There are only five Basics stores among the 330 supermarkets in the Washington area, but the Grand Union discount outlets are so successful they've started a revolution in the local grocery business.
The no-frills, low-priced Basics outlets have enabled Grand Union Inc. to increase its share of the local food business by 50 percent in the past year, according to a new survey of the local grocery market.
It is the success of Basics that spurred Giant Food's "warehouse pricing" campaign and set off the current supermarket price war, says Jeffrey Metzger, publisher of Food World, a Columbia-based food trade paper that annually estimates the volume of local supermarkets.
Yesterday Safeway opened its first two Food Barn warehouse stores in Silver Spring and Alexandria, taking on Basics head to head.
The four Basics stores in Prince Georges County all rank in the top 10 stores in sales among the more than 1,100 supermarkets in the Food World survey of the Baltimore-Washington market.
The two busiest supermarkets in the area are Basics stores in Marlow Heights and Glenn Dale, with sales of $30 million and $27 million a year, says the publication, whose annual survey is considered the most reliable measure of what's going on in the local food business.
Safeway's newest store opened recently in the Hechinger Mall on H Street NE is challenging Basics for the top volume title, Metzger says. The inner-city Safeway rang up sales of $600,000 during its first week, breaking all grand opening records for Safeway's division.
The Hechinger Mall Safeway is setting its volume records based on sheer size. It is the biggest store Safeway has ever built, with 62,000 sq. ft. of space, 14 checkouts and more than 500 shopping carts.
If sales at that store keep up the opening pace, it will replace the Safeway on Wisconsin Avenue just north of Georgetown as that chain's highest volume local store. With sales estimated at $22.1 million last year, the Wisconsin Avenue Safeway is well behind Giant Food's biggest producer, on Route 50 in Sterling, that does an estimated $25.5 million a year.
Such so-called superstores are one of the major trends in the food business, but Metzger contends the most important thing happening in Washington area supermarkets this year is the cut-rate, warehouse price approach exemplified by Basics.
Basics was started as Grand Union's effort to stop being an also-ran in a highly competitive region dominated by Giant and Safeway.
Food World estimates that Giant Food now controls 37 percent of the Washington supermarket business, with sales of just over $1 billion from its 88 stores in the around the District of Columbia.
Safeway has an estimated 28 percent of the market with sales of $764 million from its 129 local stores. Both big chains increased their sales and their share of the market last year, despite what Metzger calls "stagnant population, too many stores and more ferocious competition."
Safeway's estimated market share increased from 27.8 percent to 28 percent, while Giant Food jumped from 33.9 percent to just over 37 percent, a huge gain in the highly competitive business.
Metzger estimates that Giant has added half a point to its share since it started its "warehouse pricing" drive in April, reducing the price of more than 1,500 staple items. The cuts were meant to overcome possible consumer backlash against Giant's decision to stop marking prices on individual items and to rely on its computerized electronic checkouts to read prices off the striped universal product code on packages.
Market share is the way most major retailers keep score on their success. With inflation pushing up prices, volume figures alone aren't always a reliable indicator of how a retailer is doing. Many stores -- especially nonfood retailers -- have reported record sales figures every year measured in dollars, while their business has actually declined when measured in number of units sold.
Food World gets its estimates of sales and shares by talking to executives of supermarkets and of the companies that supply the chains with merchandise.
The biggest market share gainer in the past year has been Grand Union, thanks to the Basics stores.
Grand Union edged out A & P to become the number three chain in the market, with a 9.8 percent share and sales of $268 million, to A & P's 6.7 percent share and sales of $182 million.
A year ago Grand Union had sales of $161.5 million and just over 6 percent of the market, to A & P's $197 million and 7.4 percent share. Virtually all of Grand Union's gains have come from the Basics stores, while sales of the conventinal Grand Union supermarkets and the company's Colonial stores in southern Virginia were flat.
In Prince Georges County, the four Basics stores account for 16 percent of the supermarket sales, with volume of $101.6 million. The 10 Grand Unions in the county did an estimated $45 million in business accounting for another 7.2 percent of sales. Together Grand Union and Basics did slightly more business in Prince Georges than Safeway's estimated $143 million sales and 22.9 percent of the market.
Among independent food retailers -- those with less than 10 stores -- the local leader still is Magruder's, which checked out an estimated $60.8 million from its four units. Jumbo Food Stores ranked second among local independents, with sales of $52.6 million from six stores.