The most rugged 12 months in recent grocery industry history was not only marked by high unemployment, significant deflation, cautious consumer spending (for even those who could afford to spend) and a continuation of fierce competitiveness and an overstored landscape, but the period from April 1, 2009 through March 31, 2010 created a real separation of performance among the 65 retailers measured in Food Trade News’ annual market study.
Actually, there were three tiers to assess. Most supermarkets, drug chains, c-stores, mass merchandisers and club operators fell into the crowded middle – where identical store sales were flat or slightly negative. Then there was the handful of retailers that performed significantly better than the median – ShopRite, Giant/Carlisle, Weis, Wawa, Target (PFresh) and Walgreens. The third group consisted of those companies that demonstrated neither a value nor service image to the consumer – Acme, A&P/Pathmark, Genuardi’s and Rite Aid – and sales and share at these retailers fell significantly lower than the norm.
And for the first time in the 32 years that Food Trade News has published its annual retail market study, overall food and drug sales in the 55 county region (covering from Northern New Jersey through Central Pennsylvania) declined from the previous year. Spending was conservative and deflation was that profound.
Once again, ShopRite (PriceRite) dominated the field, growing sales at its 169 units from $7.48 billion to $7.92 billion, by far the healthiest same store sales increase in the entire region. The members of Wakefern who trade as ShopRite continued to gain share by providing a complete package of offerings to their customers – big, variety-oriented, well- run stores, solid everyday pricing and a high level of service by the owners/operators. Not only was ShopRite again a pacesetter, it was certainly helped by competing against some weakening retailers.
One of those troubled rivals was A&P/Pathmark (Super Fresh, Food Basics) which seemed to be writing a sequel to the great Jimmy Breslin novel of a generation ago – “The Gang That Couldn’t Shoot Straight.”. During the past 12 months, the Tea Company saw both The Tengelmann Group and Yucaipa Cos. infused more cash into the company and a third investment group, Altheia Group gought a 25 percent stake in the beleaguered Montvale, NJ based chain. The retailer also fired its CEO Eric Claus in October and ultimately replaced him with former Pathmark CFO (and Nash Finch CEO) Ron Marshall. It seems as though Yucaipa and Marshall are now leading the Tea Company down a path of cost cutting and austerity which could possibly lead to a sale of key assets down the road. On the playing field, A&P’s performance was rotten. Sales dropped more than 5 percent and A&P, despite some very good locations, couldn’t make a connection on value, service or execution in either its key Delaware Valley or Metro New York market. Sales in its 190 stores were $4.2 billion for the year.
Moving into third place this year was Giant/Carlisle, which had another solid stanza. Giant, too, saw some management changes at the president’s slot – Sander van der Laan returned to parent Ahold in The Netherlands and veteran Giant executive Rick Herring replaced him. Also, Carlisle will be the centerpiece of the entire Ahold USA organization when the big retailer consolidates many of its functions to Central PA later this year. For the year, Giant/Carlisle increased sales from $3.88 billion to $4.1 billion while adding two new stores (121) to its growing fold. The company was able to stay ahead of the curve for many of the same reasons as market leader ShopRite – everyday value, consistently good store conditions and solid variety throughout the store.
Moving to fourth place among all retailers in the region was Wal-Mart, where same store sales were only slightly ahead of the curve, but volume jumped from $2.82 billion to $3.03 billion, primarily on the strength of opening four new units, all SuperCenters. The Behemoth now operates 126 stores in the region, 74 of them combo units.
Giant/Carlisle achieved a lot of its success in the Delaware Valley, where it continues to gain share, as does ShopRite. Much of both retailers’ growth came at the expense of one-time market leader Acme, which had a struggling year. The Malvern, PA unit of Supervalu, fared poorly in almost every measurable metric – in sales, customer count and transaction size – and some intangibles as well. Morale at store level (and at headquarters too) plummeted as the retailer continued to cut layers of management jobs and reduce labor at its stores as well. And everyday pricing was significantly higher than most of its competitors, not what the consumer wanted in these tough economic times where competition is fierce and diverse. The Acme numbers reflected the problems. Sales declined from $2.9 billion to $2.55 billion as store count was reduced from 122 to113.
CVS, in sixth overall place, snatched the drug chain lead in the market from Rite Aid. The Woonsocket, RI based chain now operates 553 units in the Mid-Atlantic, two more than last year, good for sales of $2.28 billion.
While CVS sales increased slightly, Rite Aid fell prey to tough competition both from CVS and fast growing Walgreens, but was also hurt by its own poor execution. While it operates the most drug stores of any operator in the market (655 units), its per store average sales were considerably weaker than its two main rivals. Sales for the year slipped from $2.36 billion to $2.27 billion as the Camp Hill, PA based firm operated 12 fewer units.
Wawa once again proved why it is one of the finest convenience store organizations in the country. While it opened just three new units this year (it now operates 463 c-stores), sales increased from $2.06 billion to $2.23 billion. The company continued to produce the highest per store average sales of any convenience store chain in the country – $4.83 million per unit.
Enjoying its best year in quite a while was Sunbury, PA Weis markets. Under the stewardship of new CEO Dave Hepfinger, Weis’ sales rose from $1.71 billion to $1.74 billion with the same 112 stores. Weis’ gains were achieved by driving everyday price value and by improved store conditions.
Rounding out the top 10 leaderboard was Stop & Shop. Its 55 New Jersey stores amassed $1.46 billion in sales (up from $1.36 billion). As a part of Ahold’s restructuring, Stop & Shop’s Garden State units will now fall under the company’s newly created Metro New York division. That division will be led by Stop & Shop veteran executive Ron Onorato.
Another retailer that fared well during these challenging times was Target, which converted more than 40 of its stores to its hybrid PFresh model, featuring expanded groceries, refrigerated and frozen and the addition of a produce department.
Others that saw overall sales beat the regional average were Walgreens, which acquired Duane Reade earlier this year, and Wegmans which opened the highest volume new store in the market (Collegeville, PA).
There were some other key executive changes in the market as well. Other than the changing of the guard at A&P, Acme named Dan Sanders as president after former president Judy Spires left to become CEO of Kings Supermarkets, based in Parsippany, NJ.
Sales leaders by class were: supermarkets – ShopRite/PriceRite (169 stores, sales of $7.92 billion); drug chains – CVS (533 stores, sales of $2.28 billion); convenience stores – Wawa (463 stores, sales of $2.23 billion); mass merchandisers – Wal-Mart 126 stores, sales of $3.03 billion); and club stores – BJ’s Wholesale Club (37 stores, sales of $1.12 billion). Additionally, the six military commissaries in the 55 county market garnered sales of $91.6 million.
Taken as a group, the, 64 retail organizations operating collectively in the region operated 4,723 stores with sales of $47.63 billion in grocery, HBC, general merchandise, pharmacy, tobacco and floral products.