Saladworks to expand presence at Brown's Wakefern supermarkets

Saladworks opened its first-ever location in a supermarket about a year ago, in a Philadelphia ShopRite owned by Jeff Brown. And now, after deeming the pilot a success, it plans to expand its presence at Brown-owned Wakefern Food Corp. locations in Greater Philadelphia.

So far, Saladworks restaurants are planned for Brown's ShopRite and Fresh Grocer stores in Philadelphia and Wyncote, PA, respectively. Another three or four Saladworks locations could follow at Brown's supermarkets within the next year, according to Saladworks CEO Patrick Sugrue.

"We're finding that salad bars are falling out of favor, they're not profitable for grocery stores, they have a lot of waste and they take up a lot of space," explained Sugrue. "In the same space or less than a money-losing salad buffet, we can place a full Saladworks restaurant and deliver our core menu to consumers - made exactly the way they want."

Grocery Outlet to open 40 new stores in 2019

Grocery Outlet, the California-based discount food retailer, has quietly ramped up its growth as competitors like Aldi and Lidl are making much more industry noise. Earlier this year the company opened its 300th store, and 40 new stores are expected for 2019.

Grocery Outlet, which purchased Amelia's stores in Greater Philadelphia a few years ago, operates stores in Pennsylvania, Oregon, Washington, Idaho, Nevada and California. Southern California represents their largest region, with 70 locations.

According to a recent story in Supermarket News, Grocery Outlet offers 40% - 70% off nationally recognized brands. They purchase from manufacturers that have excess inventory and pass their savings on to consumers. As a result of this opportunistic approach, the lineup of products often varies with each shopping trip. And since the stores are locally owned (not franchised), the product lineup may also vary from store to store. Each owner has the ability to choose what products they want to buy and sell.

"People love to save money, there's no question," said Phil Lempert, founder and editor of SupermarketGuru.com. "If you can combine that with a treasure hunt, from a consumer standpoint, it's great."

Although the products may differ from week to week, Grocery Outlet's inventory is predominantly made up of national brands, unlike Aldi and Lidl, who only offer a limited amount of national brands.

Recently Grocery Outlet has addressed its millennial customers, who are often their most vocal shoppers. Millennials seek both value and high quality, as well as an understanding of 'the experience of the food," according to Vice President of Marketing Layla Kasha. As a result, Kasha describes a new store in Los Angeles as "modern and hip, focusing on clean lines and a design aesthetic that matches the surrounding area."

Nationally, the model seems to be working, as Grocery Outlet recently surpassed $2 billion in annual sales, according to Supermarket News.

Lidl willing to lease sites, build smaller stores

Following an initial growth period that fell short of expectations, Lidl once again has a full head of steam as it searches for sites in Greater Philadelphia and beyond. When the German retailer began looking for sites a few years ago, it would only purchase property that could accommodate its 36,000 square foot freestanding prototype.

Now, with some U.S. real estate and operating experience under its belt, the company is employing a more flexible approach. In addition to buying property and self-developing, Lidl will lease space and consider smaller formats.

As reported by winsightgrocerybusiness.com, a Lidl real estate brochure being distributed in the U.S. shows a variety of store formats, including ground floor commercial spaces in urban buildings, and dark supermarket spaces in shopping centers. Store sizes range from 15,000 to 36,000 square feet.

"The brochure is tailored to the U.S. and conveys our openness to different formats and possibilities," said Lidl Spokesperson Will Harwood.

Of the 58 U.S. stores now operating, all share a similar 36,000 square foot prototype, and all were ground up construction. The company's first leased property is scheduled to open soon in Staten Island, NY.

Lidl replaces U.S. CEO

Lidl announced that it has replaced U.S. CEO Brendan Proctor less than a year after its initial expansion into America. Proctor's successor is Johannes Fieber, who most recently served as CEO of Lidl Sweden.

Although Lidl initially estimated it would open 100 stores by the end of 2018, the company currently  has only 53 stores open in the U.S., according to its website. Several locations that were secured were abandoned, including many in the Greater Philadelphia market, where two stores (Middletown, DE and Vineland, NJ) are now open.

The company says it now has plans to open two stores in Philadelphia, plus three in the PA suburbs, and Lidl representatives are actively looking for more.

When Lidl first started securing locations in the U.S., it would only purchase sites and the stores were planned for 36,000 square feet. Now, after several internal staffing changes and disappointing openings, the company is preparing to open stores in the 15,000 - 25,000 square foot range, and they are open to leasing in certain markets.

