Despite Slumps, Giant, Wal-Mart Hold Top Slots In $45.3B Market

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The song remains the same: overstored markets featuring a diverse range of shopping options, a still unsteady economy and the continued growth of alternate channel operates made market conditions challenging, especially again for traditional supermarket operators. Add to that an 11 percent reduction in Supplemental Nutritional Assistance Program (SNAP) benefits (which affected the supermarket channel the hardest), the Mid-Atlantic marketplace remained a very difficult place to operate.

This year there were fewer winners (in terms of market share gains) and a lot of retailers whose identical store sales continued to trend downward. Wegmans, Whole Foods (despite its stock price decline), Trader Joe’s, Aldi, Kroger and its newest entity Harris Teeter (which it acquired last July) all proved they could continue to build sales, open stores and increase customer counts.

Conversely, perennial Mid-Atlantic market leader, Giant/Landover (a unit of Ahold USA) had a very difficult year with sales declining and store counts reduced. However, Giant wasn’t the only retailer to take it on the chin. Baltimore-Washington competitor Safeway also operated fewer stores than last year and found the competition extremely rugged. Others that produced sales declines during the past 12 months included Farm Fresh, Weis Markets, and the Shurfine/Shursave independent retailers who primarily operate stores in Central PA.

While supermarkets remain the dominant outlet in which to buy food, the combined growth rate (in sales) from mass merchandisers, drug chains, club stores, military commissaries and convenience stores now outpaces that of supermarket by nearly a 4-1 margin. Not only are those “alternates” currently adding more stores than supermarket operators, they are expanding their grocery offerings, too.

Our survey measures sales for the 12 month period ended March 31, 2014.

Here’s a look at how the top 10 retailers fared this year.

Giant/Landover remained atop the leaderboard, but as noted earlier, sales took a big hit, dropping nearly $113 million to $5.67 billion. The company operates three fewer stores this year (165 vs. 168) and Giant particularly felt the impact of Wegmans, Harris Teeter and its own internal issues.

Ranking second once again was Wal-Mart which gained extrapolated food and drug sales ($4.01 billion vs. $3.85 billion). However, the Bentonville Behemoth’s ID revenue was flat and its gains came on the strength of operating six more stores this year, including its first two stores in Washington, DC, two new SuperCenters and two Neighborhood Markets. Wal-Mart has proclaimed that it will be fast-tracking its Neighborhood Market and “Express” formats in the next three years.

After a decade of declining sales, making small positive strides this year was Food Lion. With the closure of six units over the past year (it now operates 299 stores in the Mid-Atlantic), Food Lion’s Mid-Atlantic sales declined slightly to $3.3 billion, but  the Salisbury, NC-based unit of Delhaize did see positive ID sales results due to its store refurbishment and rebranding effort which was fully implemented chain-wide. The ultimate question for Delhaize America is that once its “rebranding” number fully cycle, can it sustain its modest gains?

Holding on to fourth place in the region was Safeway. To be blunt, it was not a pretty year for the company’s Eastern Division, which under relatively new CEO Robert Edwards, did lots of trimming – labor in its stores and at the executive level. Its consumer perception remained rather vanilla and with the competition targeting Baltimore-Washington leaders Safeway and Giant, Safeway’s sales dipped while operating two fewer stores than the year before.

For the year, Safeway operated 122 stores which amassed estimated sales of $3.11 billion. It will be interesting to view the company a year from now when Cerberus/New Albertsons takes the helm.

Giant/Carlisle remained in fifth place among all food and drug merchants in the region. For the only non-union unit of Ahold USA, it remained a tale of two cities. It performed relatively well (although not as well as in recent years) in its core Central PA market. However, in the Richmond area, where it faces a rugged daily battle with Kroger and Wal-Mart, results at its Martin’s bannered stores remain disappointing. It only looks like it will become even a tougher row to hoe in two years when Wegmans debuts its first two units in the capital of the Old Dominion. Giant/Carlisle operated 80 stores in the market which garnered $2.75 billion in sales over the past 12 months.

CVS remained the drug kingpin in the region. Like its rivals, Walgreens and Rite Aid, the Woonsocket, RI retailer increased its grocery offerings this year which helped increase sales at its 490 units, seven more than last year. Sales are estimated at $2.54 billion, up from $2.49 billion last year.

Another company that began to regain its form after seven years of declining sales was Shoppers Food & Pharmacy, which saw ID sales rise. While the unit of Supervalu has a long way to go before it regains its form of the 1990’s and early 2000s, new leadership and direction both corporately and regionally helped boost sales to $1.62 billion with the same 56 stores of a year ago.

For Target, the good news was that the Minneapolis-based mass merchant had a relatively solid first seven months of our measuring period. Then the company suffered a massive credit card breach which caused holiday sales to tank and put the once idolized chain into crisis mode which ultimately results in several management changes including Gregg Steinhafel as CEO. While it has regained some its mojo, Target will most likely be scaling a tall mountain for at least the next 18 months. And it didn’t help that its fledgling Canadian stores are underperforming, too. For the past 12 months, Target’s extrapolated food and drug sales at its 100 units (including more than 80 p-fresh hybrid stores and three Super Targets) are estimated at $1.58 billion.

One of the best performers of the year was Harris Teeter, now a unit of Kroger, the largest pure play grocery chain in America. The service-oriented retailer opened three new stores over the past year (it now operates 57 units) and grew overall sales by more than $75 million to an estimated $1.35 billion. With a new price impact program just unveiled in the Baltimore-Washington market and at least six new stores in the pipeline, Harris Teeter seems poised to grab more market share over the next 12 months.