The Cape Fear region is likely to remain a tempting prospect for grocery store chains considering areas for growth, developers say, although some local projects have hit snags recently and the industry continues to change with the times.
“Over the past few years grocery store development in our area has gotten a lot of attention. Aldi, Lidl and Publix have all entered the Wilmington market in very visible ways,” explained Jason Swain, whose firm Swain & Associates is developing a 75,000-square-foot, grocery store-anchored shopping center in the Pender County community of Hampstead. As yet, the Hampstead project’s grocery anchor has not been named.
Swain said there are a couple of reasons for those entries, “the most significant being that these retailers are all very aware of how quickly we are growing and how promising our areas long-term prospects are. Wilmington has some significant land constraints – we just don’t have very much left – and so the players that are here made the decision to enter the market now before the barriers to entry get too high.”
In one of the most recent announcements for the area’s latest grocery chain players, the Publix built in Surf City celebrated its grand opening May 26. And an Earth Fare is under construction along Military Cutoff Road. Meanwhile, plans for a Lidl in midtown Wilmington appear to be off the list for now.
A LIDL UNCERTAINTY
A Texas-based development firm that had been tapped to build a Lidl grocery store-anchored project off South 17th Street in Wilmington is suing Lidl after the discount grocer terminated its purchase and sale agreement with the company.
In a complaint filed June 8 in the U.S. District Court for Eastern North Carolina, Leon Capital Group officials allege that Lidl “abruptly terminated its agreements” to buy real estate parcels from Leon Capital Group and “reneged on its obligations to construct and operate the stores in Wilmington, Cary and Charlotte.”
The complaint requests that the court hold Lidl to its contracts with Leon Capital Group, also asking that the development firm be awarded punitive and compensatory damages.
Lidl, a German discount grocery store chain that is considered an Aldi competitor, had plans to quickly enter the American grocery market in recent years.
Leon Capital Group’s lawsuit states that “Lidl has taken a hatchet to its plans and dramatically scaled back its expansion.”
Separately, Lidl also has had at least two other locations in the region in the works that don’t involve Leon Capital Group, one in the Leland area and the other on Eastwood Road. Lidl purchased the Leland area and Eastwood Road sites.
Will Harwood, a spokesman for Lidl’s U.S. operations, did not answer questions about specific potential sites in Wilmington, saying in an email, “We have received positive responses from our customers to date, and look forward to opening more stores in the future. Our teams are looking at sites in the area.”
CAROLINA BEACH CONUNDRUM
A sign announcing the future site of a Harris Teeter grocery store in the 1000 block of North Lake Park Boulevard in Carolina Beach went up nearly eight years ago, according to news reports at the time, but the store’s construction still hadn’t started as of press time.
Meanwhile, plans for a Publix- anchored redevelopment project emerged last year for Carolina Beach’s Federal Point Shopping Center, also on North Lake Park Boulevard. The town granted a conditional use permit for the Federal Point project that was later challenged in court by Jubilee Carolina LLC, the Carolina Beach Harris Teeter’s developers. A Superior Court judge ruled in favor of the town in May, said Carolina Beach Mayor Joe Benson, but Jubilee could appeal that decision, meaning the town is no closer to having a second large grocery store.
The only other major grocery store on the island that contains the town is a Food Lion.
Benson said that while he isn’t rooting for Publix over Harris Teeter, residents are frustrated by the lack of another large grocer.
“Hopefully, we will get a favorable ruling [in the potential appeal] so we can have that second food store,” Benson said.
FACING THE FUTURE
While some parts of the region, such as Carolina Beach and Hampstead, are not brimming with competing grocery stores, others are flush with options.
“I think that most parts of Wilmington have convenient access to grocery shopping. The addition of Aldi, Lidl and Publix to our market means that people now have a wider variety of shopping choices,” Swain said. “Over the past decade, Food Lion, Walmart and Harris Teeter have really been the dominant grocers in our area. Now Aldi and Lidl will compete with Walmart and Food Lion at the value end of the spectrum while Whole Foods, Trader Joe’s and Publix compete with Harris Teeter at the top end.
Existing gaps in the local market “will likely get filled by competitors as population density increases and reasonably priced real estate options become available,” Swain said.
Even in Wilmington, grocery store development is expected to continue to some extent, developers said.
A 77,000-square-foot Harris Teeter, to be built on land Harris Teeter purchased in the 3800 and 3900 blocks of Carolina Beach Road, has been in the works for at least two years.
The project’s developer Dean Scarafoni, president and founder of Live Oak Development Co., said his firm has been wrapping up the permitting process for the new store. He said Harris Teeter is hoping to announce a timeline for the store’s opening in the near future.
In general, Scarafoni said, it’s an interesting time for grocery stores.
“You’ve got some people pulling back, some people continue to expand, and then you’ve got others waiting to see what the impact Amazon/ Whole Foods is going to have,” he said, of the fact that e-commerce giant Amazon purchased Whole Foods last year. “Some of these established, bigger players like Kroger have been investing heavily in technology and delivery, whereas they used to focus on market share by opening new stores.
“An interesting new development is that some grocers and other retailers have begun to increase staffing,” Scarafoni added. “They realize that cutting labor and customer service is the wrong way for brick-and-mortar stores to compete with the internet.”