Photos by Stephanie Klein-Davis | The Roanoke Times

Though people frequent the prepared food and produce section of Ukrop's in Roanoke, the company's president said not enough people explore the rest of the 58,000-square-foot grocery store.

Michelle Sublett, a stay-at-home mother of three children in Roanoke County, shops with her youngest daughter, 16-month-old Claire, at Ukrop's, which has its headquarters in Richmond. Sublett, a Richmond native, was thrilled when the grocer announced it was building a Roanoke store.

The shelves are stocked, but the aisles aren't busy Wednesday at Ukrop's Super Market on Franklin Road in Roanoke. Eighty-six-year-old Jesse Maxey of Bassett, looking for some specialty items, said he has been to Ukrop's only a couple of times because of the distance.

The future is uncertain for a Richmond grocery chain that arrived in Roanoke 18 months ago amid much fanfare.

An undeveloped retail center, a poor economy and competition from other grocers are thorns in the side for Ukrop's Super Market, a family owned supermarket chain that opened its doors in Roanoke in June 2007.

This week, Bobby Ukrop, president and chief executive officer of Ukrop's, said the grocer cannot stay in Roanoke if sales do not improve.

"For us to continue, we need to substantially increase our business," he said late Tuesday in response to a letter that Ukrop's mailed to its customers in the Roanoke and New River valleys within the past week.

He stopped short of saying that the supermarket was in danger of closing.

"Right now, we're working to build the business. I can't tell you what's going to happen down the road," Ukrop said.

There's much riding on the success of Ukrop's in Roanoke, a 58,000-square-foot store with an underground parking garage. It was carved out of a vacant lot at the corner of Franklin Road and Wonju Street for a retail center named Ivy Market.

Roanoke has promised the developer, IMD Investment Group, $9 million in tax incentives over 15 years for opening Ukrop's and an adjacent Walgreens drugstore. But before IMD can receive taxpayer funds, Ivy Market must produce $600,000 in tax revenue each year. The company, headed by Bland Painter, only can receive the amount each year that the stores generate up to $600,000, according to the deal crafted in 2004.

The first phase of the Ivy Market project, hampered by numerous construction delays, still isn't complete. Walgreens is under construction, and last month, for the third time, the city council voted to extend the drugstore's required opening date. The store now must open by April 30 for IMD to be eligible for tax incentives. Painter said Wednesday that the store should open early next year.

IMD has yet to receive an incentive payment from the city. The deadline for submitting tax receipts and other information for the first grant year is Dec. 15, said Brian Townsend, assistant city manager.

A potential Ukrop's failure could crumble the incentives deal. If a store is not open and generating taxes, no one, including the city, would get paid, Townsend said.

Walgreens cannot generate $600,000 in taxes on its own, he said. It needs Ukrop's or some other grocery store to help.

"The level of sales activity would be significantly lower [at Walgreens] than what's coming out of a grocery store," Townsend said.

Painter would not comment about how Ukrop's troubles could affect the incentives deal.

"I think you're presupposing things," he said.

Ivy Market's success is paramount to the city largely because the land was previously undeveloped, Townsend said. And the development paved the way for a new retailer to come to the Roanoke Valley.

"Obviously we want to see them [Ukrop's] be successful," Townsend said.

The reasons for the apparent struggles at Ukrop's are varied. In a letter mailed to several thousand Ukrop's customers across the region in the past week, the retailer blames the undeveloped Ivy Market as a reason for slow traffic and sales at the store.

When IMD announced plans to build Ivy Market in 2004, Painter spoke of building adjacent retail shops, which is considered the second phase of the project. The agreement states that by November 2009, that phase should be built, featuring 60,000 square feet of retail space, more parking and additional infrastructure improvements. But at a city council meeting last month, representatives of IMD told the council that it was unlikely that they would make that deadline.

Painter said Wednesday that the poor economy has slowed retail development at Ivy Market.

Ukrop's letter to customers, signed by Ukrop and Jason Woodcock, manager of the Roanoke Ukrop's, reflects on this uncertainty.

"It is disappointing that the Ivy Market Center has not been fully developed," the letter states. "We believe in the viability of this area, but without strong retail co-tenants to draw more traffic to the center, it is difficult to build business as a stand-alone operator."

Ukrop said his vision was that Ivy Market would attract other new retail. With the struggling economy, it's unlikely that new retailers will open stores at Ivy Market, Ukrop said. Walgreens' opening doesn't quell his concerns.

"Ukrop's and Walgreens, that's not a shopping center," Ukrop said.

Packaged with coupons for $5 off $50 store purchases through the end of the year, the Ukrop's letter implores customers to give the grocer another chance.

Business at the Roanoke store's in-store dining cafe is strong, but "people aren't getting into the center of the aisles" to buy basic groceries, such as laundry detergent or cereal, Ukrop said.

He acknowledged that it's difficult to break people's grocery shopping routines. Kroger, with 18 stores, and Food Lion, with 22 stores, dominate the Roanoke and New River valleys. There are eight Wal-Mart Supercenters.

The sales slowdown is specific to the Roanoke Ukrop's store. In the Richmond area, where the grocer has 24 stores, business is fine, Ukrop said.

Pauline Pendleton said she doesn't shop often at Ukrop's because it's too far from her Roanoke County home. She lives in the Hollins area and shops at a nearby Kroger. Pendleton twice has shopped at Ukrop's and that was soon after it opened.

Once-high gasoline prices have deterred a Ukrop's fan from driving to Roanoke from her Christiansburg home.

"I love Ukrop's but have not shopped as frequently as I had hoped to," Mary Arnold, a former Richmond resident, said in an e-mail this week. "There have been times when I picked up specialty items for parties, but as for regular grocery shopping, I haven't had the luxury of enjoying Ukrop's."

Still, Michelle Sublett spends an average of $100 a week on groceries at Ukrop's. A Richmond native, she said she was thrilled when the grocer announced that it was building a Roanoke store.

Pushing a loaded shopping cart through Ukrop's on Wednesday, the stay-at-home mother of three said she particularly likes when Ukrop's associates take her groceries to her vehicle, which is a common service at the grocer's stores.

Sublett, a Southwest Roanoke County resident, said she needs the additional help with her bags. She often totes her 16-month-old daughter with her on trips to the supermarket.

"I drive past two Krogers to come here," she said.

Staff writer Mason Adams contributed to this report.