The gravitational pull of the Charlotte metropolitan area — approaching the top 20 nationwide for population — has proven enticing again to Lowes Foods Stores Inc.
The Winston-Salem grocery chain announced last week plans to open a store in Concord and Kannapolis later this year. It also has plans for a store in Pittsboro and in Aiken and Indian Land, S.C.
The stores would double Lowes’ store presence from three to six in the 11-county metro counting existing stores in Harrisburg, Huntersville and Mooresville.
The metro includes Anson, Cabarrus, Gaston, Iredell, Lincoln, Mecklenburg, Rowan and Union counties in North Carolina, and Chester, Lancaster and York counties in South Carolina.
Indian Land is in Lancaster, S.C., just south of the Ballantyne community in south Charlotte.
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“We’re excited to be building additional Lowes Foods stores to serve the booming growth areas around Charlotte and northeast of Augusta, Ga.,” Tim Lowe, Lowes Foods’ president, said in a statement.
“All five of our new stores are in various stages of planning and construction, and we look forward to sharing opening timelines and plans in coming months.”
Challenging market
Yet, Lowes hasn’t committed to a re-entry inside Charlotte’s city limits.
Lowes pulled out of the market in July 2012 by selling 10 stores to rival Harris Teeter Supermarkets Inc. in exchange for six Harris Teeter stores mostly outside the Charlotte metro.
Lowes sold three stores in Charlotte, two in Matthews and one each in Cornelius, Davidson, Huntersville, Mint Hill and Fort Mill, S.C.
As part of the store swap, Harris Teeter paid Lowes $26.5 million.
Lowes said at that time it wanted to focus on core markets in the Triad, the Triangle and Hickory.
Perhaps the biggest reason for Lowes’ cautious toe dipping into the Charlotte metro now is that the city already is served by more than 20 grocery chains.
The leading grocer in market share, according to Chain Store Guide, is Walmart, followed by Harris Teeter, Food Lion, Publix and Sam’s Club.
“The main way that food retailers can grow is to open more stores, frequently either buying them from existing food retailers or move into new markets,” said John Stanton, a professor of food marketing at Saint Joseph’s University in Philadelphia.
“What Lowes is doing is not novel and maybe expected.
“After 10 years, they may have learned something about the markets or have new ideas and approaches to deal with past failure,” Stanton said.
The operational changes with Harris Teeter as part of being owned by The Kroger Co. may have enticed Lowes Foods management to reconsider the Charlotte metro even as Publix is in expansion mode.
“Now that Harris Teeter is really Kroger, things just aren’t the same as the old days for our beloved Harris Teeter here in Charlotte,” said Tony Plath, a retired finance professor at UNC Charlotte.
“I suspect that’s what’s bringing Lowes back: there’s a gap in the middle market of the retail grocery industry here that BiLo used to occupy at the low end of the middle market, and Lowes occupied at the high end of this market.
“There’s a gap in this particular middle-market space of our retail grocery choices.”
Huntersville experiment
Lowes did not indicate whether the Concord, Indian Land or Kannapolis stores would be similar in design to its experimental Huntersville store which opened in February.
The Huntersville store is 25,000 square feet, about half of a typical store.
Tim Lowe has described the Huntersville store as “the Swiss Army Knife of grocery stores. We will have a tool for what you need to do.”
“Our new Huntersville store is like a food hall that will also serve as a community hub for morning coffee, family dinner on the go, beer with a friend, picking up groceries curbside, or a complete grocery shopping experience.”
The store features a second-floor mezzanine available for booking events, such as birthday parties, book clubs, team celebrations, group meetings, trivia nights, board game tournaments, and beer and wine tastings.
“You want something to do with the kids? We will have events for them,” Lowe said.
The Huntersville store also includes a shopping app called Scan*Pay*Go that allows customers to scan items as they shop and then check out at specially marked kiosks.
Standing out
Roger Beahm, a marketing professor at Wake Forest University, said Lowes is likely “pursuing a primary strategy of deepening its market penetration here in the Carolinas as opposed to pursuing expansion into a broader geographical area right now.”
“This includes a gradual advance back into the more-densely-populated Charlotte market.”
Beahm said Lowes Foods’ rebranding efforts in recent years are likely to attract Charlotte-area customers with expanded in-store shopping experiences, such as Chicken Kitchen, The Cakery, and The Beer Den.
“Because of its North Carolina roots, Lowes Foods enjoys strong brand equity in this geographical region.
“Leveraging that equity by opening new stores here in this region is a more-effective, yet also more-efficient, way for the company to grow.
Beahm said expansion may be an effective way for Lowes Foods to fend out expanding rivals such as Publix and Wegmans in the Triangle.
“Lowes Foods is now much more capable of holding its own against these key competitors than it would have been 10 years ago,” Beahm said.
“The announcement of these new stores demonstrates the company’s recognition that many shoppers again prefer getting into stores.
The new brick-and-mortar locations “will give Lowes Foods a deeper foundation from which to serve online shoppers,” Beahm said.
“These stores can serve as new collection points for click-and-collect, and at the same time represent a source of product for their home delivery service.”