It took less than two months for Northeast PA independent retailer Gerrity’s to convert the first of its 10 Keystone State units to The Fresh Grocer (TFG) banner, a branding choice that was made when the family-owned merchant switched from C&S to Wakefern in late June.
“This is the next chapter in our family’s business,” said co-owner Joe Fasula, whose parents Joyce Fasula (still very active as president and co-owner) and the late Neal Fasula acquired the then one-store retailer in 1980. “I want to thank our dedicated team of associates and our shoppers for their ongoing support as we complete our transition to The Fresh Grocer banner. We look forward to providing an expanded assortment of foods and products to our customers while helping them save even more.”
The initial ribbon cutting occurred on August 12 at the store that was Joyce and Neal Fasula’s first supermarket. That’s 49 days after Wakefern announced that Gerrity’s would become the 48th member of the co-op and fourth owner to operate stores under The Fresh Grocer name. Pat Burns was the creator of The Fresh Grocer banner in 2001 before he joined Wakefern in 2013. As part of that deal, Wakefern also acquired the naming trademark from Burns. Other members who display TFG banner are Jeff Brown and David Maniaci. Prior to Gerrity’s joining Wakefern, there were 11 TFG stores in Pennsylvania and New Jersey.
The remaining nine Gerrity’s stores will be converted to the banner over the next two months. The conversion/reopening schedule is as follows: Scranton (Keyser Avenue) – August 19; Clarks Summit – August 26; Scranton (Meadow Avenue) – September 2; Moosic – September 9; Hanover Twp. – September 16; West Pittston – September 23; Wyoming – September 30; Luzerne – October 7; and Bethlehem (the former Valley Farm Market it acquired in late 2021) – October 14.
This is a win/win for both the Fasulas and Wakefern. Joe Fasula noted in late June that the switch to Wakefern would allow Gerrity’s to “gain a competitive edge in a rapidly changing and challenging industry. Wakefern will help us save our customers money and provide an enhanced assortment of products to our customers, including high-quality, on-trend private label foods, and increased buying power of a cooperative.”
For Wakefern, which has only added a few new members in recent years, including Maniaci in 2019 and the Slawsby family (which operate four Price Rite discount stores in the Boston area) in 2020, the addition of Gerrity’s not only boosts the grocery co-op’s store base, but it also allows the company to expand into a marketplace where it previously had a minimal presence.
‘Round The Trade
The good news: food at home prices seems to have stabilized a bit. The bad news: July results still showed a slight uptick in pricing and, according to the Bureau of Labor Statistics (BLS), prices have jumped 13.1 percent since July 2020. Among the product leaders in price increases were: eggs, +38 percent; butter/margarine, +26.4 percent; coffee, +20.3 percent; and bread/crackers, +16.8 percent. Helped by a 7.7 decrease in gas prices, overall inflation diminished to 8.5 percent in July 2022 compared with 9.1 percent a month earlier. And changing buying habits, which haven’t yet severely impacted revenue at the country’ largest retailers, are beginning to create bottom-line concerns at some of those same merchants. Walmart certainly held its own in its recently released second quarter numbers. Overall revenue increased 8.4 percent to $152.9 billion for the 13-week period ended July 29. Comp store sales at its U.S. stores rose 6.5 (ex-fuel). And net income, a potential concern addressed by the “Behemoth” two weeks prior to the financial release, actually were better than in Q2 of fiscal 2022. Indeed, profit jumped from $4.28 billion to $5.15 billion this year. CEO Doug McMillon noted that food and consumables performed at a high level and that Walmart’s profit was enhanced by greater supply chain efficiencies achieved during Q2. The 55 year old chief executive also reiterated a claim made several months ago – that Walmart will be a desirable place to shop during challenging economic times.
A better current example of the earnings hurdles retailers will face comes from Target, where Q2 profits dipped 90 percent from $1.8 billion to $183 million despite a solid 2.6 percent gain in comp sales.
