, the company built a new store at Poplar and Highland Street.

Kroger is undertaking a massive redevelopment of its cramped store on Union Avenue in Midtown and plans upgrades to the stores at Poplar and Cleveland Street, along with the Germantown upgrade.

Whaley said Kroger, mindful of its customers’ desires, was investing here with an eye toward the future.

“This is their market and they want to provide an enjoyable shopping experience,” said Whaley. “When you have that much market share, it can be easy to lose your customer base if you’re not careful. They want to expand and control the market, but they want to do it right.”

Kroger is also facing some fresh competition from the likes of The Fresh Market Inc. and Whole Foods.

The Fresh Market recently opened its newest location at Union and Cooper Street in Midtown, with hundreds of shoppers on hand for the grand opening of the 23,400-square-foot store.

Whole Foods, which completed a $3.1 million expansion and renovation of its Poplar Avenue store in East Memphis, is opening a new 41,000-square-foot store at Poplar and Pete Mitchell Road in Germantown.

Danny Buring of the Shopping Center Group LLC said the new stores will help quench pent-up demand for more services and that all the grocery activity points to a healthy, robust market for the retailers.

“Why all of this activity and investment? I think the only answer is we’ve been under-grocered for a long time,” Buring said. “We must have been. If the retailers are putting more money into the stores, they have to be getting a good return or they wouldn’t be doing it.”

For Lakeland, a new grocery store opening in the old Kroger location not only means a new service for the community’s residents but a valuable source of revenue. The former Kroger was one of Lakeland’s top sales tax producers, Atkinson said.

“For Lakeland, this a big deal for us to fill this space,” he said.

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