What a difference a year makes! Twelve months ago, retailers, aided by continuing inflation, reached record or near record sales, only to see those gains seemingly reverse themselves in a few short months.
Last year at this time, we reported that food price inflation had jumped 11 percent for the 12-month period from April 1, 2022 to March 31, 2023 and, coming on the heels of booming retail sales as a result of the effects of COVID, most of the 48 merchants reviewed in this study continued to produce strong results.
As inflation began to moderate early last year, retailers felt the sting of lowered consumer spending. Additionally, beginning last March, the federal government ended the supplementary income benefit given to all SNAP (food assistance) qualifiers (a cut of between $95 and $250 per month per household) that was implemented during the pandemic. And all retailers remain frustrated by the increasing level of shrink created by shoplifters and organized crime which also adversely affected sales.
The impact of those “hits” generally resulted in identical store store sales being reduced significantly (50-75 percent) with comparable decreases in earnings. Moreover, the fierce competition among retailers in the 89-county $61.3 billion Mid-Atlantic market remains diverse and fierce.
Here’s the statistical breakdown of the top 10 retailers in the Mid-Atlantic market.
Giant Food, the market leader since Food World’s first retail market study was published in 1979, remained atop the leaderboard, amassing estimated sales of $6.37 billion at its 160 stores. While the Landover, MD brand of Ahold Delhaize USA (ADUSA) continued its dominance of its core Baltimore-Washington market, it was not a great year for the company which was founded in 1936 and acquired by Ahold in 1999. Overall sales were flat and the only new store to open during our measuring period was a replacement unit of its Westbard Avenue unit in Bethesda, MD. Giant also closed a large digital fulfillment center in Hanover, MD.
While Walmart once again didn’t open any new stores (in fact it closed a unit in Washington, DC), the company’s strong price image (in a challenged economic environment for food spending) helped the country’s largest retailer gain share at a faster rate than any other merchant except Costco and Aldi. Now operating 158 stores in the region, the “Behemoth” posted estimated extrapolated food and drug sales of $6.33 billion. Walmart also announced that it plans to shortly begin a multi-billion-dollar effort to remodel 650 existing stores and resume building new units (about 150) over the next five years. After spending billions since 2017 to build and upgrade its digital platforms, the Bentonville, AR merchant is poised to become an even greater threat in the brick-and-mortar space.
The channel that suffered most during the past year was drug. Leader CVS remained the dominant player in the region but closed 19 stores over the past 12 months. The Woonsocket, RI-based multi-faceted health company now operates 612 drug stores in the region with estimated sales of $3.70 billion, a decline of nearly $70 million from last year’s revenue.
Remaining in fourth place among all Mid-Atlantic merchants was Food Lion which continued to be the best performing brand in the ADUSA portfolio. The Salisbury, NC-based grocery chain now operates 256 stores (same as last year) and saw estimated sales increases from $3.46 billion to $3.49 billion in a tough economic climate.
Albertsons Mid-Atlantic, which includes the Safeway, Acme and Balducci’s banners in this study, had a steady year. Its primary Safeway banner showed modest comp store sales gains and continued to operate the same 124 supermarkets (including a major remodeling of one of its best stores in the Georgetown section of DC). Of course, a larger story remains incomplete as the outcome of the $25 billion Albertsons-Kroger potential merger lingers in litigation until at least this summer.
The Giant Company (TGC), the ADUSA brand based in Carlisle, PA, remained sixth-ranked among all grocery retailers in the Mid-Atlantic region. Sales at its 63 Giant and Martin’s stores (same as last year) in Pennsylvania, Maryland and Virginia rose slightly to an estimated $3.02 billion.
Continuing to open new stores in the region was national convenience store leader 7-Eleven. Operating both corporately owned and franchised c-stores, the Dallas, TX-based operator, which is owned by Japanese juggernaut Seven & i Holdings, now operates 1,198 stores in the Mid-Atlantic which produced an estimated $2.96 billion in annual sales.
Eighth-ranked was another conventional supermarket retailer that experienced flat sales was Harris Teeter. The Matthews, NC-based Kroger subsidiary rang up estimated sales of $2.52 billion at its 78 area stores. During the past year, HT replaced its first DC area store (in the Ballston section of Arlington, VA) with a beautiful new store on Glebe Road. Much like Safeway, Harris Teeter awaits a court decision on the legality of the proposed Kroger-Albertsons merger. If successful, one can expect significant store divestures from both entities because of store overlap.
