The U.S. and global economies are spiraling into a recession and anxious consumers are looking for ways to save money and cut back on their expenses. Many families no doubt are looking for ways to reduce, for example, their weekly grocery bill.
At the same time, the grocery industry in southeastern Wisconsin has grown more competitive in recent years as Wal-Mart has brought its Supercenter stores to the area, more Sendik’s stores have opened, and a massive Woodman’s store has opened in Oak Creek.
The increased competition has sliced into the market share of the area’s dominant grocer, Milwaukee-based Roundy’s Inc.’s Pick ‘n Save. The increased competition has hurt efforts to sell Roundy’s and some of the Pick ‘n Save stores are underperforming and may need to be closed said David Livingston, a Waukesha-based grocery industry consultant.
The under performing Pick ‘n Save stores that Livingston thinks may be closed include: one of the Kenosha stores, the store at 2320 W. Ryan Road near South 27th Street in Oak Creek and the store in the Granville Station development (formerly Northridge Mall) at 8120 W. Brown Deer Road, Milwaukee.
Vivian King, a spokeswoman for Roundy’s declined to comment on Livingston’s “opinions.”
“As you know the grocery industry is highly competitive,” she said. “It has been for some time and it continues to be. We have a lot of different competitors than we did five years ago, but it is still competitive. We choose not to worry about our competitors. Instead we worry about our customers and focus on the quality of food, service and shopping experience that we provide them.”
Just a few years ago the demise of Kohl’s Food Stores, the decline of Sentry stores in the area and Jewel-Osco’s decision to pull out of the area left Pick ‘n Save with more than 60 percent of the five county metro Milwaukee area’s grocery market, Livingston said.
About six years ago Pick ‘n Save had 39 stores in the area and a 47 percent market share, he said. Then Pick ‘n Save added 23 stores, acquiring some and building some, increasing its market share up to 62 percent.
It would have been difficult to capture a larger market share than that. Roundy’s had added 23 stores but only gained 15 percent market share, grabbling less than 1 percent market share per store. There are so many Pick ‘n Save stores in the area that it became difficult for Roundy’s to add more stores without cannibalizing its existing stores.
“They got to a point of diminishing returns,” Livingston said. “For every store they add they are not gaining much market share, basically because they are taking it away from themselves.”
The huge market share allowed the Pick ‘n Save stores to increase prices. But then new competitors came in and have sliced its market share back down to 55 to 56 percent, Livingston said.
Sendik’s owners opened new stores in Greenfield, Franklin and Elm Grove last year and Germantown and a second Franklin store this year. The Sendik’s stores, which have several different ownership groups, now have about 7.5 percent of the region’s grocery market, Livingston said.
“They’ve gone from a distant also-ran to number two (in the market) in a few years,” Livingston said of Sendik’s. The Sendik’s stores traditionally have targeted the upscale grocery market, but in recent years they have been more price competitive with Pick ‘n Save, he said.
“Sendik’s is becoming more mainstream,” Livingston said.
Piggly Wiggly now has a 7 percent share of the five county area’s grocery market, according to Livingston. The Piggly Wiggly chain is owned by Sheboygan-based Fresh Brands Distributing Inc. A few years ago, Fresh Brands was a struggling publicly held company and several Piggly Wiggly stores were closed. Fresh Brands went private in 2006, and last year chief executive officer Paul Butera bought out the other owners of the company to gain sole control.
Now the company is growing again, adding stores in Lake Geneva and Muskego. Mark and Bretty Stinebrink, will convert the Pick ‘n Save store they own at 100 E. Geneva St., Lake Geneva, into a Piggly Wiggly store. They also plan to take over the operations of the Piggly Wiggly store at 1414 E. Geneva St. in Delavan. They will also close the Pick ‘n Save store they own at 207 S. Wright St. in Delavan.
In addition, Jim and Judy Semrad, who have owned the Sentry grocery store at W189 S7847 Racine Ave. in Muskego since it was built in 1995, have become Piggy Wiggly franchisees and recently converted the store to a Piggly Wiggly store.
