The collapse of A&P was the story of the year. After 157 years, many of which the retailer served as America’s most iconic supermarket chain, the Tea Company exited with a whimper closing or selling 296 stores, many of which are still not spoken for.
Other than what will be remembered as an historic footnote, the remains of the once mighty grocery chain were scooped up by about a dozen grocery entities led by Acme Markets, Stop & Shop, Key Food and ShopRite (Wakefern), all of which gained significant sales and market share over the past 12 months according to Food Trade News’ 38th annual market study.
The market study covers a 70-county area ranging from Litchfield County and New Haven counties in Connecticut to Franklin County, PA and as far south as New Castle County, DE (see coverage map on page 10). The measuring period of the study was April 1, 2015 through March 31, 2016.
Beyond the changes created by the withdrawal of A&P, most retailers viewed the market climate as a remaining challenging, but after a decade of overstoring and a bumpy economy, many operators were better able to cope with their competitive realities. Slight inflation (except in meat) also helped many retailers achieve slightly improved same-store sales. The recent trend of sales and market share gains by alternative store merchants (mass, drug, club, c-stores, etc.) vs. the supermarket channel continued.
Other retailers that enjoyed noticeably improved sales years (besides the aforementioned ShopRite, Stop & Shop, Acme and Key Food) included Whole Foods, Trader Joe’s, Costco, BJ’s, Wegmans, Wawa, Aldi, CVS, Weis Markets, Allegiance/Food Town, Best Yet, Stew Leonard’s and Morton Williams.
Those operators that saw sales and/or store counts diminished in the past 12 months included Fairway Market, Associated Store Group (ASG), and perennial tail dragger Kmart.
When reviewing progress in the $95.32 billion marketing region, some things don’t change. Wakefern-owned retailers once again led the market, adding both stores and sales to its already dominant share with its ShopRite, PriceRite and Fresh Grocer banners. Over the past 12 months, those 257 stores (four more than last year) amassed estimated sales of $14.37 billion, a gain of more than $300 million from last year. No retailer in the market study grabbed more of A&P’s up-for-grabs market share (not including the stores that were acquired). And with Wakefern being one of the most aggressive bidders at the A&P auction (14 stores were acquired), it promises to be another banner year for the co-op next year since most of those stores had not yet opened by the close of this study – March 31.
While number two ranked Stop & Shop had another year of flat comp-store revenue, the big unit of Ahold USA was bolstered by its purchase of 25 stores from A&P (all have opened), including the Tea Company’s old Mount Kisco, NY store, for which it paid $25 million. For the year, Stop & Shop operated 219 stores, all of them in the Metro NY market, and rang up sales of $8.04 billion.
Moving up to third place this year (filling the void left by A&P) was another Ahold USA unit – Giant/Carlisle. With stores in the market study just in Pennsylvania, the only non-union division of the big Dutch-owned retailer operated 144 units which produced annual sales of $5.45 billion. On a comp-store sales basis, its Carlisle division remained Ahold USA’s best producer.
No drug chain in the market was more aggressive than CVS, now the fourth largest retailer in the region and its largest drug merchant. The Woonsocket, RI-based drug chain, which in the past year folded Target’s pharmacies into its base, now operates 1,076 stores in the market. Annual revenue is estimated at $5.39 billion.
Wal-Mart, which remained one of the highest per-store average sales retailers, had a slightly improved year when measuring comparable-store revenue. The Bentonville Behemoth opened new SuperCenters in Teterboro, NJ and Warrington, PA and closed an old “Division 1” discount store in Massapequa, NY. Estimated extrapolated sales for Wal-Mart’s 170 stores in region were $$4.97 billion.
Walgreens (Duane Reade), still the highest per -tore volume leader among all drug chains in the market, had a relatively flat year. The market share leader in Manhattan now operates 734 units in the 70-county area, amassing estimated sales of $4.67 billion. Last summer, the Deerfield, IL-based drug merchant announced its intention to acquire rival Rite Aid Corp. That deal is still in the FTC review process. The acquisition, if approved, could force nearly 1,000 store closures, with many potentially overlapping locations based in Food Trade News’ marketing area. Rite Aid, with 956 drug stores in the region, ranked just behind Walgreens in our survey, generating estimated annual sales of $3.70 billion.
