2011 Market Study: ShopRite Expands Share; Acme, A&P Plummet In $48.1B Market

The retailer leader board for the 55 county Food Trade News marketing area didn’t change much over the past 12 months, but there were a few notable exceptions as food and drug operators for the most part once again struggled with a fiercely competitive climate which featured too many stores of many different varieties, a still sluggish economy and rapid fire price increases on many commodity-driven items.

And some of those retailers in all channels that beat this year’s identical sales average (negative two percent to positive one percent) were helped in part by the weakness of three retailers that have been on the scene for a very long time – A&P, Acme and Genuardi’s.

Despite the headwinds, one retailer stood above the rest again: ShopRite. The members of Wakefern who operated 160 supermarkets in the 55 county market (there were also seven corporately owned Price Rite units in the region), continued to raise the bar higher than any other merchant in the $48.1 billion marketplace. Sales grew more than $360 million and ShopRite met every competitive challenge it faced head-on and managed to trump virtually all comers. Additionally, ShopRite’s identical store sales ranked first among all supermarket operators. While Wakefern may be the largest wholesale food co-op in the country, it is really a testament to the savvy, work ethic and creativity of its 49 members who make the company the leading retailer in the biggest and toughest marketing area in the nation. In fact this year  ShopRite achieved its first ever “triple crown” – it was the dominant retailer in the 11 county Northern New Jersey market, it ranked first in the 15 county Delaware Valley market, and for the first time ever it surpassed Acme Markets in the eight county Greater Philadelphia market. For the year, ShopRite’s annual sales are estimated at $8.28 billion.

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Giant/Carlisle surpassed A&P this year to gain the second place position in the FTN market. While the modified discounter operated the same net number of stores (123) as in 2010, several replacement units and solid ID sales spurred the unit of Ahold USA, both in Central Pennsylvania and in the Philadelphia area. Volume for the 12 months ended March 31, 2010 was $4.29 billion, a $195 million jump from last year.

Continuing its near-death spiral during the past year was the Great Atlantic & Pacific Tea Company and its plethora of banners – A&P, Pathmark, Super Fresh and Food Basics. After decades of poor management, the retailer finally hit the wall last December – filing for Chapter 11 bankruptcy and assembling a new management team. From a sales and market share perspective The Tea Company closed 37 stores and saw estimated sales drop from $4.2 billion to $3.36 billion at its current 154 units. Expect to see some action concerning the retailer’s Delaware Valley stores before the end of the year. And don’t be shocked if many of those stores in the South Jersey through Delaware band end up closed and on the auction block, much like what occurred with its Baltimore-Washington stores this month. As a company where sales have been tumbling for years, A&P is on its third CEO in two years as it tries to navigate through the bankruptcy process.

Wal-Mart continued to hold its position in fourth place with estimated extrapolated sales of $3.15 billion at its 129 units in the region including 78 SuperCenters. The Behemoth posted a modest sales gain from last year (based on the contribution of new stores), but continued to be challenged in attempting to build ID sales. Up next for the world’s largest retailer will be its foray in the smaller format “Express” concept, which in three years could yield dozens of new stores in densely populated urban areas of Philadelphia and metro New York, markets that Wal-Mart has not begun to penetrate deeply.

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The amazing story of Wawa continues. Not only is the retailer once again the highest ranking convenience store in the market study, it jumped from eighth to fifth place this year with its 473 units ringing up sales of $2.37 billion. Last year, the c-store chain had 463 stores with sales of $2.23 billion. There is no other c-store operator in the country that ranks as highly as Wawa in an area as big as the $48.1 billion Food Trade News market.

While Wawa rises, Acme continues to plummet. When we published our 2006 market study (at about the same time that Supervalu acquired the Malvern, PA based unit), Acme ranked second among all retailers in the 55 county area, with 127 stores and sales estimated at $2.9 billion. Today, Acme operates 18 fewer stores and its volume continues to decline – this year sales are estimated at $2.35 billion. Despite excellent locations and an enlightened leader in Dan Sanders, the problems begin and continue with the ineptitude of the leadership team based in Eden Prairie, MN led by chief executive Craig Herkert.