Just before presstime, we learned that a second TJ’s store in Minneapolis has voted (55-5) to become unionized. TJ’s said it will prepare to immediately begin contract negotiations with store associates. The Minneapolis unit will also be represented by Trader Joe’s United.
Do you think pharmacists are in high demand? Walgreen’s, the second largest drug chain in the U.S. is offering potential new pharmacists signing bonuses of up to $75,000. In a statement, Walgreens confirmed that it is using the one-time financial incentive to ease current staffing shortages.
We just learned that Bill Mayo, CAO at Wakefern who received his master’s degree in 2002 from Saint Joe’s, and Emily Zippilli, senior account executive with Kellogg (who received her bachelor’s degree in 2013) will be the newest entries into its Academy of Food Marketing Hall of Honor. A noteworthy distinction for both, the induction ceremony will be held at the Cardinal John P. Foley Center at SJU on September 27.
And then there are the tales of (Wacky) John Mackey and (Humble Howie) Schultz, iconic leaders of two of America’s most successful entrepreneurial start-ups over the last 50 years. Mackey, who will be retiring as CEO of Whole Foods Market, the company he founded in Austin, TX 44 years ago, made some interesting remarks in an interview (podcast) with Reason Magazine, noting that he is deeply concerned that socialists are taking over the country, adding that “…they’ve taken over education. It looks like they’ve taken over a lot of corporations. It looks like they’ve taken over the military,” Mr. Wacky told editor Nick Gillespie. Other pearls of wisdom from the “Conscious Capitalist” include his feeling that the “younger generation” doesn’t seem to want to work, adding that “pretty soon, you’re gonna hear about ‘Crazy John’ who’s no longer muzzled.” Crazy? I don’t think so. Wacky? For sure. It seems like John Mackey is retiring just at the right time. As for Schultz, there are those (including me) who feel as though he should have never returned as Starbucks’ CEO. Unlike Mackey, Schultz is not the founder of his company, but he clearly deserves credit for building it to lofty heights. But since he returned on an interim basis in April there’s something that’s been a little off with “Humble Howie”. As Starbucks began to deal with a fairly broad unionization effort at many of its stores (which began prior to Schultz returning), “Humble Howie” has taken a strident and often antagonistic view of those who want to organize some Starbucks location in the U.S. (estimated to be about 215 of its 9,000 U.S, stores). Now, Starbucks is accusing the National Labor Relations Board (NLRB), the federal agency that oversees union elections, of misconduct and is calling for all elections to be suspended pending the outcome of an investigation. “If the NLRB does not respond by investigating and remedying these types of actions, we do not see how the board can represent itself as a neutral agency adjudicating unfair labor practices disputes and election” the Seattle-based coffee roaster stated in a letter to the NLRB. The labor board said it will “carefully and objectively consider any challenges raised through these established channels.” My take is this is no more than a delay tactic which may, in fact, backfire and generate increased unionization efforts at more Starbucks stores. From what we’ve witnessed from “Humble Howie” over the past five months, he may indeed have entered the “tilting at windmills” stage of his life.
Local Notes
There was a nice piece in The Wall Street Journal about Karns Foods, the Mechanicsburg, PA-based meat maven, which is adjusting to skyrocketing prices by merchandising more private label brands, offering smaller-sized packages and value packs, including $10 “Max Packs” in the frozen meat department where it sells three-to-five-pound bundles of protein. “I see customers change their buying habits and worry about finances,” said Scott Karns, CEO, adding that profits have been adversely impacted by higher labor and energy costs.
Ahold Delhaize USA is another operator where 2Q sales were solid (comps increased 6.4 percent, ex-fuel) but whose operating margin dipped slightly – 0.3 percent – to 4.7 percent. Online revenue increased 16.4 percent. On a comparable basis, Food Lion continues to be ADUSA’s top performer and now has recorded 39 consecutive quarters of positive sales growth. In other ADUSA news, Sanja Krajnovic is the new EVP-distribution and transportation for the retailer. He will essentially fill the role held by Chris Lewis, a key architect in the retailer’s ongoing self-distribution program which began in 2019 and should be completed next year. Lewis and ADUSA parted ways earlier this year. Krajnovic was most recently SVP of store ops at Dollar General. And speaking of ADUSA supply chain integration, the company reports that its new frozen DC (built in conjunction with Americold) in Mountville, PA will begin receiving orders in October with Giant Food being fully folded in next year and The Giant Company totally immersed in 2024.
