ShopRite gains on top Philadelphia area grocer

Anyone with a competitive bone knows that there are times when being No. 1 is a blessing of achievement, and times when it is a burden to defend.

For Acme Markets these days - top dog in the race for the $10 billion that Philadelphia-area shoppers spend in supermarkets each year - front-runner status has become a bit of a watch-your-back game.

The massive supermarket chain, whose year-after-year dominance has made it as much a regional fixture as soft pretzels on a Philadelphia hot dog cart, lost market share in the last year as the competition picked up ground, according to an annual survey by Food Trade News.

Acme saw its margin trimmed after the New Jersey cooperative that runs ShopRite acquired eight Stop & Shops in South Jersey and opened another store, according to estimates published this week by the regional trade publication.

The strategy gave ShopRite a boost to 22.61 percent of the regional market, or $2.3 billion in sales, compared with Acme's 26.9 percent, or $2.8 billion in sales, for the year ended March 31, Food Trade News reported. Four years earlier, ShopRite had 20.8 percent to Acme's 27.9 percent.

The two chains now account for a combined 49.5 percent of all supermarket dollars spent in the 15-county region enveloping Philadelphia from central New Jersey to Delaware.

In the immediate eight-county Philadelphia area, Acme's market share fell in the last year by a fraction to 14.48 percent, while ShopRite's rose more than a point to 10.24 percent.

While Acme remains the most ubiquitous chain in the 15-county region (it has 109 stores to ShopRite's 63), it is concerned enough that earlier this month it launched a promotion to lure customers with lower prices and big coupon savings.

"We are redoing our stores, we have several new stores coming, we have a More-Ways-to-Save campaign that we have implemented because we are the market leader," Acme president Judy Spires said yesterday, "and we're going to remain the market leaders and continue to grow our base."

Holding third place in the last year was A&P, which owns Super Fresh and Pathmark. Giant, of Carlisle, Pa., which is owned by Dutch parent Royal Ahold NV, was in fourth, and Genuardi's, owned by Safeway, was fifth.

Food Trade News publisher Jeff Metzger said ShopRite's aggressive year was fueled by the acquisitions and a focus on low prices.

Metzger said Giant's showing was notable given that its 46 stores are in only five of the 15 counties surveyed. He said ShopRite and Giant had been forceful in muscling the competition.

"The one common theme that both of them have is aggressive pricing and creative merchandising," Metzger said. ShopRite's clear edge, though, came from acquisitions of the Stop & Shops, he said.

Giant acquired a number of Clemens stores two years ago.

Unlike Acme, which is part of publicly traded Supervalu Inc., of Eden Prairie, Minn., most ShopRites are individually owned and operated. Store owners belong to a cooperative based in Elizabeth, N.J., that handles advertising, purchasing, distribution and acquisitions.

That decentralized model gives ShopRite a competitive edge, said Karen Meleta, spokeswoman for the Wakefern Food Corp.

"Because we're individually owned and operated and our members often live in the community which they're serving, they often have a handle on what a community wants - and they deliver it," Meleta said. Live in a Polish or Muslim neighborhood? Chances are your ShopRite will carry Polish or Halal products.

Three of the stores acquired last year were taken over by a single family that now runs six ShopRites in Camden and Burlington Counties.

"Our members are always looking for opportunities to grow," Meleta said. "And when that opportunity presented itself last year, we took advantage of it."

Spires, Acme's president, said the stores ShopRite bought were "stores that we couldn't purchase because they were directly across the street from us."

Acme plans to solidify its lead by opening three stores in the Philadelphia suburbs this year, Spires said.

And earlier this month, Acme also announced it planned to lower prices on more than 2,000 products and to double the value of any manfacturer's coupon worth 99 cents or less.

But Metzger said Acme's rivals had been working the low-cost angle for some time - giving them an advantage especially now with the economy taking a toll on people's budgets.

"I'm encouraged by the fact that they finally have, as we termed it, taken the gloves off and are attacking what I think was perceived as their most vulnerable point, which was pricing," Metzger said of Acme officials.

He said it would be a challenge to win back customers who have defected - especially as far-flung competitors enter the supermarket world such as Wal-Mart SuperCenters and drugstore chains.

"Once the toothpaste is out of the tube," Metzger said, "it's really difficult to get it back in, and it's really costly to get that consumer back."