ShopRite to Exit Albany

[mjhale]

Now onto Weis strategy. If the buyer is in fact Weis, I think your assessment is spot on. I would not at all be surprised if they were interested in acquiring many of those former Big V and current SRS stores, and possibly others, to expand their presence into the Hudson Valley and Capital Region. They strike me as a fairly conservative operator -- they don't seem to take a lot of risks, they seem to figure out what they're good at and really nail it -- but they also strike me as an operator with some serious strategy, perhaps more so than someone like Stop & Shop which seems to be coasting.

My mother's family is from PA, about 90 minutes northwest of the Sunbury, PA Weis HQ. Your description of Weis is accurate based on what I have experienced over the years. Conservative operator with a focus on small to mid size places but stay away from major metropolitan areas unless they are in the core central PA Weis operating area. The out of state moves down my way (I'm outside Washington, DC) that Weis has made have been to areas with a more rural feel consistent with their PA operating area. When Weis has historically tried to enter major metros they have not been successful. In the late 1980s Weis tried to expand into the western Northern Virginia suburbs and Montgomery County MD. They got absolutely destroyed by Giant-MD and mostly closed the stores by the early 1990s. Weis does still have a long time store in Damascus, MD in Montgomery County but that area still has the rural, agricultural feel of Central PA, not suburban Maryland. Weis also has had stores in the Baltimore suburbs going back to the 1970s. These stores in in more blue collar, working class areas not unlike their clientele in PA. It is only recently that Weis seems to have broadened their offerings to be more like a traditional mid-line grocer. Their newer builds and remodels seem much less "country" in feel and don't seem like "that grocery store from PA" if you know what I mean.

With all that said, Weis did purchase a large amount of cast off Food Lion stores from the Ahold-Delhaize merger. This brought them into a wide variety of areas from rural to suburban in places like the far western and southern suburbs of Northern Virginia, back to Montgomery County Maryland, new to PG County Maryland, Western Maryland and the Maryland Eastern Shore as well as the Delaware beaches. There have been a few closures here and there but for the most part it seems that Weis has been successful with these stores. In a sense, the Food Lion purchase did fill in the gaps between the clusters of stores they have had around Maryland close to the PA border. Given this purchase, it wouldn't seem out of bounds for Weis to be looking at buying a cluster of stores elsewhere if they thought their formula could work there. I will say that I was surprised to read that Weis took out a loan for possible store purchases. I had always thought that Weis was mostly debt free and was aiming to stay that way.

Also, on the topic of Shop Rite, Wakefern started opening Price Rite stores around the DC area about five or so years ago. However, they have now closed all of those stores. I had wondered if the Price Rite stores were an initial entry into the market that would later include regular Shop Rite stores if anything became available. With the departure of the Price Rite stores, it looks like there is no longer interest in the DC market. I had always wondered if Shop Rite would make a play on divested stores in the DC area from the Kroger-Albertsons deal beyond the 10 stores C&S is buying. Also, the Shop Rite stores in Calverton and Glen Burnie, MD have closed. Both stores were owned by coop members not Wakefern itself. Perhaps the DC market is just outside of Shop Rite's expertise. I have always thought that a large format, upscale Shop Rite operator would have the potential to do well in the DC area. However, they would need scale since the stores would be a physical outlier in the Shop Rite system much like the stores that are closing in Albany.

[marketreportblog]

mjhale - Thanks for all that, I think you're 100% right.

I think, too, part of that strategy shift has allowed them to expand more in New Jersey and be more like ShopRite but with lower prices, rather than what almost borders on a limited-assortment store (smaller selection with lower prices... I know that's not entirely a good comparison but it's a similar idea). They still don't have a major presence here, but I suspect that if a couple of strategically-positioned ACMEs ever went up for sale or closed, Weis would jump on them.

My guess with the Food Lion purchase is that it was a package deal, and Weis went into it knowing that some stores would be losers. I mean, 38 stores is a lot of stores, especially for an operator that has under 200 stores. And I agree with you on the loan, too; Weis rarely takes on loans or things like that, so to me that suggests they're outside their normal business operations and are looking to do something unusual. At least, if they're not the one looking to buy the ShopRite stores, they probably have something else brewing somewhere else.

