By Al Urbanski Takes Over As Pro G Re S S I Ve GRO C E R, Com- Grocery Companies Piled the Super 50 from Its Database of 32,776 Super

COVER STORY

THE SLOW SH A K E O U T Internal consolidation

By Al Urbanski takes over as Pro g re s s i ve GRO C E R, com- grocery companies piled the Super 50 from its database of 32,776 super-

seek their m a rk e t s . ergers and acquisitions we re rightful places A l b e r t s o n ’s , w h i c h f ew among chains populat- on the d ropped one place to No. 3 ing PRO G R E S S I V E GRO C E R’s on this ye a r’s Super 50, Super 50 list this ye a r, but food chain. began a compre h e n s i ve re - consolidation within these e valuation of its business last organizations did play a sig- year under the direction of a nificant role in shaping our n ew chief exe c u t i ve, Ge n e r a l list of the top 50 supermarket chains in the United States. As Wa l - Ma rt Electric veteran Larry Johnston. Aside from selling off 80 Osco Dru g continues to spread its price-dominance across the land, conve n t i o n a l St o res in New England, the Boise-based company shed 80 unpro f- Ms u p e r m a rket chains are picking their spots and wholesalers are trim- itable operations in the aftermath of its American St o res acquisition. ming their retail operations in an all-out effort to compete with gre a t e r At least that many more are slated for closing, and the chain focus and efficiency. It is a time when hard choices are being made and announced plans to leave large markets in Texas and Te n n e s s e e . acted upon, when large retail operations are undergoing internal “We must pre p a re ourselves for a new ord e r,” Johnston told fellow shakeouts as they determine the size and scope of the supermark e t s u p e r m a rket chief exe c u t i ves at this ye a r’s FMI Midwinter Confer- i n d u s t ry in the early 21st century. ence in Phoenix. “This time the change will be significant and per- “ It’s a consolidation in which major chains are pulling back not manent. The industry must make bold, tough decisions and add new for immediate financial considerations, but in order to make more business disciplines. It’s time for Joe Albertson to meet Jack We l c h . ” money with fewer stores,” observes Hal Clark, president of Tr a d e Jacksonville, Fla.-based W i n n - D i x i e ( No. 8) is one of the chains Dimensions. The Wilton, Conn.-based operation, a sister company of d e c i s i vely paring operations, even though its acquisition of about half

W W W. G R O C E RYNETWORK.COM APRIL 15, 2002 • PROGRESSIVE GROCER • 17 COVER STORY

of Jitney Ju n g l e’s stores bro u g h t c . e . o. Joseph Fi s h e r. Almost half the Kmart business to rival Fl e m- Disappointing results at the its 2001 store total to 1,141, a of the No.23 chain’s 200-plus ing, perhaps a serendipitous move Cincinnati-based chain could f ew more than it had on last ye a r’s s t o res—including the banners Bi g in light of Kmart’s recent tro u- stem more from its significant list. Long an adve r s a ry of the Be a r, P&C Foods, and Qu a l i t y bles). Of the 550 stores still ru n nonfoods operations, such as its Bentonville gang in its southern Ma rk e t s — h a ve gotten Eu ro - s t y l e by Su p e rvalu, nearly a third are Fred Me yer stores and jewe l ry base, Wi n n - Dixie has decided to remodels heavy on fresh pro d u c e , under the Sa ve-A-Lot and Sh o p shops. Fo l l owing the company’s battle price with increased serv- high-end baked goods, and ’n Sa ve banners, limited-assort- t h i rd quart e r, c.e.o. Joseph Pi c h- ice. It pulled unprofitable loca- organic offerings (see PG, Fe b. ment discount formats that go ler announced layoffs tied to poor tions from troubled regions and 15). Fisher also hailed the posi- over well with consumers in the sales in general merchandise, jew-

The internal consolidators The share-grabbers The niche-exploiters Many chains are putting the finishing touches Some strong chains have taken the Chains that cater to special niches — on the consolidation of their expanded sta- opportunity to expand and rei n f o r ce their such as health food or limited assortment bles, trimming a number of unprofitable stores market shares . value — increased their pres e n c e . and regions over the past two years.

