Taking Stock

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Potential Opportunity For Members To Own PriceRite Units Gives Wakefern Additional Edge 

It’s not official yet, but it seems likely that in the next few weeks Wakefern will allow its 50 members to own and operate stores that carry its discount PriceRite banner. Currently all 50 PriceRite units, which are located in New York, Pennsylvania, Maryland, Connecticut, Massachusetts and Rhode Island (plus a new store currently under construction in Johnston, RI) are corporately-owned by Wakefern and have operated under that status since the first PriceRite debuted in West Springfield, MA is 1995.

However, times have clearly changed, particularly from a competitive perspective. which has reset the landscape for many ShopRite owners. And while Wakefern has done a fine job of internally operating its discount division (I believe PriceRite is the best operated and conceived of the “extreme value” merchants, which also includes Save-A-Lot and Aldi), the co-op’s uncanny ability to adapt to the needs of its member/owners and react to current market conditions is a prime reason the Keasbey, NJ-based co-op has been able to build on its market share dominance in the Metro NY-Philly corridor.

Wakefern’s long-term competitive strategy is now becoming clear. Allowing Wakefern’s current members to own future PriceRite locations allows the independent retailers to better control their destinies when competing against the likes of dollar stores, ethnic markets and other extreme value merchants which focus on price in a smaller footprint. And let’s not forget about Wal-Mart (see story on page 22), which will certainly increase its presence against ShopRite in the next few years with the addition of Neighborhood Markets and/or Wal-Mart Express units.

And last month’s announcement that the co-op has acquired the trademark of The Fresh Grocer (as well as adding the seven store retailer to its member base) will allow existing members and potentially new ones to also add flexibility on the “fresh” end of the business when competing with the likes of Whole Foods, Trader Joe’s, The Fresh Market and Balducci’s.

Additionally, the potential to open stores in a 35,000 square footprint, be it an upscale unit or a limited assortment store, allows the membership to take advantage of smaller real estate opportunities, both in affluent demographic areas (The Fresh Grocer) or more urban locations (PriceRite) where land availability and cost are often major roadblock when attempting to build a new 80,000 square foot ShopRite supermarket.

Yes, there still are hurdles to clear, we’re told. One critical concern is the selection of member-ownership in existing markets where there is geographical overlap of territories. Of course, that has always been a factor at Wakefern, where the firm’s Site Development Committee (SDC), makes the final decision on potential territorial disputes involving new ShopRite locations. While Wakefern has done a good job of segregating its members’ geographies (e.g., Bernie Kenny’s stores – all located in Delaware; and the Klein family in Harford County, MD and BaltimoreCity), there is significant overlap in New Jersey and around Philadelphia. And while the members sometimes don’t like the final decisions made by Wakefern’s SDC, they recognize that the process is a fair and objective one. And overarching above what might seem like a potentially controversial political issue is that the membership of Wakefern believes that the future growth of the co-op is much more important than any single member vs. member issue. And that is essentially the strength of Wakefern – the intensity, tenacity and stellar work ethic of its members, who at the end of the day remain focused on the long-term good of the organization.

At this point, Wakefern isn’t commenting on the status of the “member-owned” PriceRite issue. However, we’ve learned that one of the first stores under consideration is the recently closed Pathmark location in Camden, NJ, a site we’re told that the Ravitz family is interested in. That would make sense, given the Ravitz’s plan to open a new 75,000 square foot new store in that city in 2015, the first new unit to be built in more than 30 years in one of the state’s largest food deserts. A complementary smaller, more price-driven offset in Camden would make a lot of sense to add more market share in a large but economically challenged community. Actually, it’s a similar strategy that Steve Ravitz and his three sons, Shawn, Jayson and Brett, have deployed in a dramatically different demographic to build their business in the nearby Cherry Hill area.

Since both Wakefern members and vendors have been discussing the new PriceRite direction, we believe an announcement will be made shortly.

And with its recent acquisition of The Fresh Grocer name and the continuing expansion of its core ShopRite banner (Albany, NY, Baltimore-Washington and Connecticut), nobody in the industry represents the strength and creativity of the independent retailer better than the Wakefern Food Corp.