Grocers adjusting to new reality
July 15, 2011
It has been over six months since the Kimball Junction Walmart began offering groceries, and other stores say competition has become fierce.
It is the sixth grocery store to enter an area with less than 40,000 people. The extra competition was especially hard for stores affiliated with Associated Foods, which reported a significant corporate loss in early July.
Walmart spokesperson Delia Garcia said reaction to the expansion and new grocery section has been positive.
"That was a real important goal for Walmart," she said. "(It) serves our customers more comprehensively."
In addition to seeing locals take advantage of the new department, Garcia said it better serves the tourist market that likes to shop in stores they are familiar with.
"It helps them feel more at home when they’re Walmart customers in other parts of the country," she said.
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Spokespeople for Whole Foods Market and Smith’s Food and Drug the stores closest to Walmart declined to comment for the story.
Mike Holm, owner of The Park City Market, and Bret Gallacher, director of marketing for Fresh Market, were candid about the impact on their stores. Both are also affiliated with Associated Foods and shared their beliefs about the future.
Holm said it is difficult to quantify the impact of the new Walmart because Park City Market serves a different group of residents.
Still, business has been down lately, and he attributes it to several factors, Walmart being one of them.
"I’m not doing as well as a year ago. Is that because of the weather that was bad in May and June? Or are there fewer families living in town? Some of my common, every-day customers have decided to move out of Park City. I think there are fewer families in town," he said.
Holm said it’s impossible to escape the effects of a new competitor.
"Whenever you open a 52,000-square-foot grocery store, it’s another player in the game and each remaining store loses some of the cream they fought to get. It’s a cutthroat business up here. We beg and fight for every dollar we get," he added. "I think Walmart hurt every operation by taking some of those people."
The owners of Holm’s building filed a lawsuit against Associated Foods when it converted the Albertsons on Park Avenue to a Fresh Market in 2009. Holms, who is also an Associated Foods store, said that change did not impact him much.
It impacted Associated Foods, however. The company turned a profit the year before purchasing several of Utah’s Albertsons stores, and lost millions the next year.
Holm said it’s just growing pains.
Prior to the transfer, Holm said Albertsons quit marketing and stocking the stores. That lost market share.
Associated Foods has also closed some underperforming stores, thereby improving its financial situation.
"The transition was really hard," he said.
Gallacher, director of marketing and advertising for Fresh Market, said he, too, is optimistic.
"Things are continually getting better for us in Park City," he said.
Walmart did make an impact, he conceded, but said Fresh Market can succeed with a different demographic.
"With the offering we’ve got in Park City, we’re able to do just fine," Gallacher said.
The Quarry Village Fresh Market is just down Kilby Road from Walmart and said he’s working to help that location do more business.
"The store is going to be just fine, but I’ve got a lot of work ahead. It should be doing better, it’s a beautiful store," he added.