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02/01/2021

Super Regionals Worth Watching in 2021

Scale matters in retail, but in food retail, local scale really matters. Market density allows retailers to achieve supply-chain efficiency and leverage promotional expenses and other types of corporate overhead. Most importantly, market density enables food retailers to forge close bonds and foster loyalty with shoppers in the communities where their stores are concentrated.

It’s why major retailers such as The Kroger Co., Albertsons Cos. and Ahold Delhaize USA, after spending decades building their multibillion-dollar businesses through dozens of acquisitions, retained the identities of their takeover targets.

These factors, and others such as speed, family ownership and a spirit of innovation, add up to the type of competitive advantage and awareness level that make a retailer worthy of being called a “super regional.” This phrase could be used to describe operators such as H-E-B, Meijer, Hy-Vee and Publix Super Markets, which are all worthy candidates. However, a layer below these obvious powerhouse, best-in-class retailers is another tier of equally notable operators.

Progressive Grocer wanted to highlight a select group of these companies, not as a definitive ranking, but rather as a representative sample of geographically dispersed chains that are forces to be reckoned with in their respective markets and worthy of the super regional designation.

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Brookshire Grocery Co. Builds Local Advantage

Being a super regional is no easy feat in Texas, a state where industry leaders operate more than 1,000 locations combined. Even so, family-owned Brookshire Grocery Co., based in Tyler, Texas, is a regional food retailer that consistently ranks as a top grocer in its core trading area of east Texas, southern Arkansas and western Louisiana.

It’s easy to see why. The company operates 183 stores under four banners; Brookshire’s, Super 1 Foods, FRESH by Brookshire’s and Spring Market, a concept introduced in 2016 when Brookshire acquired 25 former Walmart Express locations. Across the enterprise, the company operates under a philosophy of, “Good food. Good people. Good deeds.” It certainly put the good deeds part of its value proposition into practice in 2020 to further strengthen its connection to the community. When the pandemic hit, the retailer leveraged its business philosophy of “people first, profits will follow” by going into full-on discount mode. The retailer offered a 5% daily discount for senior citizens throughout the COVID crisis; the discount was available upon request to customers age 60 or older with a valid ID. The company also offered a 5% daily discount on store-brand products for all emergency first responders (EMS, fire department and law enforcement officers); hospital personnel; and active-duty military, including National Guard and military reserve.

Finally, Brookshire also waived fees for all customers on curbside orders as another way to help out a community in dire need. In November, the retailer was one of the first grocers in the nation to say that it would offer free COVID-19 vaccines to the public, the ultimate good deed at the end of a not-so-good year. Gina Acosta, Executive Editor

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Rouses Provides Gulf Coast Rhythm

You can hardly walk a block in parts of Louisiana without hearing music, so it makes sense that Rouses Markets has what it touts as the food retailing industry’s only in-house band. That band (Thad checking on name)  — in which the cold cuts manager sings, and which has dabbled in heavy metal — is working on its second album, a reflection of the chain’s deep roots.

Rouses’ history runs deep in Louisiana. J.P. Rouse launched the City Produce Co. in 1923, employing his son Anthony Sr. and his cousin Ciro DiMarco. The pair took over the produce business when J.P. died in 1954 and then in 1960 they opened the first Rouses store. Expansion throughout Louisiana followed, then Alabama was entered in 2014 and a nine store acquisition in 2016 increased Rouse’s market share in Baton Rouge.

Now in its third generation of family ownership, Rouses has become a Gulf Coast institution. Well known for its deli and fresh produce — as well as regional staples such as shrimp, jambalaya and doberge cake  — Rouses is making a new reputation for itself via grocery delivery and online options. The chain is also pushing the tech edge via another method: drone deliveries. The company partnered with Deuce Drone for a pilot program in 2020 with an Aerial Drone Delivery Interface System (ADDIS) at the Rouses on Airport Boulevard in Mobile, Ala. Rouses already offers personal shopping and delivery services that allow customers to shop online and receive deliveries in as little as an hour, but drones could do this in half the time, or even faster. That’s music to consumers’ ears. Thad Rueter, Senior Editor

