For Most Mid-Atlantic Retailers, Survival Is The New Prosperity

Jeff has been reporting, analyzing and opining about the retail grocery business since 1973. He has served as publisher of Food Trade News and Food World since 1978 and as president since 2007. He can be reached at

Perhaps we’re all living in a time warp. While the changes in the food industry over the past 10 years have been dynamic, the way all merchants have had to sustain themselves to survive seems so challenging and demanding, it’s easy to see why some stalwart members of the herd are being thinned every year.

Retailers speak as though positive comps of less than 1 percent are not only acceptable, but progress-making even when a helping inflation headwind and a generally good economy are factored in.

However, there are other considerations that need to be factored in, too. There are still way too many stores offering consumers highly diversified choices. And if you throw in the growing impact of digital, that’s another knuckleball that retailers are attempting to try to both embrace and defend. Separately, with the unemployment rate near record lows, operators are struggling to find and maintain qualified store level associates. Even the 35-day government closure earlier this year adversely impacted retailers, wreaking havoc with SNAP benefits for a 60-day period after the shutdown ended. Also, not helping is the harsh reality that the retail pharmacy business’ profitability has been bled dry by the clout of Pharmacy Benefit Managers (PBMs) which have drained the profitability from what used to be a key contributor to many retailers’ bottom line.


It’s no wonder that independents like Darrenkamp’s and most recently Ferguson & Hassler have sold their operations to larger chains that are better equipped to deal with leadership succession issues, technology implementation and overall cap-ex needs. There are other indies as well as regional chains that are also looking to get out as evidenced by discussions we’re aware of or prospectuses that have been issued.

During the past year, Farm Fresh, a company whose roots go back to 1957 in Tidewater, left the scene, a victim of awful management by then parent company Supervalu. Supervalu is also responsible for starving another of its corporate retail units, Shoppers Food & Pharmacy, for more than a decade. However, UNFI, another woefully inept entity, which acquired SVU last October, can take much of the blame for mishandling the sales of the remaining 44 Shoppers stores. From the outset, UNFI said it would be unbuckling its corporately-owned retail stores (a good move, since its integration of SVU’s wholesale business has been dysfunctional), but in eight months has been unable to sell the remaining Shoppers stores that are open.

It’s not just traditional supermarkets that find the battleground tough. Rite Aid, which tried to merge with Albertsons last August, saw its stock owners reject the deal even before the shareholder’s vote. The beleaguered Central PA-based drug chain continued to produce poor earnings which led to it being temporarily delisted from the New York Stock Exchange. Those events ultimately cost longtime chairman and CEO John Standley his job.


Specialty perishables-oriented operators like The Fresh Market closed stores in the region and continued to perform primarily in an underwhelming manner. And discounter Lidl, whose U.S. debut two years ago has produced disappointing sales and a slowdown of projected openings, fared only a little better as it debuted about a handful of new stores in the region. Of course, it was Lidl’s own choice to try to find locations (which it puzzlingly owns outright) near discount juggernauts Aldi (the best performer in this year’s survey) and Walmart, which also had a solid year. Be careful what you wish for.

So, for the 41st consecutive year, here’s my take on the leaders (and disruptors) in our core Baltimore-Washington market with one caveat: we expect the sales process of at least half of the Shoppers’ store to be concluded in the next six weeks, which will play a big role in the shape of the B-W market next year as the number five retailer in the area exits and whose sales will undoubtedly be replaced by existing retailers currently operating in the market.

Giant Food – Consider where the company was before president Gordon Reid assumed the helm of the Landover-based organization in 2013. While it possessed the strongest locations in the area and had commanded the dominant position in the country’s sixth largest market for more than 50 years, Giant was a company that by many measures had lost its way. The vibrancy and creativeness that were hallmarks of the pre-Ahold era were long gone as the retailer struggled with management changes, lack of direction from parent company Ahold and declining morale. Reid and his leadership team have not only stopped the leaking, they’ve created a model where teamwork is emphasized. Also helping was parent company Ahold Delhaize USA’s decision to decentralize its brands, a move that helped the folks in Landover more than any of the company’s other banners. Comp sales have been solid (compared to industry standards) and store conditions have also improved (a shout out to Ira Kress). Now that Reid is headed north to run the much larger and more troubled Stop & Shop unit, it will be up to Kress to keep the momentum and flow positive. He should take solace in knowing that he’s one of the reasons that Giant at long last is on the correct path. But as they say in baseball, there’s a big difference between being the 8th inning “hold” guy and the 9th inning “closer.”

