Tops of the town

By focusing on its strengths, Tops Friendly Markets is succeeding in a complex marketplace.

It has been a long up-and-down journey for Tops Friendly Markets. The Williamsville, N.Y.-based company has become a major player in the intriguing upstate New York, market as well as parts of northern Pennsylvania and Vermont.

The nearly 53-year-old chain has established itself as a major player in the marketplace, battling Walmart and regional powerhouse Wegmans to create its own niche in the area.

It has not been an easy road.

To win the battle against a national giant and a regional player that has made headlines of its own for its award-winning merchandising and marketing strategies, Tops officials have had to develop their own way of doing business—both inside and outside of the store.

By many accounts, this strategy is paying off in terms of building loyalty with consumers, generating greater sales and profits, and an increase in market share, according to the company’s top executives. Today Tops is a profitable privately-owned 162-store chain (including five franchised stores), with about $3 billion in annual sales and a  group of senior officials who are extremely confident with the company’s position in the market and its short- and long-term future. For these reasons, Grocery Headquarters has chosen Tops Friendly Markets as the recipient of our 2015 Independent Retailer of the Year award.

“We understand our customers and our place in this market,” says Frank Curci, the chain’s chairman, CEO and president. “It is a very competitive marketplace, but we have carved out our niche and have developed a great plan that brings us close to the community. I think it is very fair to say that we don’t try to be something we are not.”

Doing business in upstate New York is no easy feat. Besides the higher cost of living and operating in the region, upstate, home to such cities as Buffalo, Rochester and Syracuse, has shown little to no population growth for decades. On top of that, Tops has to compete with the likes of Wegmans, the Rochester, N.Y.-based supermarket chain that has caused quite a stir in the industry with its own set of dynamic stores and bold merchandising, and Walmart, with its strong pricing strategies.

However, unlike Wegmans, which is expanding south into Pennsylvania, New Jersey and even Maryland while not adding many new stores in New York, Tops officials are clear that they plan on growing mostly within their current marketing territory. Curci says that he expects the chain to grow by about 20 to 30 stores over the next five years, mostly through continuing the acquisition of independents in its current turf.

“The economics here are better than ever, but still below any high-growth markets,” says Curci, who joined Ahold in 1995 and moved into his current role in 2000. “But we use that as a strength for us. Wegmans has announced that they have no current plans to open a store in this area and other retailers have been slow to move into this market.  That leaves the door open for us and we think we are taking advantage of that.”

The history of the company may also be helping the chain. Started in 1962 by a group of Buffalo-area independent supermarkets, Tops was acquired in 1991 by Ahold, which invested in much-needed infrastructure. In 2007, Ahold sold the chain to Morgan Stanley Private Equity. Exactly six years later, a management group headed by Curci bought Tops.

These turns of events, Curci says, gave him the opportunity to handpick his executive team from far and wide—as well as some local talent. That team, he says, is responsible for the plan that positions Tops squarely between its two largest competitors. “We are a promotional retailer with a big emphasis on national brands and on coupons and advertising circulars to get consumers excited,” he notes. “Wegmans, on one hand, operates with a modified EDLP plan and is big on prepared foods and private label products. Walmart, on the other, is simply known for its prices.”

Interestingly, Curci says that Tops appeals to a wide spectrum of consumers in its marketing territory, including large numbers of blue-collar employees and the region’s surprisingly high number of white collar and upscale shoppers. It does that by offering a combination of aggressive pricing and services that are simply not available elsewhere in its marketing area.

Curci takes particular pride in several incentives, including the chain’s gasoline program at its company-owned gas stations that are adjacent to 51 supermarkets. Consumers get 10 cents off for up to 30 gallons of gas they purchase for every $100 they spend on groceries over the six-week period that each program lasts for. “Consumers are always very concerned about what they pay for gas,” he says. “This program has really been an excellent driver of loyalty for us and also offers real value to our customers. They react very well to this program.”

Another big plus, he says, is the fact that Tops is the only chain in upstate New York that has butchers working in each store. “Our butchers understand the products we have and they can cut the meat to customer specifications,” he notes. “That is just part of our great service we offer, from the produce department to the bakeries with our fresh fried donuts.”

There is more that makes Tops unique. Since the chain has grown mostly through acquisition, store sizes range from a low of about 10,000 square feet at some rural locations in Vermont and the Catskill Region of New York to about 100,000 square feet. Again, Curci sees this as a positive by allowing each store to be tailored to the communities that they serve.

Local flair

The chain also places an emphasis on carrying a broad selection of locally-made products. It carries products from such local companies as Anchor Bar, Ted’s Hot Dog Sauce and Just Pizza Sauce in Buffalo, Dinosaur BBQ and Salt Potatoes in Syracuse and Cora Pasta and Bill Grey’s Hot Sauce in Rochester.

In fact, the overall merchandise mix is decidedly different than what is offered elsewhere, Curci adds. Tops puts a premium on pizza, salads, sandwiches and fried and rotisserie chicken. “We leave the fancy prepared meals to other retailers,” he notes. “Our job is to offer our customers the comfort foods they crave and the healthy options they want.”

The Tops team also knows that they have to keep the stores looking good. Curci says that the capital expenditure program calls for stores to be remodeled about every seven years. The current look is one that emphasizes more earthy tones, making for a warmer image inside the store. The layout allows for more room for the key perishables categories with produce and the bakery at the front of many stores and the meat section in a prime location near produce. “We know that consumers want to shop in a place that they feel good about,” Curci says.

Tying into the community is also very important facet at Tops. Curci says that Tops contributes to food banks and children’s charities and is a sponsor of the National Hockey League’s Buffalo Sabres and the Syracuse University Orange athletic programs. “We like to get involved with things that are important to our consumer base,” he says.

“Our associates also make a big difference,” he adds. “Their loyalty and dedication go a long way in helping make our company successful. Our store managers average more than 20 years of experience and they are charged with running their stores on a day-to-day basis with the opportunity to create their own personality for the store they run.”

Curci thinks that Tops’ relationship with its shopper is going to keep the chain headed in the right direction. “Our shoppers know us and they trust us. That keeps them coming back,” he says. “They like what we offer and how we treat them. This creates a loyal customer. They love our programs and get what we are doing here. In the end, they understand our value and that is the most important thing.” 

Tops Timeline

1962: Franchise systems were established for supermarkets under the Tops Friendly Markets name. By the end of the year, Tops had 15 franchise stores throughout western New York with a total of 300 associates. 

1968: Tops opened its first store in the Pennsylvania market in Erie, Pa.

1981: Tops opened its largest store at the time, in Buffalo, N.Y.—a 44,000-square-foot location. 

1984: Tops introduced ready-to-go hot roast beef sandwiches and pizza—the introduction to Tops’ Carry-Out Café.

1991: Royal Ahold acquires Tops.

1999: Tops’ loyalty card, the Bonus Card, debuts.

2000: Tops started introducing fuel in its Buffalo market.

2007: Morgan Stanley Private Equity became the new owner of Tops Markets.

2010: Tops was confirmed as the high bidder of the Penn Traffic Co., acquiring the assets of 79 locations.

2013: Tops management buys out Tops.

2015: Tops Markets is headquartered in Williamsville, N.Y. and operates 162 full-service supermarkets—157 company-owned and five franchise locations. With more than 16,000 associates, Tops is a leading full-service grocery retailer in upstate New York, northern Pennsylvania and western Vermont.