Harris Teeter expands in spite of fierce competition

Dive Brief:

Harris Teeter has ambitious plans for expansion and store renovations, and has recently opened two notable locations, according to reports. Earlier this month, Harris Teeter opened its largest store ever in New Bern, North Carolina, and this week the grocer debuted recently converted Farm Fresh store in Virginia Beach, Virginia.
Kroger acquired 18 Farm Fresh stores after Supervalu divested the chain last spring, and Kroger-owned Harris Teeter inherited 10 Farm Fresh locations for conversion. The new Virginia Beach Harris Teeter is the first converted Farm Fresh store to open, and will include hot food and salad bars, a sub sandwich shop, sushi counter, full-service meat and seafood departments, a floral department and international wine, cheese and beer. The new store will also feature an in-store pharmacy.
The new Harris Teeter market in New Bern will be the largest grocery store in Harris Teeter’s portfolio at 100,000 square feet. It offers an array of new features including a sushi train, burger bar, craft beers on tap and wines by the glass, a juice bar, in-store Starbucks and a drive-through pharmacy. There is also a Harris Teeter Fuel Center on site.

Dive Insight:

With plans to convert more Farm Fresh stores and the unveiling of its “crown jewel” in New Bern, Kroger's Harris Teeter banner is showing strength at a time when many other grocers are trying to find their footing.

North Carolina-based Harris Teeter is a popular grocer throughout the Mid-Atlantic and its new commitment to fresh food, grocerants and other innovative features are sure to win new fans while maintaining loyal customers. According to the Charlotte News Observer, Harris Teeter’s regional heritage is part of its appeal, and although its pricing can be higher than some other local stores, its curation of products and ability to offer something unique is a major benefit.

The big question is whether or not the new flagship store in New Bern or the Farm Fresh conversions will be enough to differentiate Harris Teeter from its competition in a crowded market. The retailer is going head to head with Publix, which is also investing heavily and opening new locations near Harris Teeter stores. Food Lion, Lowes Foods, Aldi and Lidl are all seen as competitors for Harris Teeter as well. Wegmans has also expanded its presence in Harris Teeter territory and has plans to open a new store in Virginia Beach next year.

In addition to Wegmans, other competitors could put pressure on Harris Teeter in the coming years. A significant investment from Ahold Delhaize into Giant Food stores could threaten Harris Teeter and Kroger’s other banners as well, according to Scott Mushkin with Wolfe Research. In a recent weekly update to investors, Mushkin wrote that Ahold Delhaize’s $175 million investment in Giant, in addition to ongoing remodels in more than 1,000 Food Lion stores that also compete with Kroger banners in the Mid-Atlantic, is expected to continue for the next several years.

“Coupled with Lidl’s continued expansion in the region, as well as Aldi’s growing popularity and mainstream acceptance, the pressure continues to mount on traditional operators, such as Kroger, in the increasingly competitive environment,” he wrote.

For now, Harris Teeter seems to be on solid ground, but with the ongoing volatility of and competition in the grocery industry, especially in the Mid-Atlantic, the performance of its new stores over the next few months will be an important indicator for the banner’s future success.