With so much overstoring and so much diversity in retail styles, the gridlock in the 70-county Food Trade News marketing area continued. And while many industry observers thought the departures in recent years of A&P and Bottom Dollar would create a little more breathing room for the existing operators, that hasn’t been the case – more stores are continuing to be built (albeit at a slower pace) and the amount of ecommerce business continues to increase.
The new rules have been written, and while not all retailers will survive, those merchants that have the right mix of proper capital expense (primarily for upgrading their store bases and investment in technology and ecommerce) coupled with a focus on their associates (and overall company culture) have the best chance of create more space between themselves and their less responsive competitors.
On an industry-wide basis, there was some good news to report. Deflation, a significant negative factor over the past two years, has generally subsided. There are still some soft spots – milk and eggs – but other perishables have seemed to regain more normal wholesale pricing. And one continuing negative factor is the Philadelphia “soda” tax, which has impacted sales for all retailers in the city. There is hope, however, as the Pennsylvania Supreme Court has agreed to review a lawsuit filed by opponents of the tax; additionally, a new bill has been introduced in the state legislature which would ban all taxes on food and beverages across the entire Keystone state.
On the news front, the story of the year was Amazon.com’s $13.7 billion cash acquisition of Whole Foods Market, a stunning deal that is just beginning to reshape retail. More locally, ShopRite continued its dominance over the market (but not quite at the same rate as previous years) while Lidl, the German discounter that promised 100 new stores in its first year including 49 in our marketing area, managed to open just two disappointing units – in Middletown, DE and Vineland, NJ – and generally underperformed on a lot of levels. Last month, it replaced its U.S. CEO Brendan Proctor, with another European Johannes Fieber.
Our annual retail market survey measures sales for the 12-month period ended March 31, 2018 and covers a 70-county territory ranging from Litchfield County, CT to Cape May County, NJ on a north-south plane and from New Haven County, CT to Franklin County, PA on an east-west plane.
Here’s a look at how the top 10 retailers fared this year:
Despite the rugged competitive landscape, the 264 ShopRite, Fresh Grocer and PriceRite stores controlled by Wakefern managed to increase their overall share of the $98 billion market. The big Keasbey, NJ-based co-op added two more stores to its fleet this year and increased its estimated retail sales to $14.97 billion. The company also has approximately eight new stores in the pipeline that should open in the next few years.
For the first time in five years, second ranked Stop & Shop did not close any stores and had a solid year sales-wise with revenue increasing $21 million to $8.05 billion at its 214 Metro New York stores. On January 1, Stop & Shop became part of parent company Ahold Delhaize USA’s (ADUSA) new decentralized “brand” model.
CVS, which last year surpassed Giant/Martin’s, hung onto its moved into third-place spot, despite closing 33 stores in the region. Same store sales were slightly positive, but the effects of those store closures (mainly in Pennsylvania) saw the overall volume at Woonsocket, RI drug chain dip to an estimated $5.77 billion at its 1,206 drug stores.
Giant/Martin’s, another ADUSA decentralized “brand” had a good year – the best of all the former Ahold USA divisions. Sales climbed to $5.51 billion (from $5.00 billion) at its 143 stores. On January 1, Nick Bertram became Giant/Martin’s new president, succeeding the retired Tom Lenkevich.
For the second year in a row, Walmart enjoyed success, increasing its same-store sales and providing a better in-store experience for its customers (improved service levels, better trained associates and cleaner units). The Behemoth’s upgraded digital initiative and its strong brick and mortar presence has definitely aided sales as well. Extrapolated food and drug sales at its 177 units was estimated at $5.24 billion.
Walgreens (Duane Reade) remained the highest per-store volume leader among all drug chains in the market. The company, which was only partially successful in acquiring Rite Aid (it did purchase about 1,900 stores from the Camp Hill, PA drug chain; those conversions are just beginning), had a relatively flat sales year. The Deerfield, IL-based company, a unit of Walgreens Boots Alliance, operated 698 stores in the region, good for an estimated $4.53 billion in annual sales.
The leading wholesaler serving Metro New York independent retailers (that’s not a co-op), Krasdale, again supplied the most stores in the market (568 – mostly in the five boroughs of New York City). Seven of those banners – C-Town, AIM, Bravo, Fine Fare, Market Fresh, Shop Smart and Shop1 – combined to ring up sales of $4.10 billion for the 12-month measuring period.
Costco once again paced all club operators in the market. Amassing some incredibly high individual store volumes in and around the city of New York, the low-margin (13-15 percent) club merchant opened one new unit in Oceanside, NY. For its 49 stores in the 70-couty region, the Issaquah, WA discount merchant had estimated extrapolated sales of $4.04 billion.