Northeast Grocery Shares Renewed Strategy for Retail Success
There’s a grocery store in Buffalo, N.Y., where you should consider whether to remove your shoes before entering. It’s the place where 10 innocent souls lost their lives on May 14, 2022 — holy ground that’s marked by a gentle waterfall at the front end of the store.
Walking into the Tops Friendly Market on Jefferson Avenue is a somber experience, but the team at Tops, which operates 148 stores in three northeastern states, has emerged so much stronger from the tragedy two years ago.
“It’s part of our history, and one of the things that we tell people is, because it is part of our history, it’s also part of our responsibility to talk about what happened, how we handled it, if we could be of assistance, what we learned from it,” says John Persons, CEO of Northeast Grocery Inc., who was president of Tops at that time. “There were good things that came out of this horrible tragedy.”
How can good come from such a horrendous event? The senior leadership team at Northeast Grocery graciously invited Progressive Grocer to upstate and Western New York to see firsthand not only how Tops has overcome the adversity of a deadly tragedy, but also how successfully both of its operating companies — Price Chopper/Market 32 and Tops — are navigating the operational challenges posed by their 2021 merger.
Price Chopper/Market 32, upstate New York’s first full-service supermarket chain, was founded more than 90 years ago and operates 130 stores in six states across the Northeast.
“Market 32, our contemporary customer research-driven banner, which launched in 2014, was designed to entice a younger generation of shoppers,” says Price Chopper/Market 32 President Blaine Bringhurst. “It elevates the shopping experience by romancing the product and extending a higher level of service.”
Both banners recently completed significant acquisitions that they believe will further strengthen their market share and continue longstanding histories of serving local communities. Price Chopper closed on five former ShopRite locations in New York’s Capital Region; four are being converted and will reopen as Market 32 stores this summer. Tops acquired five franchisee locations, all of which will remain open as they’re taken over by the banner’s store management team.
Today, the combined company of Northeast Grocery is invigorated, with deepened community connections and a renewed strategy focused on winning with friendly service, curated assortments and traffic-driving promotional programs.
Northeast Grocery Culture
Northeast Grocery Inc. (NGI) was born in 2021, when Tops Friendly Markets (established in 1962) and Price Chopper/Market 32 (established in 1932) united after individually navigating various acquisitions and transitions through the decades. The company elevated Persons, its COO and the former president of Tops, to CEO of NGI earlier this year. Bringhurst, who shepherded the development and rollout of Price Chopper’s Market 32 brand, leads Price Chopper/Market 32 as president, and Ron Ferri, Tops’ former EVP operations and distribution, now leads Tops Friendly Markets, also as president.
“The principle of the merger was about building for the future, not about the immediacy of trying to be more efficient and look for cost savings,” says Persons. Our premise is we’re going to put these two longtime regional companies together into this great platform, and we’re going to grow this organization, the two companies and Northeast Grocery.”
Price Chopper/Market 32 is based in Schenectady, N.Y., while Tops is based in the Buffalo suburb of Williamsville. With a combined workforce of more than 30,000, both operating companies rely on the Northeast Shared Services (NSS) group, which provides back-office support in areas like marketing, merchandising, IT and legal. The structure is serving the company well, as both banners have strong local and regional roots influenced by distinctive competitive landscapes.
“Tops and Price Chopper still generally operate independently, with the support mechanism of Northeast Shared Services in the middle,” says Persons.
This year, the team has been busy finalizing integration of the IT- and merchandising-focused areas of both companies.
“There’s still a good deal of transition to be done from an IT standpoint,” admits Persons, “but we have the end in sight for the merger of the applications. We have a good pathway leading us there. By the end of this summer, the merchandising area will be fully integrated in support of both operating companies. And by the end of 2024, our integration will be 95% complete.”
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NGI has also been focused on “what it means to be Northeast Grocery,” as opposed to just being Tops or Price Chopper/Market 32.
“Is there a Northeast Grocery culture? Yes. But both companies do operate with a different competitive set, and both companies are very strong regionally and so important in their respective communities,” notes Persons. “They are great corporate citizens and ingrained in their communities. We don’t want to diminish the importance of the organizations within the communities that they operate.”
