Win, Place or Show

An interesting past year has made for some subtle yet significant changes in the latest edition of Progressive Grocers annual Super 50 ranking of the top grocery retailers. The biggest change: The recent merger of Safeway and Albertsons has created the third-largest operator in the United States, with the new combined company operating under the AB Acquisition moniker, which rose post-deal from its No. 7 position last year. (Target, ranked third last year, dropped several places, as we’ve based its ranking on sales from SuperTarget stores, which feature a complete grocery selection, versus regular stores offering primarily general merchandise.)

That union of grocery retailing might has created a new potentially formidable player on the West Coast. Up to now a small Northwest regional operator, Haggen has acquired 146 stores divested as a condition of the Safeway-Albertsons merger, allowing the Bellingham, Wash.-based chain to expand from 18 stores with 16 pharmacies to 164 stores with 106 pharmacies, with locations in Washington, Oregon, California, Nevada and Arizona. Led by an executive team that includes industry veteran Bill Shaner, Haggen will certainly take a strong position on next year’s Super 50.

These movements triggered a ripple effect that gave a leg up to several of our usual top 10 players, perhaps by a rung or two.

Meanwhile, there are no surprises at the very top: Walmart, by its sheer size, dominates the market through volume sales, although it’s been struggling with same-store performance and experimenting with smaller-format stores as a way of competing against strong regional players that have managed to hold their own against the Bentonville, Ark., juggernaut.

And Kroger rightfully holds its place at No. 2 as the nation’s pre-eminent traditional grocer, demonstrating that a clearly defined growth strategy, customer experience and consistent executive stewardship are the ingredients for seemingly perpetual success.

For all grocers, shopper engagement has become increasingly important, as digital-savvy shoppers demand a customized experience that offers them straightforward mealtime solutions. At the core of that equation remain price, selection and service, with cost containment and capital investment continuing to be crucial to delivering a fresh, relevant shopping experience that ensures consumer loyalty in a sea of competing retail channels.

In addition to the ranking, we take a closer look at the list’s top 10 companies, beginning on page 40.

1. Wal-Mart Stores Inc.

Never content to rest on its laurels, the world’s biggest retailer has continued to push the envelope, most recently by raising the salaries of its approximately 500,000 associates so that they now earn above the federal minimum wage. The pay hike was part of a comprehensive investment in its employees, dubbed the Opportunity initiative, which also includes greater scheduling flexibility and control, and new training for further growth and advancement beyond entry-level positions, along with expected changes to hiring practices and store structure.

Although some observers have attributed the wage increase to mounting pressure from store-level workers and labor advocates, others have dismissed that as a motivation; Matthew Shay, president and CEO of the Washington, D.C.-based National Retail Federation, called the move “just another example of the power of the marketplace. Like many other retailers, Walmart made their decision based upon what is best for their employees, their customers, their shareholders and the communities in which they operate.”

Other far-seeing initiatives put forth by the Bentonville, Ark.-based company include a plan to roll out a much more data-driven merchandise selection as part of a major program to improve the in-store experience for shoppers, the launch of an online shopping portal to help customers identify and purchase sustainable products, and the championing of women-owned businesses in-store and online through an easily identifiable logo on packaging. The retailer also recently underwent a restructuring of its top management as part of a larger strategy to enhance the quality, consistency and presentation of its fresh food categories.

2. The Kroger Co.

Forty-five consecutive quarters of same-store sales growth and counting — it doesn’t get much better than that for a grocer. And for The Kroger Co. — the nation’s largest traditional grocer, which Business Insider says is “writing the playbook for the grocery store industry” — it’s become par for the course.

“Kroger delivered 12 months of consistently remarkable performance during 2014, fulfilling our commitments to our customers, associates and shareholders,” Rodney McMullen, president and CEO of the Cincinnati-based grocer, tells PG. “We captured more share of the massive food market, continued investing to grow our business and created 25,000 new jobs. We are particularly proud of hiring more than 6,000 veterans last year. While we are very proud of this outstanding year, we are committed to even more.”

Known for its top-notch customer service and broad product selection, Kroger leads with its private label and loyalty programs, and is expected to pass Whole Foods Market within two years to become the country’s top seller of natural and organic foods.