“I think Piggly Wiggly has made a comeback in the state,” Livingston said. “Piggly Wiggly has held their ground.” The chain will probably continue to slowly add new franchisees instead of building new stores, he said.
The fading Sentry chain, owned by Eden Prairie, Minn.-based SuperValu Inc., now has a 6 percent market share, Livingston said.
Wal-Mart’s addition of Supercenter stores in the Milwaukee area has given it a 5.5 percent share of the five county grocery market, he said. Wal-Mart opened Supercenter stores, which include grocery departments, in Hartford and Sheboygan earlier this year. The Bentonville, Ark.-based company is also planning, or already building, Supercenter stores in Kenosha, Cudahy, Waukesha, Saukville and Muskego. The company also plans to expand some older stores, including the two locations along South 27th Street, into Supercenter stores.
Janesville-based Woodman’s Food Markets, which only has one store in the area opening earlier this year at 8131 S. Howell Ave. in Oak Creek, has a 4 percent market share. The company, which operates massive discount grocery stores, has indicated it plans to open more stores in the area, providing another threat to Pick ‘n Save.
“I think Woodman’s clipped (Pick ‘n Save) about 3 percent (market share),” Livingston said. The Oak Creek Woodman’s store is rumored to be bringing in $1.8 million in sales a week, he said.
“That’s more than what three average Pick ‘n Saves do,” Livingston said. “Every time a Woodman’s opens it’s like taking three Pick ‘n Saves out of the market share.”
Costco, which owned a store in Grafton last year, will also likely add more stores in the area, Livingston said, providing still more competition for Pick ‘n Save.
Aldi, which has added a few stores in the area recently, has a 4 percent market share and Lena’s, with a handful of locations in the central city, has a 1 percent market share, Livingston said.
Whole Foods and Trader Joe’s each have one store in the area that have opened in recent years. Neither is likely to add another store in the area anytime soon, especially Whole Foods whose east side store, which opened in 2006, is “underperforming,” Livingston said.
In addition a Fresh Market grocery store opened last year next to Brookfield Square Mall in Brookfield.
The addition of all of these new competitors has thrown cold water on the attempts by Roundy’s owners to sell the company, Livingston said. Roundy’s was purchased by Willis Stein & Partners, a Chicago-based private equity group, in 2002. Private equity groups typically like to buy companies and then sell them five to seven years later and Roundy’s has been rumored to be for sale as recently as last year.
“Roundy’s was trying to set themselves up to sell the company,” Livingston said. “Everybody I talked to that was interested in buying the company backed off. What I was told was Roundy’s was asking for too much money for a company with declining market share. You can’t grow market share with this onslaught of competitors.”
Roundy’s is now concentrating on renovating its existing stores and is only planning to open a few new stores in Waukesha, Wauwatosa and Mequon. The new competitors and Roundy’s already dominant market position have discouraged it from adding too many new stores, Livingston said.
“(Roundy’s) doesn’t have Kohl’s and Jewel to pick on anymore,” he said. “Kohl’s, Jewel and Sentry were ineffective competitors. Pick ‘n Save really made sport of them.”
The Holiday Inn Express hotel at 3823 Germaine Ave. is planning an expansion. The hotel will add a third floor with 36 additional hotel rooms, bringing its total number of rooms to 98. The project also includes a new meeting room. Construction is expected to begin soon and be complete next spring. Sheboygan has seen an increase in hotel development recently. A proposed 81-room Hampton Inn hotel is planned along South Taylor Drive, a few blocks south of the Holiday Inn Express.
A 17,000-square-foot MC Sports sporting goods store opened recently in the Deertrace shopping center at 3650 Highway A, Kohler. This is the eighth Wisconsin location for Grand Rapids, Mich.-based MC Sports.
Brown Deer-based Bank Mutual Corp. recently opened a new branch at South 84th Street and Forest Home Avenue in Greenfield. It is the bank’s 79th branch office.