No. of Stores 19 9 9 20 0 1 No. of Stores 19 9 9 20 0 1 No. of Stores 19 9 9 20 0 1

Win n - D i x i e 1, 1 8 8 1, 1 4 1 Kroger 2,328 2,429 Aldi 599 755 Safeway 1,445 1,568 Su p e r v a l u 64 8 55 0 Smart & Final 184 221 Delhaize 1,286 1,464 A& P 54 5 51 9 Whole Foods 104 130 Wal-Mart 721 1,103 Fl e m i n g 29 1 11 6 Meijer 131 153 Penn Tra ff i c 25 9 22 1 Bashas’ 92 128 Giant Eagle 18 9 12 0 Harris Tee t e r 14 9 14 3 Nash Finch 13 8 12 3 Eagle Food Centers 88 64

remodeled other stores to fit its t i ve results of Penn Tr a f f i c’s holi- c u r rent economic climate. e l ry, and floral operations. Wi n n - Dixie Ma rketplace con- day merchandising programs, pri- Bigger retail playe r s — t h e The value equation work e d cept. Larger than conve n t i o n a l vate label sales, and new cost biggest, in fact—are riding the well for niche players A l d i a n d s u p e r m a rkets, they proffer serv- reduction pro g r a m s . t rend, too. Although it re c e n t l y Smart & Final, both limited ices such as pharmacies, photo- Wholesale companies, which announced that its fourt h - q u a rt e r a s s o rtment chains with fore i g n finishing, and food court s . for years shored up their busi- earnings we re off 5 percent fro m roots that posted strong grow t h Added services and enhanced nesses by acquiring stores, are also the previous ye a r, No. 1 K ro g e r last ye a r. Sm a rt & Final, ow n e d appearances in-store seem to be easing away from operating simultaneously declared it would by French retailer Casino having a resuscitating effect up s u p e r m a rk e t s — c o n ve n t i o n a l - go ahead with plans to open 45 Gu i c h a rd - Perrachon, jumped 12 No rth as well. Left for dead thre e s i zed ones at least. Eden Pr a i r i e , Food 4 Less stores. Many of the spots on the Super 50 to No. 32. years ago, Syracuse, N.Y. - b a s e d Minn.-based S u p e rv a l u ( No. w a rehouse-style, discount opera- Aldi, short for Albrecht Di s c o u n t Penn Tr a ff i c is now about 40 10) cut back its retail operations tions will reside mostly in the and owned by the billionaire s t o res lighter and has shed nearly by more than 15 percent in the Chicago market, including one A l b recht brothers of Ge r m a n y, $1 billion of debt under new last two years (and also gave up in a former Do m i n i c k’s store . Continued on page 24

18W• WPROGRESSIVE W. G R O C E RYNETWORK.COM GROCER • APRIL 15, 2002 APRIL 15, 2002W W• W.PROGRESSIVE G R O C E RY N EGROCER T W O R K . C• O18 M A M E R I C A’S 50 LARGEST SUPERMARKET CHAINS

