In unprecedented times like these, separating all-around performance from just increased revenue gained during the pandemic sometimes yields a blurry picture. But for a few retailers, the progress that they’ve made, particularly in long-term planning to become omnichannel relevant, has been impressive. One such merchant is Ahold Delhaize and its USA subsidiary.
First to the numbers for Q4 which ended on January 3, 2021. Sales at its U.S stores jumped 18.7 percent to $13.6 billion in the 14-week period. U.S. comps (ex-gas) grew 11.2 percent, due largely to the COVID-19 outbreak. The biggest boost, as with many other retailers, came from significant revenue gains in online sales. In Ahold Delhaize USA’s (ADUSA) case that increase was 128.5 percent. That might not be the highest percentage gain of all publicly-traded food merchants, but you’ve got to take into account the fact that ADUSA already had a solid e-commerce platform. It’s how the big chain nourished its digital efforts during COVID-19 and how it is building and securing e-commerce as a vital part of its overall omnichannel plan in the future that’s important. The Dutch retailer noted that this year’s performance, certainly aided by the sales tailwinds of COVID-19, literally blew away many of the financial targets set at Ahold Delhaize’s “Capital Market Day” conference in Manhattan in November 2018, including a 30 percent increase in e-commerce revenue.
“Exiting 2020 in this position makes us feel even more confident about our prospects in 2021 and beyond. While no doubt that COVID-19 helped our results last year, we also know that the future for Ahold Delhaize is very promising. Many consumers have found a new love for eating at home and found new ways to engage with our brands, both online and in-store, which are behaviors we think will have a lot of stickiness,” said Ahold Delhaize CEO Frans Muller during his conference call with financial analysts.
Muller also highlighted Ahold Delhaize’s recent U.S. acquisitions including buying New York-based e-grocery merchant Fresh Direct (which will play a big role in ADUSA’s future overall digital strategy) and the purchase of 62 Bi-Rite stores and a distribution center from Southeastern Grocers. Those stores are now operating as Food Lions.
The Dutch-born CEO, who took the helm of the Zaandam-based retailer in 2018, also cited gains made by its U.S. brands including 33 “reimagined” Stop & Shop units (60 more remodels coming this year) and the consistent progress of the Food Lion brand which just completed its 33rd consecutive period of same-store sales increases. He also singled out The Giant Company (TGC), and the progress the Carlisle, PA-based brand has made by improving the functionality of its e-commerce model including the recent rollout of its “ChoicePass” digital subscription program.
TGC certainly moved its e-commerce bar significantly higher over the past 12 months. It recently announced a new partnership with Swisslog to provide automation technology featuring “AutoStore” at its new 124,000 square foot e-commerce fulfillment center on Island Avenue in Philadelphia. The facility is expected to open this November.
“When we launched Giant Direct in 2019, we knew that online grocery shopping was going to be a gamechanger for the industry, so it was important for us to build a platform that exceeded expectations and clearly stood out among others in this space,” said Nicholas Bertram, president of the Carlisle, PA-based brand. “The time is right for us to invest in a new e-commerce fulfillment center as part of our omnichannel evolution, and Swisslog and Autostore are the right partners to help us transform and elevate the online grocery experience for families in Philadelphia. We’re excited to take Giant Direct to the next level with this strategic partnership.”
In another e-commerce enhancement, TGC will begin utilizing geofencing technology to strengthen the functionality of its Giant Direct app. Customers can enable location services or text functionality when en route to one of more than 150 pickup locations. Store teams receive the early notification and are now able to gather and prepare the customer’s order for their arrival, reducing customer wait times by nearly 50 percent.
On the brick and mortar front, Giant will remain active particularly around Philadelphia. It announced that it will open its flagship store on North 23rd Street in the city on March 19. The new 65,000 square foot “Riverwalk” location features a two-level shopping experience in the Logan Square neighborhood and is the first of four projects TGC has planned for the city of Philadelphia. Other new stores are slated for Christopher Columbus Boulevard (46,000 square feet); Broad Street & Washington Avenue (40,000 square feet); and a recently announced new 67,000 square foot Giant on Cottman Avenue in the Northeast part of the city. Other nearby new stores include a 72,500 square foot replacement store in Doylestown, PA (on the site of a former Kmart in the same shopping center) and a 50,000 square foot net new store in Richboro, PA (formerly a Shop ‘n Bag owned by Murray Battleman).
