Who will get Fairway?

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Who will get Fairway?

Post by pseudo3d »

Just a few days before the Fairway stores auction on March 16th (tomorrow), a new bidder has appeared for Fairway, overriding the previous $70M stalking horse bid by Village Super Market, with Bogopa Enterprises (operating Food Bazaar) bidding for the five stores and DC VSM was interested in, plus the Pelham Manor store, though unlike VSM, Bogopa has not announced that it will keep the Fairway name and format.

Based on an article a few months ago, the bidders/interested parties (as of January) included Gristedes, Albertsons (probably converting them to ACME), Lidl, Amazon (probably converting them to WFM), and ShopRite. It's also noteworthy that "no bidder has been willing to assume Fairway's liabilities—in particular, the Company's substantial labor and pension obligations—in connection with a purchase of Fairway's store" that implies that employees will officially be laid off and forced to re-apply for their jobs, even for unionized grocers (like Gristedes). The Woodland Hills store is going out of business early...guess no one wanted that one.
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Re: Who will get Fairway?

Post by retailfanmitchell019 »

Albertsons should not buy troubled Fairway. They have struggled with the A&P acquisitions so far in that area.
I could see Amazon buying them, converting those stores to 365 or Whole Foods.
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Re: Who will get Fairway?

Post by pseudo3d »

retailfanmitchell019 wrote: March 17th, 2020, 11:27 am Albertsons should not buy troubled Fairway. They have struggled with the A&P acquisitions so far in that area.
I could see Amazon buying them, converting those stores to 365 or Whole Foods.
The big problem with A&P was the fact that they overpaid for the stores and the union obligations that went with it. If they buy some Fairway stores, it wouldn’t come with those obligations but overpaying for the stores (which wouldn’t come with the Fairway name) is a risk. Still, an Albertsons purchase (as opposed to an Amazon purchase) means that the stores could have a fairly quick turnaround in reopening.
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Re: Who will get Fairway?

Post by Bagels »

retailfanmitchell019 wrote: March 17th, 2020, 11:27 am Albertsons should not buy troubled Fairway. They have struggled with the A&P acquisitions so far in that area.
I could see Amazon buying them, converting those stores to 365 or Whole Foods.
These stores are fool's gold.

In the 1990s, A&P's stores in Canada, the Midwest and Louisiana were market leading and very profitable, but A&P foolhardily used the profits to prop up its money-losing Atlantic division. The stores that actually made money for A&P were neglected, saw their market position free fall and were eventually sold... to prop up its Atlantic division.
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Re: Who will get Fairway?

Post by TW-Upstate NY »

In regards to the Union obligations Albertson's agreed to pick up when they bought those A+P stores, remember that Stop N Shop and Shop-Rite got some of those stores as well and they're both Union too (in the case of Shop-Rite, MOST of the stores are Union.) It's quite likely those two assumed the same obligations. Albertson's just strikes me as a weak operator compared to their competitors in that market. I've noticed one thing about Shop-Rite that they'll do what they have to to get what they're after but they won't overpay for a location either. They won't spend "stupid money" and you've got to admit Albertson's has been VERY guilty of that over the years.
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Re: Who will get Fairway?

Post by pseudo3d »

TW-Upstate NY wrote: March 18th, 2020, 9:10 am In regards to the Union obligations Albertson's agreed to pick up when they bought those A+P stores, remember that Stop N Shop and Shop-Rite got some of those stores as well and they're both Union too (in the case of Shop-Rite, MOST of the stores are Union.) It's quite likely those two assumed the same obligations. Albertson's just strikes me as a weak operator compared to their competitors in that market. I've noticed one thing about Shop-Rite that they'll do what they have to to get what they're after but they won't overpay for a location either. They won't spend "stupid money" and you've got to admit Albertson's has been VERY guilty of that over the years.
From what I can tell, Stop & Shop bought only a third of the stores ACME got (though they paid a bundle for A&P's most profitable store in Mount Kisco), and UFCW 1500 (in their own words) had to "aggressively fight" for the former employees of Pathmark (who knows the contract, if any, for the others) to keep their benefits, with Wakefern getting even fewer stores.

Albertsons certainly doesn't enter new markets anymore like what they did during the 1980s and 1990s, and the A&P acquisition was the only exception to that rule, but I do agree Albertsons has overspent for many supermarkets, and focused on quantity over quality, peddling a generic 50k-60k box while some of their competitors were more appropriately sized. This is why I think Albertsons pulled out of San Antonio in 2002 despite being there since the early 1970s...H-E-B was building larger and larger stores (they opened a 93k store behind one of Albertsons' stores that was explicitly said to resemble a Wegmans and a Randalls New Generation store, which also cited Wegmans in its inspiration), and did practically nothing.

The auction will apparently run for a few days with a sale hearing on the 26th. Still, there will probably be more information coming before then. I still predict ACME/Albertsons to walk away with some of the New Jersey/LI stores (but not in the city proper, which they avoided with ACME).
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Re: Who will get Fairway?

