Grocers play musical chairs, but neighborhood stores sit empty

Photo by Danny Fulgencio

Supermarkets for sale, resale

Grocery stores in the Dallas area changed hands so many times over the past three years that a few of them are back with their original owners, while two in our area remain closed.

When Albertsons’ parent company, Safeway, merged with Tom Thumb in January 2015, a federal antitrust ruling required them to sell 12 North Texas stores, including the former Albertsons stores on Mockingbird at Abrams and on Northwest Highway at Ferndale.

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As part of that divestment, Albertsons sold those buildings and six others to Minyard’s for their short-lived Sun Fresh concept. Last year, Minyard’s 84-year history came to an end when it sold out all of its 69 locations.

In turn, Houston-based Fiesta Mart bought 11 former Minyards and Sun Fresh stores. San Antonio-based H-E-B bought six, including the two former Albertsons (which more recently were Sun Fresh stores) in our neighborhood. They’ve since been sold to a holding company.

Simply stated, the two former Albertsons buildings in our neighborhood have changed hands about four times, but they still lack occupants.

North Texas has one of the most robust grocery markets in the United States.

In the corridor between McKinney and Little Elm, nearly any chain you can think of has a presence. Grocery companies, from Aldi to Whole Foods, have purchased about every corner along U.S. Route 380.

Why do otherwise busy retail corners in our neighborhood have vacant supermarkets?

It all comes down to the tricky business of profiting from groceries. The average profit margin for grocery stores is about 1 percent.

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“It’s a very high-volume, low-margin business,” says Will Adams, a real estate broker who has worked with grocery companies. “That’s why they’re so careful. Because it really can affect the bottom line of these companies.”

The Northwest Highway/Ferndale location seems like it should be a homerun, with nearby home values rising and high traffic volumes. But the business is far more nuanced than that.

Grocery companies know their customers down to the nitty-gritty. When considering real estate, they might have as many as 200 demographic data points that must match before they’ll consider making a deal.

While those specific data points are proprietary and generally a mystery to anyone outside the company, they usually include income and population density, as well as education level, median age and traffic patterns.

If any one of the points doesn’t match, the deal won’t go.

In the spring of 2017, Tom Thumb repurchased buildings in Grapevine and McKinney that had been sold as part of the antitrust order. They’re old Tom Thumb stores that were converted briefly to Minyard’s Sun Fresh and later sold to H-E-B. Now the Tom Thumb brand has returned to them.

The good news is that the old Albertsons in our neighborhood likely will be a fit for some grocer eventually, even if that turns out to be Albertsons/Tom Thumb again.

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