I think Wakefern is really struggling outside of its core NJ market (and parts of Long Island, and maybe the Hudson Valley). Price Rite stores are closing left and right -- in the last five years, 15 stores have closed while only four have opened. Those four that opened (all in Massachusetts) were converted Save-A-Lots when a Save-A-Lot operator split from the franchise and joined Wakefern. There are rumors that the single Baltimore ShopRite is struggling, too, and while I take all rumors with a grain of salt, there is likely some truth to some of them. It seems to me this is a pivotal moment for Wakefern -- they can either redefine their strategy, improve the operations members have problems with, and start growing again, or they can slowly retreat to their core area, get members frustrated, and close or sell stores here and there until they're just a minor regional group. I would like to think they're smart enough to take the first option, but I don't know how much evidence of that I can see.

[BillyGr]

Also, on the topic of Shop Rite, Wakefern started opening Price Rite stores around the DC area about five or so years ago. However, they have now closed all of those stores. I had wondered if the Price Rite stores were an initial entry into the market that would later include regular Shop Rite stores if anything became available. With the departure of the Price Rite stores, it looks like there is no longer interest in the DC market. I had always wondered if Shop Rite would make a play on divested stores in the DC area from the Kroger-Albertsons deal beyond the 10 stores C&S is buying. Also, the Shop Rite stores in Calverton and Glen Burnie, MD have closed. Both stores were owned by coop members not Wakefern itself. Perhaps the DC market is just outside of Shop Rite's expertise. I have always thought that a large format, upscale Shop Rite operator would have the potential to do well in the DC area. However, they would need scale since the stores would be a physical outlier in the Shop Rite system much like the stores that are closing in Albany.

ShopRite is reasonably new there - a local chain (Klein's) with 9 stores, joined that cooperative in 2008 and as far as I know that was the first Shop Rite presence in MD. Suspecting they do OK, being the family has had stores for nearly 100 years, and just found this as a new supplier option that might provide better deals or similar.

Maybe they were attempting to build off that with the other stores (like Glen Burnie etc.) and then into DC with the PriceRite (which sort of makes sense, being smaller stores normally in an area where space is likely harder to find)?

[BillyGr]

Price Rite stores are closing left and right -- in the last five years, 15 stores have closed while only four have opened. Those four that opened (all in Massachusetts) were converted Save-A-Lots when a Save-A-Lot operator split from the franchise and joined Wakefern. There are rumors that the single Baltimore ShopRite is struggling, too, and while I take all rumors with a grain of salt, there is likely some truth to some of them.

Also, an oddity to note that they have kept the single PriceRite in Schenectady open - this store existed before the regular ShopRite locations opened in the Albany market this time, and was maybe 5-10 minutes from the Niskayuna ShopRite location .
They also had one (PriceRite) in Queensbury (quite a bit north from there) but that one closed a while back.

It was noted, though, that they have PriceRite in Western NY (Rochester) and supply items to stores in Ohio, so this location is fairly easy to access from the Thruway en route to those areas.

[mjhale]

My guess with the Food Lion purchase is that it was a package deal, and Weis went into it knowing that some stores would be losers. I mean, 38 stores is a lot of stores, especially for an operator that has under 200 stores. And I agree with you on the loan, too; Weis rarely takes on loans or things like that, so to me that suggests they're outside their normal business operations and are looking to do something unusual. At least, if they're not the one looking to buy the ShopRite stores, they probably have something else brewing somewhere else.

I'm almost sure, as you say, Weis purchasing the divested Food Lion stores was a package deal. Looking at the stores they got the majority of them were not out of line for the markets that Weis generally serves. The only stores I was surprised about were the two in Montgomery County considering their prior experience there. However, the competitive environment is much different now and they likely couldn't say no given the likely package status of the deal. Weis ended up closing the store at Walnut Hill Shopping Center in Gaithersburg. I was surprised because there isn't another nearby grocer in the area. Otherwise, the other Gaithersburg location they got in the Food Lion deal and the long standing Damascus store seem to be doing okay.

I have no evidence to support this, but I have a suspicion that Weis is feeling tapped out in terms of expansion within PA. Western PA is dominated by Giant Eagle, south central by Giant-PA and south eastern by Acme and Giant-PA. This rumored move into Albany and the Food Lion purchase may be Weis looking to keep growing, knowing that growth will likely be outside of PA. Also, Weis has stores in northeastern PA so geographically going to Albany is along the same distribution route they are using now.