CVS was the best performer among the drug chains, although the Woonsocket, RI retailer’s flat sales of $2.29 billion at its 553 area units caused it to drop to seventh place.

Rite Aid once again closely followed CVS, with the Camp Hill, PA based retailer posting sales of $2.2 billion at its 643 stores (down 12 units from last year). Of course, there’s one major difference between Rite Aid and CVS and that is in the earnings column where the Woonsocket, RI chain (which almost hired former Wal-Mart Division-North president Hank Mullany late last year) continues to perform at a high level while Rite Aid, (which replaced veteran Mary Sammons as CEO with former Pathmark chief executive John Standley last year), continues to fumble, bumble and stumble with its sales and earnings metrics.

While the sales sheet didn’t fully reflect it, Weis Markets continued to transform its organization to a sharper, leaner and more aggressive mode under Dave Hepfinger who took over as CEO in 2009. The Sunbury, PA supermarket chain posted sales of $1.74 billion at its 112 units and earlier this month opened its newest prototype store in West Lawn, PA in Berks County (those sales will be posted in next year’s market study).

Rounding out the top 10 leading retailers in the Mid-Atlantic was Stop & Shop with sales of $1.59 billion at its 55 New Jersey supermarkets. Those stores continue to gain sales under the leadership of Ron Onorato, while also being aided by the decline in A&P’s volumes.

Other retailers that made significantly better than average progress during the past year included Target, Walgreens, Wegmans, Whole Foods and Trader Joe’s.

Target (extrapolated food and drug sales of $1.57 billion), opened four new units during the past year and has converted  more than half its 89 units to its PFresh model, with all Targets nationally expected to operate with the PFresh menu by 2013.

Walgreens, which is dropping its Happy harry banner in the state of Delaware as well as in Chester and Delaware Counties in PA by the end of the year, opened 22 drug stores over the past 12 months and produces the highest sales per unit of any drug chain in the market.

While Wegmans only opened one store last year (Malvern, PA), its ability to operate stores in the $60-$100 million annual sales range can crater any local marketing area. Such was the case with Malvern, where more than 10 competitive stores felt the Wegmans tidal wave in a 10 mile radius.

Whole Foods and Trader Joe’s (two new stores) were among the leaders in identical stores sales gains, while producing among the best sales per square foot averages among all retailers.

One major new entry this year is Delhaize America’s Bottom Dollar, which opened 18 new units in the Delaware Valley and in the Lehigh Valley. The stores average around 16,000 square and somewhat resemble extreme value operators Save-A-Lot and Aldi, but with more national brands and perishables. Being the last player in any market is tough and ones as competitive as Greater Philadelphia and Allentown-Bethlehem-Easton make the mission even more challenging. According to our research, many of the Bottom Dollar stores have gotten off to a slow start, but that will not deter its effort, as it plans about a dozen new stores in eastern PA and has also recently announced plans to enter the Pittsburgh area.

Sales leaders by class were: supermarkets – ShopRite/PriceRite (167 stores, sales of $8.28 billion); convenience stores – Wawa (473 stores, sales of $2.37 billion);

drug chains – CVS (553 stores, sales of $2.29 billion); mass merchandisers – Wal-Mart (129 stores, sales of $3.15 billion); and club stores – BJ’s Wholesale Club (38 stores, sales of $1.15 billion). Additionally the six military commissaries in the 55 county region garnered sales of $91.37 million.

Taken as a group, the 63 retail organizations operating collectively in the region operated 4,732 stores with sales of $47.91 billion. This translates to 99.63 percent of the grocery, HBC, general merchandise, pharmacy, tobacco and floral products in the measured region.