June 2008

And the winner is.....ShopRite. Yes, once again, the 161 stores that are part of Wakefern Food Corp. dominated the 55 counties in New Jersey, Pennsylvania and Delaware that comprise the Food Trade News marketing area. In the ferociously competitive $45.3 billion region, ShopRite not only added 10 stores during the market study measuring period (April 1, 2007 through March 31, 2008), its independent operators managed to increase same-store sales by well more than the annual inflation rate. Most of ShopRite’s sales growth during the past year was a result of Wakefern’s acquisition of eight former Stop & Shop stores in southern New Jersey. For the year, the 161 ShopRite stores in the region amassed estimated sales of $7.13 billion.

Moving into second place this year among all retailers in the region was A&P. The Montvale, NJ chain also created the biggest news story of the year when it acquired Pathmark Stores last December for $1.4 billion. Although the company continues to be run as two separate units while the integration process moves forward, we have combined the store counts and sales to reflect a unified A&P organization. The combined entity now operates 197 stores in the market that rang up sales of $4.53 billion under the A&P, Pathmark, Super Fresh and Food Basics banners. Last month, as part of its ongoing synergy project, The Tea Company eliminated its southern region and most of the key personnel who supervised the areas south of Trenton, NJ. In the new line-up, A&P veteran Chuck McCutchan will now supervise all stores in New Jersey, Pennsylvania, Delaware, Maryland and Washington, DC.

Along with ShopRite, the other supermarket channel retailer that moved the sales needle forward significantly during the past year was Giant/Carlisle. Operating 120 area stores (three more than last year), all in Pennsylvania, the modified EDLP unit of Ahold successfully cycled through its first full year of sales garnered from its 2006 acquisition of 14 Clemens Markets in suburban Philadelphia. Also cycling through his first full year as CEO was Carl Schlicker, who replaced the retired Tony Schiano in February of 2006. Much like ShopRite, Giant/Carlisle’s same-store sales surpassed the 3-4 percent inflation rate that affected the industry as a whole. For the 12 months ended March 31, Giant/Carlisle’s area sales rose nearly $200 million to $3.57 billion. Also of interest is Giant’s opening of its largest store, a 97,000 square foot mega-unit in Willow Grove, PA in April, after our market study measuring period ended.

One retailer that felt the brunt of the competitive nature of the marketplace was Acme Markets. While the large unit of Supervalu maintained its share of market lead in the Delaware Valley, the chains failed to keep pace with inflation and lost ground to ShopRite and Giant/Carlisle, which gained sales and market share via the aforementioned acquisitions and much more aggressive pricing structures. On June 6, Acme finally responded by unveiling a new, more aggressive pricing program. Acme’s sales for the year were virtually unchanged from our 2007 study ($2.97 billion this year vs. $2.96 billion in 2007) as its market share in the Philadelphia area dipped.

Fifth ranked Wal-Mart had a rather quiet year, opening only two net new stores. However, volume increased $102 million to extrapolated sales of $2.56 billion at its 114 area units, 65 of which are SuperCenters. And, next year looks even more promising for the Behemoth, which should be greatly aided by its low-price image in a challenging economy. Additionally, the world’s largest retailer, now under the regional leadership of former Genuardi’s president Hank Mullany, will be opening new SuperCenters during the next year in: Deptford, NJ, Edison, NJ, King of Prussia, PA; Hatfield, PA; and Middletown, DE. These SC openings will create more Mid-Atlantic market havoc. That havoc can already be witnessed at its new Willow Grove, PA SuperCenter, which opened in early May (after our market study measuring period ended).

Taking over as the largest drug chain in the 55 county region was Rite Aid. As a sales per store measure, the Camp Hill, PA drug chain still rivals CVS and Walgreens, however, its 2007 acquisition of Eckerd Drug lifted the chain’s sales to an estimated $2.42 billion with 685 area units in the market. Rite Aid is in the final stages of its Eckerd integration, one which will find all of its stores ultimately flying the Rite Aid banner.

In the seventh slot is CVS which posted solid same store sales gains at its 540 drug stores, seven more than last year. The Woonsocket, RI firm has continued to remodel/replace many of its stores with its 12,000 square foot prototype and continues to add more food offerings each year. Sales for the 12 month period were an estimated $2.12 billion.

One of the unique stories of our market study issues over the past decade has been the remarkable growth of convenience store chain Wawa. The company ranks eighth in the overall region with 466 stores that as its continues to expand its strong branded format complete with an excellent foodservice program, fuel stations (gasoline sales are not included in overall volumes figures in this study). and no-fee ATM usage.

Weis Markets made news during the past year when its announced the Price Chopper veteran executive Dave Hepfinger joined the Sunbury, PA regional chain as president and COO. If all goes according to plan, Hepfinger will replace popular chief executive Norm Rich early next year. Rich, 70, announced his retirement effective December 31, 2008. He is expected to remain as a member of Weis’ board. For the 12 month period, Weis operated 116 stores that rang up sales of $1.79 billion in sales.

Stop & Shop rounds out the market’s top 10. The biggest unit of Ahold USA had a challenging year in the marketplace, operating 10 fewer stores than last year (eight of those stores in south Jersey were sold and reopened as ShopRite stores). In fact, ShopRite proved to be Stop & Shop’s biggest thorn as a direct competitor, too. Stop & Shop’s 54 area stores, all in New Jersey, rang up sales of $1.32 billion, a drop of approximately $120 million from 2007.

Other retailers that gained ground during the past year were: Target (68 stores with extrapolated sales of $1.08 billion vs. 62 stores with extrapolated sales of $948 million last year); Walgreens (including Happy Harry’s) with current sales of $1.02 billion at its 206 area stores, 20 more stores than in last year’s study.

Breaking out the individual channel leaders are: in the supermarket arena, ShopRite leads with sales of $7.13 billion; in the mass merchandising channel Wal-Mart is the top operator with extrapolated sales of $2.56 billion; on the club front, BJ’s, with 33 area stores, led the pack with extrapolated sales of $974.3 million; in the convenience store realm, Wawa leads the way with $1.96 billion in sales; and the six military commissaries in the Food Trade News marketing area amassed annual sales of $87.9 million.

Analyzing the $45.3 billion overall market, there are currently 66 multi-store retailer organization operating 4,769 stores which produced $45.1 billion in volume, good for 99.6 percent of the region’s sales of groceries, HBC, general merchandise, pharmacy, floral and tobacco.