Small grocers battle to stay alive in Sacramento area

It hardly seems like a formula for grocery greatness: small store, no frills, limited selection. And yet, some of the oldest independents in the Sacramento region have made it work for decades.

Bantamweights like Bing's Market in Rio Linda, Vic's Discount Market in South Land Park and Lee's Food King in Sacramento and Galt battle on, despite competition from heavyweight chains like Raley's, Safeway and Wal-Mart.

But their numbers are dwindling. The share of the Sacramento market captured by independent grocery stores is fading. And a billion-dollar competitor is coming: Fresh & Easy Neighborhood Market. Its aim is to grab some of the small shops' turf with its own version of the small store.

"What does that tell you?" said Victor Ung, co-owner of the 6,000-square-foot Bing's Market on Rio Linda Boulevard in rural Robla, north of Interstate 80. "They realize what we've known for years, that they've got to get closer to the customer and stop moving people through these huge stores like cattle."

The grocery business, notorious for its thin 1 percent to 2 percent profit margins, is already plenty tough for the small player.

The number of independent grocers, defined as those with 10 or fewer supermarkets, fell from 61 to 59 last year in El Dorado, Placer, Sacramento and Yolo counties, according to a February report by Trade Dimensions Market Scope. The Westport, Conn., industry tracker also reported that their Sacramento market share slipped to 11.1 percent last year, down from 12 percent.

Meanwhile chains with 11 or more stores controlled 88.9 percent of the region's grocery market, up from 88 percent in 2006.

Raley's and its Bel Air and Food Source brands led all grocery sellers, its 52 stores taking in 34 cents of every dollar spent on groceries in El Dorado, Placer, Sacramento and Yolo counties. Wal-Mart Stores Inc., with four local stores that combine a supermarket with a discount department store, is the fastest-growing grocer in the region.

"Sacramento's a tough place to do business," said Rocky Goering, who manages Vic's Discount Market with a résumé of 30 years working for independents and chains. "When you're an independent, you're working with some added disadvantages. You don't have the buying power of the big boys. You don't have the marketing dollars. You can't pour money into a big store remodel."

The competition is so stiff that when Goering took over the store last year, he advised new owner Jay Saini, a service station operator with no grocery experience, to avoid an aggressive price-comparison ad strategy.

"I told him, 'We're not going to hurt the big boys. We just want our piece of the pie,'" Goering said during an interview in his store's bakery section. "That's the best you can hope for."

Despite their disadvantages, independents often survive by holding down operating costs. Some belong to co-ops to leverage their purchasing power. Others, like Vic's Discount Market, employ cheaper nonunion help.

Many long-timers, like Victor and Elizabeth Ung, the brother-sister team behind Bing's, own their buildings or hold inexpensive long-term leases. Their father, Bing Ung, built the modest green brick- and wood-sided market in 1960 after seven years in a building across the street.

The place hasn't changed much since then. An attended meat case anchors the store. A small produce section in one corner has a little bit of everything in season, from asparagus to zucchini. The black-and-white floor is clean but worn in spots from years of traffic. The store handles between 500 and 700 transactions per day, according to the owners.

"There's a danger for some older places when a big company decides they can capture a region," said Long Beach-based retail expert Bob Phibbs. "No one wants to shop in a dingy place, especially for food."

Sometimes competition spurs independents to reinvent themselves. Nugget Market, the 82-year-old chain based in Woodland, operated four nondescript grocery stores before making an industrywide splash in 2000 with its contemporary European market format.

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