Pathmark Embraces Upscale Elements

DAVID ORGEL

Carteret, N.J. — Pathmark, a chain long identified by sharp pricing in the grocery aisles, is fine-tuning a more upscale format in the period leading up to its expected acquisition by A&P.

The result brings touches of Cipriani to a chain better known for basic merchandise and raises questions about how these plans will play out once the deal is consummated.

Pathmark's evolving vision can be seen in its latest unit, an ambitious 58,000-square-foot store in Edgewater, N.J., that brings entertainment and gourmet elements to the perimeter departments.

In a recent interview and store tour with SN, John Standley, chief executive officer, and Kenneth Martindale, co-president and chief marketing and merchandising officer, said this unit is the result of a two-year evolution driven by a new management team, and that it's only by coincidence that it's being unveiled as the acquisition draws closer. The deal, first disclosed in March, is waiting for completion of a review by the Federal Trade Commission.

“We decided we want to get these fresh concepts to work, to change the ambience and environment of these stores,” Standley said. “It just takes time for that to come to fruition. So it's just bubbling to the surface after two years of work. And it just coincides with the timing of how this merger is playing out.”

Pathmark's efforts also coincide with A&P's own initiatives to further upgrade its fresh stores. (See story, Page 28.)

A&P's Christian Haub, executive chairman, recently said at an industry conference that his company views Pathmark primarily as a price-impact format where “the consumer is not necessarily seeking the fresh solution but wants a competitive shop and a full-store offering.”

Asked how that bodes for Pathmark's more upscale direction, Standley said, “Eric Claus [A&P's president and CEO] has said several times that it's his intention to take the best of both companies.”

Claus, reached by SN, concurred that A&P would be open-minded once a merger is consummated. “If you blend the best of both fresh stores and continue to make it better, that's the key to success,” he said.

He added that A&P puts its emphasis on format rather than banners in assessing the needs of neighborhoods. “We try to decide what's best for each market, whether price impact or fresh, for example.” Once the format decision is made, the choice of banner is determined based on how much equity a banner has in a market.

The new Pathmark format melds upscale touches in the perimeter with the chain's traditional price-oriented focus in groceries. It was created to address a perceived weakness in fresh foods merchandising.

“We had high-volume units and credibility on price,” Standley recounted. “We had a strong Center Store but were missing the boat on the perimeter of the store. So we wanted to build the perimeter image.”

The Edgewater store further evolved the chain's concept since the first new-format store was unveiled in February in Kinnelon, N.J. In all, Pathmark has now opened six new-concept remodels and expects to have 12 completed before the end of its fiscal year in its trading areas of New Jersey, New York and Pennsylvania. Specifics of each market dictate which exact elements are included in each one.

Edgewater includes some upscale features that weren't in the Kinnelon store, such as the East Side Bistro, a prepared foods centerpiece. The Bistro's chef, Gilles Veilleux, is a veteran of 15 years in the restaurant industry and was trained at Cipriani for this effort, which is considered a test kitchen for the entire chain. The Bistro showcases sampling and cooking lessons by chefs, whose images are displayed on a large television monitor hanging above the department. On weekends there are visiting chefs, an omelette bar and a crepe station.

“All of this represents a huge change for us,” Martindale said. “Traditionally, our product came out of containers, or we dropped chicken into a rotisserie or fryer. Now, in the morning, our associates chop fresh vegetables and make sauces. It's very much how preparation works in a restaurant. All of the prep work is done in-store.”

No less high-end is Bella Café, which also debuts with the Edgewater store. It's a coffee and dessert bar that claims real Italian roots. Everything from the gelato machine to the fixtures comes from Italy. Gelato is produced fresh in-store. The cafe offers Italian pastries and Italian coffee (the chocolates are Swiss, however). This part of the store presented a particular training challenge, as associates needed to become well versed in handling the products.

Executives said the Edgewater store puts more of an emphasis on natural and organic items.

The part of the store least transformed is Center Store, which sits apart from the action in perishables. There were modest changes nonetheless, including a more logical approach to merchandising and an emphasis on local marketing.