Post by BillyGr »

pseudo3d wrote: March 18th, 2020, 9:59 am
TW-Upstate NY wrote: March 18th, 2020, 9:10 am In regards to the Union obligations Albertson's agreed to pick up when they bought those A+P stores, remember that Stop N Shop and Shop-Rite got some of those stores as well and they're both Union too (in the case of Shop-Rite, MOST of the stores are Union.) It's quite likely those two assumed the same obligations. Albertson's just strikes me as a weak operator compared to their competitors in that market. I've noticed one thing about Shop-Rite that they'll do what they have to to get what they're after but they won't overpay for a location either. They won't spend "stupid money" and you've got to admit Albertson's has been VERY guilty of that over the years.
From what I can tell, Stop & Shop bought only a third of the stores ACME got (though they paid a bundle for A&P's most profitable store in Mount Kisco), and UFCW 1500 (in their own words) had to "aggressively fight" for the former employees of Pathmark (who knows the contract, if any, for the others) to keep their benefits, with Wakefern getting even fewer stores.

Albertsons certainly doesn't enter new markets anymore like what they did during the 1980s and 1990s, and the A&P acquisition was the only exception to that rule, but I do agree Albertsons has overspent for many supermarkets, and focused on quantity over quality, peddling a generic 50k-60k box while some of their competitors were more appropriately sized. This is why I think Albertsons pulled out of San Antonio in 2002 despite being there since the early 1970s...H-E-B was building larger and larger stores (they opened a 93k store behind one of Albertsons' stores that was explicitly said to resemble a Wegmans and a Randalls New Generation store, which also cited Wegmans in its inspiration), and did practically nothing.

The auction will apparently run for a few days with a sale hearing on the 26th. Still, there will probably be more information coming before then. I still predict ACME/Albertsons to walk away with some of the New Jersey/LI stores (but not in the city proper, which they avoided with ACME).
Yes, the Acme count was around 70 (they did get a couple later on that weren't in the first batch) and Stop & Shop around 25. Not sure I ever saw a number for ShopRite (but that may be that not all would be being bought by the same company/group, with the way they are set up as a co-op).
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Re: Who will get Fairway?

Post by Bagels »

pseudo3d wrote: March 18th, 2020, 9:59 amFrom what I can tell, Stop & Shop bought only a third of the stores ACME got (though they paid a bundle for A&P's most profitable store in Mount Kisco), and UFCW 1500 (in their own words) had to "aggressively fight" for the former employees of Pathmark (who knows the contract, if any, for the others) to keep their benefits, with Wakefern getting even fewer stores.

Albertsons certainly doesn't enter new markets anymore like what they did during the 1980s and 1990s, and the A&P acquisition was the only exception to that rule, but I do agree Albertsons has overspent for many supermarkets, and focused on quantity over quality, peddling a generic 50k-60k box while some of their competitors were more appropriately sized. This is why I think Albertsons pulled out of San Antonio in 2002 despite being there since the early 1970s...H-E-B was building larger and larger stores (they opened a 93k store behind one of Albertsons' stores that was explicitly said to resemble a Wegmans and a Randalls New Generation store, which also cited Wegmans in its inspiration), and did practically nothing.

The auction will apparently run for a few days with a sale hearing on the 26th. Still, there will probably be more information coming before then. I still predict ACME/Albertsons to walk away with some of the New Jersey/LI stores (but not in the city proper, which they avoided with ACME).
In fairness, Albertsons' struggles were largely a derivative of the constant fires that broke out as a derivative of its integration with American Stores, and the resources they consumed. Obviously, it's not the same company, with Cerberus largely clubbing together the remaining pieces... plus Safeway... plus whatever it was able to buy of A&P. I don't question that Albertsons is interested in further acquisitions, including new markets, but it's debt level and the decreasingly likelihood of an IPO makes it unlikely. Plus, whatever they add will likely have to be cash positive and not a long-term project, which is what I would categorize Fairway as.
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Re: Who will get Fairway?

Post by pseudo3d »

https://nypost.com/2020/03/19/amazon-lo ... ay-stores/

Amazon seems to have moved forward in the bidding process with intentions to buy the Pelham store (the same one Food Bazaar was bidding on), Paramus (which I believe is the old Fashion Center mall), Woodland Park (currently going out of business), and one in Brooklyn. I suspect if any other bidders (VSM, ACME, etc.) want to come forward, we'll be hearing about it in the next day or two.
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Re: Who will get Fairway?

Post by Bagels »

Stranger things have happened, but I'd be really surprised if Albertsons was interested. They've struggled with the ex-A&P stores; they took a huge impairment charge not that long ago, and awhile ago somebody posted an internal document on Reddit that showed the majority of the stores were between $15M - $20M in annual sales. A quick Google search yields the corporate average (per Statista) is $26.5M, so if accurate, they're well below average.
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