Tuesday, September 14, 2010
A&P Down, Trader Joe’s Up
SELLING, CLOSING, OPENING: A CHANGED LANDSCAPE
The landscape for grocery shopping continues to shift in the Northeast, and especially in the New York area.
The venerable A&P chain is heading into near extinction while the upstart Trader Joe’s is set to open its third store in Manhattan. Meanwhile, Whole Foods continues to be a destination store for both urbanites and suburbanites.
A&P is actually one of seven store “banners” that come under the umbrella of its corporate parent, Great Atlantic & Pacific Tea Co. But the stores first started by the Great Atlantic & Pacific Tea Co. back in 1856 in New York have always been known just as A&P. In some communities, the stores were so well known, shoppers referred to them as “the A&P.”
A&P announced last month that it would close 25 stores. Today’s A&P corporation, based in Montvale, N.J., includes the A&P banner along with Waldbaum’s, Pathmark, Food Emporium, Super Fresh and Food Basics.
New President and CEO Sam Martin said in a statement that “as part of our turnaround, we have initiated a detailed review of our store footprint and have decided to close these 25 locations. While this was a very difficult decision that will unfortunately impact some of our customers, partners, communities and employees, these actions are absolutely necessary to strengthen A&P’s operating foundation and improve our performance going forward. We will help our affected colleagues pursue other positions across the company should other positions be available.”
A&P officials would not say which stores under which banners would be closed, but a TFFG follower in Greenwhich, Conn., tell us that the A&P Fresh, a sub-brand of A&P, was recently shuttered and has a “space for lease” sign in the window.
The Wall Street Journal has reported that A&P is planning to sell off the entire Food Emporium chain, and it was not included in the announcement of which of its seven banners would actually close. And now A&P has announced the sale of seven stores in northern Connecticut to Big Y Foods, a chain of 56 supermarkets and one liquor/wine store based in Springfield, Mass.
According to the Middletown Register in Middletown, Conn., the seven stores purchased by Big Y—a deal that will close by the end of next month—are A&P stores in Middletown, Mystic, Old Lyme, West Hartford, Branford, East Haven and Naugatuck.
TFFG SAYS: This is more sad news coming from what was once the nation’s preeminent grocery retailer. According to the Supermarket News Top 75, Great Atlantic & Pacific Tea Co. (GAP on the New York Stock Exchange) is now just the 18th largest, surpassed long ago by national food retailing chains like Wal-Mart, Costco and B.J.s, and even discount retailer Dollar General. The [former] CEO of A&P doesn’t even rank among the top 50 leaders in the grocery industry as compiled by Supermarket News while John Mackey, CEO of Whole Foods, is 19th; Rick Dreiling, chairman and CEO of Dollar General, is 20th; and Dan Bane, chairman and CEO of Trader Joe’s, is 21st.
When I first moved to the New York area in 1990, A&P was the old reliable store you found on the main streets of the suburban communities and in the old neighborhoods in the city itself. Waldbaum’s and Pathmark were the glitzy “big stores” with huge parking lots. Over the years, “GAP” has acquired both Pathmark and Waldbaum’s yet these stores continue to lose market share in the New York/Northeast area where GAP stores operate. Current GAP tally: 429 stores in 8 states (Connecticut, New York, Massachusetts, New Jersey, Delaware, Maryland, Pennsylvania, and Virginia) and the District of Columbia.
I remember the old A&P just off Plandome Road in downtown Manhasset and the nice, big Waldbaum’s next to the Americana shopping center on the iconic Miracle Mile of Northern Boulevard in Manhasset. Just down the road on Northern Boulevard toward Greenvale and Roslyn was the spacious and gleaming Pathmark.
Now folks out there make a beeline to Stop & Shop and Whole Foods.