Costco once again paced all club operators in the market. Ringing up some incredibly high individual store volumes in and around the City of New York, the low-margin club merchant only opened two new club stores in the past year but managed to impressively increase its same-store sales. For its 45 stores in the 70-couty region, the Issaquah, WA discount merchant had estimated extrapolated sales of $3.68 billion.
The biggest gainer in this year’s survey was Acme Markets, which acquired 71 former A&P stores at auction last fall, all of which were re-opened during a two-month period. Now ranking ninth overall in the region (last year Acme ranked 14th) with 162 stores, the Malvern, PA-based unit of Albertson rang up annual sales of $3.45 billion.
Rounding out the top 10 was Wawa, the nation’s largest per-store average convenience store chain. Wawa operated 500 stores in the market (five more than last year) which produced sales (excluding fuel) of $3.02 billion.
Other retailers that surpassed the billion dollar sales mark in the region included: BJ’s Wholesale Club (74 units – two more than last year – with extrapolated estimated annual revenue of $2.96 billion); Target (extrapolated estimated volume of $2.73 billion at its 136 units); ASG (whose 288 independent stores under a variety of banners produced estimated annual sales of $2.50 billion); fast-growing Key Food (whose independent retailers operated 217 units – 37 more than last year – and garnered annual sales of $2.43 billion); independent marketing and advertising group C-Town, with estimated annual sales of $2.09 billion at its 205 locations; Weis Markets (annual revenue of $1.92 billion at its 110 stores); Whole Foods (43 stores with estimated sales of $1.81 billion); Wegmans (21 uber-stores, whose collective estimated annual sales were $1.25 billion); 7-Eleven (787 c-store units producing an estimated $1.18 billion in annual volume); and Trader Joe’s (41 stores, estimated annual sales of $1.01 billion).
Sales leaders by class-of-trade were: Supermarkets – ShopRite/PriceRite (257 stores with estimated annual sales of $14.37 billion); drug chains – CVS (1,076 stores with estimated sales of $5.39 billion); convenience stores – Wawa (500 stores with annual sales of $3.02 billion); mass merchandisers – Wal-Mart (170 stores with extrapolated estimated sales of $4.97 billion); club stores – Costco (45 stores with extrapolated estimated sales of $3.68 billion). Additionally, the region’s seven military commissaries rang up $104.9 million in annual sales.
Taken as a group, the 84 multi-store retailers in the survey operated 8,340 stores with sales of $95.13 billion, which represented 98.58 percent of the grocery, HBC, general merchandise, pharmacy, tobacco, beer and wine and floral products in the Food Trade News marketing area.
Other than the A&P collapse, other big stories this year included: Ahold’s merger with Delhaize (expected to close in the next month); Fairway’s Chapter 11 filing; the previously mentioned Walgreens’ proposed acquisition of Rite Aid; the sale of The Fresh Market to private equity firm Apollo Global Management (where former Food Lion CEO Rick Anicetti was named chief executive); and the attempt by private equity firm Cerberus Capital Management to spin off two of its grocery entries – Albertsons and Save-A-Lot (a division of Supervalu). Both national retailers are seeking to go the IPO route.
Major executive changes included: the appointment of Chris Baldwin as CEO of BJ’s, replacing Laura Sen, who was elevated to non-executive chairman; Bob Striano being named chief executive at ASG (replacing Bob Sigel); and the ascension of former Safeway exec Scott Grimmett to CEO at the Golub Corp. (Price Chopper).
And there’s Lidl, which will be a bigger story two years from now when it opens its first of what will presumably be more than 100 stores from New Jersey to Georgia. During the past year, the German-based discounter: established its U.S. headquarters in Arlington, VA; named Brendan Procter from its Irish division as U.S. president, announced that it will build three distribution centers (Fredericksburg, VA; Alamance County, NC; and Elkton, MD) and has acquired property at more than 60 locations where it will build “from the ground up” 35,000 square foot discount stores.
