Smith's market enters tight retail market with a smaller than anticipated incursion.

Smith's market enters tight retail market with a smaller than anticipated incursion 

Smith's Food & Drug Centers is trickling into the Inland Empire this year and there are those who say the Salt Lake City-based supermarket chain has put on hold its original plans to descend on the region in a downpour.

Store officials deny any such thing.

Smith's originally announced an extensive expansion in Southern California with an emphasis on the Inland Empire, but it is now delaying opening some stores by up to three years, sources said.

One competitor gave a reason for the change: Smith's is slow to open stores because it can't get the needed sites. Therefore, Smith's can't open stores in high concentrations, said Dennis Eck, chief operating officer and vice chairman of Arcadia-based Vons Co. Inc.

Smith's operates 95 stores in the inter-mountain and southwestern parts of the United States. Its stores now average 58,700 square feet, but each new Southern California store will be between 75,000 and 80,000 square feet. Smith's first Southland store opens in Oxnard on Sept. 12.

On a larger scale, another source said, Smith's changed its goals not only for its expansion into the Inland Empire, but for its entire re-entry into Southern California.

Smith's announced in August 1989 that it would open 60 supermarkets in the Southland by the end of 1992, with an emphasis on expanding into the Inland Empire. But now Smith's officials are saying all 60 stores will not be open until 1995. Consequently, not as many Smith's stores are opening up in the region in the near future, said one industry source who requested anonymity.

But a Smith's spokesman disagreed. The company is basically on target with its Southland expansion plans, said Ken White, vice president and regional manager of Smith's. The company wanted to open 11 Southland stores by the end of this year, and so far is six weeks off its target date, he said.

One analyst said the differing views on Smith's expansion are matter of semantics. Since Smith's plans to open the stores eventually, store officials are correct in their assertions and so are sources who say Smith's officials are off schedule, said Duane Norris, vice president of New York-based Salomon Bros.

Furthermore, it is not unusual for supermarket chains to fall short of expansion goals, and a delay in store openings is not inherent to Smith's, Norris said. "The whole industry has slowed down somewhat," he said.

One reason for the Smith's slowdown in particular is rivalry it's facing from other supermarket chains in the Inland Empire, such as Stater Bros. and Vons Cos. Inc., Norris added.

Smith's is entering an already hotly contested supermarket field in the Inland Empire. "That's the most competitive area in Southern California," White noted.

Other industry experts, however, say the entire Southern California region is a hotbed of competition, and supermarket rivalry in the Inland Empire is no greater.

Competition in the Inland Empire is the same as it is in Los Angeles, said Jack Brown, chairman, chief executive officer and president of Colton-based Stater Bros., which operates 75 stores in the Inland Empire.

Another rival said that, because Smith's is not opening an overwhelming number of stores in the region, competition would not take place on a grand scale. Vons will be dealing with the Smith's entrance at the local level, or on a store-by-store basis, Eck said.

Part of the reason Smith's is focusing on the Inland Empire is that the region is close to its distribution facilities in Salt Lake City and Phoenix, Norris said.

Meanwhile, overall retail growth in the Inland Empire is slowing down because of a lack of available financing. "Projects that would historically be built aren't," said Mark Koenig, vice president at the Riverside office of CB Commercial Real Estate Group.

Because of the current credit crunch, lenders are asking that 60 percent to 65 percent of a planned project's space be pre-leased before they supply financing, said Jon Friesen, retail specialist for the Riverside office of Grubb & Ellis real estate brokerage.

Leasing of boutique space is also slow, Koenig added.

So, instead of local developers building new shopping centers and malls, major retailers from outside the area who are coming to the Inland Empire supply their own financing to set up shop.

Wal-Mart opened its first Inland Empire store in Victorville in January 1990. Future stores have also been announced for Rancho Cucamonga, Fontana, Colton, Perris and Redlands, said Wal-Mart spokeswoman Kristin Stehben.

"The major tenant activity out here is very brisk," Koenig said.

The Inland Empire, unlike other parts of Southern California, is still in an expansion mode, and that's why retailers are looking toward the region, Friesen said.

Even in the highly competitive supermarket industry, there is still room to expand in the Inland Empire, added Steven Koff, president of the Southern California Grocers Association. But although the region is competitive, Smith's presence will not make the area oversaturated with supermarkets, he said.