Special Report Grocer Retailers

SPECIAL REPORT GROCER RETAILERS

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Stock Price Revenue Profit Change Employee Social RANK GROCERY RETAILER Change Year Change Year Year Over W-Score CEO Rating Satisfaction Total Score Strength Over Year Over Year Year Rating

1 Metro Inc. 28.2% 5.5% 8.9% 59.8 62.2% 69% 3.1 21

2 Loblaw 1.6% 6.5% 19.0% 60.1 61.0% 68% 3.3 24

3 Whole Foods Market -7.3% 8.4% 7.4% 59.1 47.2% 66% 3.4 35

4 Costco 15.7% 3.1% 6.7% 55.9 44.8% 89% 3.9 36

5 Empire Company Ltd. -26.6% 2.9% 0.1% 53.2 62.3% 65% 3.4 47

6 Sprouts Farmers Market 10.6% 21.1% 18.8% 48.6 53.7% 51% 2.8 48

7 Village Super Market 15.1% 4.3% 6.0% 55.7 37.1% 53% 3.1 49 Natural Grocers 8 by Vitamin Cottage -49.1% 20.0% 20.2% 40.6 55.4% 42% 3.0 51

9 Ingles Markets -23.9% -1.5% 5.7% 57.7 57.7% 57% 2.9 54

10 Weis Markets 25.3% 3.6% -4.5% 55.6 55.2% 51% 2.6 60

he grocery war continues to wage. Consolidation 1 Metro Inc.

and shopper demand for lower prices have forced Despite being examined all three years RIS has produced this ranking, grocers into a promotional environment the likes of this is the first time Metro has cracked the top 10, breaking into the report in a big way taking the number one position. Metro streaked to the which the segment has not seen since the nation- T top thanks to an impressive 28.2% increase in share price year-over-year, wide belt tightening following the great recession. As new- which was the highest gain among all of the grocers examined. In addi- comers and industry mainstays fight it out for their piece of tion, Metro came in second place in three other key metrics to secure the gold medal position: CEO Rating, W-Score, and Social Strength. the $650 billion grocery market, the Bureau of Labor Statistics reports that food prices dropped by 1.6% in July — the eighth 2 Loblaw consecutive month of declining food prices. While the Ameri- The largest food retailer in Canada finished in second place in this rank- can consumer benefits from grocery deflation the industry is ing for the second year in a row, scoring in fourth place or better in six of the seven metrics examined. Shoppers have a high affinity for the brand, faced with the difficult task of keeping sales high in the midst backed by the retailer’s first place finish in the W-Score category. Despite of an ongoing price war. The members of RIS’ Grocery Top 10 an over $1 billion increase in sourcing costs over the past two years, the report have been able to not only maintain market position but brand has embarked on an initiative to lower prices, earning its revenue with increased sales volume instead of higher margins. also grow during this volatile time. In fact, all but one of the members of this report have seen sales increase over the past 3 Whole Foods Market year. Congratulations to all the members of the Top 10 for their The grocer scored near the top in almost every category except for stock segment leading success in this challenging environment. performance and Social Strength. Shares fell over 7% over the past year

