This story incorrectly identified Delhaize, the owner of Salisbury-based Food Lion, as a Dutch holding company. Delhaize is a Belgian holding company.
Lowes Foods, trailing badly in the Triangle supermarket wars, is staking its future on its past.
This fall, while closing down poorly performing stores and remodeling others to look like upscale markets, the Winston-Salem-based supermarket chain is ramping up an advertising campaign that portrays itself as the homegrown grocer in North Carolina.
“You can’t fake local” is one of the slogans in the new ad campaign.
Without naming names, Lowes Foods is not so subtly calling into question the North Carolina pedigrees of Harris Teeter, the Matthews-based chain purchased earlier this year by supermarket giant Kroger, and Food Lion, the Salisbury grocer that is owned by a Belgian holding company.
It’s also an attempt to get ahead of the fallout expected when Florida-based Publix opens its first store in the Triangle later this year in Cary – just a mile down the road from one of Lowes Foods’ freshly remodeled stores.
The fight for a fistful of your grocery dollars has never been more fierce.
“The market has heated up ever since Publix moved in this direction,” said Roger Beahm, a marketing professor at Wake Forest University’s School of Business and executive director of the Center for Retail Innovation. “It has created a lot of angst.”
While the major players compete on price, thanks to their large-scale buying advantage, regional chains such as Lowes Foods are left to compete mostly in the more intangible area of shopping experience, Beahm and other retail experts say.
“We’re not just talking about winning minds, we’re talking about winning hearts,” Beahm said.
According to the latest market share numbers, Lowes Foods has its work cut out for it.
In the Raleigh market, which includes Wake, Johnston and Franklin counties, Lowes Foods ranks a distant fifth in market share, according to Chain Store Guide. By comparison, Walmart ranks No. 1, followed by Food Lion, Harris Teeter and Kroger. When you combine Harris Teeter’s and Kroger’s shares, however, the two grocery chains are in a dead heat with Walmart, each garnering 23 percent of the market.
In the Durham-Chapel Hill area, which includes Chatham, Durham, Orange and Person counties, Lowes Foods ranks 10th behind its traditional rivals plus Costco, Whole Foods, Sam’s Club, Super Target and Trader Joe’s.
That leaves Lowes Foods in a difficult position, at best.
From its single-store beginnings in Wilkesboro in 1954, Lowes Foods has grown to a 97-store chain owned and operated by Alex Lee, a North Carolina company that traces its roots to 1931 when Lebanese immigrant Moses George began peddling groceries in Lincolnton and Shelby. Members of the George family maintain control of the company and work in day-to-day operations.
Of today’s 97 grocery stores, 78 are Lowes Foods, while 19 operate under the budget banner Just Save. All but one of the 97 stores are located in the Carolinas. One is in Virginia.
Interestingly, the family-run company selected an outsider to lead Lowes Foods and its nearly 9,000 employees at what could be its most perilous time.
Hired just 16 months ago as Lowes Foods president, Tim Lowe was previously an executive vice president at Supervalu, a publicly traded Minnesota-based grocery company with 35,000 employees and a network of more than 3,400 stores operating under several banners.
Despite the fortuitous last name, Lowe, 46, has no connection to Lowes Foods. Before interviewing for the job, he said, “I was actually not familiar with Lowes Foods.”
Lowe was attracted to the job, he said, by the company’s “strong desire” to innovate and “operate from a position of strength.”
“That sounded like a whole lot of fun to me,” he said.
By the end of the year, the company will have remodeled 10 stores and opened three new stores, two of those in Myrtle Beach. In the Triangle, Lowes is finishing up remodeling work at two stores in Cary and one each in Holly Springs and Apex. Stores in the Triad were the first to be remodeled.
Mixed with the positive news, Lowes Foods also announced some retrenching in 2014. Four stores – all described in a company press release as “underperforming” – will close by Sept. 19. One of those stores is in the Triangle at 3480 Kildaire Farm Road in Cary’s Millpond Village. That follows last year’s closing of two Triangle stores, one in Cary and one in North Raleigh.