At the same time, NGI is cognizant of the value of bringing the two organizations together culturally. Uniting two distinct organizations isn’t for the faint of heart, and famously difficult to accomplish. Yet Northeast Grocery is doing all of the right things to get everyone working together with a shared vision while preserving tremendous respect for what each company has built, according to Mike Miller, EVP and chief administrative officer of NSS.
“Both Price Chopper/Market 32 and Tops are rooted in strong cultures, with many similarities and some unique differences,” says Miller. “It’s been rewarding to watch these two cultures come together and our people to collaborate so effectively. We work each day on the continued evolution of integration and culture, having developed a unified mission, purpose and set of core values for Northeast Grocery that we will be working to communicate and reinforce throughout the company.”
One of the benefits of having operated in the same region is that the Tops and Price Chopper teams were already familiar with one another. You can see and feel that geniality when you spend time with staff from each operating company in a store.
The NGI Customer
Although the value propositions for Price Chopper/Market 32 and Tops are unique, they do have things in common when it comes to their offering to the Northeastern shopper. Price Chopper/Market 32 stores range in size from 40,000 to 100,000 square feet (with an average 35,000 SKUs) and come in three distinct formats. Tops stores range in size from 8,000 to more than 100,000 square feet (with an average 33,000 SKUs) and come in four distinct formats.
Walking into a Tops or Market 32 store, for example, the shopper is hit with a barrage of fresh splendor. Both banners emphasize fresh and freshly prepared foods, with select stores offering made-to-order Starbucks drinks. Tops stores have farmers market-style produce departments that call out a variety of local produce; they also have a broad range of deli and appetizer options and other locally curated fresh departments.
Market 32 stores have a large designer-driven floral department, a vast array of fresh seafood and custom-cut meat, a patisserie with a place for shoppers to have their morning croissant and coffee, and a smokehouse offering glistening ribs and brisket. One store PG visited this past March has a giant specialty cheese locker, an LED-lit oyster bath, tomahawk steaks, and an end cap dedicated to at least 20 kinds of fresh mushrooms.
Each operating company maintains a full-service kosher store-within-a-store that satisfies observant Jewish dietary restrictions. Both banners also feature inviting and easy-to-shop layouts that offer product education and a nationally branded assortment with many products not offered by competitors. They employ a hybrid pricing strategy delivering everyday value and sophisticated promotions geared to what customers want. Some Tops stores even have fuel stations.
Tops makes “10 promises” to its customer, while Price Chopper’s Market 32 banner gives customers “32 reasons” to love it. Between both of these banners, that’s 42 reasons that Northeast Grocery has such high penetration and loyalty in the region.
“Being regional grocers, our operating companies really understand the various shoppers they serve,” says Diane Colgan, SVP, marketing for NSS. “They listen to what customers are saying, which helps us retain customers.”
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Communications to shoppers for both operating companies continue to evolve as customers keep adopting new ways to receive and engage. NGI is focused on digitizing and personalizing marketing and promotional strategies to build and strengthen relationships with shoppers. Both companies still distribute weekly ads in print and digital formats, but also offer websites and mobile apps, as well as employing traditional in-store signs alongside a growing number of digital screens throughout the store and at checkout. Tops also has 25-plus stores with Shop+Scan capabilities enabling shoppers to bag as they go and enjoy an expedited checkout. At one Market 32 store PG visited, shoppers can scan the banner’s app to download coupons for everything from Coke products to prepared foods.
“We know from our customers that center-of-the-plate and traditional food is really what to concentrate on,” notes Persons. “We don’t feel the need to replicate everything that our competitors might be doing with foodservice or deli, but we want to make sure that we’re providing our customers with what they’re looking for. Probably six or seven years ago, we launched a partnership with Boar’s Head, which has increasingly become a more important brand. We’ve been rolling it out across our organization, and we’ve seen great customer response as a result. Tops, Market 32 and Price Chopper are the only major food retailers in the Northeast that have it, so it’s a differentiator for us.”
Price Chopper/Market 32 actually operates a commissary to produce some foodservice products, and the combined company is now trying to determine how to possibly expand that operation to service all of Northeast Grocery.