Overall, Lidl operates more than 10,000 stores in 27 countries across Europe. 

Albertsons and Rite Aid announce merger; new company to have $83 billion in sales

Albertsons and Rite Aid announced yesterday that the companies plan to merge into a new publicly traded entity with an estimated $83 billion in annual sales. It is expected that the deal will close during the second half of the calendar year.

Here are some of the details of the planned merger:

• Albertsons' private food label products will be sold in Rite Aid stores, and most Albertsons pharmacies will be rebranded as Rite Aid.
• The new company will operate about 4,900 locations, 4,350 pharmacy counters and 320 clinics across 38 states and Washington D.C. It will service more than 40 million customers per week.
• The name of the company has not been determined, but it will have dual headquarters - Albertsons' current home in Boise, ID, and Rite Aid's current home in Camp Hill, PA.
• Rite Aid's John Standley will become CEO of the combined company, and Albertsons' Bob Miller will serve as Chairman.
• The company says it is too soon to determine if any overlapping stores will close. In the Greater Philadelphia market, both Albertsons (Acme Markets) and Rite Aid have a strong presence.
• According to Burt Flickinger III, managing director at the Strategic Research Group, "(Rite Aid) will get Albertsons distribution power and they both have good distribution centers. It is a strategic triumph for Albertsons, and whereas Kroger is selling off assets like convenience stores, Albertsons is profitably growing and making strategic acquisitions."
• In exchange for every 10 shares of Rite Aid common stock, Rite Aid shareholders will have the right to elect to receive either one share of Albertsons Companies stock plus $1.83 in cash, or 1.079 shares of Albertsons Companies stock. Depending on the result of the election, Rite Aid shareholders will own a 28% - 30% stake in the combined company.
• Walgreens and Rite Aid planned to merge last year, but the deal encountered resistance from the FTC and fell apart. Shortly thereafter, Walgreens agreed to acquire 1,932 Rite Aid stores and select distribution centers. According to Bloomberg, the newly formed company will have fewer pharmacy counters than Rite Aid did before it agreed to sell the stores to Walgreens. 

Target to close 12 big box stores and expand small-format portfolio

Target announced last month that it plans to close 12 stores on February 3, 2018. The company said that the closings are due to "several years of decreasing profitability." According to reports, none of the stores slated for closure are in the Greater Philadelphia or Northeast market.

Despite the closings, Target is significantly expanding its smaller format footprint, which Target CEO Brian Cornell has said are more profitable than their big box locations. Target has opened 32 smaller format stores this year and plans 35 more in 2018.

In addition, Target has also committed resources towards updating about 1,000 of its 1,800 stores by 2020.

Supermarkets in malls proving to be a win-win

Here in Greater Philadelphia, we are getting used to having supermarkets at the mall (Wegmans in Montgomeryville, Whole Foods in Plymouth Meeting, Sprouts coming to Moorestown...), but it's still a new concept in many parts of the county. Industry analysts believe we will see several more supermarkets lease space in malls in the coming years.

"With the fast-paced nature of America, shoppers want to be as efficient as possible when running errands," said Displaydata Marketing Director Paul Milner. "Grocery stores in malls could give Americans the benefit of a one-stop shop for all of their needs... This transition is another step towards providing shoppers with the advanced and friction-less shopping experience that the American consumer demands."

Milner also sees supermarkets in malls as a winning proposition for landlords. Mall owners, often stuck with a declining retail property, can transform their asset into a destination allowing consumers to complete all of their shopping in one place. He warns, though, that parking could be a deterrent if shoppers have to carry their groceries too far.

Whole Foods data breach hits Greater Philly area stores

It was reported about a month ago that Whole Foods had experienced a data breach where some customer credit and debit card info was hacked (Whole Foods announces credit and debit card hack). Shortly thereafter it was revealed that some stores in the Greater Philadelphia area were included in the breach.

The cyber attack, which was aimed at Whole Foods' taprooms and restaurants and not the stores grocery checkout lines, affected the Center City store at 2101 Pennsylvania Ave., as well as stores in Wynnewood, Allentown, Upper St. Clair and Wexford.

Whole Foods said it has taken "appropriate measures" to address the issue, and the investigation is ongoing.

Albertsons to purchase meal-kit company Plated

Albertsons announced recently that it plans to acquire New York-based meal-kit company Plated, which has annual sales of over $100 million, according to a story in Supermarket News.

