Schnucks Denies Market Exit

Aug 25, 2010


are some regional supermarket
chains facing tough times
as they go up against bigger competitors.

Marsh Supermarkets, according to
a recent Indianapolis Business Journal report,
had been for sale but is not currently because its owner, Sun Capital Partners,
was not able to get the price it wanted. The chain, which
in the past had often been mentioned among the innovators in the grocery business
along side the likes of H.E.B., Publix and Wegmans, has fallen on tough times
in recent years going up against Meijer, Kroger, Target and Wal-Mart
in Indiana.

Another chain, Schnuck Markets, finds itself in the odd position
of having to deny rumors that it is closing up shop in one of its market areas
because of a recent store closing in the Memphis, Tennessee market.

At the
time, Scott Schnuck, chairman and CEO of the chain, said in a press release, "We
are now facing increasing pressure from five competitors within a two-mile
radius, including two supercenters. In our experience, grocery options in Cordova
have well exceeded demand."

Since that announcement, speculation has been that Schnucks couldn’t cut it
in Memphis.

"There is absolutely no truth to any claim that we’re leaving Memphis," Lori Willis, director of communications for Schnuck Markets, told The Commercial
. "The Cordova closing was an isolated case and there are
no plans to close or sell any of our other properties. We have not talked
to any other companies."

According to The Commercial Appeal report,
Publix was named as a possible suitor for Schnuck stores in Memphis. A spokesperson
for Publix, Brenda Reid, told the paper, "We have no confirmed expansion
projects to announce for Memphis or the surrounding area. Our Tennessee presence
is primarily in Nashville and Chattanooga."

Discussion Questions: How do you perceive the current state of regional
supermarket chains in the U.S.? Is Schnuck Markets better or worse positioned
than most to succeed?

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7 Comments on "Schnucks Denies Market Exit"

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David Livingston
11 years 8 months ago

Generally, I am finding regional chains doing quite well. Schnucks going to Memphis was a mistake. They went after a failed group of stores. Combine that with lack of name recognition and the learning curve of a new market and I would not be surprised if they did decide to exit. However, in St. Louis they are still king.

As long as the regional chain is privately held by family members, I’m finding they are doing well. Once they go public or sell to an investment group, that’s when things begin to go very very wrong. Sure, every now and then a family member will take a crazy pill and things like Marsh leap-frogging to Chicago or Schnucks to Memphis will happen. That’s the exception rather than the rule.

David Biernbaum
11 years 8 months ago

Schnucks is extremely strong in the St. Louis market; however I’m pretty confident that Schnucks has a firm commitment in Memphis, as well. Regional supermarkets chains are more important in certain markets than others. In markets like St. Louis, for instance, where consumers are quite ethnocentric about their home town, their own regional taste and idiosyncrasies, their own home town brands, etc., retailers like Schnucks will continue to thrive and survive because most of the national chains don’t “get it” for what it takes to do well in a “regional market.”

Roger Saunders
11 years 8 months ago
Strong regional chains remain solid performers. They, like every other thoughtful retailer interested in strategies of “protecting & growing” their base, and “investing” in new properties/markets, or choosing to “harvest” or “abandon” certain locations, have to keep the eye and ear on the consumer. We took a look at strong regional chains like Schnucks, Publix, and Wegmans and how the consumer interacts with them. Based on the the August, 2010 Consumer Intentions & Actions (CIA) Survey of 8,200+ respondents, when asked: “Why do you shop here most often?”, each of these three chains ring up well with their customers in “Price,” “Selection,” and “Quality”–always the top issues on the minds of consumers when it comes to groceries. Fully 80%+ answered in the affirmative on each point. Location is also a high priority for Schnucks and Publix shoppers, while Wegmans’ unique appeal drives customers from further distances. Each chain has long-term, loyal customers. When they are taking business from competitors, they are pulling them away from other grocery stores–not the big boxes. And, their customers are… Read more »
Justin Time
11 years 8 months ago
Great A&P, once the dominant national supermarket chain, and now No. 2 in its North East markets, is facing pressure from all sides. It recently announced the closure of 25 underperforming stores in 5 Northeast states. It is trying to get out the message that it beats nearby drugstores in price, calling itself the “best drugstore in town.” And with its “live better wellness” club, is making some inroads. It is also doing EDLP in fresh categories such as produce and meat/seafood. If it can concentrate on excellence in these categories and promote its exclusive, award winning quality private label brands, it just might turn itself around. Schnucks has survived A&P, National and others, to become the dominant super chain in St.Louis, competing with Shop’n Save just like Giant Eagle is the dominant supermarket chain in the Pittsburgh market and keeps another SuperValu chain, Shop’n Save at bay. Both are privately held regional supermarket chains that have branched out of their traditional markets, Giant Eagle into Northern and Central Ohio, Schnucks into Memphis. In these… Read more »
M. Jericho Banks PhD
M. Jericho Banks PhD
11 years 8 months ago

David Livingston hit the head on the nail. Or vice versa. Keep the family in ownership if not in overall control. It’s worked here in the past in Sacramento for Raley’s, as I learned while working there. Sometimes even in spite of ownership blunders.

Regional supermarket chains are the bedrock of the grocery business in our country. Big enough to compete while driven enough to innovate. When is the last time you saw a significant grocery innovation from Walmart or Target? Like, never?

Ed Rosenbaum
11 years 8 months ago

It is a sad comment about our economic condition when a grocery chain makes a decision to close a poor performing store and rumors start that the chain is closing.

I am a fan of regional grocery chains and think there is a permanent place in our economy for them to survive.

Ken Dillard
Ken Dillard
11 years 8 months ago
I’ve visited Memphis and live in North Georgia. Seesel’s predated Schnucks in Memphis and catered to the “carriage trade” in the region. Under ownership by Bruno’s and then Albertsons, Seesel’s became damaged goods. When Schnucks acquired the stores, they knew they had a lot to do to rebuild the business base, and started by eliminating a tarnished name for a well respected name in the supermarket industry, but unknown to most of the populace in Memphis. The idea was to make a fresh start. Memphis is a city dominated by Kroger and Walmart in terms of volume and market share while Kroger is found in virtually all areas of the Memphis metro and caters to all demographics. Schnucks primarily caters to the middle class and upwards and thus has limited market presence. Unfortunately, Memphis is a poor city, especially compared to Nashville, Atlanta, Jacksonville and Charlotte, all of whom are stars in the Southeastern landscape. In the present state, Schnucks has much potential in the Memphis region despite competition and the economy. Remember they inherited… Read more »

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