“The commissary supports roughly 45 stores now,” says Persons, “so we are now trying to figure out whether to have one in each market, or one central commissary that serves both banners. We’re researching it to make it as efficient as possible. We don’t want to jeopardize the quality of fresh-made products in-store, but some other things we can make centrally and ship out to stores. So that will be an enhancement for us in the near future.”
Remodels and Retrofits
Over the past five years, both operating companies have invested millions of dollars in capital improvements — more than 43 store remodels for Tops and nearly 26 full-fledged conversions from Price Chopper to Market 32. Both types of projects put the focus on fresh the moment a customer enters the store. Center store aisle flow and category planograms create ease of shop and points of differentiation. Further, the assortment is curated to meet shopper needs, with an emphasis on products that are locally grown, manufactured and produced. The banners have hundreds of local partners and host a Local Summit each fall to welcome more into the fold.
A big focus of remodels has also been on self-checkout expansion. “From a customer contact standpoint, we have been adding self-checkouts and upgrading our self-checkout hardware to be more user-friendly,” says Ferri. “So, when we do a remodel now, we may have 10 to 15 self-checkouts installed, whereas in the past we only had four to six. Some of these stores have 60% to 70% usage for self-checkout. Customers are definitely comfortable using them. The downside we’re seeing to that is increased shrink.”
As for how the Northeast Grocery customer will be shopping in the near future, it looks like most of those trips will happen in-store. According to NGI, e-commerce penetration has normalized to around 6%, and 75% of online orders are for delivery, not pickup. Ferri says that the company is going to continue its cap ex program in the next year with those shopping behaviors in mind.
“We started out with a heavy concentration here in Western New York,” he notes, “and then last year, we focused on Rochester. Now, we’re starting in the Syracuse market. And one of the things we’re most proud of is that during the pandemic, we did not stop our remodel program.”
So, while the supply chain was snarled, labor shortages were intense and construction costs skyrocketed, Northeast Grocery kept not only its transition going, but also its store openings and renovations. “We had to rely on reconditioned equipment,” says Ferri. “The benefit of some of that is it allowed us, when the supply chains dried up of equipment, to continue our program. Now, with both organizations collaborating, there are some things that we are learning and leveraging off each other from a construction standpoint.”
After 5/14
On May 14, 2022, the Northeast Grocery family experienced a previously unimaginable tragedy. A gunman entered the Tops Friendly Markets store at Jefferson Avenue in Buffalo and shot 13 people, 10 of them fatally.
Walking into the store on a snowy March day and seeing the memorial “water wall” at the front is an emotionally overwhelming experience; the landmark features a poem from Buffalo poet laureate Jillian Hanesworth.
“The tragedy really had us do some self-reflection on our involvement in the community,” observes Persons. “We have 100% re-engaged with local organizations, community members, churches. We are now involved at the grass-roots level.”
In the wake of the event, Persons says that Tops began to receive calls almost immediately begging the company not to abandon the community. Later, the company began to receive calls saying the store should not reopen because it’s sacred ground. Tops leaders had a lot of things weighing on their minds as they mulled how to proceed.
“Within 10 days we decided the approach had to be for us to reopen,” notes Persons. “We decided to essentially remodel the store top to bottom, front to back, completely, so when you walked in there as a customer, you wouldn’t even realize it was the same store. That’s what we did, and we did it in two months, working around the clock day and night.”
During those two months, Tops provided transportation to people in the community to other area stores, and also gave away tons of food. The team additionally surveyed the neighborhood and local politicians for ideas on what the remodeled store should have in terms of new features.
“They asked for a little bit bigger meat department, a little bit bigger produce department,” says Persons. Security features were also added.
When the store reopened in July 2022, “we had so many people who were just so thankful that we did that, that we didn’t abandon the neighborhood,” he recounts.
At the time of PG’s visit, there was another memorial under construction at the Jefferson Avenue Tops market. This one is outside, in the parking lot, and scheduled to open this year on the second anniversary of the shooting. On the day that PG was there, though, a shopper peered through the fence surrounding the site, excited for what was to come: a remembrance of the past, as well as a tribute to the future.