Safeway – A year of stabilization and then progress for the Eastern division of Albertsons. Again, leadership has a lot to do with Safeway’s progress. After several years of management musical chairs (remember Brian Baer circa 2013-2014?), the company brought Jim Perkins back to run the Lanham-based division in late 2017 (he was also president of Albertsons’ Acme division). Perkins’ tremendous people skills and operational discipline helped Safeway get back on track. Ten months later, Perkins handed the ball off to Tom Lofland, another Albertsons veteran who had headed up merchandising at Eastern since 2015. It was Lofland’s first shot at running his own show and he’s made the most of it. The stores are looking better and Safeway’s “old school” merchandising approach is building sales, especially on the important weekend days. There’s still a lot of work to do, especially since it suffers from the same fate as many of Albertsons’ approximately 2,300 supermarkets across the U.S. – smallish stores (by today’s standards) that need refreshing. But, also like most of the Boise, ID retailer’s units, locations are excellent and market share remains solid in virtually all of its operating areas. And at Safeway-Eastern (and Acme, too) the leadership is very strong.

Walmart – No new stores opened in the B-W market, a first in more than 25 years for the Bentonville, AR-based retailer. While most of Walmart’s cap-ex went into its growing digital initiatives, there was some earnest money spent on bricks and mortar improvements. Walmart’s baseline success has always come from its low-price perception which it doggedly protects and works hard to maintain. In the past year, the world’s largest retailer has continued to improve store conditions, added more labor (which have helped with out-of-stocks) and upgraded its perishables. Walmart has also benefited by combining its online programs (“Ship to Store” and delivery service in some areas) to add more convenience for its shoppers. It’s a winning combination for the Behemoth that should prove solid for a long time.

Harris Teeter – A steady year for the upscale division of Kroger. The merchant added one new store this year bringing its B-W total to 50, impressive since it was 20 years ago that the North Carolina retailer first entered the market. Harris Teeter’s year was kind of typical of many other supermarket operators – their game is still very solid, but market conditions made it very difficult to achieve the same level of progress as in past years. Still, HT is poised to be a long-term contender in the market, with consistency of operational execution and new stores slated for Washington, DC (Howard University); Arlington, VA (two units); Stafford, VA; and Kent Island, MD.

Wegmans – It seems the only thing that can stop Wegmans is Wegmans itself. I’m referring to the company’s infrastructure. As it continues to add stores it also needs to gradually replace some of its very talented, but aging leadership team. As it moves to new marketing areas – Tidewater and Raleigh-Durham-Chapel Hill – it will need to add a third distribution center, probably in Central Virginia. That’s not only costly ($100+ million), but also taxing to the entire organization which is still relying on many of its experienced and gifted senior managers to take on more responsibility. And the Rochester uber-merchant isn’t slowing its store expansion plans either with new Baltimore-Washington area units alone planned for DC (Wisconsin Ave. NW); Annapolis, MD; Rockville, MD; Alexandria, VA; Arcola, VA; Reston, VA; and Tysons Corner, VA.

Shoppers – RIP (almost) – A real shame. Thousands of people have/will lose their jobs because of the ineptness of former owner Supervalu. And to “pile on” for no obvious reason, is the heartlessness and indifference of new owner UNFI which seems satisfied to have a once great retailer decay like a collective dead corpse.

Maybe It’s The Unfunded Pension Plan That’s Delaying Sales Of Shoppers’ Stores

We’ve already established that after eight months of ownership, UNFI has set a very low standard in terms of being a full-line wholesaler. At least that’s how many of its independent retailers (who count the most), some associates and vendors feel about the Supervalu integration/transition.

Service level issues, new fees and delisted items are just a few of the problems that its independent customers have complained to us that have adversely impacted their businesses. And then there’s the overlying communications problems between UNFI’s headquarters staff in Providence, RI and the Supervalu legacy team, many of who still work from the company’s old headquarters in Eden Prairie, MN (one associate called the environment akin to operating in the “cone of silence”).

One fact however, which UNFI communicated clearly even before the deal was consummated, was that it had no interest in continuing to own SVU’s corporate supermarkets. That message was direct, but like other transitional issues, has not been executed very crisply.