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Big Y is the Reason Why

Big Y Foods is starting off 2021 in a super regional way: opening a 425,000-square-foot “Fresh & Local Distribution Center” in its hometown of Springfield, Mass., to service more than 500 partnerships with local farmers across the retailer’s two-state New England footprint. The grocer, which started out in 1936 in Chicopee, Mass., as a store offering personalized service and produce from local farms, aims to offer regional food producers an efficient, one-stop location for distribution. A typical Big Y sells more than 3,000 products from local food producers. The grocer knows that shoppers are looking for authentically New England products, so it actively searches for new local craft foods for its assortment. For example, the retailer is famous for its Polish doughnuts, or paczki.

In October, Big Y became the first supermarket in Massachusetts to participate in the MassGrown Exchange, an initiative launched by Gov. Charlie Baker to facilitate business-to-business connections within the local food system for products and services. Big Y’s efforts to support local communities include donating more than $10.5 million of food over the past 10 years to fight food insecurity, and creating more than 1,000 new jobs in the past two months as the company looks to future growth.

One of the largest independently owned supermarket chains in New England, Big Y operates 83 locations throughout Massachusetts and Connecticut, including 71 supermarkets, Fresh Acres Market, Table & Vine Fine Wines and Liquors, and 12 Big Y Express gas and convenience locations, with almost 12,000 employees. Gina Acosta, Executive Editor

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Raley’s Rules Out West

Family-owned and founded in 1935, Raley’s Supermarkets serves as a food-retailing role model in the Northern California and western Nevada trading area where its 129 stores are concentrated. Raley’s operates six distinct formats — Raley’s, Nob Hill, Bel Air, Raley’s O-N-E Market, Food Source and Market 5-ONE-5 — to appeal to various shopper segments in the diverse communities that it serves. Despite its size, Raley’s punches above its weight when it comes to innovation and early adoption of the latest consumer trends. The West Sacramento, Calif.-based company was among the first to eliminate private label sugar-sweetened sodas and tobacco products while sourcing 100% sustainable seafood and implementing checkstands that offered only better-for-you products. In addition, the launch of the Raley’s Shelf Guide in 2018, which helped shoppers base purchase decisions on product attributes, served as an ingredient transparency blueprint for the industry. More recently, when online demand surged during the pandemic, Raley’s adjusted quickly to transform an old store into an e-commerce fulfillment center.

The company’s latest innovation is Raley’s O-N-E Market. The 35,000-square-foot store, which opened last summer, is an evolution of the Raley’s Market 5-ONE-5 concept first introduced in 2018. The focus on organics, nutrition, education and transparency is consistent with the company’s vision of infusing life with health and happiness by changing the way that the world eats, one plate at a time. Mike Troy, Editorial Director

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Sedano’s Authenticity Satisfies Florida

When shoppers in South Florida want an authentic Hispanic shopping experience, one name instantly comes to mind: Sedano’s. The family-owned operator of 35 stores, 32 of which are in the Miami/Fort Lauderdale area, is a force to be reckoned with in a market where Spanish is the first language of a majority of the population. Sedano’s is a key player in a heavily Hispanic market that Jacksonville, Fla.-based Southeastern Grocers has its eye on as it prepares to go public, touting its 27-unit Fresco y Más as a key element of its growth strategy. But it will have to take on Miami-based Sedano’s, an entrenched operator with great brand awareness that generated estimated annual sales of $1.05 billion, placing the company in 90th place on The PG 100 ranking of North America’s leading retailers of food and consumables.

Sedano’s wins with South Florida shoppers through a merchandising strategy focused on authenticity and hyper-local assorting. In addition, the company has been a leader in its region on micro fulfillment. In 2018, the company debuted artificial intelligence (AI)-enabled robots that pick supermarket orders in minutes. As the company looks to grow in the future, perhaps expanding its presence in Orlando where it operates three stores, it does so under the leadership of Agustin Herran, following the death of founder Manuel Herran in 2020. Mike Troy, Editorial Director

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Stater Bros. Established as SoCal Institution

It’s hard to find a better example of a super regional than Stater Bros. All of the company’s 171 stores are concentrated in Southern California where the retailer is as much of a cultural institution as surfing, cars and the entertainment industry. Founded in Yucaipa, Calif., in 1936, when twin brothers Cleo and Leo Stater purchased a 1,225-square-foot store from W.A. Davis for $600, Stater Bros. has grown steadily to become the largest privately owned food retailer in Southern California, with more than 18,000 employees.

