Taking Stock

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Total Market Gridlock – Overstoring, Diversity Of Shopping Options, Deflation Creating More Agita

Overstoring still causing an endless traffic jam of retailers in the Northeast? Check.

A wide variety of brick and mortar retail formats and styles from which consumers can choose? Check.

An increase in online delivery-driven shopping for grocery items? Check.

A growing portal of meal kit solution companies beginning to gain greater penetration? Check. Deflation in many perishable categories especially milk, eggs and meats? Double check.

Let’s step back and analyze. Virtually every urban and suburban marketing area in the Mid-Atlantic has been overstored for the past seven years and it seems every silo of food and drug retailing – supermarkets, specialty stores, ethnic markets, club stores, mass merchants, drug stores, c-stores and dollar stores – have increased their grocery SKU load over the past 18 months. Amazon and its perishables unit have added more fulfillment houses in the past 12 months. Start-ups such as Blue Apron, Hello Fresh and Plated are making at least some headway with their meal kit offerings.

So, without further ado, here’s my progress report on the largest supermarket operators in the region.

ShopRite – Whether it was Metro New York or the Delaware Valley, the ShopRite legacy continued to flourish. ID sales were generally flat for the retail arm of Wakefern, but when you’re averaging more than $1 million per week per store, that’s an impressive mark by itself to attain. With the addition of 10 new stores (mostly former A&P units), ShopRite operators produced the best post-A&P results of any of the other Tea Company store buyers and has other additional new stores slated for Philadelphia (Bridge & Harbison); Bedminster, NJ; Old Bridge, NJ; S. Brunswick, NJ; Sparta, NJ; Camden, NJ; Shrewsbury, NJ; and Sparta, NJ. The only question about ShopRite’s long-term future success is whether the next generation of family owners can perpetuate the high level of success that previous generations have. However, as for the present, Shop Rite remains a dominant number one because, as I said last year, they walk it and talk it – and at the end of the day, have earned their spoils.

Stop & Shop (New York Metro Div.) – The perfect number two competitor for market leader ShopRite. Stop & Shop runs solid, yet uninteresting stores that seem unwilling to press ShopRite a little harder. Locations are good, pricing is competitive and you can certainly find virtually any item you need at the 211 Stoppies in the Metro NY area. ID sales declined again this year and we’ll see how much Stop & Shop “improves” (as the executives at the new Ahold Delhaize organization predict) once the banner (brand) shifts to a decentralized merchandising model and the potential productive effects of synergies take hold early next year. One change over the past few months: Mark McGowan now heads the combined New York and New England division for Stop & Shop replacing the estimable Don Sussman in Metro New York.

Giant/Carlisle – Internally, not much of a different scenario than of its sister brand Stop & Shop. The decentralized merchandising plan is evolving with a new lineup set to begin early next year. Also early next year Nick Bertram will be replacing Tom Lenkevich (who is retiring) as president of the division. Externally, the differences between the two banners are distinct. Giant is not organized; Stoppie is a union shop. Morale at Giant is superior to that of Stoppie’s and the performance of the Carlisle, PA-based “brand” has been much more consistent over the past five years. However, there are some signs of slippage at Giant – more store staffing is needed and, like other Ahold USA units, associate training has declined. At the end of the day it’s about improving customer engagement which leads to “selling more stuff.” Giant still gets high marks, but is capable of doing better.

Acme Markets – A difficult year for the Malvern, PA-based division of Albertsons. Market conditions certainly affected the chain, which had performed admirably in the two prior years, but some of Acme’s challenges were predictable. The decision to acquire and quickly open 71 former A&P stores might have provided a short-term boost, but the condition of those stores and the culture Acme inherited in them created a negative rebound effect, particularly in Northern New Jersey where consumers were generally unfamiliar with the Acme name. While Albertsons is spending more cap-ex on its Acme division than any other in the entire company, even more is needed. What’s also needed is a cultural improvement at many of the Tea Company stores it purchased. Former Acme president Jim Perkins officially returned last month to once again steer the Acme ship. Jim is dogged, street smart and tireless, but he’s working with a thin staff, so more is needed from everyone to regain the momentum of the recent past.

Weis Markets – A great year for the regional chain especially in light of how tough market conditions were. ID sales were up during all four quarters and with 44 newly acquired stores added to its fleet, Weis now operates more than 200 stores with projected overall sales eclipsing $3.5 billion. One of Weis’ greatest strengths is its humility. Not a lot of egos on the team or excessive process in how to reach the end zone. CEO Jonathan Weis and COO Kurt Schertle really are the new disciples of “selling more stuff.” Look for more “in-fill” acquisition opportunities to exploit; but don’t look for a lot of flash. The mojo is very positive and the plan is working.

Wegmans – Just because their average store volume exceeds $1.1 million per week and their loyalty quotient is on the same level as ShopRite, it doesn’t mean Wegmans isn’t prey to the fierce competitive conditions and deflation that others also faced during the past 12 months. The one common link between the per-store volume kings is the consistency of their operations and the loyalty of their customer bases. In a flat year when measuring ID sales, Wegmans’ foundation remained very strong. Later this year, the Rochester, NY uber-merchant will cut the ribbon on stores in Hanover Township, NJ (July 14) and Montvale, NJ (September 24-which should be a killer). Other new stores in the NY-NJ-PA pipeline include locations in Lancaster, PA, Brooklyn, Harrison, NY and the recently announced Middletown, NJ. One management change worth noting is the elevation of Colleen Wegman to CEO. Her dad, Danny, becomes chairman. Don’t look for any discernible disruptions in the powerful Wegmans engine.

Krasdale – Now that all of the groups supplied by wholesaler Krasdale have been lumped together, they are truly a collective force, primarily in the five boroughs of New York City. Revenue growth in recent years has been relatively flat, but with 349 stores in NYC operating under such banners as C-Town, Bravo, AIM, Market Fresh, Shop Smart and Stop 1, Krasdale’s foundation is solid. And those independents which are serviced by the White Plains, NY wholesaler have shown tremendous loyalty in their dedication to the distributor and vice-versa. Perhaps the overarching issue for the family-owned wholesaler is determining a long-term succession plan.

Key Food – Continues to make progress against the other wholesale and co-op driven independent groups (particularly ASG) in the Metro NY market. Performance during the past 12 months was solid, but not at the same spectacular levels of 2015 and 2016. The 80 year old organization still managed to add four new stores, increase its market share in the five boroughs and expand further into New Jersey. In the long-term, the tireless work ethic and aggressive marketing approach of CEO Dean Janeway and COO George Knobloch will be the keys to the company’s future success, just like it’s been for the past eight years since the former Wrigley executives joined forces in Staten Island to rebuild what was then a fading legacy.