“We will continue to execute our growth plan, building on the foundation of our Customer 1st strategy,” McMullen says of the future. “We are committed to innovation, whether through expanding our digital capabilities to deepen our relationship with customers in new and exciting ways, or by pushing the boundaries on what customers can expect from our corporate brands. And we are investing to grow in both new and existing markets by pursuing our fill-in markets strategy and expanding our presence through our successful merger integrations with Harris Teeter and Vitacost.com.”

Looking toward its 2015 performance, Kroger anticipates identical-sales growth, excluding fuel, of 3 percent to 4 percent, and full-year net earnings of $3.80 to $3.90 per diluted share.

3. AB Acquisition LLC (Albertsons-Safeway)

A significant development in the ongoing transition of third-ranked Super 50 contender AB Acquisition LLC — comprising Albertson’s LLC, New Albertson’s Inc. and Safeway Inc. — occurred in mid-April, when the company appointed its current Boise, Idaho-based executive chairman, Bob Miller, to assume the additional role of CEO as part of a four-person “office of the CEO” executive realignment.

Robert Edwards, who was chairman and CEO of Pleasanton, Calif.-based Safeway and had been appointed Albertsons CEO at the closing of the merger earlier this year, has shifted to the role of vice chairman, where he’ll provide counsel to the board and the organization on key strategic and integration matters. With Edwards’ role reduced and the new Albertsons-heavy executive team bolstered, the move signifies what many observers believe is a preface to Edwards’ exit from the company in the not-too-distant future. “We’ve made significant strides in the time since the merger has closed,” says Edwards, “and I feel comfortable turning my focus to other matters that will be of the best benefit to the company.”

In addition to Miller, AB Acquisitions’ realigned executive team — which will support the day-to-day operations of the company’s 14 divisions and 2,200 stores — includes Wayne Denningham, COO for all divisions; Justin Dye, chief administrative officer; and Shane Sampson, chief marketing and merchandising officer. Jim Perkins and Kelly Griffith will continue as EVPs of operations for the company’s regions. Denningham, Dye and Sampson have worked for Albertsons for years and were with the company before the Safeway acquisition was completed.

4. Publix Super Markets Inc.

Publix is going through a period of aggressive growth: As reported in its home state of Florida, the Lakeland-based supermarket chain has purchased six southwest Florida shopping centers over the past year for $86 million and has set aside $1.3 billion in 2015 to buy additional centers, construct new stores and renovate others. In 2014, Publix spent the same amount to open 32 new stores and buy shopping centers in the Sunshine State.

The company has also been steadily expanding in such markets as North Carolina. “Within the past year, we have opened eight stores … and continue with aggressive growth in the state,” Director of Media and Community Relations Maria Brous tells PG. “We also opened a new distribution center in Orlando, Fla., and have continued to make improvements in tore designs and merchandising.”

As part as its mission to enhance the shopping experience, the grocer has revamped its coupon policies, clarifying the limit on how much of one product a customer can buy using coupons, allowing money back to go on a Publix gift card rather than as cash to the customer, and only honoring coupons that refer to product size.

Such programs are a natural outgrowth of what Brous describes as “the relationship we share with our customers. Our associates engage with our customers every day in our stores. We hear from our customers and share information with them … on social platforms, in our stores, in our advertising and in our customer voice surveys. As a company, when we make important decisions, we weigh the impact to our associates and customers.”

It follows then, that associates are also a major priority for the grocer. “As an employee-owned company, promotion from within is a key differentiator for Publix,” Brous notes. “With company growth comes opportunity for advancement. We will remain focused on the training and development of our associates for advancement and our future growth.”

Publix has even placed itself in the vanguard of public opinion, with its January announcement, ahead of the legalization of same-sex marriage in Florida, that it would expand spousal coverage of health, dental and vision benefit plans to all of its employees in same-sex unions, regardless of where they live. “[W]e believed it was the right thing to do to extend the benefits to all our associates across our six states,” Brous explained to PG earlier this year, “as we want our associates and their families to be healthy.”

5. Ahold USA

There’s no rest for the weary, as Ahold USA knows full well. But that hasn’t kept PG’s 2014 Retailer of the Year from retreating in the cutthroat derby that has mightily tested the company’s U.S.-based divisions under the watchful eye of its parent company in the Netherlands.

As the grocer focuses heavily on improving its performance across the board, COO James McCann tells PG: “The markets in which our retail divisions operate remain incredibly competitive, which is why we have embarked on a good-to-great journey to put our complete focus on improving the customer experience in stores. We’ve worked hard to save money across many areas of our business and have reinvested all of these savings into improving our value proposition, fresh offerings and service engagement,” which he says have enabled Ahold USA’s retail divisions to pick up market share and customer-tracking scores in the key areas of price and service.

