Food Trade News Market Study: ShopRite, Giant/Carlisle Continue To Gain Despite Rugged Economy; Acme, A&P Slip 

June 2009

The economy got worse, competition became more intense and we began to see more separation between those retailers who drove the business versus those who seemed to be just watching.
The prime “driver” during the 12 months (the market study measuring period ran from April 1, 2008 to March 31, 2009) was again ShopRite. With 165 stores in the region (four more than last year and including seven Price Rite discount units), the members of the large Wakefern co-op seemed immune to the general consumer trends of trading down and cautious spending.

ShopRite retailers amassed estimated sales of $7.48 billion, an impressive 16.02 percent of the large $46.7 billion region. Gains were made because of strong retail execution as well as at the expense of “running in place” competitors that included Acme in the Delaware Valley and A&P/Pathmark in Northern New Jersey.

A&P held down second place in the diversified 55 county area, but it was hardly a year of celebration for the Tea Company. The first full year of Pathmark integration was disappointing with decent comp sales from its A&P banner (Northern New Jersey) but poor identical revenue from its Pathmark unit across all markets. And in the Philadelphia area, where it has converted many of its original Pathmark units to its “discount” (by A&P’s definition) Pathmark Sav-A-Center format, the results have been less than stellar.

During the past year, A&P closed six stores (it now operates 191 units under the A&P, Super Fresh Pathmark, Sav-A-Center and Food Basics banners) and amassed estimated annual sales of $4.45 billion.

Another “driver” was Giant/Carlisle, which changed senior management over the past year when Carl Schlicker moved to the top post at Stop & Shop and Giant/Landover and young Ahold veteran (and Dutch native) Sander van der Laan assumed the helm in Central PA. The beat remained the same as Giant experienced significant sales gains driven by price. During the past year, Giant/Carlisle added two new stores and rang up sales of $3.88 billion. In the supermarket channel, it was almost on par with ShopRite in sales gains, prominently ahead of the rest of the supermarket pack.

Acme Markets remained in fourth place in the 55 county region. The large Malvern, PA based unit of Supervalu struggled again with comp stores sales and a lack of new stores. But, the primary problem was still its price image. In a market where consumers have been more conservative with their spending than in recent memory, Acme just couldn’t effectively deliver a strong price message to its customers. It also didn’t help that Acme has become the meat in a ShopRite and Giant/Carlisle sandwich. During the past year, Acme closed three stores, opened no new units and saw sales drop to $2.90 billion with 122 stores, one fewer than Giant/Carlisle.

Wal-Mart had a fine year, particularly in the Delaware Valley region where it opened or converted five SuperCenters (a sixth conversion in Norristown, PA opened after our measuring period ended). Under the leadership of talented local guy Hank Mullany, the Behemoth was aided by the poor economy, and with solid same store gains and eight new stores in the fold, Wal-Mart grew its extrapolated sales for the year by more $260 million to $2.82 billion.

Ranking sixth among all retailers in the region was Rite Aid. However, (much like A&P) because of a flawed acquisition (Eckerd Drug), there wasn’t much rejoicing in the halls at the company’s Camp Hill, PA headquarters. Rite Aid’s earnings have been poor, its stock price sank below the Mendoza line (under a $1 a share) for part of the year (it has since bounced back a bit) and observers wonder what the long-term plan is, especially against aggressive and creative competitors CVS and Walgreens. No other retailer operated more stores than Rite Aid (667), which saw sales drop to $2.36 billion this year.

The aforementioned CVS is going in the other direction, although recent major same store gains have been curtailed because of the economy. The Woonsocket, RI drug chain is still pursuing new sites while also converting existing stores into its new drug/food prototype. With 550 stores in all areas of the market, CVS garnered estimated sales of $2.25 billion for the year.

Wawa held down eighth place among all retailers in the region and remained the largest convenience store operator in the market. Sales at its 460 units were $2.06 billion and with its strong deli program and a growing presence in prepared foods, Wawa produced the highest per sales volumes of any c-store merchant in the region, and arguably in the country.

Weis Markets, now under the leadership of Dave Hepfinger, who became CEO at the tail end of 2008, is making many positive moves. With an aggressive pricing program and improved discipline both at store level and internally, the past 52 weeks saw the Sunbury, PA chain make strides, particularly in the second half of our measuring period. The challenge is for the company to continue to investment spend to upgrade systems, while still stepping on the pricing throttle (Weis is in the midst of its second 90 day price freeze). Weis’ effort still remains a work in progress, but it has clearly moved from a “watcher” to a “driver.” Sales for the year for its 112 stores were $1.71 billion.

Stop & Shop, which had a solid year with its New Jersey stores, ranked 10th among all retailers in the region, which stretches from Susquehanna County, PA to Cape May, NJ on a north-south plane and from Bergen County, NJ to Franklin County, PA on an east-west plane. Sales at its 53 stores (which only operate in 14 of the 55 counties in the survey) were $1.36 billion, a $42 million gain over last year.

Other changes of note during the past year were eight new Target openings (despite negative comps, the retailer continued to expand its food offerings) and significant declines in ID sales at Whole Foods (which opened two new stores).

Taken as a group, the 66 multi-store retail organizations that do business in the Food Trade News market, operated 4,801 stores and rang up $46.5 billion in sales of groceries, HBC, general merchandise, pharmacy, tobacco and floral products.