Lowe wouldn’t disclose how much money his company has spent on store remodeling other than to call it a “sizeable investment,” but the changes are significant. Each of the remodeled stores has a spacious farmer’s market-style produce department much like you would see at Whole Foods. The remodeled stores will also employ more employees – a total of 200 additional positions at the four stores in the Triangle, Lowe said.
Features common to all the newly remodeled stores:
• A beer den where customers can fill 64-oz. growlers with a rotating choice of craft beers on tap. Hundreds of bottled craft beers will also be sold in select-your-own six-packs.
• A pick-and-prep area where shoppers can hand-pick produce and have it chopped, diced or sliced before they leave the store.
• A large wooden table made out of abandoned tobacco barn wood is prominently featured in each store as a place for shoppers to gather. Children’s activities, chef talks, recipe tastings and how-to sessions will be scheduled at each store.
• And finally, a giant chicken chandelier hanging above the “Chicken Kitchen,” where shoppers can buy fried and rotisserie chicken, chicken salad and chicken soup. When rotisserie chickens come out of the oven, the giant chicken starts flapping its wings and inviting shoppers to do the chicken dance.
The emphasis on local is hard to miss. Signs dot the produce shelves, marking local selections. Shoppers can choose among 20 flavors of sausage all made in North Carolina or South Carolina. Produce boxes filled with homegrown fruits and vegetables are available in select stores as an alternative to Community Supported Agriculture boxes. In an effort to make them more attractive, Lowes Foods does not require a subscription or charge upfront fees.
“We really want to make the products the heroes in our stores,” Lowe said.
Leading up to the remodeling, Lowe said, the company visited 120 North Carolina families in their homes, trying to get to know them and what they most want in a grocery store. “They allowed us to look in their cupboards and refrigerators. We were able to learn quite a bit,” Lowe said.
Lowe declined to name any single competitor as his company’s biggest threat, citing the crowded field of grocery sellers, including dollar stores, big-box stores and convenience stores on top of the traditional supermarkets. “Everyone plays,” he said.
“Rather than focus on our No. 1 competitor, what we’ve tried to do is add some color, instead focus on our guests, find what resonates with them,” he said. “Our goal is not to chase others.”
Will local beer taps, dancing chickens and a call to local be enough to keep Lowes Foods in the game?
Wake Forest’s Beahm, who noted that the business school and Lowes Foods have informally talked about a possible partnership, said he thinks the grocer is headed in the right direction, asking the right questions: “When and how can we differentiate ourselves?”
With the remodeling and the emphasis on local, Beahm said, “Lowes is really leveraging this.”
Supermarket analyst David Livingston, based in Wisconsin, was less optimistic, calling the changes at Lowes Foods “more for the press release.”
He questioned the chain’s emphasis on its North Carolina roots. “Oh, feel sorry for us – we’re local. That doesn’t work.
“I’ve seen a lot of local grocery stores pull the local card, but I haven’t seen any say, ‘Wow, this was really successful.’ ”
Regional chains, such as Lowes Foods, are in “a very difficult position,” he said.
“Publix and Kroger are very formidable. They’re going to be difficult to compete with.
“If they (Lowes Foods) are closing stores, that tells me they’re having problems.”
Shoppers, of course, will have the final say.
So far, the reviews from customers at the Cary Lowes Foods on High House Road – who described the old decor as “kind of dark and dreary” – are mostly positive.
“They sent me a $10 off coupon. That’s what brought me in,” said Ellen McGuire of Cary, who splits her shopping dollars between Lowes Foods for basics “because they have good prices” and Fresh Market for its produce.
But the IBM retiree said she’ll definitely be giving Publix a try, too. “I’ve never been to a Publix. I’m curious.”
Stephanie Jabusch, 52, of Cary, said she won’t rule out shopping at Publix, though “I’ve heard they’re more expensive.”
She said she prefers shopping at Lowes Foods, has come to know the employees there and feels like the prices are about right. “They are a little less expensive than Harris Teeter and Kroger but a little better quality than Food Lion,” Jabusch said.
The remodel has been a plus, she said, though she’ll be happy when she can finally find everything on the shelves. She likes the new floors, the open feel and the produce department’s market style. And she’s fairly certain her husband will enjoy the local beer on tap. “He likes trying new beer,” she said.