A 3,500-square-foot Ragman store recently opened at Bayshore Town Center. The store sells clothing and accessories for men and women.
Commercial real estate Transactions
Hellmann Worldwide Logistics Inc. leased 16,168 square feet of industrial space at 440 Bell Ct., Oak Creek, from Liberty Lane LLC.
Gerald Nell Inc.
Favorite Healthcare Staffing Inc. leased 1,140 square feet of office space at 2505 N. 124th St., Suite 115, Brookfield, from G&N Investment Company.
Line X – Milwaukee leased 4,200 square feet of industrial space at 3725 N. 126th St., Unit B, Brookfield, from Sunset Investment Co.
Pediatric Psychology Associates Inc. leased 3,380 square feet of office space at 3636 N. 124th St., Wauwatosa.
Oneline Trading Academy leased 3,380 square feet of office space at N96 W17035 Division Road, Germantown.
Camera Case leased 2,150 square feet of industrial space at 410 Winfield Ct., Slinger.
Jewish Family Services leased 1,006 square feet of office space and Dr. Sheryl Dolezal and Dr. Daniela Jaramillo leased 1,820 square feet of office space at 5800 N. Bayshore Dr., Glendale.
J&R Ventures LLC leased 1,197 square feet of retail space at Highway 31 and Highway 20 in Mt. Pleasant.
Bray Associates Architects Inc. leased 2,706 square feet of office space at 215 N. Water St., Milwaukee.
Kelly Corp. leased 14,000 square feet of industrial space at 2140 S. 55th St., West Allis.
Mid-America Real Estate
Topper’s Pizza leased 2,023 square feet in the Kenilworth Building on Farwell Avenue in Milwaukee from Kenilworth Retail LLC.
Sonic America’s Drive-In leased 0.51 acres at Miller Park Shoppes, 2100 S. Miller Park Way, West Milwaukee, from Miller Park Way Limited Partnership.
Great Clips leased 720 square feet of space in Elmbrook Plaza at the northwest corner of North 124th Street and North Avenue in Brookfield from Elmbrook Plaza Brookfield LLC.
Mid-America Real Estate
Jimmy John’s leased 1,838 square feet of space at 141 N. Main St., Racine, from Johnson Redevelopment Corp.
Jimmy John’s leased 1,600 square feet of space in River Point Shopping Center at the southwest corner of Brown Deer Road and Port Washington Road from North Shore Centers Partners.
Aspen Dental leased 3,600 square feet of space at Washington Square Shopping Center, 3118 S. Business Dr., Sheboygan, from Bayside Development LLC.
Cousins Subs leased 1,838 square feet of space in the Marketplace at Pabst Farms, 1380 Pabst Farms Circle, Oconomowoc, from Pabst Farms Market Place LLC.
Securant Bank & Trust leased 3,289 square feet of space at Autumn Grove Plaza, 12850-960 W. Bluemound Road, Elm Grove, from Towne Realty Inc.
Cynthia Renee & Company leased 1,540 square feet of space at Highland Plaza, 8624 Brown Deer Road, Milwaukee, from 8600 Brown Deer LLC.
JCPenney leased 9 acres in the Shoppes of Prairie Ridge on Highway 50 in Pleasant Prairie from BG-MA Pleasant Prairie LLC.
NAI MLG Commercial
Premier Billing Services LLC leased 1,417 square feet of space at 2428 N. Grandview Blvd., Waukesha, from Merchants Grove Group LLP.
Phases Hair Design Inc. leased 1,507 square feet of space at 15460 W. Capitol Dr., Brookfield, from Glenwood Executive Centre Ltd.
Select Staffing leased 1,400 square feet of office space at 10633 W. Oklahoma Ave., West Allis, from Chozen Properties LLC.
Elements Therapeutic Massage leased 1,500 square feet of space at 2810-40 W. Rawson Ave., Franklin, from Landmark Rawson LLC.
Albany International Corp. leased 14,400 square feet of space at 2100 Washington Ave., Grafton, from Oakridge Equities LLP.