Holding down ninth place among Mid-Atlantic retailers was Wegmans, which for the first time in five years did not open any new stores in the region (it did debut stores in Yardley, PA and in Manhattan). Sales were slightly better than the market norm with an estimated volume of $2.37 for its current 26 stores in the region.
Rounding out the area’s top 10 was Target. Frankly, the Minneapolis-based mass merchant had a down year. Extrapolated sales declined from an estimated $2.22 billion last year to $2.17 over the current 12-month measuring period. The company closed two stores and now operates 112 units in the market.
Other retailers that topped the $1 billion mark in annual sales in the 89-county region included: the 138 “International Markets” (specialty and ethnic supermarkets that are at least 20,000 square feet in size are grouped together in this survey). Collectively, those stores rang up estimated annual sales of $2.16 billion; Costco – 30 stores, estimated extrapolated annual sales of $2.07 billion (one of the best performers in the region); Weis Markets with 96 stores and annual revenue of $2.03 billion; Walgreens (one of the worst performers in the survey) – 311 stores and $1.89 billion in estimated annual sales; Whole Foods, with 37 natural and organic stores and now six Amazon Fresh units (two fewer than last year and performing poorly) that together amassed an estimated annual revenue of $1.52 billion; regional convenience store power Wawa (another stellar performer this year), whose 191 c-stores (six more than last year) rang up annual sales of $1.50 billion; Kroger, which continued to operate 37 conventional stores and Marketplace stores in the Mid-Atlantic and garnered estimated annual sales of $1.39 billion; Aldi, (one of the biggest gainers) with 149 stores (five more than last year) and estimated annual revenue of $1.38 billion; BJ’s Wholesale Club – 30 stores (one more than last year) with estimated extrapolated annual sales of $1.19 billion; and Sam’s Club (a unit of Walmart), which operated 26 club units in the Mid-Atlantic region, which amassed an extrapolated annual volume estimate of $1.13 billion.
By class of trade, the leaders are: supermarkets – Giant Food (Landover) with 160 stores, $6.37 billion in sales; clubs – Costco with 30 stores, $2.07 billion in extrapolated sales; mass -Walmart with 159 stores, $6.33 billion in extrapolated sales; drug – CVS with 612 stores and $3.70 billion in estimated sales; and convenience stores – 7-Eleven with 1,198 stores and an estimated $2.96 billion in revenue.
Additionally, the 20 military commissaries in the region rang up annual sales of $540.5 million, a slight increase over last year.
Viewed as a group, the 48 corporate chains in the market operated 5,181 stores and accrued an estimated $60.2 billion in annual sales, good for 98.2 percent of the Mid-Atlantic region’s $60.6 billion food and drug market.
Among all independent retailers (those operating between two and 17 stores), Mechanicsburg, PA-based Karns Prime & Fancy Foods led all merchants with annual sales of $186 million at its 10 Central PA stores. Baltimore-based B. Green, which operates stores under the Green Valley and Food Depot banners, ranked second among all indies with six stores and $143.9 million in annual volume. Also surpassing the $100 million sales mark was Family Owned Markets, the Millersville, PA retail marketing group that supervises seven independent stores in Central PA and northern MD that had annual sales of $127.7 million.
As a combined group, the 10 multi-store independent retail organizations in the Mid-Atlantic operated 52 supermarkets which garnered estimated annual sales of $786.5 million. Collectively, those stores controlled 1.28 percent of the region’s food and drug revenue.
Major news stories over the past year included the rejection of the Kroger-Albertsons merger by the FTC (which included 579 stores that would be acquired by wholesaler C&S).
Not surprisingly, when economic conditions get more challenging and sales and earnings are impacted, changes at the CEO level are inevitable. Here are a few c-suite changes we’ve seen over the past year that were caused by bottom line pressures or planned retirements. At Costco, Ron Vachris replaced Craig Jelinek as CEO who retired. Tim Wentworth became Walgreens’ newest chief executive after Rosalind Brewer resigned under pressure. Joel Rampoldt, a management consultant, become the first American born president of Lidl’s U.S. operations, replacing Michal Lagunionek. Rampoldt is the fifth person to lead the German discounter’s U.S. business in slightly more than a decade. Kevin Murphy took the helm at Publix on January 1, replacing Todd Jones, who became executive chairman of the highly profitable Lakeland, FL based grocery chain. Finally, Fred Boehler became chief executive officer of beleaguered discount merchant Save A Lot after Leon Bergmann was forced out.
