Wal-Mart Pushes Giant For Lead In Ferocious $47 Billion Mid-Atlantic Market

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Harris Teeter enjoyed a solid year of growth, adding six new stores (the most of any supermarket chain in the region) and increasing sales to an estimated $1.53 billion, which moved the unit of Kroger up two spots to seventh place. The growth cycle is expected to continue for at least the next few years as the Matthews, NC-based chain has six new stores in its future real estate pipeline.

Weis Markets’ prodigious acquisition effort vaulted them eight places in the survey. Now with 104 stores in the Mid-Atlantic (up from 63 last year), the closely-held merchant posted annual revenue of $1.53 billion, an increase of more than $500 million from 2016, making the company the eight largest retailer in the region.

It was yet another challenging year for Shoppers Food & Pharmacy, now in ninth place among all retailers in the region. The discount retailer saw its store count drop from 55 to 52 and, as much as the intense, diversified competition has impacted Shoppers, corporate parent Supervalu has also contributed to the damage by continuing to undercapitalize the discount merchant and providing little creative support to the Bowie, MD-based regional chain. Sales for the year are estimated at $1.49 billion, down from $1.60 billion last year. Earlier this year, Shoppers inherited the merchandising functions from other SVU corporately-owned stores – Farm Fresh and 22 Shop ’n Save stores in Western MD, PA and WV.

One grocery channel that continues to grow is ethnic and specialty supermarkets (“International Markets”), whose stores are at least 10,000 square feet in size. Now with 117 stores in the region and ranking 10th overall, those primarily Asian and Latino stores produced estimated sales of $1.48 billion, a gain of 10 new stores and $107 million in additional sales.

Other retailers that topped the $1 billion mark in annual sales in the Mid-Atlantic region included 7-Eleven. The c-store operator continued on its path of modest comp-store improvement, while upgrading many of its stores. 7-Eleven operates more stores in the region than any other retailer – 990 – which produced estimated sales of $1.47 billion in revenue, up from $1.42 billion last year.

Target had a tough year overall, especially so in its attempts to expand its grocery business. Slightly negative same store food sales plus the sale of its 102 pharmacies in the region to CVS produced an approximate $170 million sales drop. We estimate that sales at its 102 stores (including three SuperTargets) were $1.43 billion for the 12 month period.

Perennial club store leader Costco was one of those retailers that made progress despite the headwinds of the past year. The Issaquah, WA-based warehouse discounter operated the same number of stores as last year (29) and amassed estimated annual extrapolated food and drug sales of $1.37 billion, $33 million more than in 2016.

While Wegmans had a relatively flat year when measuring same store revenue, the Rochester, NY-based uber-retailer had a stellar 12 months in expanding its base. The high-volume merchant opened a record four new stores – all in Virginia – during the past year and increased its overall Mid-Atlantic volume by nearly $300 million. Now, with 19 stores in the Mid-Atlantic, Wegmans’ estimated annual volume rose to $1.40 billion.

Rite Aid and Walgreens, two drug chains that remain in merger talks (which have continued for more than a year), round out the list of billion dollar merchants in the Mid-Atlantic. Rite Aid now operates 376 stores in the market, good for an estimated $1.26 billion in revenue. Walgreens, the highest per store sales drug chain in the country, rang up an estimated $1.11 billion in volume at its 217 locations in the region. The FTC is still reviewing the deal (which now has a July 27 deadline according to Walgreens). If approved, more than 1,000 stores are expected to be divested including several hundred in the Northeast.

By class of trade, the leaders are: Supermarkets – Giant/Landover (161 stores, $5.29 billion in sales); clubs – Costco (29 stores $1.37 billion in extrapolated sales); mass – Wal-Mart (161 stores; $4.49 billion in extrapolated sales); drug – CVS (622 stores and $2.92 billion in estimated sales); and convenience stores – 7-Eleven (990 stores and an estimated $1.47 billion in revenue). Additionally, the 20 military commissaries rang up annual sales of $710.5 million, continuing a decline of military commissary volume since 2009.

Viewed as a group, the 45 corporate chains in the market operated 4,957 stores and accrued $45.78 billion in annual sales, good for 97.45 percent of the Mid-Atlantic region’s $46.98 billion food and drug market.

Among all independent retailers (those operating between two and 17 stores), Baltimore-based B. Green & Co. retained its lead as the region’s top indie with 10 stores amassing $187.7 million in annual sales. Other independent retailers topping the $100 million sales mark included MOM’s Organic Market (14 stores with estimated annual sales of $182 million) and Karns Prime & Fancy Foods (eight stores that compiled $134.3 million in annual sales).

As a collective group, the 13 multi-store independent retailing organizations in the Mid-Atlantic operated 72 stores which garnered sales of $936.2 million Independents controlled 1.99 percent of the region’s food and drug revenue. That’s down significantly from last year’s 2.27 percent share. The primary reason was the shuttering of Mars Super Markets – and its 13 stores – last summer after 73 years in business.

Events of note to watch for over the next year will be the debut and progress of Lidl’s U.S. entry; the evolution of Ahold Delhaize’s merger integration plan (synergy strategy), which features decentralizing all of its divisions (brands); a final outcome of whether Walgreens and Rite Aid will actually merge their companies; and the debut of Publix in the already overcrowded Richmond market.

While there may be some relief for retailers when deflation cycles through later this summer, the overall ride going forward still promises to be a tough and gritty battle.