The future is unknown for the building that currently houses Denison’s Kroger store once the grocer closes its doors for the final time later this spring. The grocery chain recently announced plans to close the long-time location after nearly 60 years of business in downtown Denison.
Officials with the Denison Development Alliance said the vacant storefront will bring unique possibilities for redevelopment, though what that will be remains in question.
“First, we don’t know when they may sell it,” DDA Vice President William Myers said. “They may put a deed restriction on that building to keep it from being a grocery store.”
Myers said it is fairly common for companies to place similar restrictions on properties once they leave to prevent competition from moving in to the location and the market.
As an example, a similar clause was included in the deeds for the former Texoma Medical Center complex after the hospital moved to its current location along FM 691 and U.S. Highway 75 in 2009. These restrictions kept the building from being used for medical purposes, and it was ultimately demolished in 2018 following redevelopment efforts by the DDA.
In the event that a deed restriction is not put in place, Myers said the building could attract a grocer tenant, but it would likely be a specialist grocer. As an example, he noted that several chains, including organic and natural grocers, often move into former grocery storefronts as a business model.
Even if the storefront is not used as a grocery store, Myers said the building still shows promise for other uses. He said it could be used for general retail, soft goods and other franchises. However, Myers said the 29,000-square-foot building likely would be broken up into smaller pieces for multiple tenants.
Redevelopment likely would be difficult as there has been interest in recent years in second- and third-generation buildings by prospective tenants and developers. As an example, Myers said he is often called by prospects interested in a former grocery store that is currently occupied by the Salvation Army near the Kroger location.
In emailed statements, officials with The Kroger Co. cited profitability as a reason for the closure.
“We have worked to improve the store with various upgrades, products and great talent,” April Martin Nickels, corporate affairs manager for The Kroger Co., said via email. “However, despite our best efforts, we were unable to improve profitability. We never want to close any store; however, we cannot continue to operate stores that underperform for sustained periods.”
Myers said Denison and DDA officials had spoken with Kroger in hopes of having the store repaired and remodeled to bring it up to current standards and allow it to compete with other grocers in the area. These efforts included letters sent by the city in 2013, and again in 2016.
“Kroger appears to have a great foundation to build on, and the current $4B+ company-wide investment in upgrades, efficiencies and new facilities is certainly impressive,” then-Mayor Jared Johnson wrote in a 2016 letter to Kroger corporate representatives. ” … Unfortunately, Kroger’s values are not being upheld in Denison and fall well short of all expectations.”
These efforts resulted in repairs being done at the building to improve the appearance, but Myers said he felt those improvements could have gone further.
“It could have been more updated and modernized like what Albertsons did,” he said. “It certainly was a nice store, but some customers were going to Sherman because it was a nicer store. We thought and think Denison shoppers deserve more.”
Impact to the local market
Despite the news of the closure, the decision to close stores is only expected to apply to the Denison location, and will not affect the Sherman market, Marsha Gilford, regional corporate affairs director for Kroger, said Friday. The chain also announced plans to close a location in Grand Prairie this week.
Kroger officials said store employees would be offered severance based on union contracts and corporate policy. However, Gilford said the severance packages are proprietary and could not give additional details on it. Likewise, officials could not confirm how many employees would receive severance.
Kroger officials said transfer to other stores would be possible for the employees at the store, but could not give details on how many would be able to transfer to the Sherman location.
Myers said there were no firm numbers on how much of an economic hit the closure would be to the city’s sales tax revenue, as those details are often kept confidential by the state. However, he said the sales tax revenue would likely go to other grocers both inside and outside of Denison.
Many shoppers will likely transition to using the city’s Walmart, located at FM 120 and U.S. Highway 75, or the recently-renovated Albertsons store, which is only blocks away from the Kroger store. Others could go to Sherman for their grocery needs.
“If this was the last grocery store closing down in downtown, I think it would be much more substantial,” Myers said in regard to the economic impact.
Despite the loss, Myers said the Kroger announcement may have opened the door for other grocery chains to move into the Denison market. For the past few years, the DDA has received some interest from other chains that have considered expanding into the growing Texoma market. However, most of these options were located closer to the U.S. Highway 75 corridor and western portions of Denison.
With the closure of the Kroger store, Myers said the city could see a competitor move in to fill that void in the near future.
“I would say it (the odds) just increased with Kroger closing,” he said.