I think Wakefern is really struggling outside of its core NJ market (and parts of Long Island, and maybe the Hudson Valley). Price Rite stores are closing left and right -- in the last five years, 15 stores have closed while only four have opened. Those four that opened (all in Massachusetts) were converted Save-A-Lots when a Save-A-Lot operator split from the franchise and joined Wakefern. There are rumors that the single Baltimore ShopRite is struggling, too, and while I take all rumors with a grain of salt, there is likely some truth to some of them. It seems to me this is a pivotal moment for Wakefern -- they can either redefine their strategy, improve the operations members have problems with, and start growing again, or they can slowly retreat to their core area, get members frustrated, and close or sell stores here and there until they're just a minor regional group. I would like to think they're smart enough to take the first option, but I don't know how much evidence of that I can see.

Do you know who owns the Baltimore area Shop Rite stores? Is it Wakefern directly or one of their members? The Baltimore store looks to be a new build that is close to some iffy neighborhoods. There don't look to be any other chain grocers in the are so give whichever operator runs the store credit for making a go of it there. Parkville is a former SuperFresh. More grocery options here especially if one is willing to go outside the Beltway. Lots of residential in the area though. The Lutherville store is a former SuperFresh as well. Plenty of grocery options in this area. The store is kind of off the road and not super visible as you pass by. It is also away from the main shopping strip along York Road (MD 45). Like DC, Baltimore is generally Giant-MD and Safeway dominated. Baltimore does seem to have more small non-chain neighborhood type stores that DC doesn't have. Kleins is the only other area Shop Rite operator and they don't get down into Baltimore proper. Perhaps Baltimore is another example of Shop Rite just not being able to be viable outside of their core markets. I had hoped that Shop Rite would find more success in Baltimore and inch closer to DC. With the potential of more cast offs from the Kroger-Albertsons deal, Shop Rite was on my short list of people who I thought might be interested in picking up some stores (whether for Shop Rite or Price Rite). That scenario seems doubtful now.

[marketreportblog]

I have no evidence to support this, but I have a suspicion that Weis is feeling tapped out in terms of expansion within PA. Western PA is dominated by Giant Eagle, south central by Giant-PA and south eastern by Acme and Giant-PA. This rumored move into Albany and the Food Lion purchase may be Weis looking to keep growing, knowing that growth will likely be outside of PA. Also, Weis has stores in northeastern PA so geographically going to Albany is along the same distribution route they are using now.

I think you're spot on in that assessment. Other than a few isolated stores here and there, I don't think there's much opportunity for them to expand organically. And as far as acquisitions, there really aren't that many chains (that are substantial enough to be noteworthy) that could be targets for acquisitions. They could pick up a few independents or small chains scattered, but who else could they buy? I was thinking of Gerrity's, but they just joined Wakefern which makes me think they're not about to sell out. But the Southern Tier, Capital Region, and Hudson Valley of New York are all natural potential expansion areas, and there is an opportunity to push farther north and/or east from there -- although of course that would be way in the future.

Do you know who owns the Baltimore area Shop Rite stores? Is it Wakefern directly or one of their members? The Baltimore store looks to be a new build that is close to some iffy neighborhoods. There don't look to be any other chain grocers in the are so give whichever operator runs the store credit for making a go of it there. Parkville is a former SuperFresh. More grocery options here especially if one is willing to go outside the Beltway. Lots of residential in the area though. The Lutherville store is a former SuperFresh as well. Plenty of grocery options in this area. The store is kind of off the road and not super visible as you pass by. It is also away from the main shopping strip along York Road (MD 45). Like DC, Baltimore is generally Giant-MD and Safeway dominated. Baltimore does seem to have more small non-chain neighborhood type stores that DC doesn't have. Kleins is the only other area Shop Rite operator and they don't get down into Baltimore proper. Perhaps Baltimore is another example of Shop Rite just not being able to be viable outside of their core markets. I had hoped that Shop Rite would find more success in Baltimore and inch closer to DC. With the potential of more cast offs from the Kroger-Albertsons deal, Shop Rite was on my short list of people who I thought might be interested in picking up some stores (whether for Shop Rite or Price Rite). That scenario seems doubtful now.

The ShopRite of Howard Park, the only one within Baltimore city limits, is a Klein's. It was apparently planned to be a Brown's but they pulled out before the store opened. In fact, all of the MD ShopRites except Lutherville (which they refer to as Timonium) are Klein's-owned, and Timonium is owned by Village Super Market from NJ. Village also owned the ShopRite of White Oak in Silver Spring, another acquired SuperFresh. And given Price Rite's steady retreat from the DC/Baltimore region, I doubt that Wakefern or any of its members would be looking to acquire DC-area stores in the near future, except possibly a store or two by Klein's.

