After Quiet Acquisition Period, Manufacturers Getting Back Into Buying Game

‘Round The Trade

After a relatively quiet acquisition period, manufacturers are getting back into the buying game. Over the past month, Campbell’s said it will buy Sovos Brands, parent company of Rao’s pasta sauces and Noosa yogurt in a deal valued at approximately $2.7 billion ($23 a share). That seems like a pricey amount for Campbell’s, which considers Rao’s to be a complementary (non-conflicting) business to its core Prego’s brand. In an even bigger (and seemingly similarly overpriced) deal, J.M. Smucker has agreed to acquire Hostess Brands for $5.6 billion. That’s a great return for a company that’s filed twice for bankruptcy and operates in a category that doesn’t exude nutrition and wellness unless you consider a plateful of Ho-Hos and Twinkies items that are beneficial for mental health.

Local Notes

The Inserra family will open its first Fresh Grocer store in Brooklyn in that borough’s eight-block-long Fulton Street Mall. The 21,000 square foot unit will be the first Fresh Grocer to open in the five boroughs. Inserra’s currently operates 22 ShopRites in New York and New Jersey and owns the only two member-owned Price Rites in Garfield and Paterson, NJ. It is also building a new 65,000 square foot ShopRite in Elmwood Park NJ. Another Wakefern member celebrated a new store that’s been years in the making. Pat Burns, his family and operating team finally cut the ribbon September 1 on the newest ShopRite store – a 72,000 square foot beautiful supermarket in Drexeline, PA. Pat has operated a store on that site as a Fresh Grocer for many years and it was his dream when he joined Wakefern in 2013 that the store would eventually be rebuilt as a ShopRite. The dream is now a reality…at Giant Food, after announcing last month that it would close all three of its e-commerce fulfillment centers in Hanover, MD; Manassas, VA; and Milford DE on October 21, the Landover, MD-based retailer revised that plan. The new plan was revealed after the Landover, MD merchant and Teamsters Local 639 agreed on a new labor contract that will allow Giant to keep open its 80,000 square foot Manassas, VA depot which debuted in May of this year. Giant’s original e-commerce fulfillment center in Hanover will close next month, impacting about 200 jobs. Also closing is a much smaller cross-docking warehouse in Milford, DE which opened three years ago to serve the chain’s seven Eastern Shore stores. In releasing its new e-commerce plan, Giant said: “We are pleased to announce updates to our home delivery service to meet the changing needs of our customers for faster delivery, more delivery timeslots, and a broader assortment. We will consolidate our Giant Delivers business out of our newly opened Manassas, VA, e-commerce fulfillment center and launch a localized picked-from-store model using our Giant associates, as well as continue to partner with third-party providers to provide faster delivery for our customers (Giant currently uses Instacart for that function). We are excited that we can continue to provide this important service for our customers. As a trusted neighborhood grocer for over 87 years, we look forward to continuing to serve our customers in all the ways they want to shop whether in-store, via Giant Pickup or delivery.” In making the decision to consolidate its e-commerce warehouses into one facility and fortify a model that relies more heavily on individual stores assembling online orders that would be delivered by Instacart, a source told us the rethinking of its digital strategy was driven simply by declining sales that Giant and other supermarket retailers have faced since the robust e-commerce usage (particularly home delivery) when COVID cases were rampant and more people were eating most of their meals at home. The new plan is for the Manassas depot to serve as the e-commerce home delivery hub (Giant Delivers) for most of the regional chain’s Virginia and DC stores. For stores in Maryland, e-commerce home delivery customers will find their orders being assembled at a nearby store and then delivered by Instacart. Instacart will also serve Giant customers in areas served by Giant Delivers if they choose. All stores will continue to offer curbside pickup (click-and-collect), the fastest growing and most dominant segment of e-commerce sales. Our source added that construction of the new Manassas facility was an example of Giant’s need to add more e-commerce distribution space during a period of skyrocketing usage three years ago. “The decision to build the Manassas fulfillment center was made in late 2020, when COVID was still rampant and eating at home had accelerated dramatically which led to greater consumer utilization of home delivery (and curbside pickup). With more overall e-commerce space, the Manassas DC could also help Giant serve customers in the Northern Virginia area more efficiently and was also instrumental in allowing the conversion of the chain’s delivery schedule from a next-day to a same-day model which today translates to three-hour deliveries,” our source explained. Giant Food was the first supermarket retailer in the Baltimore-Washington area to utilize a segregated e-commerce warehouse for home deliveries. That business, then under Ahold USA’s Peapod subsidiary, began in Gaithersburg, MD in 2000. In 2011, Peapod/Giant opened a new 155,000 square foot DC in Hanover, MD (Anne Arundel County). In 2019, after Ahold and Delhaize merged, all business operations out of Hanover, MD were rebranded as Giant Delivers. One more Giant Food note: company president Ira Kress, who has been outspoken about the difficulties of dealing with increasing retail theft over the past few years, is taking action at one of the chain’s most affected stores on Alabama Avenue in Southeast DC. In a last ditch effort to keep the store open, the ADUSA brand will pull all national brands of HBC products and offer only private label health and beauty care products for sale at the store. If Giant were to close its Anacostia supermarket, which serves a territory (Ward 8) of about 85,000 residents, it would create an even larger food desert than currently exists in an economically depressed area. And that would be a shame for the well-meaning citizens who comprise the majority of those who reside in Ward 8.