2017’s Top 10 Stories
This year was full of surprises, new terms and new operators. Who would have predicted the Amazon purchase of Whole Foods? Lidl, a well-known European discount grocer, made an impact in the Southeast starting in June and made its entrance into New Jersey in mid- November. Online grocery delivery expanded beyond Amazon to such companies as Shipt and Instacart. Albertsons purchased Plated, a meal kit service, in line with both companies’ strategies to “reinvent the way consumers discover, purchase and experience food.” Some well-known family-owned companies passed the torch to the next generation. Colleen Wegman became the CEO of Wegmans, and Chip O’Hare, head of JOH, a major Northeast independent broker, passed the leadership torch to John Saidnawey and Chip’s son, Matt.
Amazon to Acquire Whole Foods Market in $13.7 Billion Mega-Deal
On June 16, Amazon and Whole Foods Market announced a merger agreement under which Amazon would acquire Whole Foods for $13.7 billion.
The deal is the largest in Amazon’s history. The acquisition further immersed Amazon in the $611.9 billion supermarket industry, in which Whole Foods holds a 2.7 percent market share.
According to IBISWorld industry analyst Madeline Hurley, “Although industry revenue is only set to rise at an annualized rate of 0.8 percent over the five years to 2022, the transaction will allow (Amazon) to boost not only its grocery sales but expand its brick-and-mortar presence.”
“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” said Amazon CEO Bezos. “Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades—they’re doing an amazing job, and we want that to continue.”
John Mackey, Whole Foods Market’s co-founder and CEO, said, “This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders while at the same time extending our mission and bringing the highest quality experience, convenience and innovation to our customers.”
Whole Foods continues to operate stores under the Whole Foods Market brand. Mackey remains CEO of Whole Foods; headquarters remain in Austin, Texas.
In fiscal 2016, Whole Foods Market had sales of approximately $16 billion. It operates more than 460 stores in the U.S., Canada and the U.K. According to Mergermarket, the transaction represents the second-largest U.S. grocery deal on record. The only one larger is 2006’s $17.4 billion deal for Supervalu, Cerberus Capital Management and others to purchase Albertsons.
Amazon already is the biggest e-commerce player in America, and it has become so pervasive in retail that 42 percent of consumers bought something from Amazon last year, according to The NPD Group. Sixty percent of Millennials are Amazon buyers.
“Fresh foods are the final frontier for Amazon. Figuring out how to get it to your front door is the ultimate in convenience for consumers. In order for Amazon to get the volume growth they are looking for, fresh foods have to be part of the equation. This deal gives them credibility with consumers and a major foothold in that space,” said David Portalatin, VP of industry analysis-food for NPD.
Philadelphia Food Retailers Impacted Hard by New Beverage Tax
The Philadelphia sweetened beverage tax continues to be the hot topic in Pennsylvania, causing retailers inside and outside Philadelphia to take a look at their soda inventory and sales.
Alex Baloga, new president of the Pennsylvania Food Merchants Association (PFMA), said the impact of the Philadelphia tax is significant. Beverage sales in the city have dropped 50 percent, and residents are leaving the city to buy products. If they are buying beverages, they are paying exorbitant prices. “For many residents living in Philadelphia, they can’t afford it. Businesses are also hurt by this; overall sales are dropping,” said Baloga.
In late June, PFMA Chairman Jeffrey Brown, of Brown’s Super Stores, outgoing PFMA President David McCorkle and Grant McLoughlin, EVP, The Fresh Grocer, testified before the Pennsylvania Senate Local Government Committee concerning the business losses the industry is experiencing due to the 1.5 cents per ounce tax on beverages in Philadelphia.
“In my opinion, if the tax continues, it will stop food store development in Philadelphia,” McCorkle said. “The result will be store closings, additional job losses and the loss of convenient city shopping locations where healthy and affordable food will be available.”
In his testimony, Brown, who operates six ShopRites in the Philadephia area, explained that the tax impacts nearly 4,000 items sold in his stores including items that are not soda, such as sports drinks, flavored water and nutrient enhanced drinks.
“In my six ShopRite stores alone, sales are down by an average of 15 percent storewide,” Brown said. “I have 210 fewer associate positions in my stores this year as a direct result of the beverage tax, and I am not alone.”
McLaughlin added, “Many of our customers rely on SNAP benefits to feed their families. Year-to-date, our SNAP sales are down almost 14 percent in the impacted stores as evidence that the Philadelphia beverage tax is forcing those customers to leave the city to avoid a reduction in their purchasing power. Those who cannot leave the city are using their valuable SNAP benefits to purchase Philadelphia beverage-taxed items thus reducing their purchasing capabilities.”
