There’s never been a year like this one as retailers adapted to new ways of servicing their customers, protecting their associates and pushing hard to keep supply chains functional. Here’s my view on how the leading operators in the $101 billion Food Trade News marketplace fared.
ShopRite – It was a much stronger year for the perennial “King of the Hill” in Metro New York than in the Philadelphia market. Comp sales were once again just OK for the first 11 months of our survey (then exploded in March, when virtually all retailer’s experienced huge increases). Biggest gains came through expansion; ShopRite acquired three Gourmet Garage units in Manhattan (the company’s first foray into NYC wealthiest borough) and then lured the Maniaci family into the Wakefern fold. Further Wakefern expansion will be documented in next year’s study when the five former Fairway stores ShopRite’s acquired are reflected in their totals. A good, but not great year for the member-owned stores, but with several more net new and new replacement stores in the pipeline, ShopRite is well positioned for future wars.
Stop & Shop (New York Metro Div.) – For most of its stores, it was a rather flat year for the biggest Ahold Delhaize USA brand. COVID-driven sales in March helped Stoppie more than most and so did the first-part of its Long Island store overhaul – where the retailer sunk approximately $75 million to refurbish 21 of its stores. The results were discernible and Stoppie plans on completing the overhaul of most of its remaining 30 “Island” stores over the next year. The termination of the King Kullen deal should have no significant effect on the Nassau-Suffolk leader (however, I can’t say the same for the faltering King Kullen organization). Stop & Shop had been mired in a downward progression for the past decade, but thanks to some well- deserved capital investment and the leadership skills of president Gordon Reid, there’s a much better vibe at the venerable old chain.
Walmart – As the Behemoth continues to focus on building its e-commerce business, the role of its bricks and mortar units hasn’t really been diminished in any area other than store growth. Day-to-day at its 173 stores (including 102 SuperCenters), the focus remains the same: price, price, price. Walmart had solid same store sales for the first 11 months of our measuring period, and like many other retailers had an outstanding March, despite surprisingly higher than expected out-of-stocks (when compared to others in the region). Don’t expect much new store movement over the next few years either (new projects are slated for Yaphank, NY; Roxbury, NJ; and Farmingdale, NY and it did expand its Rio Grande, NJ discount store into a SuperCenter over the past 12 months), but the planet’s largest merchant proved that investment in upgrading its e-commerce platform coupled with a strong physical store base has yielded big benefits.
The Giant Company – A sensational year for the Carlisle, PA-based merchant which changed its name from Giant/Martin’s earlier this year. Strong comps were produced throughout the year and especially (like most others) in March. New stores opened in Pocono Manor, PA, Walnutport, PA and Broomall, PA (replacement) as well three new Heirloom Markets in Philly. Giant has three other huge supermarket projects on tap for Center City, where it has now claimed the top spot in that 8-county MSA. Strong leadership from president Nick Bertram and a very talented team have resulted in a stellar performance.
Acme Markets – Nobody in our entire marketing area outperformed Acme during the month of March and the primary reason was its ability to maintain high in-stock service levels. Even during the extremely busy last three weeks of the month, Acme maintained a supply of products others didn’t have including flour, pasta, rice and a variety of canned goods. As for the previous 11 months, Acme’s sales were pretty flat, a victim of new store competition and its lack of new store additions. A couple of interesting things to watch going forward: will Albertsons’ upcoming IPO allow for more capital to be directed to an underserved banner like Acme?
Weis Markets – Another solid, consistent year for the regional chain based in Sunbury, PA. Weis lost a little bit of share in Central PA and in the Lehigh Valley, but remained dominant in its core Northeast PA market. New beer/wine cafes have also aided sales (there are currently 101 stores that offer such libations, with that number increasing annually). With no debt the company continues to invest in areas needed for improvement; during the next 12 months that translates to five new stores – replacement stores in Bethlehem, PA, Macungie, PA and Gap, PA, as well as net new stores in Dingman Twp., PA and Martinsburg, WV.
Wegmans – Wegmans’ future challenges have been documented earlier in this story. As for the past 12 months, it was a very good campaign for the Rochester, NY-based uber-retailer. Although only one new store opened in the 70-county area – it was a memorable one, an eye-catching high-volume unit in Brooklyn. Wegmans continued to dominate all supermarket retailers in sales per store average basis. And its new store pipeline will continue in the region with new stores planned for Harrison, NY (which was scheduled to open in May but has been postponed), Middletown, NJ and Greenville, DE.
