PG Web Extra: The Super 50
By Jim Dudlicek, Bridget Goldschmidt and Meg Major
Progressive Grocer annually ranks the top 50 grocery retailers based on sales in its Super 50 report. The full report can be found here, with analysis of the top 10 companies; the following is a closer look at some of the other top performers.
# 11 Bi-Lo Holdings Inc.
The biggest change at Bi-Lo Holdings of late was the accession of veteran international retail executive Ian McLeod as the Jacksonville, Fla.-based company’s new president and CEO in March, following weeks of speculation as to the future direction of the Southeast regional grocer after the previous CEO, Randall Onstead and COO Mark Prestridge abruptly departed at the end of 2014.
McLeod, who previously ran more than 2,200 Coles food, liquor and convenience stores across Australia, was credited with leading “a major turnaround in that business, improving the quality and value of products as well as the service and store standards offered to customers," as his new employer put it, adding, “We are confident he will be instrumental in driving continued growth and success at Bi-Lo Holdings as we execute our strategy and work to further enhance our customers’ shopping experience.”
Before the current round of executive moves, the Southeast regional grocer, parent company of the Bi-Lo, Harveys and Winn-Dixie banners, had seemingly “lost its way,” as illustrated by faltering same-store sales trends and a failed IPO. When contacted by Progressive Grocer, industry observer Burt Flickinger attributed the chain’s problems to heated competition in its market area, along with a combination of leadership conflicts, costs and operational incongruities – all of which the company aimed to address by appointing McLeod.
Going forward, to allay shareholders’ fears, the company will need to boost its top-line and same-store sales, as well as operating profits, Flickinger noted. With a new leader at the helm, Bi-Lo seems poised to do just that.
#12 Trader Joe’s
Ranking among the top 12 retailers on the 2015 Temkin Experience Ratings, the Monrovia, Calif.-based Trader Joe’s is, in the words of Business Insider, “making brand names in food obsolete.” The 433-store chain sells twice as much per square foot as Whole Foods, yet offers very few brand-name products.
As GfK Retail Industry’s Bill Romania wrote in a PG.com exclusive in January, Trader Joe's provides a well-curated, fun place to shop, with great customer service and a high-value, low-price model centered on its private label items.
Trader Joe’s customers, who tend to be more health-savvy and environmentally minded than average, flock to the retailer’s markets for great deals on wine (remember Two Buck Chuck) and a host of creative products like Cookie Butter, Triple Ginger Snaps and Unexpected Cheddar Cheese, served by quirky associates in Hawaiian shirts.
The stores’ limited selection (about 4,000 items, compared to as many as 50,000 at typical supermarkets) is dominated by organic, natural and vegetarian foods sold under its own brands, which pledge not to contain artificial ingredients, MSG, trans fats or GMOs.
The chain recently entered the Birmingham, Ala., market, putting its coverage at 39 states. Owned since 1979 by the same German family trust that owns the hard-discount Aldi chain, Trader Joe’s has proven itself a leader in aligning food shopping with healthy, sophisticated consumers.
“Trader Joe's customers want to buy healthy food and help the environment. They get a lot of what they want when they visit these stores,” Romania says. “But in the grocery business, just like every other sector, there is always room to introduce innovative programs that make customers happier, smarter and, in this case, healthier than they already are. The challenge will be for grocery retailers to innovate in this space while remaining true to their brands and the experiences their shoppers expect.”
#15 Giant Eagle
Three years after launching its eight-store discount Good Cents discount format stores and roughly one month after about a month after Belgium's Delhaize Group closed all 66 of its discount Bottom Dollar Food stores on Jan. 12, Giant Eagle shuttered the experimental format in favor of concentrating on its corporate flagship and companion upscale Market District banners.
Focusing heavily on revenue-generating and cost-saving measures as part of its Vision 2020 companywide improvement process, the multiformat food, fuel and pharmacy retailer has prioritized sustainability as a key component.
With 12 LEED-certified retail locations and nearly half of its distribution fleet converted to CNG-powered vehicles, Giant Eagle's latest such move aims to reduce water consumption by five percent by July 2017. As a result, all corporately operated Giant Eagle supermarkets will be retrofitted with water conservation equipment by June 30.
Brands that build and keep their promise over time – and develop strong differentiation – stay relevant for the long term. And so it goes with Hy-Vee, which has bolstered its well-respected brand on sound dietary, nutritional and wellness empowerment.
The company’s commitment to healthy lifestyles is increasingly evidenced by its ever-growing HealthMarket departments featuring natural and organic products, consulting services of in-store dietitians and chefs, and consumer and employee wellness programs.
Earlier this year, Hy-Vee tapped retail services firm Interactions to launch a series of experiential marketing events throughout 2015 in roughly two-thirds of its 235 stores.
#23 Stater Bros.
Stater Bros., a stalwart on the heartland southern California grocery scene for nearly 80 years – 40 of which have been helmed under the impeccable stewardship of CEO Jack H. Brown – has seen positive annual sales for the past 35 years.
The 168-unit chain, which has built its reputation on low prices and fostering bonds by tailoring its assortment to local community needs, has concentrated heavily in recent years on growing its private label offerings, fresh produce and selection of take-home family meals.
