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The Flickinger Files - Part 2: Super 50 'Report Card'


Editor's Note: During a 12-month expedition that’s spawned dramatic ripples across the mighty supermarket seas, this year’s annual Super 50 ranking of the nation’s leading food retailers is punctuated by a swift undercurrent of mergers, acquisitions, spinoffs and wider expansion nets that are collectively redefining the ecosystem. With this the case, PG editors broke down this year's Super 50 analysis into five “oceans,” each consisting of common characteristics akin to each:

At the Helm: Larger legacy retailers that have weathered many a storm over the years, with strategic growth, innovation and a com­mitment to the customer experience

Rising Tide: Owning a strong presence in their various market areas, these grocers, through a savvy mix of tried-and-true ap­proaches, are well grounded and willing to take risks with new concepts to forge ahead

Beyond the Mainstream: Grocers owning the natural and organic category, or swal­lowing an ever larger portion of it, through persistent stewardship and faithful execution

Changing Course: These retailers have redefined themselves, or are in the process of endeavoring to do so, as a way of better navi­gating the changing demands of a dynamic marketplace

Steady as They Go: Regional players with true staying power, dedicated to their core customers and local communities

As the second installment of a two-part series, retail food industry expert Burt P. Flickinger III, managing director of New York-based Strategic Resource Group (SRG), assesses the Super 50 food retailers in the Changing Course, Beyond the Mainstream and Steady as They Go camps, in a continuation from Part 1 here.

(Grading on a scale of A+ to F-)

Beyond the Mainstream

Whole Foods: Grade B Whole Foods still has some of the highest-volume, most productive stores in the industry. The company has dynamic leadership. Its issues are beyond bricks and mortar, which can be fixed.

Trader Joe’s: Grade B+  Slower than its sister company, Aldi, to accelerate  expansion in high-opportunity states, TJ's picks some secondary sites in Eastern markets – occasionally with insufficient parking – apparently to save on store rents.

Sprouts: Grade B While Sprouts has had a successful expansion, it appears to have some of the cap ex issues that The Fresh Market has had, in not investing consistently across the store base.

Aldi: Grade A+ After nearly five decades of measured expansion, Aldi has a formidable, larger, high-volume food format, which is winning with all income and age groups. When a leading five-star restaurant chef is shopping at Aldi weekly – as one of five “suppliers” for quality in Wegmans' home market [of Rochester, N.Y.] – Aldi can beat any food retailer who is not ready.

Changing Course

Walmart: Grade B+ A new leadership team appears to be bringing back the ways of “Mr. Sam” [Walton, company founder] to clean up 15-plus years of mistakes made by the former board and the prior CEOs. The transition could take a few years.

Ahold/Delhaize:  Grade Incomplete  Delhaize-Hannaford-Food Lion has better people in a number of key positions, and Ahold has to avoid the mistakes made with Giant and Ukrop's of losing sales, market share and shoppers by “company bagging” what works in Massachusetts and Connecticut, yet did not connect previously with consumers in Maryland and Virginia, and will not in the Southeast, northern New England and New York state.

Raley’s: Grade Incomplete As new leadership makes and implements changes, it will be interesting to see what unfolds for the West Sacramento, Calif.-based regional grocery chain's next chapter in the competitive California market.

Target: Grade B+ Target is moving beyond the problems passed along by the two prior CEOs and management teams. Assortments are improving, from consumables to wearables (apparel and accessories). The CVS Rx partnership could be a powerhouse. Understaffing stores and significant out-of-stocks on weekends could suppress success until the company takes more constructive, corrective action.

The Fresh Market: Grade B-  Historically, a good idea with inconsistent executive management and too many underperforming stores in too many markets. TFM’s private equity buyer, Apollo, has had a mixed track record in retail, with some success as well as some reported retail failures.

Woodman’s: Grade A  Woodman’s is an exciting, exceptional place for shoppers with high, fresh quality, and everyday lowest prices in states with high taxes and high costs of living for cash-constrained consumers. Woodman’s biggest opportunity is to expand to fill more of a competitive vacuum, while replacing some of the sales lost from plant closings and job and population losses in Woodman’s legacy markets.

Brookshire Grocery Co.:  Grade Incomplete Following its “For Sale/Not For Sale” period, this is a rebuilding year.

