For many retailers, the past 12 months marked a slight – but steady – improvement over the sales patterns of the past five years. However, the trend of alternate channel operators gaining market share at the expense of traditional supermarket leaders continued.
A view of the leaderboard for the 88 county measuring area also revealed that those merchants that have achieved market share gains over the past three years maintained their momentum, while those retailers that achieved negative or flat sales during that span, continued to lose market share.
Among those “winners” were Kroger, Wegmans, Whole Foods, Trader Joe’s, Aldi and Costco. These retailers once again showed that they could continue to build sales, open new stores and increase customer counts.
In the other column, Giant/Landover (still the overall market leader), Safeway and Target all had poor years.
Perennial loser Food Lion managed to make headway when measuring ID sales, and other retailers that had struggled in recent years such as Shoppers Food & Pharmacy, Farm Fresh, 7-Eleven and Rite Aid, produced positive identical store sales.
Our annual retail market survey measures sales for the 12 month period ended March 31, 2015 and covers a geography that ranges from Central Pennsylvania to Southeastern Virginia including key marketing areas Baltimore-Washington, Harrisburg-York-Lancaster and Richmond-Norfolk.
Here’s a look at how the top 10 retailers fared this year:
Another dismal year for market leader Giant/Landover. Sales declined more than $100 million to $5.52 billion for its 166 stores, mostly located in the Baltimore-Washington region. Gordon Reid, who became president of the Ahold USA unit in late 2013, has done a good job of management team building, and the company’s “Project Thunder” price impact program has yielded a slightly better value image, but Giant’s ID sales continue to plummet in the face of extremely competitive conditions.
Ranking second once again was Wal-Mart, which produced estimated extrapolated food and drug sales of $4.22 billion for its 154 units (a $212 million increase over last year). While the Behemoth’s ID sales trickled up over the past 12 months, most of the company’s gains came as a result of adding/converting two stores two its Supercenter model and adding eight new Neighborhood Market units the region.
After a decade of declining revenue, Food Lion improved its corporate comparable stores sales performance over the past 12 months. However, because the largest unit of Delhaize America closed eight stores in the market and also continued to find the landscape in its two largest Mid-Atlantic markets – Richmond and Tidewater – remaining highly competitive, sales declined about $75 million in the region. With 291 stores in the market Food Lion’s sales are estimated at $3.23 billion.
Giant/Carlisle (Martin’s), Ahold USA’s best performing unit, moved up to fourth place in this year’s rankings. Despite flat sales ($2.72 billion this year vs. $2.75 billion last year), and one fewer store (79 supermarkets) than in 2014, the only-non-union division of Ahold incurred most of its problems in the fiercely competitive Richmond market. Its core Central PA business remained solid.
Now in fifth place among all food and drug retailers in the region is CVS, which opened 14 net new stores over the past 12 months. With 504 units in the Mid-Atlantic, the Woonsocket, RI drug chain amassed estimated annual sales of $2.67 billion.
It was another challenging year for Safeway, which dropped to sixth in the standings, but that seems to be changing quickly. Overall sales declined again for its 123 B-W area stores as the big chain once again offered little excitement or creativity for its customers. Sales for our measuring period were $2.62 billion, which marked the company’s fifth consecutive year of revenue decline. Next year promises to be different, however. When Albertsons/Cerberus officially acquired Safeway in late January of this year, it was as though a light switch had been flipped on. In the past few months, more attention has been paid to store conditions, associate empowerment, better pricing and more aggressive merchandising and marketing. The company is hopeful that those changes will result in significant sales increases which would be reflected in next year’s market study.
Shoppers Food & Pharmacy stemmed its ID sales losses of the past eight years, and began to show some new energy under the leadership of youthful veteran Bob Gleeson. The Bowie, MD-based regional chain produced estimated sales of $1.62 billion at its 56 stores, one fewer than last year.
It was a very challenging year for Target Stores, but much like the situation at Safeway, new management is beginning to make a difference and the beleaguered Minneapolis mass merchant is once again beginning to show new signs of life. Now under the leadership of former Safeway and Pepsi executive Brian Cornell, the company pulled the plug on its 133 store Canadian operation and slowly improved overall operations following the 2013 credit card breach problem. Target operated the same number of stores as a year ago – 100 – and produced marginally declining estimated extrapolated sales of $1.58 billion
Continuing its solid performance of the past five years was Harris Teeter. The upscale unit of Kroger opened three new stores over the past year (it now operates 60 Mid-Atlantic units) and grew overall sales by more than $75 million to an estimated $1.47 billion. The Teeter also continues to be among the most aggressive retailers in terms of new store expansion. About six new Mid-Atlantic units are in the pipeline.