RIS NEWS.COM OCTOBER/NOVEMBER 2016 15 as Whole Foods lost market share in the healthy and organic segment, 7 Village Super Market and rumors continue of an impending sale. The grocer’s inability to keep its organic-obsessed shopping base from fleeing to the competition is re- For the second year in a row Village Super Market qualified for the Top flected in its poor performance in the Social Strength metric. However, the 10 improving by one position over last year’s result to take the seventh grocer continues to expand into new markets including its recently opened spot. The retailer operates 29 supermarkets under the ShopRite banner store in a low-income Chicago neighborhood. The brand promised to sell in New Jersey, Maryland and Pennsylvania, and finished above par in roughly 30 staples the typical resident buys below competitive pricing. four categories: stock price, revenue, employee rating and W-Score. The retailer’s high score in the W-Score metric is not surprising considering 4 Costco it is in the process of updating its stores from simple, traditional grocers to one-stop-shop locations complete with sushi counters and oyster bars. Costco moved up one position from last year’s ranking to capture the number-four position this year. The membership-style retailer earned its 8 Natural Grocers by Vitamin Cottage position thanks to first-place finishes in CEO Rating and Employee Sat- isfaction. It is not surprising that Costco employees ranked the company Long before the healthy and organic craze took hold Natural Grocers and its CEO so high considering its benefits packages is one of the best was committed to providing its shoppers with quality food at competitive in the industry — health, dental, 401K, stock plan and more. In addition prices. Currently the 60-year-old grocer is in full growth mode adding six to the impressive benefits package, Costco also increased its minimum new stores to its roster in Q3, bringing its total to 118 stores in 19 states. wage to $13 per hour earlier this year, an increase that costs the com- This growth has helped the retailer increase its revenue by 20% year- pany nearly $40 million per year. over-year. Remarkably, profitability has grown in lockstep with sales, in- creasing by 20.2% year-over-year, the biggest increase seen in this report. 5 Empire Company Ltd. 9 Ingles Markets For the third consecutive year Empire Company made the Top 10, improving five positions from last year’s 10th place finish to take the fifth- After failing to make this ranking last year Ingles Markets is back in place spot this year. The Canadian grocery conglomerate, most well the Top 10, landing in the number nine position. Ingles’ results in most known for its Sobeys Supermarket chain, came in first place in the So- categories was pedestrian, but it did turn in fourth-place finishes in both cial Strength category thanks in part to its commitment to keeping costs the W-Score and Social Strength, indicating that the grocer is making a down for shoppers. Earlier this year the retailer launched an initiative strong connection with its shoppers. The retailer is committed to form- to lower prices on both produce and meat, with plans to institute the ing strong and lasting connections with the community. For example, in everyday price cuts in its grocery assortment as well. early October the grocer helped collect and distribute food and supplies to those affected by Hurricane Matthew. 6 Sprouts Farmers Market 10 Weis Markets Sprouts continues to shine as a leader in the grocery segment, earning a place in this ranking for the past three years. The grocer was able In the second half of 2016 Weis Markets completed two major acquisi- to grow the top line by 21.2%, outpacing the average growth of the tions, which will increase its store count by more than 25%, swelling its companies examined four times over. Sprouts’ ability to continue to roster to 204 stores in seven states. In August the growing grocer con- grow sales in the deflationary environment the grocery segment is en- verted five Mars Super Markets, and in September announced plans to during is not only noteworthy but commendable. In fact, in Q2 2016 turn 38 Food Lions into Weis locations. That 25% growth matches the Sprouts reported a $1 billion increase in sales, representing a 14% bump grocer’s stock price gain over the past year as investors have shown con- year-over-year. fidence in the brand’s expansion plans. RIS

Methodology

To compile the Top 10 Grocers list RIS News examined the top publicly traded retailers in the segment. Seven key metrics were used to compare the companies: stock price change year-over-year, revenue change year-over-year, profit change year-over-year, W-Score, social strength, CEO rating, and employee satisfaction rating. For stock price change, share price on August 31, 2015 and August 31, 2016 were compared. For revenue and profit change the last two full years of reported financials were examined. W-Score and social strength were compiled by our research partner wRatings. Social strength is a company’s ability to create long-term and emotional relationships with customers while a company’s W-Score refers to its ability to meet customer expectations. Glassdoor.com’s survey results were utilized for the CEO and employee satisfaction ratings. For each category, retailers were ranked from best to worst. The retailer with the best score in a category received one point. A perfect overall score would be seven. After ranking all seven metrics the grocer the lowest combined score, Metro Inc., was declared the winner.

16 OCTOBER/NOVEMBER 2016 RIS NEWS.COM SPECIAL REPORT GROCER RETAILERS