3 new grocery stores coming to Chattanooga, and they may be Wal-Marts

3 new grocery stores coming to Chattanooga, and they may be Wal-Marts

November 9th, 2014 by Alex Green in Business Around the Region

Wal-Mart Neighborhood Market

Wal-Mart Neighborhood Market

POLL: Do you like shopping at Wal-Mart?

Wal-Mart is expanding in Fort Oglethorpe and Dalton and probably in Chattanooga as well next year.

But not with more behemoth, 100,000-square-foot Supercenters that the world's largest retailer has built over the past three decades.

These days, the retailer is building smaller, convenient 40,000-square-foot stores, known as Neighborhood Markets.

And they're not going where Wal-Mart usually builds.

Wal-Mart Neighborhood Markets, first introduced in 1998, are only one-fourth the size of a typical Walmart Supercenter in the United States and offer about 28,000 grocery items.

A developer who has built Neighborhood Markets around the South is seeking rezoning for three new grocery outlets in Chattanooga. The company, Polestar Development, is a subsidiary of the Chattanooga-based Hutton Co., and looking to build at an old community pool lot in East Ridge, on a flat lot tucked between Heritage Park and an old strip mall off East Brainerd Road and at a grassy, flat lot next to a church in a flood-prone area between Brainerd and the sprawling retail district of Highway 153.

Polestar officials couldn't say much about their plans.

By the numbers

27: Bi-Lo stores within a 30-mile radius of Chattanooga

16: Wal-Mart stores within a 30-mile radius of Chattanooga

8: Food Lion stores within a 50-mile radius of Chattanooga

5: Publix stores within a 50-mile radius of Chattanooga

4: Kroger stores within a 50-mile radius of Chattanooga

"We have a confidentiality agreement, and we're not in a position to announce who a client is for a particular site," said Matt Phillips, vice president of real estate at the Hutton Co.

But according to zoning applications, Polestar is proposing a 42,311-square-foot grocery store with a fueling area and 178-space parking lot at 1505 N. Moore Road.

In East Brainerd, at 7911 East Brainerd Rd., Polestar has proposed to build a 41,117-square-foot grocery store and 165-space parking lot.

And in East Ridge, Polestar has proposed building a 52,311-square-foot grocery store with a fueling area and 173-space parking lot.

Phillips could not say whether Polestar's proposed stores will be operated by Wal-Mart. And he said when the announcement is made, it will come from the stores' operator, not Polestar.

Wal-Mart officials declined to say whether the proposed grocery stores will be Wal-Mart Neighborhood Markets.

"Wal-Mart is proud to serve the greater Chattanooga area, and we are always looking for opportunities to bring access to convenient, affordable shopping to our customers in our area," said Amanda Henneberg, a Wal-Mart spokeswoman.

A year ago, Wal-Mart officials announced that its Neighborhood Market stores across the nation were enjoying success, even as Supercenter profits generally decreased. The company publicly committed in September 2013 to building hundreds more of its Neighborhood Market stores.

Seven months later, the Arkansas-based mega retailer announced that Fort Oglethorpe was getting the Chattanooga area's first Neighborhood Market store only two miles from an existing Supercenter.

In September, a month after Dalton grocer Green Spot Superette went out of business, Wal-Mart announced it would fill the void with a Neighborhood Market store on the same site. The Hutton Co. is handling construction.

Jon Springer, retail editor at supermarket industry trade publication Supermarket News, said that it would make sense for Wal-Mart to saturate the area by introducing several Neighborhood Market stores instead of one or two.

"Generally, all retailers, not just Wal-Mart here, would prefer to sort of concentrate their stores by market, so they get the best leverage from their investments in a particular neighborhood," he said.

Springer said that seeing that concentration happen over a short period of time would not be unusual.

Wal-Mart finds itself coming up against new kinds of competition, Springer added, as smaller convenience stores like Dollar General and Family Dollar up their food inventory and locate closer to residential areas, where folks have a quicker trip from home.

Illustration by Lin C. Parker

"Their alternative is going to the Supercenter or going to a more convenient store, a smaller grocery store closer to their home," said Springer. "Wal-Mart would probably prefer they go to theirs, than the competitors'. So where it might take away something from the Supercenter, at least it's going to Wal-Mart. I guess that's the thinking."

Springer said Wal-Mart's Supercenter stores tend to draw customers from a roughly 10-mile radius, while the Neighborhood Market is meant to draw customers from a much tighter one- to two-mile zone.

If Wal-Mart is the name behind the three grocery stores Polestar has proposed, it would mean the company has committed to building at least five Neighborhood Market stores within a 30-mile radius of Chattanooga.

And that would be on top of 16 existing stores and Supercenters within the same radius, pushing Wal-Mart's grand total to 22 stores within a 30-mile radius of the city.

That sounds like a lot, but Bi-Lo, Wal-Mart's leading competitor in the Chattanooga grocery market, already has 27 locations within a 30-mile radius of Chattanooga.

Contact staff writer Alex Green at agreen@timesfreepress.com or 423-757-6480.