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Grocer to launch food fight

Hannaford reaches for more Mass. market

(Correction: Because of a reporting error, a story in yesterday's Business section about Hannaford Bros. Co.'s expansion of grocery stores in Massachusetts gave a wrong name for the company's private food brand. It is Inspirations.)

TAUNTON -- Hannaford Bros. Co. takes on its fiercest food fight this weekend as it opens two of its biggest stores here and in Easton in its latest grab for Massachusetts shoppers.

The company, which more than tripled its Massachusetts locations after the takeover of Victory Super Markets in 2004, is now the fifth largest grocery chain in the Commonwealth, moving ahead of Whole Foods, Roche Bros., and Price Chopper during the last year.

The Scarborough, Maine, chain, best known for shirking coupons and weekly specials in favor of ''everyday low prices," will unveil stores Saturday that feature an expanded seafood section, plenty of samples, and a dining expert who will help customers with recipes and meal planning.

''Hannaford is committed to becoming a major player in Massachusetts," said Rick Meyerkopf, Hannaford's central division vice president of retail operations. ''This is one of the most competitive markets we're entering but we feel like we have a compelling offer."

For years, Hannaford has eyed the lucrative Massachusetts market and even made a stab at it a decade ago with its HomeRuns delivery business in Boston. But that venture wasn't profitable enough, and so, like many grocers anxious to penetrate the area, Hannaford bought its way in with the purchase of 17 Victory Super Markets. (The company previously had six stores near the New Hampshire border).

Buying local supermarkets is a popular, if not the only way, for grocers like Hannaford to establish a presence in the Boston region because of high real estate costs and intense competition. The eight largest supermarket operators in the Boston area control 85 percent of the business, according to research firm Metro Market Studies, making the region hard to penetrate.

Earlier this week, the ownership of Shaw's and Star Market changed -- for the second time in less than two years -- when parent company Albertson's was sold for $9.7 billion to a team that included Supervalu Inc. and CVS Corp. Hannaford itself was purchased by Belgium's Delhaize Group in 1999, and Ahold of the Netherlands bought Stop & Shop, the biggest grocer in Massachusetts, in 1996.

''The best retailers are still making a lot of money in the marketplace," said Mark Husson, an analyst with HSBC Securities. ''If you can get the infrastructure there, you can load up on sales."

In some ways, the Massachusetts area is particularly attractive to supermarket chains because of what it's lacking: lots of Wal-Marts. With its vast supercenters, Wal-Mart Stores Inc. has catapulted to the top of the US supermarket business with an estimated $80 billion in annual grocery sales. But Wal-Mart hasn't gained a foothold in Massachusetts, analysts say, making Hannaford and others eager to bulk up here as a preemptive strike.

''We wanted to make sure as Wal-Mart expands that we have our act together," Hannaford's Meyerkopf said. ''Because when Wal-Mart comes to an area we're in, we lose at least 5 percent of sales in the first year."

That has meant fine-tuning Hannaford's approach over the past few years, introducing new concepts like its private brand Inspirations line of gourmet foods, hiring in-store dining experts, and increasing produce and organic items. In its new stores, Hannaford has created individual counters at the seafood and meat departments to foster customer interaction.

While its Taunton and Easton locations are about 56,000 square feet each, Hannaford is also designing 35,000-square-foot stores to make it easier to open in communities where real estate is hard to come by. It runs counter, in many ways, to the super-center approach adopted by many grocers from Shaw's to Wal-Mart that can require up to 80,000 square feet.

A Shaw's spokeswoman declined to comment on Hannaford's expansion plans, except to say that Massachusetts is a very important market for Shaw's and it plans to continue to grow here.

''On some level, we think customers prefer a smaller store to something more cavernous that's so large to walk through," Meyerkopf said.

Last fall, the company completed converting each Victory Supermarket into a Hannaford, deciding to keep the Hannaford name because it is recognized and has brand equity in Massachusetts. Meanwhile, the chain is remodeling at least three stores this year in Middleborough, Marlborough, and Taunton, and eventually plans to revamp all of the acquired shops.

Later this year, Hannaford plans to open another store in Lowell and will continue to scout for new locations and potential acquisitions in the state. The company would not provide specifics on other future openings.

''Delhaize sees growth in this market and feels Hannaford is the right one to expand that can compete against Stop & Shop and others on price and product," said Mike Berger, editor of the Griffin Report of Food Marketing, a Pembroke trade publication. ''Who's going to win? We won't know for a while."

Jenn Abelson can be reached at abelson@globe.com.

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