The deal will allow Plated, which will operate as a wholly-owned subsidiary of Albertsons, to operate well beyond its subscription model with new distribution points, including Albertsons locations. Albertsons claims to have 35 million customers per week at its stores, which include 19 banners across 35 states (including Acme in the Greater Philadelphia Region).

Albertsons CEO Bob Miller said Plated would provide the company with a more personalized and versatile shopping experience.

Plated offers customers pre-portioned ingredient packages that can be used to prepare easy meals at home. The company was founded in 2012 and was featured on the television show "Shark Tank" a few years later, where it gained investment funding from one of the "sharks."

Aldi to spend billions on new stores and remodels

Aldi announced earlier this year that it plans to remodel more than 1,300 stores by 2020 at a cost of $1.6 billion. The remodeled stores will focus on fresh items, including produce, dairy and bakery sections, and feature open ceilings, natural lighting and environmentally-friendly building materials.

Currently Aldi owns and operates about 1,600 stores in the U.S., and by the end of 2018 it expects the number of stores to exceed 2,000. The company says that an investment totaling about $3 billion will be necessary to acquire land, facilities and equipment for the new stores.

Locations for new stores coming soon to the Greater Philadelphia market include Limerick, PA and Voorhees, NJ, among others.

Analyst says Aldi and Lidl to hurt small grocery operators

A Supermarket News story recently quoted an analyst who predicted that the "invasion" of Lidl into the U.S., combined with Aldi's rapid expansion, will prove to be problematic for smaller operators and those focused on lower-income shoppers. The analyst did not think the two European powerhouses would have as devastating an effect on top U.S. grocers.

However, based on where Lidl is buying property in the Greater Philadelphia region, it certainly appears they believe they will have a big effect on top grocers. From what I have seen, they are eager to open up stores adjacent to - or across the street from - market leaders Giant and ShopRite.

Although they are opening new stores all over the country, Aldi's recent growth has been mostly focused on California. Lidl is planning to open at least 75 stores from New Jersey to Georgia in early 2018.

Whole Foods closing in on $1,000 in sales per square foot

Whole Foods announced earlier this month that its stores generated an average of $983 in annual sales per square foot (PSF) in 2013. According to statistics published by the Food Marketing Institute, the average sales PSF for supermarkets in the United States is $360 (based on a median total store size of 46,000 and median weekly sales per supermarket of $318,170).

In the Greater Philadelphia Market, the high-volume Giant Food and ShopRite stores are most likely generating north of $500 PSF, and perhaps even close to $800 PSF in some cases (a 55,000 SF store with $44 million in annual sales, for example).

For those immediately wondering about Wegmans, they certainly have incredible sales numbers, but with stores so large (132,000 SF in Collegeville), reaching Whole Foods-like PSF totals is nearly impossible. My guess for a store like Collegeville is about $600 PSF ($80 million in sales).

Bottom Dollar opens store in Philly food desert

Discount grocer Bottom Dollar, which now has 40 locations in the Greater Philadelphia market, celebrated the opening of its store in the Brewerytown section of Philadelphia last week. The store was reportedly built with the help of municipal subsidies and is being hailed as the neighborhood's first supermarket in more than 10 years.

The next Bottom Dollar opening is slated for the Germantown section of Philadelphia.

Whole Foods growth is good for REITS

An article on SeekingAlpha.com last week described how Whole Foods' growth is helping its landlords, which often are major U.S. shopping center REITs. The story cited research that says supermarket industry revenue will grow an estimated 0.4 percent this year, while Whole Foods sales may rise as much as 16 percent.

With shopping center construction at extremely low levels, the companies that own the top shopping centers in a market face little to no competition from new construction. And it's the REITs - like Kimco, with 12 Whole Foods stores in its portfolio - that often have the top supermarkets and therefore benefit the most.

It doesn't take a rocket scientist to figure this one out. Whole Foods is successful and growing, and the real estate it occupies is typically high end and valuable, and likely to be owned by a large REIT. In the Greater Philadelphia Region, Wegmans can be put in the same category. Lease to a store that people love, and your center will do well. (But you already knew that.)

The Fresh Market reports significant first quarter gains

Last week The Fresh Market, which operates 116 stores in 21 states - including three in Greater Philadelphia, announced a first quarter net income increase of 43% over the same quarter one year ago.