Some local Walmart news: this month the “Behemoth” will open a new 400,000 square foot high-tech consolidation center in Lebanon, PA, one of four designed to serve the chain’s 42 distribution centers nationally. The new depot will use automated technology that will allow three times more volume to flow through its supply chain. Suppliers deliver small loads to the facility where they are consolidated into larger loads which are shipped to Walmart DCs (which are in the process of becoming automated) and then on to Walmart’s 4,700 U.S. stores. A similar consolidation center opened in Colton, CA in 2019. The Lebanon facility is expected to employ about 1,000 associates.
We have some store opening and closing news to report: Target cut the ribbon on its 95th Metro New York store earlier this month, a 27,000 square foot urban unit at Broadway and E. Houston Street in Soho. Lidl will open its long-awaited Commack, NY store on August 31(a replacement for an old Best Market) and also announced that it will build its first discount store in Brooklyn (a 25,000 square footer in Park Slope) that is slated to debut in 2023. Wegmans announced that October 26 will be the ribbon cutting date at its first Delaware unit, an 84,000 square foot store in tony Greenville. Trader Joe’s abruptly closed its popular wine shop in Manhattan’s Union Square, located near TJ’s highest sales per square foot store in the chain. The retailer said it is looking to “explore” another location that will allow it to “optimize the potential of our one and only license to sell wine in the State of New York.”
Uncle Giuseppe’s, the high-volume perishables-driven merchant with 10 stores in New York and New Jersey, is the first retailer to utilize Instacart’s online catering option. Instacart acquired Food Storm, a catering software firm, late last year. Consumers can now place catering orders for online delivery through the Instacart app. “Instacart Platform technology has helped more customers discover our catering selection, resulting in incremental sales this important part of our business,” said Russell McVeigh, catering director at the Farmingdale, NY-based independent.
I am sad to say that we have another two more deaths to report this month. The great author and historian David McCullough, 89, has left us. McCullough was best known for his two Pulitzer Prize-winning biographies about Harry Truman (1992) and John Adams (2001). He also received two National Book Awards for “The Path Between The Seas: The Creation Of The Panama Canal” (1977) and “Mornings On Horseback” (1981), which told the story of young Teddy Roosevelt and his family. McCullough was able to connect with his audience by compellingly recreating major events and important characters of American history. He also made his mark on television – hosting the PBS series “American Experience” from 1988-1999 and narrating Ken Burns’ great documentary “The Civil War” in 1990. In 2006, McCullough received the Presidential Medal of Freedom.
From the world of music, Lamont Dozier has died. That name may not ring a bell at first mention, but Dozier along with his two songwriting partners, brothers Brian and Eddie Holland, collaborated to write some of the biggest R&B hits of the 1960s. The trio was hired by Motown Records founder Berry Gordy and churned out such great songs as “Please, Mr. Postman” (1961) by the Marvelettes; “Heat Wave” (1963) by Martha and the Vandellas; “Where Did Our Love Go?” (1964) by The Supremes; “How Sweet It Is (To Be Loved By You)” (1964) by The Temptations; and “It’s The Same Old Song” (1965) by The Four Tops. While Brian Holland wrote the lyrics and his brother Eddie primarily wrote the music, Dozier proved to be the ideal complement to the brothers with his ability to compose music and write songs. All told, the trio wrote more than 100 songs that made the Top 40 charts over a 10-year period. A member of both the Songwriters Hall Of Fame (1988) and the Rock & Roll Hall of Fame (1990), Dozier was 81 when he passed.