In a process that began more than a year ago, first under the aegis of Supervalu, UNFI has now taken over the duties of peddling the 44 Shoppers that are still open. Final bids were reportedly due last November and since then there’s been nothing but silence (leaving the remaining several thousand Shoppers associates mystified and angry).

In the past few months, several landlords have contacted us also expressing their frustration with their anchor lame-duck tenant, complaining UNFI’s inaction (and declining Shoppers sales) have impacted the value of their properties. All said they were preparing to contact prospective interested retailers in case control of those leases is shifted to the shopping center owners.

And based on our reporting, that could happen in some cases. For months we’ve been hearing that Giant Food was the prime bidder in the process, interested in about a dozen Shoppers stores. But according to our sources, UNFI wants to stick Giant (which would be the biggest, if not the only unionized company to be in the auction) with the unfunded liability of the Shoppers plan Safeway reportedly chose to not enter the derby with Shoppers’ unfunded pension plan (a separate plan from the one that Giant and Safeway are part of). In fact, Shoppers is by far the biggest member of that plan which was created in 1961 and currently has about 12,000 active and retired employees (food retailers such as Kroger were once part of that same fund). The unfunded liability now stands at approximately $135 million.

If UNFI is not able to find a buyer(s) that is willing to take on that pension shortfall, it would either have to continue to contribute to the plan or pay a large withdrawal penalty (reportedly as much as $110 million).

And why would Giant or any other company (especially a non-union retailer) want to be responsible for taking on any pension plan especially one that is severely unfunded?

Don’t be surprised if this ends up costing UNFI a fortune (which would create a significant balance sheet red mark – spoiler alert: UNFI’s stock price closed at $9.65 on June 19 (a year ago, it was $41.44). In the end, the bungled process could also result in UNFI selling fewer stores at lesser prices than they anticipated. Then again, wouldn’t that follow the path that these clowns have taken since they assumed control of Supervalu and Shoppers?

‘Round The Trade

Gordon Reid proved the doubters wrong when he arrived in 2013 and began to turn Giant Food around. He combined an operator’s skill with passion and empathy for the associates and achieved something that no other president in Landover had accomplished in the 20 years since the company was acquired by Ahold USA. Now comes a different challenge as he leaves for the Boston area to run Stop & Shop, a company with a clearly distinct culture.

For years, Ahold underfed its largest asset and when post-synergy Ahold Delhaize finally opened the cashbox to repair the market share losses over the past decade and hopefully strengthen its leadership position in New England (and number two spot in Metro New York), the recent 11- day strike took an enormous toll – both financially and emotionally on the company. That’s a tough situation to step into. However, Gordon understands the steepness of the hill that needs to be climbed. Fixing Stoppie will certainly require a long-game approach; just regaining sales that still haven’t returned post-strike is tough enough. And understanding the nuances of the Stop & Shop culture (much different than that of Giant) will take some time, too.

For Mark McGowan, I only have the highest praise. He is one of the finest people I’ve met in my 46 years of covering the industry. He took on any role he was asked to, and he did it selflessly and with pride. Sometimes teams need new coaches, if only to change the rhythm. Mark was literally a modern-day Mr. Stop & Shop (with all due respect to predecessors Sidney Rabb, Bob Tobin and Bill Grize), having begun there nearly 30 years ago and performed virtually every job for the retailer. In a way, I’m happy for Mark – he worked so hard for so long, perhaps he can enjoy some much-earned time off to spend with his family and do stuff that he’s never had time for. There’s no doubt he’ll be back and will help some organization become better

Erik Keptner, one of the brightest people in the entire food biz and also a former Ahold USA executive, has left Wakefern and will join Rite Aid as its senior VP-marketing and merchandising effective June 24. Keptner, who cut his teeth at Giant/Martin’s and later became EVP-marketing at Ahold USA, joined Wakefern last July as senior VP-marketing, the first key move made by Wakefern EVP Chris Lane, who is seen by many as the future successor to Wakefern president and COO Joe Sheridan. Keptner assured me his seemingly abrupt departure from the Keasbey, NJ-based co-op was not performance related, but a personal issue that caused the need for him to return to his native Central PA.

Obviously, Keptner’s got a supreme challenge to help improve Rite Aid, which just in the last six months, has forced the exit of its longtime chairman and CEO (John Standley), named a new chairman (Bruce Bodaken), been temporarily delisted from the New York Stock Exchange and continues to post poor sales and earnings. A search is currently ongoing to replace Standley. Erik’s a supremely talented guy who will undoubtedly help the Camp Hill, PA-based drug chain. The problem is that Rite Aid needs about five Keptner-like executives to move the needle significantly forward. We wish him well in his new endeavor.