Krasdale/Alpha 1 – The White Plains, NY-based wholesaler maintained its New York City leadership position when measuring primary supply for the market’s thousands of independent retailers. The family-owned company, which was founded in 1908 by the Krasne family, has continued to support strong independent banners in the five boroughs such as C-Town, Bravo, AIM, Market Fresh, Shop Smart and Stop 1 as well as strong local independents such as DeCicco’s and North Shore Farms. All told, Krasdale supplies 565 independent retailers in the region whose sales represent more than $4 billion annually.
Key Food – Another strong year for the recently relocated (from Staten island) Matawan, NJ-based co-op, which added 10 more stores to its independent base, including the former Fairway Market on Ralph Avenue in Brooklyn (although that unit isn’t included in this year’s study). Strong leadership from CEO Dean Janeway and COO George Knobloch have helped Key Food rapidly grow over the past decade. These guys have a solid operating plan, a diverse marketing program and their energy-level and work ethic continue to impress the reps and brokers in the Metro New York market.
Associated Stores Group – It took much longer than expected, but installing Joe Garcia as CEO in 2018 for the diverse independent group whose focus is mainly in the five boroughs which comprise New York City proved to be a wise move. Actually, Garcia has been at ASG since 2013, but elevating the former White Rose executive to the top spot has helped stabilize sales and restore confidence in the organization from customers and its associates to the vendor community. Garcia and his team have a definite plan to add more retailers to its base and that may include expanding into new marketing areas.
Allegiance Retail Services – It was kind of a roller coaster year for the Iselin, NJ-based marketing and advertising organization which counts (among others) the Foodtown, Pathmark, D’Agostino’s and newly added Gristedes banners in its membership. Chief executive John Derderian, as savvy and smart as they come, has helped Allegiance grow steadily in the four years he’s been CEO by adding the Pathmark name to its roster (he’s an alum of that once great merchant) and combining the strengths of D’Ags and Gristedes into the newly formed New York Supermarket Group. During the past year, former Allegiance chairman David Maniaci shifted his four stores to Wakefern, but Allegiance has offset that loss by adding new stores from its existing membership base as well as adding new accounts like Gristedes’ 27 stores.
Albertsons Close To Going Public As Chain Prices Public Offering
It’s been five years since Albertsons first attempted to launch its initial public offering (IPO) several months after it acquired Safeway. That effort failed due to sliding market conditions.
Another attempt in 2018 to merge with drug chain Rite Aid (already a public entity) also failed when the Camp Hill, PA-based drug chain pulled the plug because it believed its shareholders would reject terms of the $24 billion deal a few days prior to a scheduled vote.
Over the past three years as Albertsons has improved its balance sheet by reducing debt (about $3 billion), increasing profit and posting a consecutive string of comp store sales gains, the Boise, ID-based chain with nearly 2,300 supermarkets believed it was finally in a position to test the financial markets again.
On March 6, Albertsons filed a registration statement (S-1) with the SEC and in early May amended it, adding more details about the robust sales it had achieved during the COVID-19 pandemic when its March sales jumped 47 percent.
Late last month, Albertsons announced it sold a 17.5 percent stake in the company to Apollo Global Management for $1.75 billion of the chain’s convertible preferred stock.With the current announcement, Albertsons is seeking to sell 65.8 million shares of stock at an initial price of $18 to $20 per share, which could raise as much as $1.5 billion. The entire package will likely be valued in the $11 billion range.
A successful IPO would allow the primary owner Cerberus Capital Management to reduce about 16 percent of its equity that could be worth approximately $560 million. If all goes as planned, the large private equity firm would still hold approximately 32 percent of Albertsons. Other long-term investors such as Schottenstein Shops Corp., Lubert-Adler, Kimco Realty and Klaff Realty LP, who like Cerberus first invested in Albertson in 2006, could collectively reap approximately $208 million if the shares sell at the top-end of the offering.
Albertsons said it is not selling any shares pursuant to the common stock offering. In connection with the offering, certain of the selling stockholders expect to grant the underwriters a 30-day option to purchase an aggregate of 9,870,000 shares of the retailer’s common stock. If its public offering is successful, Albertsons will be listed on the New York Stock Exchange (NYSE) under the ticker symbol “ACI.”
Additionally, Albertsons will not receive any net proceeds from the sale of common stock by the selling stockholders, including from any exercise by the underwriters of their option to purchase additional shares of its common stock from the selling stockholders.
