The grocery competition is fierce in North Texas, but that has not stopped new players from entering the market. Lidl is buying up sites. H-E-B is still rumored to come to North Texas eventually. Kroger is expanding and remodeling. Walmart is holding on to the largest market share.
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“The whole market is one big area of growth,” Weitzman Executive Vice President of Development David Palmer said.
A few factors are contributing to major grocery growth, he said. As the population swells in previously smaller trade areas (particularly along U.S. 380 and Interstate 35W) and urban submarkets densify, those new residents need to buy groceries.
“In the world of groceries, you still have the advantage of proximities. People want to shop where they live,” Palmer said.
But with new digital technologies, grocers have found ways to create another revenue stream with e-commerce, delivery and curbside pickup.
Here is a quick update on some of the major players in North Texas’ grocery scene.
Walmart
Walmart’s largest market is North Texas, and North Texas’ largest grocer is Walmart, accounting for just under 20% of the local market share. DFW is also Walmart’s largest online grocery market in the U.S., averaging between 500 and 600 orders weekly. Since launching online grocery shopping with curbside pickup in 2015, Walmart has expanded to 50 stores in DFW, about 40% of its local footprint.
Kroger
With nearly 100 stores in North Texas, this chain accounts for more than 14% of the local market share of groceries, the second-largest in the region. Kroger has been quick to adapt to e-commerce and delivery innovations such as ClickList and Instacart. Between 2015 and 2017, Kroger pledged $700M to build and remodel North Texas stores, concentrated in its large format footprint. Its interest along the U.S. 380 corridor has been growing.
Sprouts Farmers Market
This natural food market is hot in North Texas, though none of its stores delivering by August are in Texas. Sprouts Vice President of Store Operations Dan Sanders has called the DFW market underserved for Sprouts’ offerings. By the end of 2017, the grocer will have 25 units in North Texas. In June 2016, Phoenix-based Sprouts partnered with Amazon’s Prime Now service to offer grocery delivery in Dallas. In early May, the long-awaited Lake Highlands store opened.
Sprouts entered discussions to merge with Albertsons in March, but anonymous sources said Sprouts was trading at too high a multiple for a transaction to be feasible. Since March, Sprouts’ shares have risen 30%.
Lidl
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Though the German grocer will first establish its U.S. footprint on the East Coast, Lidl is seriously eyeing at least seven sites in North Texas. By 2020, Lidl will have 300 stores in the U.S. Seven North Texas sites have been purchased or are undergoing zoning updates for grocery store development. Each tract is in a different city: Dallas, Frisco, McKinney, Little Elm, Rockwall, Wylie and North Richland Hills.
Aldi
Low price grocer Aldi will no doubt be a fierce competitor to Lidl once it arrives in Texas. In February, Aldi said it would spend $1.6B expanding and remodeling stores, including nearly 100 locations in Texas, to offer more fresh foods. In DFW, Aldi has about 55 stores and accounts for 8% of the local market share.
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