A record year for sales in food retailing was sadly overshadowed by the global COVID-19 pandemic which to date has infected 33.5 million Americans resulting in nearly 600,000 deaths.
And while many thought that retail food sales would revert back to 2019 levels by this time, that hasn’t happened yet as many retailers have protected themselves from significant sales reductions by making their stores safer and more efficient to shop. They’ve also ramped up and refined their online platforms, where e-commerce sales typically doubled during the past 12 months.
In the annual Food World market study published in the June 2021 issue, we review the key individual markets in our 88-county region and assess and analyze what’s occurred over the past year. During its measuring period which ran from April 1, 2020 through March 31, 2021 retailers generally experienced sales gains in the 12-14 percent range. And while this market study doesn’t focus on earnings, virtually all retailers – particularly supermarkets, club stores and mass merchandisers – earned record level profits despite significantly higher expenses related to adding safety protections and protocols at their stores and rewarding their clerks and meatcutters with bonus pay.
What you’ll see as you read the data is that retail food sales increased significantly. However, there was little share of market change in our key market-by-market analysis because most retailers were focused on keeping their in-stock conditions tolerable (during the first three months of the pandemic) and ensuring that the safety of their customers and associates was prioritized. Additionally, more than any other year since we began publishing our market study in 1979, the amount of new store openings (which would affect market share change) was at an all-time low.
Here’s a breakdown of the top 10 retailers in the Mid-Atlantic market.
The perennial market leader, Giant Food, once again performed well during challenging times. Sales surpassed the $6 billion mark ($6.10 billion) for the first time in its 85-year history. The Landover, MD-based Ahold Delhaize USA (ADUSA) brand added one net new store to its portfolio bringing its total to 159 units. In other company news, Giant also ratified a new four-year contract with UFCW Locals 27 and 400 (in March 2020) and also (with the help of those two unions) created a new pension plan for its store level associates.
Ranking second again this year was Walmart, where increased revenue was greatly aided by continued investment in e-commerce. The Bentonville Behemoth expanded its curbside service, added dozens of micro-fulfillments center (attached to its stores) and expanded its home delivery options, partially by launching a new e-commerce unit, Walmart+. Extrapolated food and drug sales in the region are estimated at $5.43 billion, up from $5.02 billion last year. And for the third consecutive year, Walmart did not open any new brick and mortar stores in the Mid-Atlantic.
CVS, the largest drug chain in the region, retained its third-place ranking in the market. Our research indicated that the sales increases that drug chains (and c-stores) experienced was substantially less than supermarkets, mass merchants and club stores. The Woonsocket, RI-based drug merchant added seven new stores during the past 12 months, giving CVS 646 drug stores in the market. Annual sales for the big drug chain are estimated at $3.56 billion.
Once again, Food Lion proved that its re-engineered model (“Easy, Fresh & Affordable”) continues to pay dividends. In fact, of all the ADUSA brands, Food Lion performed the best. Part of the reason is that all of its 254 stores in the Mid-Atlantic underwent a refurbishment in recent years. Another key reason for Food Lion’s success during the pandemic: its ability to keep product in-stock during the worst of the supply chain gridlock was a key component to their volume increases. Estimated sales for the year were $3.23 billion.
Moving up a notch this year was Albertsons/Safeway, which became part of the parent firm’s Mid-Atlantic division when Safeway and Acme Markets joined forces in September 2020. Safeway’s headquarter operations were shifted from Lanham, MD to Malvern, PA (Acme’s offices) and distribution was also moved from Safeway’s warehouse in Upper Marlboro, MD to a mechanized facility in Denver, PA (which had been serving Acme’s stores but was still underutilized). In the new alignment, former Safeway-eastern president Tom Lofland became senior VP-merchandising and marketing and Jim Perkins, who was Acme’s president, remained in place with newly expanded duties. Earlier this year, Albertsons also acquired 27 Kings and Balducci’s stores of which Balducci’s operated four stores in this market. Because of excellent in-stock conditions during the height of the pandemic, Albertsons/Safeway enjoyed some of the strongest comp sales of any retailer in the survey. Sales this year increased to $3.0 billion for its 122 stores, up from last year’s volume of $2.37 billion with 110 stores (please note: the store counts and sales of Safeway, Acme and Balducci’s have been rolled into the overall Albertsons Mid-Atlantic division’s volume for the region).
It was another strong year for ADUSA’s The Giant Company’s brand. The Carlisle, PA-based merchant, which over the past 18 months has targeted its growth in Philadelphia, produced annual sales of $2.75 billion (vs. $2.40 billion last year) at its 62 stores, three more than last year. The three new stores all opened last year and included two new former Musser’s Markets stores in Lancaster County and a former Weis store in Swatara Twp. (Dauphin County). The company currently operates 51 Giant stores in Central PA; six Martin’s stores in Maryland; and five Martin’s stores in Virginia. The non-union operator also gained momentum over the past 12 months by elevating its e-commerce business.
Harris Teeter maintained its seventh-place position in the Mid-Atlantic region. The Matthews, NC-based Kroger subsidiary benefited from the tailwinds of pandemic-related sales. Sales at its 78 stores are estimated at $2.36 billion, a gain of $337 million from last year.
Convenience store juggernaut 7-Eleven, which operated more physical stores than any other retailer in the region (1,142), also paced all c-store operators in sales. We estimated that revenue for the Dallas, TX-based firm, which is owned by Japanese company Seven & i Holdings, grew to $2.17 billion over the past 12 months. 7-Eleven operates both corporately-owned and franchised stores in the Mid-Atlantic.