[mjhale]

Also, on the topic of Shop Rite, Wakefern started opening Price Rite stores around the DC area about five or so years ago. However, they have now closed all of those stores. I had wondered if the Price Rite stores were an initial entry into the market that would later include regular Shop Rite stores if anything became available. With the departure of the Price Rite stores, it looks like there is no longer interest in the DC market. I had always wondered if Shop Rite would make a play on divested stores in the DC area from the Kroger-Albertsons deal beyond the 10 stores C&S is buying. Also, the Shop Rite stores in Calverton and Glen Burnie, MD have closed. Both stores were owned by coop members not Wakefern itself. Perhaps the DC market is just outside of Shop Rite's expertise. I have always thought that a large format, upscale Shop Rite operator would have the potential to do well in the DC area. However, they would need scale since the stores would be a physical outlier in the Shop Rite system much like the stores that are closing in Albany.

ShopRite is reasonably new there - a local chain (Klein's) with 9 stores, joined that cooperative in 2008 and as far as I know that was the first Shop Rite presence in MD. Suspecting they do OK, being the family has had stores for nearly 100 years, and just found this as a new supplier option that might provide better deals or similar.

Maybe they were attempting to build off that with the other stores (like Glen Burnie etc.) and then into DC with the PriceRite (which sort of makes sense, being smaller stores normally in an area where space is likely harder to find)?

There was one Shop Rite store on Cherry Hill Road near the Calverton neighborhood in PG County. The official mailing address is Silver Spring. When the store was open, it was the closest location they had to DC proper. The Shop Rite replaced a SuperFresh that had made it to the end of them in the DC/Baltimore market. Competition was an old Giant on MD 212 at I-95 and a Safeway along US 29. With plenty of residential nearby and being in a busy center with a Target, I would have though that Shop Rite would have been successful. There isn't anything that makes Giant-MD or Safeway stand out now - they are just your average middle of the road grocers. There is much less brand loyalty in the DC market than there was historically. There is more competition and people move to the DC area from other locations. Perhaps Shop Rite store operations were poor. Or their offer wasn't what people were looking for given other area options. Whatever it was, without name recognition, they just couldn't make a go of it. After Shop Rite closed, Giant moved in as a replacement store for the store they had at I-95 and MD 212.

As for the Price Rite stores, the two I knew about, one in Woodbridge and one in Hyattsville just outside DC proper in PG County were both closed grocers that were taken over. Woodbridge was a Safeway and the PG County store was one of the first suburban Giant-MD locations. Both areas had the demographics that one would think would be interested in a limited assortment store. There is plenty of competition in Woodbridge but not so much in. Hyattsville. Perhaps it was just too much to supply one store in the area with the other not being successful. The Woodbridge store is now and international grocer and the Hyattsville location apparently will be come a Lidl.

[jdb820]

> There was one Shop Rite store on Cherry Hill Road near the Calverton neighborhood in PG County.

That plaza is barely in Montgomery County, not PG. It did well early on, at least, but they needed volume to get anything done and that you didn't see them go after any of the Shoppers closures spoke volumes.

ShopRite had that scale in Albany and somehow still had issues.

[buckguy]

The Calverton store was an odd, somewhat awkward location despite being near I-95. I stumbled on it years ago and it was not something you'd find otherwise--it probably did have a local following, but a location like that probably needs to be more of a destination store to really work. There's also an Aldi in the plaza which also has a Kohl's. That may be why they wound up with Super Fresh in the first place---it wouldn't immediately have drawn other chains' interest. Giant has taken it over and closed the store up I-95 that's described as Beltsville, but is far from what's normally considered Beltsville.

The Hyattsville store mentioned here is really in Chillum---although Hyattsville is an incorporated town, the postal area is much larger. Even more confusing is that people who aren't geography nerds would probably consider the area to be Langley Park, an adjacent unincorporated area which has a lot of legacy 50s commercial properties, multiple low end or international grocers, and a more distinct identity. It's near the DC line, but the DC neighborhoods are more well-off and enjoying something of a renaissance, so probably less of a draw for them.

[marketreportblog]

So much for Weis. It's just going to be more Price Choppers...

News 10
Times Union (paywall)

Niskayuna and North Greenbush become Market 32s. Slingerlands subleased, and Albany and Colonie TBD.