by Kristen Cloud/staff writer
Retailers in Pennsylvania earlier this year dodged what could have had a “catastrophic” impact on their businesses, according to Randy St. John, senior VP of association services for the Pennsylvania Food Merchants Association (PFMA).
The state’s governor, Tom Corbett, had proposed in the winter to cap the sales tax vendor allowance to a maximum of $3,000 a year, in an effort to fatten the state coffers by approximately $47 million a year; for years, retailers have kept 1 percent of the sales tax they collect. For the 2011-12 year, that vendor allowance statewide accounted for nearly $71 million, the Patriot-News reports.
“We have many, many, many companies in Pennsylvania, both convenience stores and supermarkets, that receive vendor allowances (of upward of $700,000) a year,” St. John told The Shelby Report.
“We, the Pennsylvania Food Merchants Association, worked in conjunction with the Pennsylvania Retailers’ Association to approach the governor, asking him to rescind this idea. He refused. We then went to the legislature and, after a considerable amount of work by us and by our members, the legislature killed his proposal. We had a significant victory in saving the vendor allowance when the final budget was done at the end of June,” St. John said.
The state legislature ended its session in June but will return for an eight-day session in September before reconvening in January.
Because it’s an election year, St. John doesn’t expect much to happen during the brief meeting in September—though a proposal for the privatization of wine and spirits cannot be ruled out. It’s an issue that’s been “brewing in Pennsylvania for several years,” he revealed.
Currently, beer is sold privately in the state, while wine and spirits are only available through state-run stores.
At the beginning of the most recent legislative session, Gov. Corbett and the Pennsylvania House of Representatives Majority Leader Mike Turzai announced they wanted to privatize state stores.
“For the last year and half, a number of proposals have been brought forth, and it came to a climax in June in the House of Representatives when Rep. Turzai wanted to bring his bill, which was a bill to privatize the system, to a vote,” St. John said.
However, in June, Turzai found that he did not have the votes to privatize.
“This signature effort that both the governor and the majority leader of the House of Representatives presented—and wanted to push through quickly—they found that they couldn’t,” St. John said. “So Turzai has announced that he wants to try and work on this issue privately over the summer and see if he can get a vote in this eight-day session when the House comes back in September.
“My sense would be that it’s unlikely that the state-store system would be privatized here in Pennsylvania,” added St. John, noting that it’s likely that Turzai will wait until January to bring up the issue again. “But there is more and more interest in making beer and wine available in convenience stores and supermarkets.”
As for any other upcoming legislative issues that could affect the industry, St. John says it’s unlikely any new topics will come to the table during the short September session.
“Nobody wants to do anything controversial,” he said, stressing again that 2012 is an election year. “Nobody wants to do anything that would give the other party an advantage. So I would think that very little would come up. It’ll be quiet.”
Genuardi’s acquisition strengthens Ahold’s presence in state; Weis profits up
Carlisle-based Giant Food Stores’ acquisition of 15 Genuardi’s locations in Pennsylvania earlier this year further solidifies its parent company’s strong hold on the market in the state. Giant Food Stores, owned by Ahold USA Inc., purchased the Genuardi’s locations from Pleasanton, Calif.-based Safeway in mid-June for more than $100 million.
“Giant Food has really been moving into the Philadelphia area,” said Elizabeth Peroni, director of communications for the PFMA. “Obviously, with buying those Genuardi’s stores, that makes a bigger impact.
“They’ve switched the stores to their banners and they did that recently, within the last three or four weeks,” she told The Shelby Report in late August. “That’s pretty big news in the Philadelphia area. It takes one of the banners away in that area.”
With the remodels, key departments such as produce, bakery, deli, meat and seafood have been updated to provide a clean look.
“While all store aisles have been updated with new signage, we’ve worked hard to keep products in the same general location,” said Giant Food Stores President Rick Herring. “At the same time, we will be bringing improved selection to customers across the store.”
Safeway, which exited the Philly market with the sale of its Genuardi’s locations, also sold three of the stores—in Doylestown, Norristown and Conshohocken—to Sunbury-based Weis Markets. Weis, like Giant Food Stores, appears to being doing well. The company, celebrating its 100th anniversary this year, reported a 12.1 percent increase—to $23.2 million—in its second quarter net income.
Additionally, the company has completed a $3 million remodel of its Chambersburg store. It reopened Aug. 5 with: an improved exterior, allnew décor, a larger deli with an increased selection of take-out and heat-and-serve meals, a new service seafood department, an expanded produce department, a re-located and expanded pharmacy, a new floral department and additional self-service.
Weis also plans to open a store in The Marketplace at Huntingdon Valley in early 2013, as it will soon occupy the vacant property that was formerly a Pathmark (A&P banner).
The new supermarket will be expanded from its current size of 52,000 s.f. to 62,000 s.f. and include a new food court that will serve hot food and lunches. Customers also will be able to order a glass of wine or beer while eating there (it’s legal for a supermarket in Pennsylvania to sell alcohol if it operates a café). The remodeling efforts are expected to cost between $5 and $8 million, the Upper Southhampton Patch reports. Weis currently sells beer in at least 12 of its locations.
“It’s becoming a trend in supermarkets now,” Stan Casacio, partner at New Century Associates—the property owner of The Marketplace at Huntingdon Valley—told the Patch.