Thursday, April 20, 2017

Shipt to begin Costco delivery service

Shipt, a delivery service headquartered in Birmingham, AL, announced late last month that it would start delivering Costco products to customers in Tampa, FL, with plans to expand Costco service to 50 markets by the end of the year. Shipt says it is already working with Whole Foods, H-E-B, Harris Teeter and Meijer.

For a $99 annual fee, Shipt customers will get unlimited Costco deliveries, and will have a one-hour window for when merchandise is dropped off. The company says it plans to deliver from stores, not from warehouses.  

Fresh Grocer, UPenn in litigation over Acme deal in University City

The Philadelphia Business Journal reported last week that Acme signed a lease with the University of Pennsylvania for a 34,500 square foot store on Walnut Street in University City. However, Fresh Grocer currently operates a store there and doesn't plan to leave, even though Penn notified them that their lease expired on March 31.

Penn's claim that Fresh Grocer missed the deadline to renew its lease is disputed by Wakefern, the cooperative that Fresh Grocer is a member of. Attorneys are now heavily involved...

Monday, March 27, 2017

Wegmans plans openings for two North Jersey stores

Wegmans announced that new stores in Hanover, NJ and Montvale, NJ will open this year on July 23 and September 24, respectively. Each store will feature a Burger Bar, which is Wegmans' in-store restaurant counter. They will also have wine, beer and spirits shops operated by a third-party.

The stores are the company's closest locations to New York City so far. A Rochester, NY newspaper reported that stores may be coming in 2018 to Westchester County and Brooklyn.

Target unveils "reimagined" store design

Target unveiled its design last week for a "reimagined" 124,000 square foot store, the first of which is scheduled to open near Houston, TX in October. An additional 40 stores are slated to be redesigned during the same time period. Target plans to convert about 500 stores to the new design - or a similar design based on customer feedback - in 2018 and 2019.

According to Target Chairman and CEO Brian Cornell, the redesign will introduce separate entrances and parking for groceries and products ordered online, where employees will deliver the orders to customers in their cars.

The redesign also includes stenciled concrete floors, revised lighting and elevated merchandise presentations. The appearance of the grocery section will also be upgraded, and will include an expanded assortment of fresh produce and quick meal options.

Target employees in these locations will be equipped with mobile technology that will enable them to search inventory, take payment and arrange for delivery, all from the sales floor.

Giant to close to Lancaster County stores

Giant Food Stores announced it would close two stores in Lancaster County, PA on May 18. The stores are located on Reservoir Street in Lancaster and Fruitville Pike in Manheim.

According to a story in, the Lancaster store is 37 years old, and the Manheim location was acquired 10 years ago.

Albertsons in talks to acquire Sprouts

It was reported last week that Albertsons is considering a deal to acquire Sprouts Farmers Markets, and an industry source told me that he thought the likelihood of such a deal was 50-50.

Sprouts, based in Phoenix, is the largest farmers' market-style food retailer in the country. It operates more than 250 stores in 15 states, not including Pennsylvania, where a Philadelphia store is planned. There are no stores currently in New Jersey either, and it has been rumored that the company is looking for a site in South Jersey.

According to reports, Sprouts has plans to open 32 stores this year, following 36 new stores last year and 27 in 2015.

Jefferies Anlyst Chris Mandeville said last week that "the logic of a deal makes sense in our view," but added that it would be very expensive.

Albertsons, which is owned by Cerberus Capital, acquired Safeway and Supervalu in recent years. Reports said that the company was in talks to acquire Price Chopper late last year, but the deal never happened.

Monday, March 20, 2017

Food deflation and competition hurting supermarket profit margins

A story this morning in USA Today reported that "low food prices and razor-sharp competition" are putting a serious dent into grocery chain profits. However, the issue is good news for consumers, who last year saw the first annual decline in supermarket prices since 1967.

According to Supermarket Analyst Phil Lempert, the low food prices and competition have created "a price war among everybody." This price war, combined with supermarkets' efforts to attract new customers (mainly via investments in pricing), have badly hurt profit margins.

According to the Agricultural Department's Economic Research Service, prices of supermarket items declined 1.3% in 2016 compared to the year before. The article cites confirming evidence from Wegmans and Costco, both of whom provided examples of recently lowered prices on items like bananas, peanut butter, eggs, pistachios and laundry detergent, among others.

The USDA said that meat, chicken and eggs have seen some of the biggest price cuts due to oversupply and lower than expected exports.

Kelly Bania, a senior analyst at BMO Capital Markets, added that "we're definitely in a prolonged deflationary period."