
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, September 29, 1995                   TAG: 9509290054
SECTION: BUSINESS                    PAGE: A-9   EDITION: METRO 
SOURCE: Associated Press|
DATELINE: SCARBOROUGH, MAINE                                LENGTH: Medium

SUPERMARKET CHAIN LOOKS AWAY TO DIXIE

Hannaford Bros. Co. thinks its newest supermarkets will move plenty of beef and pork, but not as much fresh seafood. Sales of grits will soar, perhaps at the expense of baked beans. And jams and jellies will fly off the shelves like never before.

After satisfying Yankee palates for more than a century, the Maine-based food distributor is analyzing eating patterns in the South as it embarks on an ambitious expansion into Dixie.

``There's quite a different product mix. We have to learn all that,'' said Hugh G. Farrington, president and chief executive officer of the company.

Hannaford, a fast-growing regional company whose $2.2 billion in sales during 1994 elevated it into the Fortune 500 for the first time, is moving into Virginia and the Carolinas, leapfrogging hundreds of miles into a region it enters as a virtual unknown.

Hannaford, which traces its roots to a fruit and vegetable market founded by Arthur and Howard Hannaford in Portland in 1883, aims to become a major player in markets like Charlotte, Raleigh-Durham, Richmond and Virginia's Tidewater region.

The largest food retailer in northern New England, Hannaford virtually saturated its home territory in Maine, New Hampshire and Vermont, forcing the company to look elsewhere for growth opportunities.

It moved into upstate New York nine years ago, opening 19 stores under the Shop 'n' Save name and carving out a robust share of the market in a region from Albany to the Canadian border. The company also operates along the northern fringes of Massachusetts.

``This last recession was pretty deep in the Northeast. It really caught our attention in terms of what kind of company we are and what we would like to be in the future,'' Farrington said.

The company chose Virginia and the Carolinas for its expansion because of their strong economies, growing population and a marketplace that allows his company to offer ``something a little different from what was there now.''

Although it's unusual for a supermarket chain to launch a major expansion into a noncontiguous region, stock analysts say the company's strategy is understandable.

``I suspect they've done the right thing,'' said Mark Husson of J.P. Morgan Securities. ``They had no choice but to move somewhere,'' he said, and Hannaford wisely picked a region that shares some of the operating characteristics of its own.

Hannaford ranks among the most profitable chains in the industry, according to analysts. In a business where profits are measured in pennies on the dollar, the company wins praise for both its use of technology to trim overhead and its corporate culture that has produced a loyal and dedicated work force.

``Hannaford is one of the better managed supermarket chains in the country,'' said Joseph Ronning, an analyst who follows the company for Brown Brothers Harriman.

Nonetheless, Ronning cautions that moving into a new and unfamiliar market is not without its risks. ``It's a move that could be dangerous in so far as the markets are very much different from each other,'' he said.

Farrington doesn't minimize the competition, which includes Kroger, Winn-Dixie, Food Lion, Harris Teeter and Ukrops. But he is looking to Hannaford's ``new format'' stores, which range in size from 45,000 to 64,000 square feet, to win over customers by blending high quality, wide variety and low prices in an attractive environment.

by CNB