When asked about the key points the company will focus on in 2015 to strengthen its brand, McCann acknowledges: “While our good-to-great journey has created momentum for the business, there is still much left to do; 2015 is about getting to great even faster. Our focus remains on staying ahead of growing trends such enabling our customers to shop where, when and how they want, and transforming our produce departments because we know how important fresh and healthy offerings have become to customers. Look for us to continue to develop exciting own-brand lines, which offer the quality and value that customers expect from the national brands, but at more affordable prices.”

6. H-E-B

H-E-B is not only a favorite in its home state of Texas, it scores high among industry observers as well, including a spot among the top 12 companies on the 2015 Temkin Experience Ratings, which rank the quality of customer experience delivered by large organizations.

The San Antonio-based privately held grocery chain is one of retail’s most influential players, leading the way to what PG’s Meg Major calls “a new era of transformative diversification to test, learn, explore — and ultimately seize — new opportunities to meet consumers’ needs and expectations.”

For example: After a decade of perfecting its highly tailored midsize and larger-store formula, H-E-B is poised to open its first combo small-format market/gas station in its downtown San Antonio stomping grounds in fall 2015, as Major described in a Progressivegrocer.com column earlier this year. The 12,000-square-foot concept store will be a proving ground for H-E-B to experiment with new offerings, delivery methods and inventory management for a smaller box.

“Texans know that H-E-B is the best grocery store in America,” Business Insider opined in February. “The chain has been providing a superior shopping experience for much longer than Whole Foods.” Additionally, Glassdoor.com ranked H-E-B seventh in its latest annual “Best Places to Work” rankings last December, with one reviewer calling the grocer “one of the few companies that actually cares.”

Among the reasons for this success: a 900-item produce section, a highly local private label program, chef-prepared free samples and stellar customer service.

Meanwhile, The Dallas Morning News has speculated that H-E-B is mulling an expansion in north Texas, reporting that the grocer has purchased at least a dozen locations in the region. Currently, H-E-B operates five of its Central Market specialty food stores in the Dallas-Fort Worth area.

7. Delhaize America Inc.

Cognizant of the significant work that remains to be done to deliver on an ambitious agenda established in March 2014, Salisbury, N.C.-based Delhaize America has made a solid dent in moving the needle forward to strengthen its competitive stance.

“Across all of Delhaize America, we are developing a customer-focused organization with winning business strategies for both Food Lion and Hannaford in our local markets,” Delhaize America President and CEO Kevin Holt tells PG. “At both banners, we’ve put the customer back at the center of our business and are making sure that we operate with a local focus to serve our customers and differentiate both banners in the markets in which we operate.”

Holt points to pilot work under way at Hannaford, which is currently testing additional fresh and healthy concepts in prototype stores, including a large-scale store and a smaller-scale location. Additionally, he continues, “Hannaford is continuing to differentiate in the marketplace by further strengthening service and quality, which is already a core attribute for the Hannaford brand. Meanwhile, Food Lion unveiled 76 remodeled stores last year in the Wilmington, N.C., and Greenville, N.C., markets, and is currently remodeling approximately 160 additional stores in the Raleigh, N.C., market to bring its ‘Easy, Fresh and Affordable. You Can Count on Food Lion Every Day!’ strategy to life.”

Thus far, the efforts appear to be trending in the right direction. “We are very pleased with the work underway at Delhaize America and are confident about our strategies that have helped create a stronger position in an extremely competitive marketplace,” adds Holt.

Looking ahead to what comes next, Delhaize America is focused on several key areas, which includes “creating a customer-centric organization by offering excellent service, enhancing our assortment based on customers’ local preferences, and ensuring we are a trusted brand in our communities, known for supporting our neighbors and being a good environmental steward,” Holt affirms. “We will continue to focus on delivering our strategies within our local banners and winning new customers, as well as growing our relationship with existing customers throughout 2015.”

8. Meijer Inc.

Superstore retailer Meijer is in expansion mode. More than two years after publicly confirming that it was considering opening stores in Wisconsin, Meijer is in the home stretch of construction of four new supercenters in the greater Milwaukee area.