Halloween Express leased 7,380 square feet of space at 427-505 Silver Spring Dr., Glendale, from Capital Ventures LLC.
Dominion Medical Management leased 7,208 square feet of office space at 10850 Park Place, Milwaukee, from Interstate Partners.
Jefferson Wells leased 7,999 square feet of office space at 330 E. Kilbourn Ave., Milwaukee, from Tishman Speyer.
Educational Credential leased 17,670 square feet of office space from Schlitz Park Associates II.
BDS Tax LLC leased 1,080 square feet of retail space at 5812 W. Capitol Dr., Milwaukee, from 60th & Capitol Joint Venture.
AMERCO Real Estate Company purchased a 175,000-square-foot industrial building at 1570 S. 1st St., Milwaukee, from Grede Foundaries Inc.
McGourthy Bros LLC purchased a 42,242-square-foot industrial building at 704 10th Ave., Grafton, from JMC Holdings LLC.
WMV LLC purchased 7.8 acres of land at 955 Maritime Dr., Port Washington, for $270,000.
Elims LLC purchased the 20,000-square-foot industrial property at 3845 N. Bremen St., Milwaukee, for $520,000.
NAI MLG Commercial
The Village of Grafton purchased the 12,000-square-foot former Brook Stevens Design building at 860 Badger Circle, Grafton, from BSDA Design House LLC.
RT Real Estate of Southern Wisconsin LLC, dba Ruby Tuesday, purchased 1 acre of land on at outlot of Southridge Mall on 76th Street in Greendale from RE Real Estate of Southern Wisconsin LLC.
DEP Investors LLC purchased 5.6 acres of land at 4710 Basswood Dr., Franklin, from SFP Group LP.
McGourthy Brothers LLC purchased a 42,242-square-foot building at 704 10th Ave., Grafton, from JMC Holdings LLC.
Plymouth-based Jim Pankow Inc. was awarded a contract from North Shore Bank to remodel and expand a farmhouse at 2301 Wisconsin Ave., Grafton, into a 4,553-square-foot bank building.
Wauwatosa-based Selzer-Ornst Construciton Co. has been selected to complete the remodeling of the corporate Verizon store at the Summit Place office complex in West Allis.
Brookfield-based Briohn Building Corp. recently completed the design and construction of a 32,500-square-foot multi-tenant building on Commerce Centre Drive in the Town of Lisbon for Commerce Centre Partners LLC. Briohn was also selected to construct a 127,254-square-foot renovation for TAPCO Traffic & Parking Control Company Inc. at 5100 W. Brown Deer Road, Brown Deer. In addition, Briohn was contracted to build an 11,000-square-foot tenant improvement for M&I Treasury Management at the Milwaukee Center, 111 E. Kilbourn Ave., Milwaukee. Briohn has also been contracted to design and build an 8,000-square-foot tenant improvement for Fastenal in the new Pabst Farms Development LLC multi-tenant building at 940 Blue Ribbon Circle North, Oconomowoc. Briohn has also been contracted to design and build a 4,150-square-foot interior remodeling for McKey Perforating at 3066 S. 166th St., New Berlin.
Menomonee Falls-based Wahlgren-Schwenn Inc. recently completed construction of a 13,340-square-foot multi-tenant office building at 3400 S. 103rd St., Greenfield. The building was developed by WDP Greenfield LLC, a partnership of West Development Partners and Wahlgren-Schwenn. Wahlgren-Schwenn also recently completed a 8,050-square-foot tenant suite for Heat Cheer LLC at W248 N5250 Executive Dr., Sussex. Wahlgren-Schwenn is building a 10,000-square-foot expansion for AAA Sales & Engineering at 1120 W. Northbranch Dr., Oak Creek. Wahlgren-Schwenn also is building a new 3,500-square-foot Milwaukee bureau for Wisconsin Public Radio on the 7th floor of the Reuss Federal Plaza building at 310 W. Wisconsin Ave., Milwaukee.