• Net income for the fiscal first quarter, which ended April 29, 2012, was $19.3 million.
• Sales totaled $324.8 million, up 22.8%.
• Comparable-store sales gained 8.2%, including a 5.7% increase in transaction count and a 2.5% increase in basket size.

The company expects to open 14-16 new stores in this fiscal year.

Traditional supermarkets lost stores in 2011, high-end grocers added stores

Supermarket powers Safeway, Kroger and Supervalu closed more traditional stores than they opened last year, while higher- and lower-end stores continued to add stores.

• Safeway, which includes Genuardi's in the Greater Philadelphia region, ended 2011 with 1,678 stores, a net decrease of 16 locations (22 closures and 6 openings).
• Kroger, the only chain of the three traditional markets mentioned here that has increased capital expenditures in 2012, had 2,435 stores at the end of last year, representing a net decrease of 25 units (41 closures, 16 openings).
• Supervalu, which includes Acme and Save-A-Lot in Greater Philly, ended 2011 with 2,434 locations, which is actually a net increase of 40 stores. However, taking discount grocer Save-A-Lot out of the equation and it's a net decrease of 12 traditional supermarkets. 

On the other hand, The Fresh Market added 13 new stores last year and currently operates 116 in total. Earlier this week at the annual International Council of Shopping Centers conference in Las Vegas, a company representative said their long-term goal is at least 500 stores nationwide. A significant capital investment is underway this year, representing approximately 8-9% of sales, and 14-16 new stores are expected.

Whole Foods, which added 12 net new stores last year and has about 300 current locations, has 63 stores in the planning stage and says it may eventually reach 1,000. In 2012, 24-27 new stores may open.

The Fresh Market to add 14-16 new stores this year

The Fresh Market, which has three stores in the Greater Philadelphia Region (Center Valley, Glen Mills, Horsham; all in PA), announced last week that it plans to add 14 to 16 new stores in fiscal 2012. It is expected the expansion will take place within their existing markets, and possibly even California, where they do not have any stores. The Fresh Market currently has 115 locations in 21 states throughout the Southeast, Midwest, Mid-Atlantic and Northeast.

The company, which describes itself as a high-end specialty retailer whose stores are like old world European markets with an open air feel, opened six new stores in the fourth quarter of 2011, and two stores have already opened in 2012.

The Fresh Market recently completed its first full year as a public company. Net income for the year was $51.4 million, compared to $21.3 million in 2010 (which included IPO-related charges). Sales for 2011 were up 13% from the previous year.

Save-A-Lot store count on the rise in PA

At one point last year Save-A-Lot parent company Supervalu said the company would open 160 new Save-A-Lot stores in the next year. They backed off that number in the fall, revising it to 80-90 new stores. This growth has been evident in Pennsylvania, where four have already opened this year, and two more are planned to open within the next month.

Five of the six new stores are outside of the Greater Philadelphia market. Our lone representative of the group opened in late January in Upper Darby. Since January 2011, 11 new Save-A-Lot grocery stores have been added in PA. The company's total store count in PA will be 76 by the end of March.

According to Save-A-Lot, there are more than 1,300 stores operating in 39 states, and each store carries from 1,200 - 1,500 grocery items. Stores average about 15,000 square feet.

ShopRite expanding to Northern New York and Maryland

As Food Trade News declared in its annual Market Study issue, ShopRite has become the dominant grocery retailer in Northern New Jersey, the Delaware Valley and Greater Philadelphia. And as the Supermarket News reported last week, ShopRite is now competing in new markets.

In recent weeks the company opened its first store in the Albany, NY area. That's Price Chopper territory. In the 70s and 80s it was Price Chopper (where I stocked shelves) and Grand Union (where my best friend worked the register). Now it's Price Chopper and Hannaford (part of the Delhaize Group, which includes Food Lion and Bottom Dollar). The word on the street is that ShopRite is looking to open several stores in the area, including Clifton Park, NY, which is my hometown and home to two Price Choppers, a Walmart Supercenter, a Hannaford and an Aldi. My how the town has grown.

ShopRite is also expanding into Maryland, where it will compete with Giant and Safeway, among others. The bottom line is that it won't be easy for ShopRite in Northern New York or Maryland, but the members of the Wakefern Cooperative are strong operators with a proven recipe for success, and ultimately plenty of staying power. In the end it will be good for consumers, as ShopRite will force its competitors to remain on their game.