Albertsons will now begin its (virtual) roadshow to convince other investors that the chain is worthy of publicly-traded status. With most of the foundational work already completed, most observers believe that Albertsons will become a listed firm before the end of June.
‘Round The Trade
Belated congratulations to Fred Brohm, most recently COO of McCaffrey’s Food Markets, who recently retired. Fred cut his teeth with Kings Food Markets, where he spent 13 years rising to the position of executive VP and chief strategy officer, leaving in 2013 to join Jim McCaffrey and his perishables-driven retail organization. A no-nonsense, extremely intellectual executive, Fred was as knowledgeable as any industry executive when it came to fresh and prepared food. We wish him well in his future endeavors.
I think most of us believe that removing/retiring the logos and graphic images on such products as Uncle Ben’s (owner: Mars, Inc.), Aunt Jemima (owner: Quaker), Mrs. Butterworth’s (owner: ConAgra) and Cream of Wheat (owner: B&G Foods) is long overdue. More recently, Eskimo Pie (owner: Fronteri) said it would change the name of its product and earlier Land O’ Lakes redesigned the packaging on its cheese and butter products to longer feature the Native American woman with the feather in her hair. Is there more to come? And where do you draw the line between racist/ethnic slurring and harmless messaging? Do Lucky Charms offend the Irish? Or even leprechauns? How about Chef Boy Ar Dee (who was a real person)? Are Italians looking for a new name and image that might be perceived as less offensive? Is Chiquita’s use of the banana lady seen as an affront to Latino women? I don’t believe anybody can answer all these questions, but at this particular time in history, anything that even appears slightly on the edge is likely headed for extinction or revision. Oh, and there’s one more image (not food related) that has got to go. The Washington Redskins logo is a blatantly racist symbol that should have been buried decades ago. However, clueless owner Danny Snyder refuses to budge on the issue. I’ve got an idea: let’s “retire” Snyder (the worst owner in sports who runs a team that’s almost as ineffective as he is) and replace him with a newly designed stick of Land O’Lakes butter.
Earlier this month, Walmart had to postpone its annual shareholder meeting and show biz extravaganza which is usually held at the 19,000 seat Bud Walton arena in Fayetteville, AR. This year’s version resulted in a 60-minute conference call in which chairman Greg Penner and CEO Doug McMillon addressed a wide range of issues including social justice, the effects of COVID-19 (more than 270,000 of the company’s 1.5 million U.S. associates have taken coronavirus-related leave of the past three months) and the rapid increase in online buying…
Speaking of the Behemoth, Scott Neal, formerly a senior VP in Bentonville, has joined Sprouts as its new chief fresh merchandising officer where he reports to CEO Jack Sinclair, another former Walmart executive. As I’ve often said, this business seems to consist of the same 500 people who remain in the business by changing companies every few years.
It’s been a crazy month here at Best-Met Publishing, but we have a couple of obituaries to report. Recently leaving the earthly realm at 95 was a great R&B singer who should have had a bigger career than he did: Bobby Lewis. Possessed of a throaty, soulful voice, Lewis began his career in the early 1950s, had a few regional hits and then struck gold with “Tossin’ and Turnin’ in 1961. The high-energy tune was Billboard Magazine’s number one song for seven weeks and has been covered by many other singers such as The Supremes, Dusty Springfield, Delbert McClinton and Philly native Bobby Rydell. Sadly, after finding his groove with that one great song, Lewis never again had a top 10 hit.
Sad to report the death of former Miami Dolphins running back, Jim Kiick. The native of Lincoln Park, NJ was a star halfback at the University of Wyoming and was chosen in the fifth-round of the 1968 NFL draft (his teammate Larry Csonka was the team’s first-round pick that year). Under the coaching leadership of Don Shula (who also recently passed away) the three-headed running back group of Kiick, Csonka and “Mercury” Morris led the Dolphins to three Super Bowls (two wins) in the early 70s (including the perfect 17-0 season in 1972). Sadly, Kiick was only 73 and died from Alzheimer’s disease, one of five Dolphins – Earl Morrall, Nick Buoniconti, Bill Stanfill and Bob Kuechenberg – who have passed away from neurological problems between the ages of 69 and 79.
And finally, as we publish our signature issue of the year. I want to remind my many industry friends to be careful and cautious. COVID-19 remains a huge existential threat. Beyond the impact that it’s already had on our lives, there are certain to be more challenges for most of us. Do the right thing; please stay safe.