As reported on Progressivegrocer.com earlier this year, Meijer has plans for additional stores in the area and throughout the Badger State, and expects to open two to three new Wisconsin stores each year for the next four years. “All of us at Meijer are looking forward to bringing the Meijer experience to new customers in Wisconsin this summer,” says Frank Guglielmi, senior director of communications at the Grand Rapids, Mich.-based retailer.

Meanwhile, Meijer revealed last month that it plans to invest nearly $50 million to extensively remodel four of its stores around Dayton, Ohio, with enhanced “intuitive” floor plans to allow for expanded selections in departments throughout the stores, which are expected to launch later this year. “Our customers expect high standards from us, and our investment in these stores will ensure they enjoy the best shopping experience we can provide,” says Meijer Co-Chairman Hank Meijer.

Now with more than 200 round-the-clock stores throughout the Midwest, the retailer has grown steadily by focusing on fresh grocery options, value to customers and community partnership. Further, the company just launched Meijer Curbside, which allows customers to shop online and pick up their groceries at the curb without leaving their cars; it’s being piloted at one of the Grand Rapids stores. “The way customers shop for food is changing, and Meijer Curbside is one more way we are striving to find solutions to everyday challenges,” says Michael Ross, VP of customer marketing and emerging technology.

Additionally, Meijer is backing Fresh Thyme Farmers Market, a new natural and organic food chain that’s been expanding rapidly throughout the Midwest; it opened its first Chicago-area store a year ago.

9. Wakefern Food Corp.

Over the past year, Wakefern Food Corp., the largest retailer-owned cooperative in the United States, whose members operate stores under the ShopRite banner, has gone from strength to strength: At its annual shareholder meeting held last October, the Keasbey, N.J.-based company revealed a record $14.7 billion in retail sales for the fiscal year ending Sept. 27, 2014, a 4 percent rise from the year-ago period.

“Year after year, Wakefern continues to grow and adapt to meet the needs of an ever-changing industry and an increasingly demanding customer,” President and COO Joe Sheridan said at the meeting. “After more than 65 years in this business, we rely on the lessons from past successes while always looking to the future for new and better ways to help our members succeed.”

Also last year, Wakefern received financing from CIT Bank, the U.S. commercial bank subsidiary of CIT Group Inc., a Livingston, N.J.-based provider of commercial lending and leasing services, with the proceeds to go toward new equipment and store upgrades. “CIT worked closely with us to develop a customized financial solution that will help us pursue our growth objectives,” the company’s CFO, Doug Wille, noted at the time.

As for happenings at store level, the chain has continued such enduringly popular programs as its annual winter and summer Can Can Sales, which have resulted in more than 3 billion cans of food sold since the initiative began back in 1971.

10. Whole Foods Market

Driven by consumers’ demand for fresh, healthy foods, Whole Foods Market is continuing its robust expansion, the Austin, Texas-based chain having signed leases for eight new stores in the United States and three in western Canada, with additional stores in development.

As Progressivegrocer.com reported earlier this year, the U.S. stores are planned for Baltimore; Bellingham, Wash.; Bridgewater, N.J.; Charlotte, N.C.; Chicago; Mandeville, La.; Sarasota, Fla.; and Toledo, Ohio. The grocer will open its Canadian stores in Calgary and Edmonton — Whole Foods’ first locations in the province of Alberta — as well as Victoria, British Columbia.

“Whole Foods Market has been in Canada for more than 10 years,” said Joe Rogoff, president of Whole Foods’ Pacific Northwest region, adding that the “individualized store experience has created strong relationships between the brand and our customers, and has enabled us to grow to 10 stores in B.C. and Ontario.”

Whole Foods, which currently operates more than 400 stores, with an additional 116 stores in development, is working to shed its “Whole Paycheck” image by making natural and organic foods more accessible to the masses. To that end, it’s planning stores in underserved urban areas where residents would be otherwise hard-pressed to find or afford such products. As Co-CEO John Mackey told Bloomberg in January, “We are now going to make sure we tell customers what we are about: values and value.”

After sagging performance over the past two years, the company cut prices to attract customers and drive sales. The result, as noted on Quartz.com in February: Whole Foods beat earnings expectations for the second consecutive quarter and reported record revenue and higher-than-expected income, despite shrinking profit margins.

Further, the company is expanding its in-store dining and bar options, beginning with four new stores in Chicago. As PG’s Meg Major reported in February, its Streeterville location in that city, the first of seven former Dominick’s converting to the Whole Foods banner, is the first to feature an in-store venue offering raw and vegan foods via a partnership with Chicago restaurant Raw.