MID-LEVEL RETAILERS FADE OUT: A SEQUEL

David Merrefield

Last week's column occasioned quite a bit of comment with the observation that mid-level retailers such as Grand Union, Jitney Jungle and others without much of a point of distinction against their competitors were on their way out.

Regrettably, as you'll see on Page 1 of this week's issue, that was all too prescient: Big V Supermarkets, the ShopRite operator based in upstate New York, has filed for bankruptcy reorganization, has slated seven of its 39 stores for closure and -- this is big -- has plans to leave Wakefern Food Corp., its long-time supplier, in favor of pulling from C&S Wholesale Grocers. (Big V entered into an improbably long contract with C&S: 15 years.) This is the same C&S that's involved in the Grand Union imbroglio we looked at last week. C&S, Grand Union's supplier, agreed to buy most Grand Union store locations and may spin off many to other retailers such as Ahold, Pathmark, Price Chopper, Shaw's and Hannaford Bros. C&S may retain some stores to operate itself. It's thought C&S may continue to supply many of the stores acquired by the chain operators, even those that are self-distributing otherwise. We'll see.

Now, A&P has entered into the picture and is protesting to C&S that it had no chance to bid on stores cast from the now-moribund Grand Union. On the face of it, it seems that if A&P were nosed out of the sweepstakes, it would have fallen heir to the best possible outcome. But there's more: C&S is also Pathmark's supplier. So maybe those who came up empty-handed in the apportioning of Grand Union suspect that C&S is about to achieve some sort of critical mass in the New York region. (There's a news article on Page 1 about some of this.)

Be that as it may, let's return to Big V and its contretemps. Big V now faces some formidable challenges. Chief among them is that it will be obliged to rebanner its ShopRite units as Big V Supermarkets. As Albertson's found out with Lucky in California, that's not always as easy a task as it might seem. Moreover, it's never an easy piece of work to pull out of a wholesale cooperative. Wakefern claims Big V is obliged to pay it a hefty "loss-of-volume" fee. Also, Wakefern sued C&S last week, claiming the wholesaler had interfered with its long-standing relationship with Big V. Wakefern stands to lose a whopping 13% of its sales volume with Big V's departure; Big V is Wakefern's largest account. There's a lot left in this drama.

Who knows what regional chain will find itself in this muddle next? Let's not ask but instead press on to cheerier topics, namely the overall situation concerning Price Chopper. That regional chain, a player in our C&S saga, is the subject of a Page 1 news feature in this week's SN. In the feature, Price Chopper's controlling Golub family describes some of the competitive strategies it has in place to avoid the fate that has befallen other chains in the New York region.

Naturally, Price Chopper has an eye out for Wal-Mart, the actor behind the downturn of many regional chains. Price Chopper intends to defend against larger players by offering better perishables, superior store operations and good variety. In the longer term, Price Chopper's goals are modest, but within reach: It plans to remain a family owned company, it wants to increase its store base at the rate of 8 to 10 units per year and it intends to remain highly involved in the communities where it runs stores.