When I moved to the Upper West Side a dozen years ago there was a nice, no-frills A&P on West End Avenue and a Food Emporium on Broadway at 73d. Location, location, location, indeed. As proof of how valuable a location for the A&P, the single-story building that housed the A&P came down, so of course the store closed, but the space was filled by a glitzy new condo tower. So what is there now, on the same site (in the new building)? A no-frills Rite Aid drugstore. What’s up with that, A&P? And the upstart Jubilee chain (threes stores in Manhattan only) opened in one of the new Trump-built 30-story towers that line the Hudson River on Riverside Park South just a block away.
The Food Emporium (with its sky high prices) closed but was replaced by a Gristede’s that was just short of awful (sullen checkers, dysfunctional technology, and a freezer door case that was frozen over solid for more than a month!!!). And today in that same location, location, location? A very successful Loehman’s ready-to-wear store.
This is case of having things literally slip between your fingers. I am sure that powers-that-be (an ongoing revolving-door collection) at A&P corporate headquarters in northern NJ justify all this as being done “for shareholder value” and all that claptrap.
Oh wait, here is what else CEO Martin said: “We are moving forward aggressively to advance our turnaround and position A&P for a strong future. Even as we reduce our store base and drive efficiencies across our company, A&P continues to remodel stores and take other important steps to enhance our customer’s experience across our store formats. To this end, we are set to reopen two newly remodeled stores in the coming months.”
Well, uh, he couldn’t say much about shareholder value now, could he, as the stock trades for a measly $3.74 a share (as of 3 p.m. today) on the New York Stock Exchange. Comparatively, Wal-Mart’s stock trades at $53 a share and the price on the Nasdaq at 3 p.m. today for Whole Foods was $35.
Whole Foods now has 21 stores in the key trading area of the original A&P and its corporate banners of New York/New Jersey/Connecticut. Eleven stores are in New Jersey; seven in Connecticut including the affluent suburbs of Darien, Greenwich and Westport; one in suburban Westchester County (White Plains); three on Long Island (Jericho and Long Grove along with Manhasset); and six in New York, all in high profile locations—Columbus Circle, Bowery, Chelsea, Tribeca, Union Square and the newest store on the Upper West Side on Columbus Avenue at West 100th Street, which opened last year.
Whole Foods plans to open a store on the Upper East Side in 2013—on East 57th Street between Second and Third Avenues.
[*A COMPLIMENT: One good thing to be said for Food Emporium is they are one chain to get things right in the frozen food section as it is the only store that I have seen using signage to mark the dinners and entrees area as “Meal Solutions,” which is something the frozen food industry has been endeavoring to promote for nearly 15 years. Get it? Your protein, vegetable, fruits, a side dish, maybe even a dessert? The whole frozen food section is a meal solution: Easy to buy; quick to prepare. (But can be a bit pricey, ahem.)*]
Meanwhile, the new Trader Joe’s store opening on the Upper West Side is about midway between the Whole Foods at Columbus Circle and the new Whole Foods store at 808 Columbus (West 100th). It's located in a brand new condo tower at the southwest corner of West 72nd where Amsterdam Avenue and Broadway intersect, and just across the street from the subway station serving the busy 1, 2 and 3 lines. Besides being in a neighborhood with mega-density and legions of affluent, young professionals, this prime corner spot will be a big draw for tourists as it is smack dab between Central Park and Riverside Park/Riverside South Park (the new southern extension of Riverside Park than runs along the Hudson down to 59th Street), as each are just two blocks away, along with the Beacon and other nearby hotels, Lincoln Center, the Museum of Natural History, the New-York Historical Society Museum, and the Beacon Theatre.
This will be Trader’s Joe’s 30th location in the New York-New Jersey-Connecticut area. It will be the third to crack the Manhattan grocery juggernaut (high rents, demanding customers, no space for logistics like deliveries, etc.) with one having opened a few years ago on East 14th Street near Union Square and another having opened this spring in Chelsea.
Trader Joe’s has been on such an updraft, even Fortune magazine has taken notice, featuring the company on the cover of this month’s issue. Fortune’s cover story is titled, “Inside Trader Joes: Check Out the Hottest—and Most Secretive—Retailer in America.” Check-out, indeed. Ca-ching, a-ching. So check it out ($4.99 at a news stand near you).