Supervalu: Grade B+ Supervalu has stabilized corporate retail and wholesale in many very tough markets, with unprecedented pressure from new food retail entrants, particularly the twin international “Towers of Power,” Aldi and Lidl, hitting hard discounters like Supervalu, Save-A-Lot and traditional food and combo store retailers hard.

Southeastern Grocers:  Grade Incomplete With new leadership and a reported IPO postponed indefinitely, Southeastern Grocers is in transition, having aggregated previously bankrupt supermarket chains -- Bi-Lo, Bruno’s, and Winn-Dixie -- and sold 29 stores to K-VA-T.

Golub/Price Chopper: Grade B Previously, Price Chopper had done an excellent job capitalizing on some competitive vacuums. More recently, it is uncertain to date whether the meaningful scheduled cap ex commitments to the new Market 32 format will work well in all markets as highly capable, well-capitalized competitors move in with very competitive food formats to more of Price Chopper's important trading areas.

Lowes Foods: Grade B 2016-18 are tougher transition years for Lowes and Ingles as Lidl, Costco, Aldi, Kroger/Harris Teeter, BJs, Whole Foods, Wegmans and others move into major Lowes markets with rising populations and income growth. Lowes runs good, popular stores, which are exceptionally well committed to key community causes like Back2School.

Steady As They Go

Big Y: Grade A Big Y is opening strong, large stores with significant success on Stop & Shop’s doorstep. The D’Amour family’s excellent combination of professional and family management will be the key catalyst in Big Y’s successful expansion in existing and competitive markets, along with Big Y’s tremendous service andwholesale supply partnership with Bozzuto’s, so Big Y can maximize its cap ex commitment to innovative brick-and-mortar stores and other important initiatives.

Coborn’s: Grade B Coborn’s has been hit by the Bakken region oil rig count declining nearly 10 percent over the last four weeks, and more than 80 percent in less than 24 months. Coborn’s has added a number of good people to withstand the wild weather blowing in from its North Dakota stores, where the only winner in a tough economic downturn for the state is the University of North Dakota’s Fighting Hawks/Sioux, with Brad Berry being the first new coach in U.S. history to win the D-I NCAA Hockey Championship. Like Coborn’s hometown St. Cloud Hockey Huskies of Coach Bob Motzko, Chris and Dan Coborn’s Cash Wise and multiformat stores will bounce back  successfully ahead of Hy-Vee’s invasion into northern Minnesota and further into North Dakota.

DeMoulas/Market Basket: Grade A  After the stores were effectively shut down the prior year with $3 billion-plus in sales moving to Stop & Shop, Hannaford and others, DeMoulas/Market Basket regained all of the shut-down stores' lost sales, and gained more volume at the expense of Ahold and others. DeMoulas/Market Basket is a one of the most formidable forces in regional food retailing anywhere in the world.

Ingles: Grade A-  Ingles' excellence is epitomized in everything from its high quality to its outstanding community giving programs. Ingles wins with fresh, organics, flowers, families and pets.

Schnucks: Grade B Schnucks is stabilizing market share in tough economic times with declining populations and income levels, along with the loss of the NFL team in St. Louis. With the retirement of the great merchant and operator Steve Harper, Todd Schnuck is rebuilding the management team for the future.

Tops Markets: Grade B Tops is buying smaller stores to stabilize market share in some of the poorer U.S. regions, which have ongoing population losses in the grocer's trading areas. As the Buffalo Bills rebuild, Tops is getting good reviews with its tastefully done, fresh-inspired Orchard (Park) Fresh store to feed residents and fans a few hundred yards away from the “Ralph,” the Bills’ home in Orchard Park.

Stater Brothers: Grade A Stater Bros. has moved beyond Yucaipa to build a powerhouse in one of the toughest economic regions in the West: Riverside and San Bernardino counties, which where the "center of gravity" for the U.S. housing market collapse. While other food retailers were facing insolvency, Stater Bros. built a more efficient supply chain while keeping costs and price competitive, so shoppers are very loyal.

Weis Markets: Grade B+ Weis has weathered economic and competitive storms well while capitalizing on numerous food retail, co-op and wholesale bankruptcies.


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