Wegmans remained the highest per-store average supermarket retailer in the region, but its increases were not at the same level as many of its competitors primarily due to the fact that it was forced to close or restrict access to many of its multiple service bars and other prepared foods departments in its stores. Always a key contributor and major differentiator, the need to shutter/restrict those departments in order to obey health and safety protocols certainly put a dent in Wegmans’ potential to grab greater sales during the past year. Some of those areas have since been reopened or reimagined. Wegmans also pulled the plug on a store it expected to open next year in Arcola, VA (Loudoun County) due to concerns about that store cannibalizing sales from other existing Wegmans units in the market. Still, it was a solid year for the Rochester, NY uber-retailer with estimated revenue rising to $1.97 billion for its 23 stores, one more than last year (it opened a new unit in Tysons Corner, VA in November 2020). Other new Mid-Atlantic units are slated for Rockville, MD; Alexandria, VA; Reston, VA; Greenville, DE; and Washington, DC.
Maintaining a hold on the 10th position in the region are the rapidly growing “International Markets” (specialty and ethnic supermarkets that are at least 20,000 square feet in size are grouped together in this survey). As the area’s Latino and Asian population continues to grow, we estimate that there are now 131 ethnic markets in region. Collectively, those stores rang up approximately $1.89 billion in sales, a revenue gain of $152 million over 2020. Our research also found that even during the pandemic, consumers who shop at ethnic or specialty stores utilized e-commerce to a lesser extent than what we witnessed at more traditional supermarkets.
Other retailers that topped the $1 billion mark in annual sales in the 89-county region included: Target with 110 stores and an estimated extrapolated annual volume of $1.85 billion; Weis Markets with 97 stores and annual revenue of $1.83 billion; Walgreens – 327 stores and $1.77 billion in estimated annual sales; Costco – 30 stores, estimated extrapolated annual sales of $1.74 billion; Kroger, which operated 38 stores in the Mid-Atlantic and garnered estimated annual sales of $1.28 billion; Whole Foods, whose 32 natural and organic stores (two more than last year), amassed an estimated annual revenue of $1.2 billion; regional convenience store power Wawa, whose 169 c-stores rang up annual sales of $1.15 billion; BJ’s Wholesale Club – 29 stores with estimated extrapolated annual sales of $1.05 billion; fast-rising Aldi with 128 stores (eight more than in last year) and estimated annual revenue of $1.03 billion; and Sam’s Club, which operates 26 club units in the Mid-Atlantic region, good for an extrapolated annual value estimate of $1.02 billion.
By class of trade, the leaders are: supermarkets – Giant Food (Lanover) – (159 stores, $6.1 billion in sales); clubs – Costco (30 stores, $1.74 billion in extrapolated sales); mass -Walmart (161 stores, $5.43 billion in extrapolated sales); drug – CVS (646 stores and $3.56 billion in estimated sales); and convenience stores – 7-Eleven (1,142 stores and an estimated $2.17 billion in revenue). Additionally, the 20 military commissaries rang up annual sales of $582.9 million, a significant drop from last year’s annual revenue of $607 million, continuing a declining trend of military commissary sales that has occurred over the past decade.
Viewed as a group, the 48 corporate chains in the market operated 5,114 stores and accrued $53.7 billion in annual sales, good for 97.73 percent of the Mid-Atlantic region’s $54.9 billion food and drug market.
Among all independent retailers (those operating between two and 18 stores), Baltimore-based B. Green led the pack with 11 stores that amassed annual sales of $217.7 million.
Karns Prime & Fancy Foods ranked second among all independent retailers in the region. The family-owned independent, based in Mechanicsburg, PA, now operates nine stores, which did $171 million in sales last year.
Another Central PA-based retail marketing group, Family Owned Markets, which now oversees eight supermarkets, compiled an aggregate volume of $153.6 million over the past 12 months. Up-and-comer Streets Market, based in Washington, DC, added two new units this year and produced estimated annual revenue of $90 million.
Other perennial Mid-Atlantic independents on the leaderboard included: McKay’s (which acquired two former Shoppers stores); Graul’s; Eddie’s of Roland Park; Geresbeck’s; and discount/closeout specialist Sharp Shopper.
As a combined group, the 13 multi-store independent retail organizations in the Mid-Atlantic operated 68 supermarkets which garnered estimated annual sales of $951.1 million. Collectively, those stores controlled 1.73 percent of the region’s food and drug revenue.
There were some industry changes to review as well. One new retailer entered the market this year – Compare Foods – which operates neighborhood stores in Metro New York and North Carolina. Compare acquired four former Shoppers stores (two in Baltimore and two in Prince George’s County, MD) in 2020.
Personnel changes over the past 12 months include Karen Lynch replacing the retired Larry Merlo as CEO of parent firm CVS Health and Neela Montgomery being named president of its drug store division. At rival Walgreens Boots Alliance, former Sam’s Club and Starbucks executive Rosalind Brewer was brought in as CEO replacing veteran Stefano Pessina who became executive chairman of the board. At BJ’s, Bob Eddy was named chief executive following the untimely passing of Lee Delaney earlier this year. Chris Baldwin remains executive chairman. Lidl named Michal Lagunionek as its newest CEO-U.S., following the resignation of Johannes Fieber. Lagunionek becomes the fourth U.S. chief executive since the German discounter announced it planned to open stores in this country in 2015.
Additionally, as mentioned earlier, Albertsons rolled up its Safeway-Eastern and Acme Markets divisions into its newly combined Mid-Atlantic unit which now encompasses both chains as well as the Kings and Balducci’s banners. The new unit oversees more than 300 stores and nearly $7 billion in annual sales.
You can access the entire Market Study issue of Food World here.