1 Kroger 2,429 $46,726 88,292 27,391 231,881 Pacific (655) Conventional (2,284) 1 Cincinnati, Ohio East North Central (499) Supercenter (145) Joseph A. Pichler, c.e.o. Mountain (369) 2 Safeway 1,568 31,451 56,553 15,040 118,382 Pacific (845) Conventional (1,564) 2 Pleasanton, Calif. Mountain (285) Limited Assortment (4) Steven A. Burd, c.e.o. South Atlantic (137) 3 Albertson’s 1,713 30,207 59,758 16,777 151,392 Pacific (599) Conventional (1,713) 3 Boise, Idaho Mountain (303) Lawrence R. Johnston, c.e.o. West South Central (286) 4 Wal-Mart 1,103 28,247 67,415 30,772 305,070 West South Central (284) Supercenter (1,073) 4 Bentonville, Ark. South Atlantic (275) Conventional (30) H. Lee Scott Jr., c.e.o., Wal-Mart Stores, Inc. East South Central (165) 5 Ahold USA 1,245 24,104 49,415 15,079 103,072 South Atlantic (487) Conventional (1,238) 5 Chantilly,Va. Middle Atlantic (321) Limited Assortment (7) William Grize, c.e.o. New England (207) 6 Delhaize America 1,464 15,231 42,463 12,291 65,522 South Atlantic (1,237) Conventional (1,464) 6 Salisbury, N.C. East South Central (101) R. William McCanless, c.e.o. New England (85) 7 Publix 687 14,624 27,345 7,647 73,095 South Atlantic (683) Conventional (687) 7 Lakeland, Fla. East South Central (4) Charles Jenkins Jr., c.e.o. 8 Winn-Dixie 1,141 13,012 44,354 11,786 86,579 South Atlantic (729) Conventional (1,141) 8 Jacksonville, Fla. East South Central (239) Allen R. Rowland, c.e.o. West South Central (155) 9 Great A&P Tea 519 8,540 16,392 5,740 39,245 Middle Atlantic (259) Conventional (519) 9 Montvale, N.J. East North Central (147) Christian Haub, c.e.o. New England (43) 10 Supervalu 550 7,396 16,404 5,207 35,077 South Atlantic (188) Conventional (276) 10 Eden Prairie, Minn. East North Central (136) Limited Assortment (261) Jeffrey Noddle, c.e.o. West North Central (67) Supercenter (13) 11 H-E-B 278 7,057 10,508 3,458 35,785 West South Central (278) Conventional (278) 11 San Antonio, Texas Charles Butt, c.e.o. 12 Shaw’s 187 4,320 7,526 2,355 17,511 New England (187) Conventional (187) 12 East Bridgewater, Mass. Ross McLaren, c.e.o. 13 Meijer 153 3,939 7,819 4,543 59,083 East North Central (145) Supercenter (153) 13 Grand Rapids, Mich. East South Central (8) Jim McLean, c.e.o. 14 Pathmark 142 3,906 5,940 2,232 17,012 Middle Atlantic (138) Conventional (142) 14 Carteret, N.J. South Atlantic (4) James Donald, c.e.o. 15 Defense Commissary Agency 196 3,616 5,525 2,426 13,129 South Atlantic (57) Commissary (196) 15 Virginia Beach, Va. Pacific (42) West South Central (23) 16 Hy-Vee 187 3,536 7,602 2,576 28,014 West North Central (176) Conventional (187) 16 West Des Moines, Iowa East North Central (11) Ronald Pearson, c.e.o.

and paper goods. This equivalent square footage and sales volume was SUPER 50 METHODOLOGY AND NOTES entered into calculations for the listing. Warehouse clubs such as Sam’s Club and Costco represent a sub- PROGRESSIVE GROCER’s Super 50 was derived from Wilton Conn.-based stantial volume of food sales, but they have been omitted from the Trade Dimensions’ database of 32,776 supermarkets selling a mini- Super 50 ranking because of sales to businesses and institutions in mum of $2 million apiece per year. Stores selling under $2 million institutional packaging not directly competitive with supermarkets. operated by Super 50 chains were not included in the calculation of Trade Dimensions estimates that the 501 Sam’s Clubs would add the total number of stores or total sales volume. $18.5 billion of supermarket-equivalent sales to the Wal-Mart total, lift- The Super 50 attempts to count only the supermarket business of ing total sales to $46.7 billion, a virtual tie with No. 1 Krog e r . listed chains, though some operate diverse formats. Hypermarkets and Trade Dimensions further estimates that sales of supermarket items supercenters sell extensive selections of general merchandise. For at the 279 Costco warehouses would add up to $16.5 billion, placing these two formats, Trade Dimensions estimated the square footage the chain at No. 6, ahead of Delhaize (Food Lion). Estimates of $3.4 bil- and sales volume of the items typically sold in the traditional super- lion in supermarket sales for 130 BJ’s Wholesale Clubs would put BJ’s market formats: grocery, health and beauty care, household chemicals, at No. 17, ahead of Aldi.

