FTN 2013 Market Study: ShopRite Still King, S&S, Giant Gain In Fierce $89.5B Market

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Sales remained flat, the company closed about a dozen stores and even failed (at least so far) at selling arguably its best asset – its Food Emporium unit in Manhattan. Other than the labor and distribution savings it negotiated during its 15 month bankruptcy period, those gains have not been reflected in improved customer service, upgraded associate morale or sales. At its 284 stores, which operated under the A&P, Pathmark, Super Fresh, Food Basics, Waldbaum’s or Food Emporium banners – sales were estimated at $6.21 billion. Continuing to make gains was Giant/Carlisle (Martin’s), which added 16 new stores during the past year. Fifteen of those stores were acquired from Safeway, which finally bailed on its Genuardi’s operation after a dozen years of poor results. Sales at the Ahold USA owned division were $5.14 billion at its 142 units. Not only did Giant/Carlisle achieve the largest volume increase over 2012, it became the leading retailer in the Greater Philadelphia market this year (the Philly market encompasses the eight counties closest to the city; ShopRite still leads in the 15 county Delaware Valley market). In fact, if you were to look at both Ahold USA banners in the market study area, the combined sales of Giant/Carlisle and Stop & Shop would actually surpass those of ShopRite (PriceRite) by a small margin.

Wal-Mart continued its dominant presence in the market by surpassing its same store sales national average at the 166 units in the 70 county area. Of those 166 stores, 87 were SuperCenters including expansions from conventional units in: Pottstown, PA; Whitehall, PA; Lower Oxford, PA; Howell, NJ; and a new SuperCenter in Williamstown, NJ. Extrapolated annual sales at those stores were $4.70 billion. Wal-Mart has about a dozen more SuperCenters in its pipeline and also plans to add additional smaller Neighborhood Markets to its roster in the Northeast over the next two years. However, one place it will no longer seek to enter is the City of New York, as U.S. CEO Bill Simon recently noted that the company has shifted its priorities away from entering the five boroughs. The three largest U.S. drug chains held down the next three spots.

On the strength of its presence in Metro New York, Walgreens (Duane Reade) emerged as the leading drug retailers in the region. On the new store expansion front, no drug merchant was as aggressive is Walgreens in opening new units and expanding its grocery presence. Other than its 2010 acquisition of Duane Reade and its 2006 purchase of Newark, DE-based Happy Harry’s, all of the chain’s growth has come organically. Estimated regional sales for the Deerfield, IL-based firm’s 741 area units (including a whopping 166 alone in Manhattan – most of them Duane Reade units) were $4.45 billion.

CVS, with 934 units, operated more stores than rival Walgreens, and while producing healthy per store averages, couldn’t match Walgreens’ generally larger and newer footprint, sales-wise. However, one area where both chains made headway was in expanding their presence in food. Both chains now sell hundreds of grocery, refrigerated and frozen food items and both companies have ramped up their advertising and marketing of food as a traffic builder and featured sales component. Estimated sales at the 934 CVS stores in the market were $4.37 billion annually. While Rite Aid, which operates even more stores (971) than the two drug chains it trails, is still struggling on many levels, improvement was achieved this year. The company actually has been showing black ink on the bottom line recently, something unseen at the Camp Hill, PA organization since 2007. Under the leadership of CEO John Standley (ex-Pathmark CEO and Fred Meyer executive), the stores look better, the merchandising is crisper and, like Rite Aid’s competitors, the stores have more food to the mix. Estimated sales at its nearly 1,000 units (whose presence is large in the urban areas of Philadelphia and the City of New York) was $3.67 billion.

The leading club store operator nationally and also in the Food Trade News marketing area is Costco. The big Issaquah, WA-based discount retailer operated 41 high-volume stores in the 70 county region with extrapolated estimated sales of $3.30 billion. Costco not only achieved the highest per store average among its club store competitors (BJ’s and Sam’s Club), it also produced the best per store sales average among all retailers in the market study. In addition to an aggressive international expansion plan, Costco also has new units slated to open in Riverhead, NY and Yorktown, NY later this year and additional new units in Lower Macungie Township, PA and Lawrence, NJ next year.

Rounding out the top 10 retailers in the market was Wawa. It was another excellent year for the leading convenience store chain in the region. The Wawa, PA-based retailer opened nine new stores in the market (it now operates 487 units here) and continued to achieve strong same store sales gains. Overall revenue (excluding fuel, as gas sales are not included for any retailer in this study) was $2.56 billion and the c-store operator also experienced two other key changes. Former COO and CFO Chris Gheysens was named CEO of the company at the beginning of 2013, replacing the iconic Howard Stoeckel (who remains on Wawa’s board) and the company cut the ribbon on the first of what it hopes are many stores in Florida last July when it debuted in Orlando. At presstime, Wawa has approximately16 units open in the Orlando-TampaBay corridor.

Other retailers that surpassed the billion dollar sales mark in the region include: BJ’s (extrapolated estimated sales of $2.49 billion at its 65 club stores); Target (extrapolated estimated volume of $3.37 billion at its 123 units); Acme Markets (103 stores which amassed estimated sales of $2.19 billion); the independently owned C-Town (206 units, sales of $2.04 billion); Weis Markets (annual revenue of $1.81 billion at its 112 stores); Key Food (whose independent retailers operated 137 stores and garnered $1.40 billion in sales); Whole Foods (36 stores with estimated sales of $1.32 billion); 7-Eleven (766 c-store units producing an estimated $1.09 billion in annual volume); and Wegmans (19 megastores whose collective estimated annual sales were $1.04 billion).

Sales leaders by class of trade were: Supermarkets – ShopRite/ PriceRite (229 stores – sales of $12.1 billion); drug chains – Walgreens/Duane Reade (741 stores – estimated sales of $4.45 billion); convenience stores – Wawa (487 stores – sales of $2.56 billion); mass merchandisers – Wal-Mart (166 stores – extrapolated sales of $4.70 billion); club stores – Costco (41 stores – extrapolated sales of $3.30 billion). Moreover, the region’s eight military commissaries rang up $119.3 million in annual sales.

In addition to the withdrawal of Genuardi’s from the DelawareValley in 2012, other key retail news of the past year included more store closures from A&P (which named Greg Mays as chairman replacing Yucaipa Cos. founder Ron Burkle; Sam Martin remains as CEO) and Acme, which appointed Albertsons veteran Jim Perkins to head the beleaguered chain. He replaced Keith Wyche, who earlier in 2012 had replaced Dan Sanders. High-volume independent Fairway Market, which has been controlled by private equity firm Sterling Investment Partners since 2007, launched a successful public offering this spring and hopes to add about 90 additional units from Boston to Washington, DC. And one of the best executives over the past 25 years, Carl Schlicker, retired as COO of Ahold USA. He was replaced by James McCann, who has relocated from Amsterdam to Carlisle, PA where he will helm AUSA’s 775 store fleet. Taken as a group, the 87 multi-store retailers in the survey operated 8,219 with sales of $88.54 billion, which represented 98.94 percent of the grocery, HBC, general merchandise, pharmacy, tobacco, beer & wine and floral products in the Food Trade News marketing area.