European Grocer Lidl USA Opens in Southeast and New Jersey
According to Will Hargood, Lidl U.S. spokesperson, since launching its first store in the Southeast on June 15, Lidl has driven prices down in the neighborhoods in which it operates stores.
“In many markets, other retailers have reacted by slashing prices by as much as 30 percent in the immediate vicinity of Lidl stores in order to compete. We are proud to be driving prices down for customers around our stores. This ‘Lidl effect’ is great news not just for Lidl customers but for everyone who shops in the areas surrounding our stores,” Hargood said.
Lidl operates more than 10,000 stores in 28 countries. The company’s stated goal is to offer fresh produce, meat and bakery items as well as a wide array of household products at the lowest possible prices. Lidl first established its U.S. headquarters in Arlington County, Virginia, in June 2015.
Since then, it has announced regional headquarters and distribution centers in Spotsylvania County, Virginia; Alamance County, North Carolina; Cecil County, Maryland; and Bartow County, Georgia. Lidl opened its first New Jersey store in Vineland on Nov. 16 and has a total of about 45 stores open.
Weis Markets Unveils Superstore Community Market
In March, Weis Markets celebrated the opening of its new flagship store in Enola, Pennsylvania, featuring the company’s new community market design.
The 65,000-s.f. supermarket’s layout features a food court offering a selection of fresh cooked meals and hand-rolled sushi made in the store, service-focused fresh departments and more.
The Enola location has the company’s first in-store pub, complete with a rotating selection of draft beers and a growler station. The pub features an adjoining café stocked with 900 domestic and craft beers in addition to 500 varieties of wine. The store also has an in-store ice cream parlor for a soda float or scoop of Weis ice cream.
“Our community market design has been in development for a number of years, so we are delighted to debut our new store to the Enola community,” said Weis Markets CEO Jonathan Weis. “Each new feature of this store was designed to not only provide convenience to our customers, but to also elevate the grocery shopping experience. We wanted to look beyond what our customers are putting in their carts to offer a distinctive shopping experience that combines value, variety and service. We think we achieved this goal and look forward to serving the Enola community for many years to come.”
Colleen Wegman Adds CEO to Her Duties
Colleen Wegman, president of Wegmans Food Markets, added CEO to her job title. Her father, Danny Wegman, who had served in the position, assumed the chairman’s role.
“I will continue in my role but now as chairman of the company,” said Danny Wegman. “The time has come to create a structure for the future that will allow us to remain strong, vibrant and family-owned. I have no doubt that our company will be in good hands.”
Colleen joined the company in 1991 and was named president in 2005 by the late Robert B. Wegman, her grandfather. New York-based Wegmans operates 92 supermarkets in New York, Pennsylvania, New Jersey, Virginia, Maryland and Massachusetts.
Golub Corp. Opens New Market 32 in New York
In late June, The Golub Corp. cut the ribbon on its latest Market 32 store that was built from the ground up in Clifton Park, New York.
“Market 32 is a contemporary, food-focused store that reflects what our customers have told us they want in a modern and convenient shopping experience,” said Scott Grimmett, Golub Corp. president and CEO. “We continue to evolve our Market 32 brand incorporating the offers, enhanced service and technology that are resonating most with today’s customers.”
At 52,400-s.f., the latest Clifton Park unit is the 15th Market 32 store to open since the company announced its plans to develop the new brand across the majority of its stores.
To date, 11 of the company’s Price Chopper stores have been converted to Market 32, while four have been built from the ground up—in Sutton, Massachusetts (opened in October 2015); Oxford, Connecticut (September 2016); Fort Edward, New York (January 2017); and Clifton Park.
Several conversions currently are under way across the chain’s six-state footprint—in East Greenbush, New York; Burlington and Brattleboro, Vermont; and Worcester, Massachusetts. Golub Corp. also expects to break ground on a new Market 32 in Maynard, Massachusetts.
The look and feel of Market 32 is distinctively more modern than the Price Chopper format. Marked by open space, the décor is filled with soft earth tones. There are product-focused displays, murals and lighting, ready-to-eat foods that are fresh and locally grown.
The stores also feature the convenience of product/department adjacencies, such as greeting cards next to the floral department.