20 • PROGRESSIVE GROCER • APRIL 15, 2002 W W W. G R O C E RY N E T W O R K . C O M A M E R I C A’S 50 LARGEST SUPERMARKET CHAINS

17 Aldi 755 3,197 9,895 3,460 16,358 East North Central (333) Limited Assortment (755) 17 Batavia, Ill. Middle Atlantic (112) Chuck Youngstrom, c.e.o. Pacific (108) 18 Raley’s 149 3,069 6,535 1,585 10,202 Pacific (110) Conventional (149) 18 West Sacramento, Calif. Mountain (39) Michael J. Teel, c.e.o. 19 Giant Eagle 120 2,965 5,428 2,158 13,900 East North Central (70) Conventional (120) 19 Pittsburgh, Pa. Middle Atlantic (45) David Shapira, c.e.o. South Atlantic (5) 20 Wegmans 62 2,678 4,463 1,360 14,686 Middle Atlantic (62) Conventional (62) 20 Rochester, N.Y. Daniel Wegman, pres. 21 Stater Bros. 155 2,671 4,122 1,342 6,796 Pacific (155) Conventional (155) 21 Colton, Calif. Jack H. Brown, c.e.o. 22 Golub/Price Chopper 100 2,399 4,107 1,317 10,986 Middle Atlantic (71) Conventional (100) 22 Schenectady, N.Y. New England (29) Neil M. Golub, c.e.o. 23 Penn Traffic 221 2,304 7,158 1,761 11,304 Middle Atlantic (141) Conventional (205) 23 Syracuse, N.Y. East North Central (63) Supercenter (16) Joseph Fisher, c.e.o. New England (10) 24 Super Kmart Centers 123 2,264 6,416 3,333 33,411 East North Central (43) Supercenter (123) 24 Troy, Mich. South Atlantic (19) James B. Adamson, c.e.o. West South Central (19) 25 Ingles Markets 205 2,247 7,799 1,968 10,170 South Atlantic (179) Conventional (205) 25 Asheville, N.C. East South Central (26) Robert P.Ingle, c.e.o. 26 Harris Teeter 143 2,219 4,632 1,368 11,905 South Atlantic (138) Conventional (143) 26 Matthews, N.C. East South Central (5) Fred J. Morgenthall, pres. 27 Whole Foods Market 130 2,209 3,704 1,276 14,445 Pacific (34) Limited Assortment (130) 27 Austin, Texas South Atlantic (32) John Mackey, c.e.o. East North Central (16) 28 Fleming 116 2,073 4,989 1,314 8,469 West North Central (42) Conventional (116) 28 Lewisville, Texas Pacific (27) Mark S. Hansen, c.e.o. West South Central (22) 29 Weis Markets 163 1,950 6,012 1,590 10,523 Middle Atlantic (138) Conventional (163) 29 Sunbury, Pa. South Atlantic (25) Norman S. Rich, pres. 30 Schnuck Markets 90 1,909 4,630 1,144 9,842 West North Central (59) Conventional (90) 30 St. Louis, Mo. East North Central (31) Craig D. Schnuck, c.e.o. 31 Brookshire Grocery 137 1,638 5,000 1,327 7,754 West South Central (137) Conventional (137) 31 Tyler, Texas Bruce G. Brookshire, chairman 32 Smart & Final 221 1,509 3,125 909 3,921 Pacific (196) Warehouse (221) 32 City of Commerce, Calif. Mountain (13) Ross E. Roeder, c.e.o. South Atlantic (12) 33 DeMoulas/Market Basket 58 1,508 2,436 695 6,378 New England (58) Conventional (58) 33 Tewksbury, Mass. William J. Shea, chairman 34 Bashas’ 128 1,419 3,731 959 6,829 Mountain (126) Conventional (128) 34 Chandler, Ariz. Pacific (2) Eddie Basha Jr., chairman 35 Save Mart 96 1,392 3,297 803 4,662 Pacific (96) Conventional (82) 35 Modesto, Calif. Warehouse (14) Robert Piccinini, c.e.o. 36 Roundy’s 69 1,360 3,298 840 6,655 East North Central (69) Conventional (69) 36 Pewaukee, Wis. Gerald F. Lestina, c.e.o. 37 Nash Finch 123 1,360 3,816 979 7,737 West North Central (105) Conventional (123) 37 Minneapolis, Minn. East North Central (12) Ron Marshall, c.e.o. Mountain (4)