Here are two more Ahold connections: James McCann, former Ahold USA COO from 2013-2016, has emerged from retirement and will join the board of directors of Deliv, which calls itself a “last mile delivery solutions” organization. Deliv, based in Menlo Park, CA, currently operates in 35 markets and works with about 5,000 businesses. McCann will be an asset to the seven-year old startup, providing hands-on industry knowledge and one of the biggest brains in the grocery industry. He’s also a recent author having scribed Startups and the Tech Revolution: An Essential Guide last August. And Walt Lentz, who joined Ahold USA in 2009 as senior VP-supply chain and became acting CEO and chief supply chain officer for its Peapod unit in 2016, has joined Grand Rapids, MI-based wholesaler/retailer Spartan Nash as president of food distribution.

Two other retail executives we want to give a shout out to: John Grimes and Bob Gleeson. Grimes will be retiring from Weis Markets as its VP-meat/deli/seafood later this month, after 11 years with the Sunbury, PA-based merchant and more than 35 years in the grocery biz. John Grimes is a pro’s pro, admired for his intelligence, work ethic, industry knowledge and people skills. And later this month, Gleeson will join Weis as VP-fresh merchandising and will head all of the regional chain’s fresh operations. Gleeson had been president of Shoppers Food & Pharmacy until resigning last year. Bob is one of the best-liked executives in the Balt-Wash area, having been with Shoppers for more than 30 years. And he should do well in his new post, having spent most of his career on the merchandising side of the business. Gleeson also worked with Weis COO Kurt Schertle for many years when they toiled at Shoppers.

More news from central PA: Giant/Martin’s continued its “infill” strategy when it acquired successful one store retailer Ferguson & Hassler, which has serviced the Quarryville, PA (Lancaster County) community since 1916. The store will reopen June 28 as a Giant and joins other small batch purchases made by the Ahold Delhaize USA brand over the past eight months including, Darrenkamp’s (one store) and Shop ‘n Save (five stores).

Another retailer with 19 stores in Central PA, Grocery Outlet (GO), which announced it was going public in April, has now shed some light on those plans. The Emeryville, CA-based discount merchant is seeking to raise $250 million for its IPO in which it hopes to sell about 17 million shares at $15-$17 a pop. The company’s sales were $2.3 billion in 2018 it currently has about $850 million in debt on its books which it is hoping to reduce to $610 million if the IPO can be successfully launched. Current owners, PE investor Hellman & Friedman, would continue to control the company following the public offering.

Grocery Outlet entered Pennsylvania in 2011 with the acquisition of Amelia’s and has had mixed success in the Keystone State where it battles Aldi, Save-A-Lot and other diverse discounters such as Walmart and dollar stores. And in the next 12 months, Lidl will begin opening more stores in GO’s territory which will make the extreme value field even more crowded. The company’s operating model is somewhat different than the others, offering primarily branded merchandise that features supplier overruns, product discontinuations/close outs and items that are nearing their “sell by” dates.

“Slow” Eddie Lampert is up to his old games again. The former Sears Holdings chairman CEO and now the major equity holder in the reformulated company – Transform Holdco which is part of his hedge fund, ESL Investments – is requesting that Federal Bankruptcy Judge Robert Drain release him from his obligation to compensate former Sears employees up to $43 million for associates who lost their jobs from October to February, the period between Sears’ bankruptcy filing and “Slow” Eddie’s reacquiring the company’s assets.

Lampert’s snarky actions were best summarized by Brandon Urrutia, a former Sears employee who leads an employee advocates group called United for Respect. “Sears always promised us one week of severance for every year we were with the company. But after 21 years of service, I was laid off in January 2019 and received just four weeks of severance pay. It’s not fair that Eddie Lampert and his friends are walking away with billions and now trying to cheat dedicated employees like me from what we were promised.” Sadly for Mr. Urrutia, I wouldn’t hold my breath.