Ranking 10th among all Mid-Atlantic food and drug retailers was the largest convenience store chain in the country – 7-Eleven. The c-store operator finally achieved solid sales gains as its tries to rebrand its image after years of complacency. The largest retailer in the region (in terms of number of stores), the Japanese-owned c-store merchant operated 985 stores in the 88-county area, which garnered estimated sales of $1.38 billion in revenue, a nearly $50 million increase from 2014.
Other retailers amassing more than one billion in annual sales included the 104 “International Markets” (these are ethnic and specialty stores – primarily Hispanic and Asian units – that we have lumped together. Stores included in this market study must be larger than 10,000 square feet in size and/or produce annual sales of at least $5 million). The “International Markets” are one of the fastest growing food retail segments in the entire region and we estimate that the collective annual sales to be $1.28 billion.
Club store giant Costco operated 28 stores in the region (the same number as last year) and garnered estimated annual extrapolated food and drug sales of $1.28 billion; Rite Aid, which continued to rebound nicely over the past 12 months (on an ID sales basis) , saw its sales improve at its 383 stores in the region to an estimated $1.24 billion; and rival Walgreens (which maintained the highest per store average among all drug chains), with 224 stores in the region, accumulated estimated annual sales of $1.10 billion.
Other retailers of significance which moved the sales needle forward and/or continued to open new stores included: Wegmans, with 14 stores in the market and estimated sales of $992.1 million; Whole Foods, with two new stores in the Mid-Atlantic pipeline, increased annual sales to an estimated $824.8 million; and Trader Joe’s, which now operates 23 stores in the region and increased estimated annual sales to $430.4 million this year.
By class of trade, the leaders are: Supermarket – Giant/Landover (166 stores, $552 billion in sales); Club – Costco (28 stores $1.28 billion in extrapolated sales); Mass – Wal-Mart (154 stores; $4.22 billion in extrapolated sales); Drug – CVS (504 stores and $2.67 billion in estimated sales); and Convenience Stores – 7-Eleven (985 stores and an estimated $1.38 billion in revenue). Additionally the 20 military commissaries (three fewer than 2014) rang up annual sales of $767.2 million.
Viewed as a group, the 48 corporate chains in the market operated 4,671 stores and accrued $43.99 billion in annual sales, good for 96.99 percent of the Mid-Atlantic region’s $45.35 billion food and drug market.
Among all independent retailers (those operating between two and 17 stores), Baltimore-based Mars Supermarkets remained the leader with15 stores with estimated sales of $196 million (after our March 31, 2015 deadline, Mars closed an additional two stores which will be reflected in next year’s market study). Other independent retailers topping the $100 million sales mark included B. Green, which added three Shoppers Value units to its portfolio and rang up annual sales of $163.6 million at its nine stores; and Karns Prime & Fancy Foods (eight stores which compiled $130.5 million in annual sales).
As a collective group, the 16 independent retailing organizations in the Mid-Atlantic operated 81 stores which garnered sales of $1.10 billion (marginally up from last year). Independents controlled 2.42 percent of the region’s food and drug revenue.
The biggest stories of the year included the Albertsons/Cerberus $9.4 billion acquisition of Safeway and the bankruptcy of wholesalers AWI and White Rose and the subsequent acquisition of those firms by C&S Wholesale Grocers, which impacted the number ShurFine/ShurSave operators that remained in the group.
The competitive pressures of the business as well as industry acquisitions created some key executive changes. At Safeway, former CEO Robert Edwards departed shortly after Albertsons/Cerberus took control. As previously mentioned, Brian Cornell became Target’s new chairman and chief executive. Just before presstime, Harris Teeter veteran executive Rod Antolock was elevated to president and long time HT chief Fred Morganthall was named senior VP-of retail divisions for parent company Kroger. At Food Lion, Kevin Holt replaced Beth Newlands Campbell as president. Additionally, Sean Crane was named interim CEO of The Fresh Market, replacing Craig Carlock.
Those retailers that folded their tents during the last year included Camellia Food Stores, Stop Shop Save and Farmer’s Foods.
And finally, what changes should our readers be tracking during the next 12 months? Here are a few potential developments to think about: the possible Ahold’s acquisition of Delhaize. The impact of Safeway’s new decentralized system and its “local” go-to-market strategy. And Lidl’s activity in the Mid-Atlantic region as it prepares for its 2018 debut.