In a long-expected announcement, Safeway Inc. said it intends to exit the Philadelphia market where it operates 27 Genuardi’s stores. The Giant/Carlisle division of Ahold USA has agreed to purchase 16 of those stores (all in Pennsylvania) for $106 million. Safeway also announced plans to shutter three locations and said the remaining eight stores in the market are for sale. It is expected in the next few weeks that several other retailers, including Weis Markets and Whole Foods, will acquire some of those units.
“We have made the decision to exit the greater Philadelphia market, including four stores in New Jersey, and focus our resources in those operating areas where we have a stronger presence,” said Steve Neibergall, president of Safeway’s Eastern Division. “We will be working with the purchasers to ease the transition for our store employees and making efforts to facilitate continued employment for as many of them as possible.”
The three stores that will be closed are: Exton, PA; Norristown, PA (1930 Main St.); and Royersford, PA.
“Giant is always looking for convenient locations to better serve our customers,” said Rick Herring, president, Giant/Carlisle. “We are very excited to have the opportunity to expand our presence in greater Philadelphia and serve new customers. We look forward to providing customers with the quality, selection, and savings that they have come to expect from Giant.”
And from Ahold’s corporate headquarters in Amsterdam, the company said, “This acquisition fits well within Ahold’s strategy to grow our businesses as presented in November last year. We continue to actively explore growth opportunities in and around our current markets in the United States and Europe, and in new geographies where we can achieve sustainable profitable growth.”
The stores that Giant/Carlisle has agreed to acquire are: 395 York Road in Jamison, PA; 2890 S. Eagle Road in Newtown, PA; 168 N. Flowers Mill Road in Langhorne, PA; 4275 County Line Road in Chalfont, PA; 1375 Boot Road West Chester, PA; 830 E. Baltimore Pike East Marlborough, PA; 550 E. Lancaster Avenue in St. Davids, PA; 950 Baltimore Pike in Springfield, PA; 50 E. Wynnewood Road in Wynnewood, PA; 1844 Bethlehem Pike in Flourtown, PA; 737 Huntingdon Pike in Huntingdon Valley, PA; 1121 Bethlehem Pike in Spring House, PA; 310 S. Henderson Road in King of Prussia, PA; 1925 Norristown Road in Maple Glen, PA; 2350 Susquehanna Road in Roslyn, PA; and 467 Sumneytown Pike in North Wales, PA.
The sale is currently expected to close within the first half of 2012, subject to customary closing conditions, including expiration of the applicable waiting period and regulatory review.
Upon completion of the sale, Giant said it plans to convert the former Genuardi’s stores to the Giant/Carlisle banner. Employment opportunities with Giant will be made available to Genuardi’s associates in these stores.
The exit from the Delaware Valley market marks the end to a very rocky 11 year run for Safeway, which acquired the regional chain in early 2001from the Genuardi family for a reported price of $600 million (including debt). That deal included 36 Genuardi’s stores and three Zagara’s specialty food units.
However, it didn’t take long for Safeway to change the product mix, alter the marketing and merchandising programs and add more private label in the stores. Those changes, among others, created a significant loss of market share and a decline in employee morale, something the big Pleasanton, CA chain never was able to fully overcome.