A tip of the hat to veteran food broker executives Steve DelBonis and Bill Chiodo, who by different means, are now part of the Affinity Group and its newly formed Affinity Group Retail. I’ve known both men for years – DelBonis as owner/president of Matrix Sales & Marketing and Chiodo who most recently served as executive VP- grocery sales east for Acosta. DelBonis sold his business to Affinity and Chiodo becomes president of its retail group. The company has a very unique retail operating model, having been successful for many years as a foodservice broker with multiple offices nationally. Led by youthful chairman Enzo Dentico, the Buffalo-based organization is building a national brokerage model based on its perishables expertise. It’s clearly off to a fast start acquiring like-minded businesses (it also acquired New England’s Jon Morris & Company, a company with a strong bakery reputation) and bringing in experienced talent.

One more shout out to the fine folks at the Coastal Companies, one of the largest produce distributors in the Mid-Atlantic, on its recent acquisition of Hearn Kirkwood. This is one of those deals that should work seamlessly, blending two excellent corporate cultures which individually provide value added services that are in-step with the current needs of retailers and end users. Good people and a good fit usually result in a positive outcome. We wish them success!

Some death notices to report: from the music world, we lost Dr. John, who died earlier this month at the age of 77. Born Malcolm Rebennack in New Orleans, he began his musical career as a guitar player in the 1950s. An unfortunate shooting incident caused him to lose a finger, so he shifted to piano. By the mid-1960s, he had reinvented himself as Dr. John, a mysterious, swampy voodoo persona, which ultimately manifested itself as one of the most unique R&B/funk artists of the past 50 years. In truth, Dr. John, with a voice that was nasal and greasy, was a great piano player and creative songwriter. I’ve seen the good doctor more than a dozen times over the past 25 years – he was always entertaining and unique. Sad to see him pass.

Another quirky singer has also left us. Leon Redbone, whose interpretation of early jazz and ragtime music made him an unlikely star in the 1970s and ‘80s, was 69. Redbone usually performed solo, wearing a suit and tie, sunglasses and a Panama hat and belted out nasally versions of old classic tunes (“Shine On Harvest Moon,” “Ain’t Misbehavin’”) as well as traditional blues songs (“Diddy Wah Diddy,” “Mississippi River Blues”). Not much was known about Redbone, who chose to keep his personal life a mystery, content to perform only in character. We do know that his real name was Dickran Gobalian (not a typo) and he was born in Cypress. He moved to Canada in the mid-1960s and began performing in local clubs, ultimately developing his new persona. If you haven’t heard any of Redbone’s versions of often-recorded songs, they’re worth a listen.

Two athletes whose deaths are worth noting include former Green Bay Packer Hall of Fame quarterback Bart Starr and major league baseball’s Bill Buckner. Starr, who was a 17th round draft pick out of Alabama in 1956, struggled for his first three years in the league. Those Packer teams went 3-15-1. Things changed rapidly after that. In 1959, the Packers hired Vince Lombardi. And with Starr as his QB the team would never have another losing season in the Starr-Lombardi era which ran through 1967. During that span, the Packers would win five championships (including the first two Super Bowls). Starr, 85, was enshrined in the NFL Hall of Fame in 1977 and still remains the league’s leader in postseason passer rating.

We shift from a classic Hall of Famer to a very good athlete whose name was maligned for many years over one unfortunate play. Bill Buckner, 69, died late last month. Primarily a first baseman, he played 22 seasons in the majors, collected more than 2,700 hits and won a National League batting title in 1980. With the Red Sox leading three games to two, it was one play in the ninth inning of the sixth game of the 1986 World series between Buckner’s Red Sox and the New York Mets that sadly forged his legacy, when Mookie Wilson’s ground ball to first base went through Buckner’s legs, turning almost sure victory into a bitter defeat. The Mets would also go on to win the next game on their way to becoming World Series Champions.

What impressed me the most about Buckner was how he handled the endless criticism that followed. Perhaps Red Sox principal owner John Henry said it best in describing Buckner: “His life was defined by perseverance, resilience and an insatiable will to win. Those are the traits for which he will be most remembered.”

Finally, Claus von Bulow is dead. Talk about “tastes great, less filling,” von Bulow was best known for allegedly putting his wife Martha “Sunny” von Bulow into an irreversible diabetic coma to gain her fortune, so he could live with his mistress, soap opera actress Alexandra Isles (you can’t make this stuff up). The Danish-born socialite was convicted of attempted murder in 1982, but the conviction was overturned on appeal three years later, as documented in the excellent movie “Reversal of Fortune” (1990), in which Jeremy Irons gave an Oscar winning portrayal of the entitled and arrogant lead character. Von Bulow was 93 when he went into his own permanent coma.