#26 Golub Corp.
The most noteworthy thing about Schenectady, N.Y.-based Golub Corp.’s supermarkets right now is that they’re in transition from the familiar Price Chopper banner to the still unproved Market 32 brand, which Neil Golub, executive chairman of the board, describes as “the next natural progression for us.”
“The opening of our new Market Bistro store provided us with a great vehicle that has taken our prepared foods and customer service capabilities to the next level,” President and CEO Jerry Golub tells Progressive Grocer. “We’ve used the learnings gained from this store and other customer insights to help finalize the development of our long-term strategy, including the gradual changing of our banner to Market 32 as we roll our major store modernization and rebranding initiative.”
As such, Market 32 stores will feature expanded foodservice options, an enhanced product mix and a re-emphasis on customer service, while incorporating key elements of the savings platform offered by Price Chopper locations, including its private-brand products, AdvantEdge card savings, weekly features and special promotions, the Fuel AdvantEdge program, and double coupons and e-coupons.
“We’re currently putting the finishing touches on our first three Market 32 stores, which are conversions of existing units,” says Jerry Golub. “We’re also planning the opening of our first ground-up Market 32, in Sutton, Mass., this summer. There are a number of additional stores that will be modernized and converted to Market 32 over the coming 12 months. In addition, we are incorporating some experiential elements from Market 32 into many of our Price Chopper stores in order to keep our core business growing and strong during the gradual conversion to Market 32.”
With more than half of the 135-store chain scheduled to be converted to the Market 32 banner within five years, the Golub Corp. expects to invest more than $300 million in the changeover to that point.
But even backed by the enthusiasm of Golub Corp.’s management, the aggressive rollout of Market 32 is something of a risk, as industry observer Burt Flickinger has pointed out. He questions how what he concedes is “a very impressive concept” will be received, “because so many of the markets they operate in have less disposable income. Consumers are really under pressure and historically have concentrated on Price Chopper as a place to save.”
Beyond its reinvention at store level, the company has solidified its health-and-wellness bona fides by teaming with Aureus Health Services, a Pittsburgh-based specialty pharmacy and health management company, on a program to provide more convenient, personalized solutions for patients with chronic and complex health conditions, and offering a full slate of activities and resources to coincide with American Diabetes Month in November.
Iconic New England grocery chain Market Basket is now firmly back in the hands of CEO Arthur T. Demoulas, following an epic battle for control of the company between him and his cousin Arthur S. Demoulas, which led to Arthur T.’s temporary ouster, along with the dismissal of some of his longtime loyalists. In December 2014, Arthur T. and other family members finalized the purchase of 50.5 percent of Tewksbury, Mass.-based Demoulas Supermarkets Inc., giving them 100 percent ownership of the company.
“Upon Mr. Arthur T. Demoulas’ return to the company, store sales immediately rebounded to above average,” Joe Schmidt, the chain’s operations manager, informs Progressive Grocer. “In addition, after his return, Market Basket opened five new stores over a four-month period and brought ‘More for Your Dollar Shopping’ to multiple new communities.”
As for what the near future holds for the company, Schmidt asserts: “In 2015 and beyond, we will continue to work diligently to provide our customers with the products that they are looking for. The Market Basket team continues to work every day towards obtaining the lowest price for our customers, which is something that is engrained in our business philosophy. Market Basket’s key ingredient is our team of loyal and dedicated associates who understand the business, who understand our customers, and who understand that Market Basket is a special place at which to work and shop.”
The Market Basket saga was notable for the active role that the chain’s employees took in bringing Arthur T. back, staging rallies, strikes and protests that led to warehouse drivers and outside vendors’ refusal to make deliveries in solidarity with the workers, and the support of longtime shoppers through boycotts and social media. This extraordinary reaction, described by Schmidt as “the defense of the longtime ‘people first’ business philosophy of Market Basket,” was similarly seen by many as a direct result of the once and future chief executive’s hands-on management style.
“Not to dilute the value of equitable wages and well-developed recognition programs, but Arthur T’s leadership is the driving force for these employees: They’re willing to risk their livelihoods for a leader who took the time to develop personal relationships with them,” wrote Revel Experiences’ Stevi McCoy and Kate Urekew in an exclusive online column for Progressive Grocer.
Less to customers’ liking, Market Basket ended its long-running flat 4 percent discount on grocery bills late last year rather than extending it, a decision brought about by rising wholesale prices, as well as the debt incurred by the company after the money-hemorrhaging period of Arthur T.’s absence from the CEO suite. At the time, the e-newsletter “Coupons in the News” noted: “After a whole year, many shoppers became so accustomed to their 4 percent savings that ending the discount essentially amounts to a 4 percent price hike.”
#29 Weis Markets
Weis Markets observed the end of an era when Robert F. Weis – who has served as an employee, director and/or officer of the regional retailer that bears his name since 1946 and who was appointed its chairman in April 2002 – stepped down as chairman in April 2015.
Armed with a $92 million cap-ex purse for 2015-16 to fuel store upgrades, information technology systems and supply chain efficiencies to improve and increase variety in its fresh departments, the regional retailer is seeing success with its online shopping service with curbside pick-up, which is now available in 26 stores and which will increase to 31 locations by the end of this summer.