TGC also has plans to open a new supermarket in Pocono Summit, PA and recently announced another new store to be built in Benner Township, PA (Centre County), seven miles from State College. That 50,000 square footer is slated to open in 2023.
Not only was 2020 a tremendous year for Ahold Delhaize, the company and its brands are clearly poised and prepared for continued success in the future.
‘Round The Trade
Not only did Ahold Delhaize turn in strong fourth quarter and fiscal 2020 numbers, Walmart also reported excellent results. The world’s largest retailer increased its overall sales to a record $152.1 billion, up 7.3 percent. And comp store revenue rose 8.6 percent at its more than 4,600 U.S. stores. E-commerce gains also continued to be impressive, with sales increasing 69 percent. For its full fiscal year ended January 31, Walmart’s total sales were a whopping $49.2 billion, a 6.7 percent jump. “This is a time to be even more aggressive because of the opportunity we see in front of us. The strategy, team and capabilities are in place. We have the momentum with customers, and our financial position is strong,” said Walmart CEO Doug McMillon. Walmart is also raising wages for many of its employees, but not to the $15 threshold that the new Biden administration is seeking. This round of raises includes 425,000 more front-line associates and dovetails with the wage gains made by 165,000 other employees last fall. While McMillon noted that he was watching the $15 dollar an hour conversation nationally, Walmart will be raising its starting wage (currently about $11.25 an hour). He added that he is sensitive to geography when it comes to hourly rates. More Walmart news: the Behemoth will also begin selling ad space on the checkout TV screens in its physical stores. According to Janey Whiteside, the mass merchant’s chief customer officer, the changes at the Walmart Media Group, which will be renamed Walmart Connect, signal the company’s growing ambitions to diversify revenue and become a top 10 ad company in the next few years. And one final thought: how much impact will the temporary closure of 501 Walmarts (due to winter storm Uri) have on the company’s Q1 financial performance? Many of those stores, which are located in Texas, Mississippi, Tennessee, Louisiana, Arkansas, Virginia and West Virginia, are now open, but had to shutter from one to six days.
At rival Target, the Minneapolis-based mass merchant has made several key changes in its merchandising department naming Rick Gomez EVP and chief food and beverage officer. He was formerly chief marketing, digital and strategy officer. Former chief merchant Christina Hennington now becomes Target’s chief growth officer. Additionally, Jill Sano now becomes chief merchandising officer for hardlines and softlines and Cara Sylvester has been promoted from SVP to EVP of marketing and digital.
Some manufacturer news to report: Hormel will pay Kraft Heinz $3.35 billion to buy its Planter’s brand which includes the reborn Mr. Peanut. Revenue at Kraft’s Planters unit was about $1 billion last year and will help broaden Hormel’s peanut portfolio which currently includes its Skippy brand of peanut butter, a company that Hormel acquired from Unilever in 2013…and the loser is? Pearl Milling Company. Who? What? Duh? Yes, that’s the new name for the brand formerly known as Aunt Jemima. Yes, the AJ name needed to go; and yes, there is some historical significance to the Pearl Milling connection (it was a small mill in Missouri that in the late 1800s produced the self-rising pancake mix later known as Aunt Jemima). But the Pearl Milling moniker is an automatic buzzkill, most likely created by a marketing team/ad agency that’s lost all real-world sensibilities.
Local Notes
Multiple sources have told us that there will be a new Amazon Fresh store in Oceanside, NY, which would be “Godzilla’s” first entry on Long Island and in the Empire State. The former Waldbaum’s store on Long Beach Road is currently under construction. Also on Long Island comes news that its newest merchant – Lidl – will increase its starting wage to $16.50 an hour at its Nassau and Suffolk County units. Eight months ago, the German discounter made news that it would offer its associates a $15 an hour staring wage. As we’ve previously reported, by the end of 2021, Lidl expects to have all 24 of its Long Island stores converted from the Best Market format to its discount model.
