This should be interesting. Which store do you think is most likely to succeed, given their respective strategies as well as Pittsburgh demographics? Do you think they’ll both do well?
A simmering Pittsburgh grocery war may have just found its hottest battleground at Ross Towne Center and its neighboring retail properties on McKnight Road.
North Carolina-based Bottom Dollar has leased a former Goodwill location abutting the center for what may be its 13th store in the region. Right next door, in the former location of Roomful Express, ECHO Real Estate Services has leased 45,000 square feet to Giant Eagle , which may be planning to open the region’s first Valu King, a discount-oriented store concept that operates at a similar price point as Bottom Dollar, whose neighboring store will be 18,000 square feet.
Giant Eagle previously rolled out the Valu King concept in eastern Ohio and Erie, but has yet to bring it to its home market.
Herky Pollock, director of the retailer services group in the Pittsburgh office of CBRE, confirmed he represented the landlord for the former Goodwill store in reaching a deal with Bottom Dollar and that representatives of the neighboring former Roomful Express store, which is under a different owner, have told him of the plans for Valu King.
Officials for Bottom Dollar confirmed it will open a store in the McKnight Road location this fall. Dick Roberts, a spokesman for Giant Eagle, said there is “no confirmed plans for a location (for Valu King) in Pittsburgh yet.”
COMPETITION HEATING UP
But Pollock and other local real estate professionals have been notified that Giant Eagle, which operates a thriving store a short drive up McKnight Road at McIntyre Square, plans to bring Valu King to the former Roomful space.
Pollock views two discount grocery stores operating side by side in the same suburban shopping center as part of a larger outbreak in grocery competition in the Pittsburgh area, as long-dominant Giant Eagle faces an onslaught of new competitors entering the market.
That includes not just Bottom Dollar , owned by multibillion dollar Belgian conglomerate Delhaize , but also Fresh Market and Whole Foods , soon to open in Wexford, as well as Aldi and Trader Joe’s , which also are eyeing locations in the North Hills.
Kevin Dougherty, principal of North Carolina-based AdVenture Development and a Pittsburgh native, acknowledged he’s had talks with Trader Joe’s about establishing a store at his McCandless Crossing project further up McKnight Road.
He said it was only talk so far and expects Trader Joe’s is considering other locations as well in a Pittsburgh grocery market engaged in an ongoing chess match for the best locations.
“It sounds like people are repositioning and trying to give themselves the best competitive advantage,” he said.
“That would be good for the Pittsburgh market and the Pittsburgh consumer, that’s for sure.”
HEAD TO HEAD AND SIDE BY SIDE
It’s a rare circumstance to have grocery stores competing side by side, but where Ross Towne Center ends, other adjoining retail space with two other owners has made it possible. Often, Giant Eagle , in a common retail industry practice, sets up a store in a shopping center and establishes noncompete clauses to prohibit other stores from opening nearby, according to a number of retail real estate professionals, but this does not appear to be an option in this instance.
Craig Cozza, a developer with ample retail experience with retail leasing, noted it’s common for all retailers to seek noncompete clauses for the shopping centers they commit to and that grocery stores have more clout to exact such agreements since they are so coveted by landlords.
He said it’s possible Giant Eagle’s Valu King concept and Bottom Dollar could both thrive as neighbors.
There may be enough business there for both of them anyway,” he said.
Giant Eagle already has retooled its concept once before following the arrival of a competitor. When the region’s first Whole Foods opened in East Liberty a decade ago, Giant Eagle converted its Shadyside store a few blocks away into a Market District within a few years.
Giant Eagle has recently done the same in Pine, converting a Giant Eagle to Market District not far from where Whole Foods will soon open.
“For many, many years, Giant Eagle has maintained a dominant position in the region,” Pollock said. “Now that competition is coming in on the high and low end, they’re looking to shore up their dominance.”
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