Stater Bros. is deliberate about new store growth, but last year it added a 45,000-square-foot store in the city of Ontario, while it regularly updates existing locations with new amenities to stay relevant with shoppers. The company’s new Ontario store features full-service meat and seafood and deli departments, along with a prepared food offering that features, among other things, Cleo & Leo branded fried chicken.

The heavy concentration of stores in the sprawling Southern California metropolis means that Stater Bros. is able to service its entire operation from a massive 2.1 million-square-foot distribution facility that opened in 2008 about 60 miles due east of Los Angeles, in the grocer’s hometown of San Bernardino. It does so under the leadership of Pete Van Helden, CEO since January 2016. He filled the position previously held by Jack Brown, who had been the company’s CEO for 36 years and died late that same year. Brown established Stater Bros. Charities in 2008, with a commitment of not just doing business in the community, but also of being part of the community. Mike Troy, Editorial Director

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Schnucks Serves Central United States

Third-generation family-owned and operated Schnuck Markets Inc. has been in business for 81 years, but when CEO Todd Schnuck unveiled the company’s latest charity initiative, a gift card program to benefit local restaurants, he saw something he’d never seen before. He explained to Fox News that restaurant owners were in “stunned silence, and a couple were brought to tears. One in particular said, ‘I’m working on my budget for January right now, and I did not know how I was going to pay my rent, and now, with this check, I can pay my rent for January and keep my business going.’”

St. Louis-based Schnucks operates 113 stores in four Midwestern states (Missouri, Illinois, Indiana, Wisconsin), the majority of which are concentrated in the St. Louis area, and employees more than 14,000 associates. Last month, the company gave all of those employees a $15 gift card to spend at local restaurants as a way to help those establishments. Schnuck acknowledged that investing $200,000 is a lot of money, especially in a time when businesses are incurring increased costs to keep employees safe, but “it is so worth it to be able to help those that are really struggling.”

That’s not all that the company has been doing to help its communities throughout the pandemic. In April, Schnucks said that it would begin carrying grab-and-go meals from local restaurants. Three months later, in July, Schnucks expanded these partnerships to focus on local Black-owned restaurants. Meanwhile, the company has been remodeling older stores and opening new locations in 2020 to position itself for growth in the coming year. Gina Acosta, Executive Editor

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Longo’s Takes Care of Toronto

Being a super regional means more than simply operating a large number of stores in a geographic area. A retailer can possess other attributes that elevate its profile and give it an outsized impact in its trading area. That’s the case with Longo’s Brothers Fruit Markets, a 36-store operation that serves the greater Toronto area. Founded in 1956 by brothers Tommy, Joe and Gus Longo, the retailer sets a standard for food-retailing excellence with stores that inspire shoppers and serve as a destination for other retailers to discover ideas that they can apply to their own operations.

Aspects of makes Longo’s special can be found in the company’s newest store, in the Liberty Village neighborhood of Toronto. The 23,000-square-foot location reimagines the concept of a grocery store by offering live music, cooking demonstrations, special events and a partnership with fellow Toronto company Amsterdam Brewery. The company also opened a format-defying concept called Pronto Eats in August 2019 inside the Hudson’s Bay Centre, a major mixed-use development in downtown Toronto, to cater to workers and commuters with 1,000 square feet of ready-to-eat and semi-prepared meal options. Further, Longo’s was an early adopter of digital grocery, acquiring Grocery Gateway in 2004, giving it an advantage when the pandemic changed shopper behavior.

With a third generation of family members now involved in the business, Longo’s carries on a legacy of corporate social responsibility and sustainability that resonates strongly with Canadian shoppers. Mike Troy, Editorial Director

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