THE FRIDAY 5: Grocers in Growth Mode; America’s Obsession With Costco

1. Grocers in Growth Mode

Readers were interested in news that several retailers are expanding their footprints across the United States, including Meijer, which is readying its first smaller-format grocery store in the state of Indiana. The Michigan-based retailer will unveil its location in Noblesville, Ind., near Indianapolis, on July 11, marking its third Meijer Grocery outpost, following the early 2023 openings of two stores in southeast Michigan, near Detroit.

H Mart, meanwhile, is now the owner of the shopping center where its San Francisco store is located. The Korean-American supermarket chain has bought Oceanview Village Shopping Center on Alemany Boulevard for a little more than $37 million, according to public records. H Mart opened that location in 2021 and is in the midst of planning an expansion into the former 24-Hour Fitness space next door.

Finally, T&T Supermarket Inc., the largest Asian grocery retailer in Canada, has unveiled plans for a second location in Washington state. Last year, the grocer revealed its expansion into the United States for the first time, with a flagship store scheduled to open in Bellevue, Wash.

2. America’s Obsession With Costco Continues

Cash-strapped consumers continue to flock to Costco clubs for all of their household needs, as evidenced in the company’s third-quarter financial results. For the period ended May 12, Costco Wholesale Corp. reported net income of $1.68 billion, or $3.78 per diluted share, up from $1.3 billion and $2.93 per diluted share last year. 

Shopping frequency increased 5.5% in the United States, while average transaction or ticket remained relatively flat, at 0.7%. Digital delivered solid results for Costco in Q3, with e-commerce comp sales growing 20.7% on a reported basis and adjusted for foreign exchange. Total e-commerce sales growth in the quarter was led by gold and silver bullions, gift cards and appliances. 

Costco reported that its Q3 membership fee income was $1.123 billion, an increase of $79 million, or 7.6% year over year. There was still no word on when Costco will raise its membership fee. 

“We're still evaluating those considerations to determine what the right timing is and when we reach that point where we feel it is the right time, of course we'll be very open and direct and communicating that,” said Gary Millerchip, EVP, CFO, during Costco’s earnings call.

3. A Shooting at Tops 

Sadly, a Tops Friendly Markets location has become the scene of another shooting. Police in upstate New York responded to a shooting at the Tops Waterloo parking lot on the afternoon of June 2, and according to local media, Tops shoppers reported hearing a gunshot in the parking lot; then they were instructed to stay inside as the store went into lockdown.

Police arrested Jose A. Garcia-Vellen for allegedly shooting the victim after an argument. Garcia-Vellen was arrested on the scene without incident and charged with first-degree assault, a felony, in connection with the incident. Police said that they believe the two men knew one another. The investigation is ongoing. 

Unfortunately, this isn’t the only incidence of violence that has occurred at a Tops location. Last year in Buffalo, a gunman shot 13 people, 10 of them fatally. The racially motivated killings shook the nation and the industry. 

Last month, Tops formally dedicated a 5/14 Tops Honor Space that the company established to honor the victims. Built and designed in collaboration with local partners and community members, it serves as a permanent place of honor, solace and reflection as the community continues its ongoing healing process.

4. Save Mart, Stew Leonard’s in Legal Trouble

Legal woes among grocers also made news this week. Without admitting or denying liability, California-based Save Mart Supermarkets will pay $1.6 million to resolve claims that it sold expired over-the-counter (OTC) medications, baby food and infant formula beyond their “use by” dates. The case was filed in California’s Yolo County Superior Court, and the settlement resolves allegations that Save Mart Supermarkets LLC violated state health and safety laws restricting the sale of certain products past their expiration or “use by” dates.

A joint investigation found a recurring failure by the company to remove from its shelves expired items beyond their “use by” dates since at least 2018. The company cooperated with the investigation, and as part of the judgment, Save Mart was ordered to pay $1.56 million in civil penalties and costs, as well as another $40,000 in restitution to a trust that funds future consumer-related prosecutions.  

Additionally, news came out that a wrongful-death lawsuit against grocery chain Stew Leonard’s was filed in the Superior Court in Waterbury, Conn., last week on behalf of a young British dancer who died after ingesting a cookie sold by the grocer. Órla Ruth Baxendale, who had a severe peanut allergy, died this past January after eating a Vanilla Florentine Cookie that contained undeclared peanuts. 

According to the lawsuit, although employees at Stew Leonard’s had been informed that the cookie recipe had changed to include peanuts, the company continued to sell the cookies without changing the label and warning customers that the product now contained peanuts. The complaint alleges that Stew Leonard’s showed gross negligence and reckless indifference by failing to properly label the cookie packaging, which resulted in Baxendale’s death. 

5. Walmart "Enters" More Homes

As more and more food retailers are finding interesting new ways to engage with their omnichannel shoppers, Walmart is bringing its popular InHome delivery service to more households throughout the United States. Customers in the Greater Philadelphia market, as well as those in Boston, Detroit, Minneapolis and San Bernardino, Calif., will now be able to utilize the service. 

The five new service areas bring the total scale of InHome to more than 50 markets covering over 45 million homes. The option lets customers have fresh groceries and everyday essentials delivered to their doorsteps, or directly to their refrigerators.