It’S A Grocery War Supermarket Chains Move Quickly To Earn Market Share

Third and Thor.

57th and Regal.

Highway 2 and Mt. Spokane Park Drive.

Mead. Cheney. Liberty Lake.

All of these sites are either being discussed or have been confirmed for new supermarkets.

In a city that already has an abundance of supermarkets, and in an industry where profit margins are notoriously narrow, why build so many more new stores?

“We’re kind of wondering about it ourselves,” said Denny York, vice-president of Yoke’s Food and Drug. “This is a crazy business we’re in.”

Crazy or not, here they come.

Half a dozen new supermarkets could open in Spokane in the next two years. The stores’ plans range from the firm, such as Fred Meyer’s intention to open at Third and Thor, to the more-speculative, such as Rosauers’ exploration of Mead for a Super 1 Foods, to those that are only rumored, such as talk of a new Safeway at Liberty Lake.

Stores are also being discussed for at least two locations on the South Hill and one in Cheney.

With supermarket profit margins historically hovering around 1 percent and the population of Spokane growing slowly, adding so many stores may not make much sense.

But the grocers have their reasons.

“Every year costs go up, and unless sales go up, you have to grow,” said Bill Haraldson, chief operating officer of Rosauers. “What’s the expression? `If you’re growing you’re green, if you’re ripe you’re rotten.”’

Competition, particularly between national powers Safeway and Albertson’s, is also fueling much of the expansion talk.

With neither chain able to dominate Spokane, each is aggressively trying to outmaneuver the other as they seek new neighborhoods.

The desire to be first in a new location has led the chains to open stores well in advance of the customers, say industry observers.

Liberty Lake is a prime example, said York.

“Albertson’s went out there and I believe it wasn’t one of their shining stores (when it opened) and it’s a great store today,” York said. That’s the advantage of having the financial muscle of a big, publicly traded company like Albertson’s, said real estate developer Joe Ward.

“They bought the market,” said Ward. “The first couple of years, they ran in the red, and now they own the market. They absolutely own the market.”

The idea of waiting years for a profit to materialize is foreign to Spokane’s independent grocers, said Haraldson.

“We want to know it’s going to be successful (immediately),” he said. “We don’t want to wait two, three, four years to make money. That’s not a luxury we can afford.”

Boise-based Albertson’s dominance in Liberty Lake has led to speculation that the chain may attempt to build a bigger store across the street in a new Vandervert development, rather than see Safeway move into the market.

In that scenario, Albertson’s would move from its existing 30,000-square-foot store to a new 50,000-square-foot store across the street, then lease out its smaller store.

“So what if they rent it out and lose $1,000 per month? They would more than make it up in the bigger store,” Ward said. “If you have deep pockets, you can afford to that.”

A similar switch has also been rumored for the South Hill, where Albertson’s could lease its store at 44th and Regal and open a new one at 57th and Regal.

Albertson’s and Safeway real estate representatives did not respond to interview requests for comment.

Supermarkets also may be jockeying for position in Mead, where both Albertson’s and Rosauers, through its Super 1 Foods chain, are looking at sites.

But there’s a significant difference between looking at a site and opening a supermarket, said York.

“There’s a lot of grocery stores that will never be built,” he said. “It’s kind of like a chess game, and that Mt. Spokane site is a great example. “Albertson’s announced they were going there, Rosauers announced (they were looking there) and whoever gets the job done first will probably open there. It will support another grocery store, but not two.”

Spokane’s first Chevys Mexican restaurant will open in River Park Square’s ground floor, facing Spokane Falls Boulevard.

Chevys, which has 170 locations nationwide, is owned by a division of Applebees, but the Spokane branch will be owned by a franchisee based in Minnesota.

The 7,200-square-foot restaurant will seat about 300 diners and employ 100, including 20 full time.