22 • PROGRESSIVE GROCER • APRIL 15, 2002 W W W. G R O C E RY N E T W O R K . C O M A M E R I C A’S 50 LARGEST SUPERMARKET CHAINS

2001 Full-Time No. of Supermarket Square Feet Equivalent Chief Supermarkets Sales Selling Area No. of Store-Level Trading Areas Store Company Name ($2M+ sales) (millions) (thousands) Checkouts Employees (No. of stores) Formats 38 Marsh 111 1,331 3,445 925 7,762 East North Central (111) Conventional (111) 38 Indianapolis, Ind. Don E. Marsh, c.e.o. 39 Spartan Stores 102 1,123 3,080 813 5,629 East North Central (102) Conventional (102) 39 Grand Rapids, Mich. James B. Meyer, c.e.o. 40 Lowes Food Stores 105 1,100 3,331 867 5,621 South Atlantic (105) Conventional (105) 40 Winston-Salem, N.C. Curtis Oldenkamp, pres. 41 Big Y Foods 46 1,037 1,715 566 4,242 New England (46) Conventional (46) 41 Springfield, Mass. Donald H. D’Amour, c.e.o. 42 WinCo Foods 36 1,017 2,306 559 4,140 Pacific (26) Conventional (36) 42 Boise, Idaho Mountain (10) William D. Long, c.e.o. 43 K-VA-T Food Stores 86 993 2,470 734 4,756 East South Central (65) Conventional (86) 43 Abingdon,Va. South Atlantic (21) Steven C. Smith, c.e.o. 44 Minyard Food Stores 74 915 2,593 730 5,037 West South Central (74) Conventional (74) 44 Coppell, Texas Liz Minyard, Gretchen Williams, co-c.e.o.’s 45 Fiesta Mart 43 881 1,754 473 4,294 West South Central (43) Conventional (43) 45 Houston, Texas Donald L. Bonham, chairman 46 Wild Oats Market 104 852 1,958 712 5,346 Pacific (40) Limited Assortment (70) 46 Boulder, Colo. Mountain (27) Conventional (34) Perry Odak, c.e.o. West South Central (9) 47 Big V Supermarkets 32 818 1,477 399 3,417 Middle Atlantic (32) Conventional (32) 47 Florida, N.Y. James A. Toopes Jr., c.e.o. 48 Houchens Industries 168 750 2,452 871 3,857 East South Central (131) Limited Assortment (123) 48 Bowling Green, Ky. South Atlantic (25) Conventional (45) Jim Gipson, c.e.o. Middle Atlantic (9) 49 Eagle Food Centers 64 730 2,018 559 4,153 East North Central (54) Conventional (64) 49 Milan, Ill. West North Central (10) Jeffrey Little, c.e.o. 50 King Kullen 46 716 1,690 520 3,288 Middle Atlantic (46) Conventional (46) 50 Westbury, N.Y. John B. Cullen, Bernard D. Kennedy, co-c.e.o.’s

