Operators Struggle With Acquired A&P Stores
Apr. 2, 2012
Making it in Maryland has proven more difficult than expected for two relatively new names here.
Village Super Markets and Natural Market Restaurant Group, which teamed to put together a winning bid for 10 stores when A&P's SuperFresh sites in the area went on the auction block last year, have each encountered their share of troubles since reopening the stores under their own banners last summer.
Toronto-based Natural Market, which converted the eight stores it took over to a new Fresh & Green's banner, struggled to establish the brand and drew some harsh reviews on social-media sites at some stores. It sold two of those stores — in Hampden and Parkville, Md. — in February to Ahold's Giant of Landover division. Those stores, renovated and converted to the Giant banner, opened last week and should enhance Giant's presence in greater Baltimore.
Village, the Springfield, N.J.-based ShopRite operator that paid $6.6 million for SuperFresh stores in Timonium and Silver Spring, said recently that those stores, converted to the ShopRite banner last summer, were losing money as sales got off to a slower start than expected. The company said it was making additional investments in the market to build the brand.
In the meantime the remaining Fresh & Green's stores — five in Maryland and one in Washington, D.C. — are planning their own renovations and reintroduction with a campaign highlighting service.
Area observers told SN the struggles of the new operators in part relates to the lack of momentum at SuperFresh in the months prior to the sale. Fresh & Green's, some said, erred when it moved to reopen the stores almost immediately following the deal as opposed to renovating the sites first.
"With regard to the Fresh & Green stores, I don't think they stood a chance in the local Maryland supermarket landscape," Jeremy Diamond of the Baltimore-based consultancy The Diamond Group told SN. "They were better than SuperFresh stores, but that wasn't so difficult to do."
Fresh & Green's decision to sell the stores provided a second opportunity for Giant, which was outbid for the same two locations by the Fresh & Green's/Village consortium as part of the A&P auction. Giant and Fresh & Green's did not release terms of their transaction, which was completed in early February.
Giant closed the stores shortly after completing the deal and last week reopened the locations following extensive 8-week interior renovations. The 47,000-square-foot Hampden store replaces a smaller Giant store at the nearby Rotunda shopping center, Jamie Miller, a spokesman for Giant, told SN.
"We felt this was a good opportunity for us to build our presence in the Baltimore area," said Miller.
"Giant will definitely do better [than Fresh & Green's] and it was a great idea to close the Rotunda store while adding a newer replacement store nearby," Diamond said. "The Rotunda should have been redeveloped years ago and Giant was their only stable anchor store."
Village Super Market in a press release last month said it was investing to build ShopRite brand awareness in Maryland after sales at its two stores there disappointed during the fiscal quarter that ended Jan. 28. A company official reached by SN last week declined to elaborate on the specifics of the investment.
Both Village's Silver Spring and Timonium stores are current participants in the ShopRite Culinary Workshop, a program of weekly cooking classes at select stores in the Wakefern Food Corp. cooperative. The stores share a weekly sales flier with other Maryland ShopRites including a Glen Burnie location added by Collins Family Markets in 2010 and the former Bel Air-based Klein's chain that converted to ShopRite stores beginning in 2009. Klein has two new stores currently in development.
"I think Shoprite is poised for more expansion in Maryland and surrounding areas," Diamond said. "It will take time and Shoprite/Wakefern needs to do more to build its brand in Maryland. They offer a great shopping experience, but face a lot of competition."
For Fresh & Green's, the sale of the two Baltimore-area stores leaves it with six stores — one each in Washington, D.C., and Baltimore, as well as Arnold, Md., just outside Annapolis; the Eastern Shore towns of Chestertown and Cambridge; and across the state in Brunswick, Md., near the West Virginia border. Fresh & Green's intends to renovate these stores and spread awareness of its brand behind customer service and neighborhood marketing, according to Kathleen Shaffer, vice president of MGH, a Baltimore advertising agency Fresh & Green's hired earlier this year.
Shaffer in an interview with SN said her firm was helping Fresh & Green's create new signs and events to reinforce the positioning.
"What they've determined is that they want to be known for their customer service, so we're helping them become the leader in exceptional customer experience," Shaffer said. The effort will begin coming to life this month in events like egg hunts and egg-coloring workshops around Easter, she said.
New signs will freshen up the look of the stores and reinforce a service message, she added. "It will make it very clear to shoppers that if they don't see something in the store that they want they can just tell the manager, and the manager will find a way to get that stocked," she said. "They very much want to be a community and neighborhood grocery store."
Including stores sold back to its landlords and the sale of pharmacy records, A&P netted roughly $40 million through the auction of its SuperFresh stores. Supervalu acquired one store in Ellicott City, Md., which it converted to its Shoppers Food & Pharmacy banner in early September. That store is "doing very well," Steve Sylvan, a Supervalu spokesman, told SN last week.
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