After three years of record or near-record sales, aided by the “eating at home” impact of COVID and followed by continuing inflation, most retailers experienced a significant reversal during the past 12 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. However, as inflation began to moderate early last year, retailers felt the sting of lowered consumer spending. Additionally, beginning in March 2023, 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. Moreover, 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 sales being reduced significantly (50-75 percent) with comparable decreases in earnings. All said, the fierce competition among retailers in the 70-county $120 billion Food Trade News market remains diverse and fierce.
Here’s the statistical breakdown of the top 10 retailers in the Food Trade News marketing area covering Connecticut, Delaware, New Jersey, New York and Pennsylvania,
For the 39th consecutive year, ShopRite and its sister banners (Price Rite, Fresh Grocer, Gourmet Garage, Dearborn Market and Fairway Market) continued to dominate the landscape in the overall marketing area. As for the numbers, parent company Wakefern’s banners operated 294 stores in the region and rang up estimated annual retail sales of $18.4 billion. Wakefern retailers posted solid comp sales and were aided by new or replacement stores by ShopRite owners Inserra (two), Village, Ronetco, Saker and Zallie.
It was another challenging year for the number two player in the market – Stop & Shop. Once again the large Ahold Delhaize USA brand did not add to its store count; in fact, it operated three fewer stores than last year. Late last month, JJ Fleeman, ADUSA’s CEO said an unspecified number of Stoppie units would close due to underperformance. Estimated volume for the retailer’s 201 stores in CT, NY and NJ was $8.1 billion, slightly down from 2023.
While Stop & Shop’s struggles continue, sister brand, The Giant Company (TGC) keeps on producing solid results at its 161 units (the same number as last year), all in Pennsylvania which trade under the Giant, Martin’s and Heirloom Market banners. Estimated sales for the Carlisle, PA-based merchant are $7.5 billion.
How do win by losing? That’s a question that can best be answered by studying the drug chain business in the region. Fourth ranked CVS actually closed 41 stores but saw sales uptick marginally. That’s because one of its main rivals – bankrupt Rite Aid – closed more stores and saw sales plummet during the past year. CVS’ drug stores are just a part of the entire CVS health network, which in total is a very healthy company. The Woonsocket, RI based drug chain now operates 1,199 stores in the 70-county market, good for an estimated $7.1 billion in annual sales.
Remaining in fifth place among retailers in the region was Walmart, which again did not open any new brick-and-mortar stores but managed to achieve one of the best comp store sales increases in the entire market. The Bentonville, AR-based mass merchant once again focused primarily on upgrading its e-commerce initiatives. Annual extrapolated food and drug sales for its 173 stores in the region are estimated at $6.8 billion. Additionally, 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.
Costco again enjoyed one of the finest years of any retailer in the market, an inflation-defying operator whose average comp store sales were about double those of most retailers over the past 12 months. The Issaquah, WA-based club merchant operates 50 stores in the region (same as last year), good for estimated annual extrapolated sales of $5.6 billion.
Walgreens, like CVS, benefited from the closure of Rite Aid stores. And much like CVS, it, too, shuttered stores but saw sales slightly improve. The Deerfield, IL-based division of Walgreens Boots Alliance now operates 682 stores in the market (35 fewer than last year) that produced estimated annual sales of $5.2 billion.
Albertsons Mid-Atlantic division of Albertsons whose banners include Acme, Safeway, Kings and Balducci’s, experienced the same overall flatness that affected many of other retailers, especially traditional supermarkets. The Malvern, PA-based division operated two fewer stores than last year (177 vs. 179) and had slightly improved overall sales that are now estimated at $4.8 billion. Of larger long-term concern is the outcome of the parent company’s $25 billion merger attempt with Kroger. The FTC has rejected that proposed deal and the matter now is in Federal District Court where a trial will begin on August 26 in Portland, OR.
Ranking ninth again in the region was Target, which now operates 182 total units (two more than last year), The company also runs more than 26 smaller urban models primarily in New York City and Philadelphia. However, it was not a particularly good year for the Minneapolis-based mass merchant on a national basis where comp store sales have been marginally down after four spectacular years. The numbers were slightly better in the Mid-Atlantic and Northeast where we estimate extrapolated annual sales to be $4.7 billion
Regional c-store powerhouse Wawa enjoyed some of the best comp sales of all retailers analyzed in our annual survey. The Wawa, PA-based privately-owned merchant also opened 11 new stores in the region and now operates 575 units in the 70-county territory good for $4.3 billion in annual sales (excluding gas).
Other retailers that surpassed the $1 billion sales mark were Krasdale, which supplies 482 independent stores and amassed sales of $4.2 billion; BJ’s (80 stores with extrapolated annual sales of $4.1 billion); Key Food, which oversees 336 independent supermarkets and $3.9 billion in annual sales; Whole Foods, including Amazon Fresh and Amazon Go (79 units good for estimated annual sales of $3.1 billion); Weis Markets (111 stores, annual sales of $2.8 billion; 7-Eleven (994 c-stores, estimated annual volume $2.5 billion); ASG, which supervises 250 independent supermarkets with sales of $2.4 billion; Wegmans (29 stores whose estimated annual revenue was $2.4 billion); Trader Joe’s (63 stores, estimated annual volume of $1.9 billion); Aldi (189 discount units whose estimated annual sales reached $1.83 billion); beleaguered Rite Aid (402 stores – 190 fewer than last year, estimated annual volume of $1.81 billion – approximately $774 less than in 2023); Allegiance Retail Services/Foodtown (129 stores with annual sales of $1.4 billion); and Sam’s Club (24 stores, estimated extrapolated annual sales $1.1 billion).
By class of trade, the leaders are: supermarkets – ShopRite/Price Rite/Fresh Grocer et al (294 stores, $18.4 billion in estimated annual retail sales); clubs – Costco (50 stores, $5.6 billion in estimated extrapolated annual sales); mass – Walmart (173 stores, $6.8 billion in estimated extrapolated annual sales); drug – CVS (1,199 stores and $7.1 billion in estimated annual sales); and convenience stores – Wawa (575 stores and $4.3 billion in annual revenue).
Viewed as a group, the 73 chains and independents operating in the grocery, club, mass, drug and c-store channels operated 8,458 stores and accrued $117.7 billion in annual sales in the Food Trade News marketing region, good for 98.1 percent of the region’s $120 billion food and drug market.
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 reported on 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. Bryan Palbaum was promoted to chairman and CEO of Trader Joe’s after long time chief executive Dan Bane retired. Michael P. D’Amour became CEO of Big Y, replacing Charles L. D’Amour who moves to executive chairman of the family-owned regional chain. Fred Boehler became chief executive officer of beleaguered discount merchant Save A Lot after Leon Bergmann was forced out. Bankruptcy specialist Jeffrey Stein is now CEO of Rite Aid. Popular industry veteran Joe Fantozzi was promoted and is now president and COO of Allegiance Retail Services/Foodtown. And finally, last month Andrea Karns became CEO of Karns Foods, replacing her father, Scott, who will now serve as chairman of the 10 store Central PA retailer.