Continued from page 18 membership fees. Regular con- taken from the names of the two larger than 25,000 square feet nor rose three places to No. 17. sumers are free to drop in—and men who bought the business in c a r rying more than 1,000 items. Western phenomenon Sm a rt & they do in great numbers at store s 1914: J.S. Sm a rt and H.D. Fi n a l . ) Food offerings focus on center-of- Fi n a l’s success in retail is almost u p - a n d - d own the West Coast and Aldi continues to trade on its the-plate fare like fro zen and an accident. Stocking only about in Idaho, Ne vada, Arizona, and cult-like following of bargain-seek- canned entrees, and brand names 10,000 items including bulk size s Me x i c o. The chain has established ers, gradually expanding out fro m ar e few, but the jaw-dropping val u e s of paper products, groceries, and an eastern beachhead in Fl o r i d a , its Illinois base to more than 20 appeal to a sizeable expanse of con- cleaning supplies, the store s’ tra- w h e re it continues to expand. contiguous states ranging east-we s t sumers. Recent specials noted at ditional clientele was small busi- (And allow us take this oppor- f rom Virginia to Nebraska and Aldi include a package of six fro ze n nesses, restaurants, and catere r s . tunity to clear up the origins of n o rth-south from Wisconsin to Sa l i s b u ry steaks for $1.79, a cheese But Sm a rt & Final, unlike large the name of Sm a rt & Final for Georgia. Aldi locations have grow n pizza kit for $1.99, and a 13-inch w a rehouse operations such as Sa m’s those who confuse it with a chain f rom about 600 to more than 750 color television for $74.99. Club and Costco, charges no of cut-rate funeral parlors. It is in the last two years, none of them Continued on page 26

24 • PROGRESSIVE GROCER • APRIL 15, 2002 W W W. G R O C E RY N E T W O R K . C O M Continued from page 24 but, hey, you cut your food bills in m a rket spectrum, large chains playe d lands-based A h o l d made the most of A shopper quoted at a new No rt h h a l f. I was coming out of Kro g e r on their strengths to expand their them, picking up the largest block of C a rolina Aldi’s by the Raleigh Ne w s with $180 of groceries [each we e k ] . m a rket shares. Acquisitions in the Grand Union stores in the No rt h e a s t & Ob s e rve r sums up the appeal: This was $73.” i n d u s t ry we re limited to a few mid- and adding the Bru n o’s chain in the This is a heck of a drive [for me] On the other end of the super- s i zed chains last ye a r, and Ne t h e r- Southeast. The moves helped solidify No. 5 Ahold USA’s position on the eastern seaboard, with the company’s s t o re total growing by a third. It s other banners include Stop & Sh o p in New England, Giant Carlisle and Giant Landover in the Mi d - At l a n t i c , and Bi-Lo in the Caro l i n a s . Sa f e w a y mo ved ahead of Albert- s o n’s into the No. 2 position largely on its acquisition of Ph i l a d e l p h i a - a re a gem Ge n u a rd i’s. The Pl e a s a n t o n , Ca l i f .-based chain of more than 1,500 st o r es announced that its fourth - q u a r - ter sales increase of 7 percent was mainly the result of that acquisition. Like Alberts o n ’s, Saf e way showed dou- ble-digit earnings growth last year (14 p e rcent), which c.e.o. St e ve Bu rd attributed to, among other factors, continuing improvements in shrink co n t r ol, buying practices, and privat e - label grow t h . Continued strong operations at Ha n n a f o rd Bros. and Food Lion keep No. 6 Delhaize America g row- ing, with the Sa l i s b u ry, N.C. company re p o rting an 18-percent sales i n c rease in 2001. Food Lion last ye a r announced the initiation of a series of competitive programs aimed at Wa l - Ma rt. They include a new scheduling system to ensure enough associates are in-store at high-traffic times, a doubling of quality assur- ance teams for fresh produce and meat, and a De p a rtment of Con- sumer Insight to aid decisions on s t o re location and product assort- m e n t . Fi n a l l y, PRO G R E S S I V E GRO C E R i s pleased to welcome to the Super 50, a t No. 50, King Kullen Gro c e ry, the Long Island, N.Y., chain still ru n by the founding Cullen family that claims to have pioneered the concept of the modern supermarket. And the first shall be last. ■

W W W. G R O C E RY N E T W O R K . C O M