According to location-based software firm Placer.ai, Acme Markets has achieved the highest rate of shopping trip increases of any retailer in the U.S. during the pandemic. In Q4 of 2020, according to the Los Altos, CA-based software firm, Acme’s store visits rose nearly 24 percent, while Whole Foods in-store visits dropped nearly 19 percent. Placer.ai was quick to point out that store visits are not necessarily connected to increased sales (although Acme’s revenue has been robust during the pandemic). The survey also implies that those retailers whose overall sales are more greatly impacted by e-commerce growth stood to suffer a loss of in-store visits. But what is clear is that for those customers who rely on visiting stores to purchase groceries, they are less apt to cross-shop and more likely to increase their shopping baskets. That’s certainly good news for Acme and Weis Markets, which was also named a top performer in the study.
Honor Foods, the foodservice redistribution company owned by Burris Logistics, has relocated its Philadelphia headquarters from North 5th Street to a new facility on a 20-acre parcel on Tacony Street. “Because of the service provided by our incredible team members, Honor Foods has truly been busting at the seams. This new facility will triple our capacity and will better enable us to serve both our customers and our vendor partners,” said Donnie Burris, CEO of the family-owned distributor. The $50 million investment is expected to create 100 new jobs over the next decade.
We have just learned that the former 91,000 square foot Kmart in Wall, NJ will soon become a Target – one of five former Kmarts that was recently acquired by Tar-Jay.
We have a few obits to report this month, including one of the greatest jazz keyboard players of all time, Chick Corea. A master of jazz-rock fusion, Corea made a mark on the scene in the late 1960s, playing with such greats as Dizzy Gillespie, Stan Getz and Sarah Vaughan. But it was in the next decade that the Boston native really carved out his niche. Although he said he enjoyed playing the acoustic piano, his career was defined by his creativity and energy playing the electric keyboard. During that era, he played with Miles Davis and formed his own group, Return to Forever, which became one of the most popular instrumental ensembles of the decade. Corea, 79, continued to perform up until two years ago. In a great career he recorded nearly 90 albums as a bandleader or co-leader and garnered 23 Grammy Awards.
Leon Spinks, who scored one of the greatest upsets in boxing history, has left us at the age of 67. In February 1978, with his World Boxing Association (WBA) and World Boxing Council (WBC) titles on the line, Spinks faced the legendary Muhammad Ali for the heavyweight title. Ali, who was 36 at the time and weighed 224 pounds, faced a much younger (25 years old) and lighter (197 pounds) Spinks. After 15 rugged rounds, Spinks was awarded a split decision. That was the highlight of a Leon Spinks’ career; six months later, Ali regained his WBA title, defeating Spinks in a unanimous decision. However, prior to turning pro, Leon Spinks had a notable career, winning the Olympic light-heavyweight Gold Medal in the 1976 Montreal games. His brother Michael also took gold in the middleweight division of those same games.
A great American actor, Hal Holbrook, has left us. In a career that spanned more than 60 years, Holbrook appeared in 136 film and TV roles, but was best known for his many portrayals of legendary American author Mark Twain (Samuel Clemens). Holbrook began playing Twain in 1952 when he developed a one-man show. All-told, he appeared as Twain in more than 2,000 performances. Other famous roles included Deep Throat in “All The President’s Men” (1976) and as an old man in the under-rated “Into the Wild” (2007), for which he received an Oscar nomination. Holbrook was 95.
And, finally, with mixed feelings, I note the death of Larry Flynt. Sure, Flynt, the founder of Hustler Magazine, was a sleazebag, but he was also a staunch defender of First Amendment rights. Flynt, 78, spent many years and millions of dollars defending himself against obscenity charges (prevailing in most cases). While on trial for one such case, near a courthouse in Lawrenceville, GA in 1978, he was shot by a sniper and permanently paralyzed. And for whatever it’s worth, there was an excellent movie about Flynt’s life, particularly as a defender of free speech, made in 1996 and directed by the great Milos Forman, “The People vs. Larry Flynt” which whimsically portrayed the pornographer as kind of an American folk hero. Woody Harrelson was nominated for an Oscar for his performance as Flynt. And while not quite at the level of serial bridegroom-ness as Larry King, Flynt was betrothed five times to five different women.