C&S Selects Rosie as E-Commerce Partner for Independents
C&S Wholesale Grocers partnered with online grocery shopping platform Rosie to bring customized e-commerce and omnichannel digital marketing programs to its independent grocery retailers across the country.
The partnership enables more than 3,000 C&S-supplied grocery stores across the U.S. to implement Rosie’s online program at an affordable price attracting new customers and additional revenue according to the wholesaler.
“The C&S family of companies is very pleased to partner with Rosie as an e-commerce solution for our independent retail customers,” said Frank Puleo, C&S VP of retail marketing and services. “At C&S, we are serious about our responsibility to help independent retailers be successful, and we feel that same commitment from Rosie. The product they developed is best in class, and their commitment to continuous improvement is indicative of the company’s ability to be nimble in this evolving industry. We especially appreciate their high integrity and accessibility, and we look forward to continued mutual success in helping our retail customers compete in the e-commerce environment.”
JOH Undergoes Major Leadership Changes
JOH, a major independent regional broker based in Billerica, Massachusetts, has reorganized its corporate leadership.
Effective Sept. 1, Chip O’Hare took on chairman emeritus status; John Saidnawey was promoted to chairman and CEO; and Matt O’Hare, Chip’s son, became president and COO. Chip has 42 years of experience in the food industry.
JOH was founded in 1956 by Harry O’Hare Sr., Chip’s father, and is a strong regional food broker with 16 offices and strategic partnerships across the U.S. JOH has more than 500 employees and represents 400-plus clients.
“I am very proud of John Saidnawey and his contribution to the success of our company,” said Chip O’Hare. “We all appreciate his steadfast dedication to JOH over the last 35 years and for his efforts in the role of president and COO for the past seven years. As he steps into his well-deserved role as chairman of the board and CEO, I know we can continue to expect great commitment, enthusiasm and leadership from him.”
Saidnawey’s role includes general management, strategic planning, finance and client and customer relations, Chip added.
In his new role at JOH, Matt O’Hare is responsible for overseeing all JOH operating divisions including retail operations, category management, marketing, technology, personnel and other business operations. He joined JOH in 2011 and has worked as an account executive, director of frozen & dairy and, most recently, as SVP of corporate development.
Albertsons Acquires Online Meal-Kit Service, Plated
Albertsons Cos., parent company to Shaw’s and Star Market, acquired Plated, a meal kit service, in line with both companies’ strategy to “reinvent the way consumers discover, purchase and experience food.” The transaction closed in late September.
New York City-based Plated operates as a wholly owned subsidiary of Albertsons Cos., Boise, Idaho. In teaming up with Plated, Albertsons says it adds a meal kit company with leading technology and data capabilities, a strategic step as it continues to focus on innovation, personalization and customization.
Among the key projected outcomes of this deal is for Plated to become the first omnichannel meal-kit offering with national scale.
“Today’s consumer is looking for a variety of personalized shopping alternatives, and this transaction is the latest example of Albertsons Cos. meeting our customers wherever and however they like to shop,” said Bob Miller, chairman and CEO of Albertsons Cos. “With Plated, we’ve found a partner who shares our commitment to delicious, affordable food; superior technology and innovation; and world class customer service. Plated knows its customers better than anyone, and together we will accelerate our ability to serve them. We are excited to offer our customers more online options and fresh, quality ingredients along with distinctive recipes at their doorstep or through traditional shopping trips.”
Albertsons Names Perkins to Lead Safeway Eastern Division
Albertsons executive Jim Perkins has taken on the additional role of Eastern Division president for Safeway as he continues in his current role as EVP of retail operations, special projects and Acme Division president. Perkins is the third leader of the Eastern Safeway division in three years.
At Safeway, Perkins succeeds Dan Valenzuela who left the company to pursue other opportunities. Valenzuela had been named president of the Safeway Eastern Division one year ago and had worked for Safeway for 40 years.
Safeway’s Eastern Division operates 125 store locations in the Baltimore-Washington, D.C. area.
Valenzuela, formerly with Safeway’s Seattle division, succeeded Steve Burnham at the helm of the Eastern Division in September 2016. Burnham had taken on the role in October 2014 as part of the leadership structure that would come out of the merger of Albertsons and Safeway, which was completed on Jan. 30, 2015. The merger created a retail network that includes 2,230 stores, 27 distribution facilities and 19 manufacturing plants with more than 250,000 employees in 34 states including the District of Columbia.
Perkins returned to Acme in June and had been supervising the integration of the 76 stores that Albertsons acquired from A&P through bankruptcy.