ELIZABETH, N.J. — Wakefern Food Corp., already the nation's largest supermarket cooperative, appears to be growing in several directions.
In addition to opening its wholesale distribution up to non-members (See July 2 issue of SN, Page 6), the company also has agreed to acquire 10 Stop & Shop stores in New York and New Jersey, most of which will be operated by its members. Wakefern also may be expanding into new geographic areas as well in its quest for new members, some observers said.
Wakefern supplies the 200-store ShopRite chain and also operates some corporate ShopRite and Price-Rite locations. In the Stop & Shop deal, Wakefern said it would buy nine Stop & Shop stores in southern New Jersey and one in Middletown, N.Y. Terms were not disclosed. Eight of the nine New Jersey locations are scheduled to be turned over to individual Wakefern members, according to Brian String, president of the union local that represents the workers at those stores.
Wakefern could not be reached for comment on the sale.
String said the Stop & Shop in Rio Grande, N.J., near Cape May, will be closed, although Wakefern is expected to seek a non-supermarket tenant for the space. It was not clear if the Middletown store would become a ShopRite or would be shuttered.
All of the stores are scheduled to close July 31. The ones that will reopen under the ShopRite banner will do so within four to six weeks, according to String.
“We're excited,” he said. “We think ShopRite is going to turn around these low-volume locations and make them into money-making stores.”
He noted that many of the supermarkets are relatively new and will likely need little refurbishment. They had been Super G stores, another banner operated by Ahold, Stop & Shop's parent company, before they were converted to Stop & Shops in 2005.
Village Super Markets, the 23-store ShopRite operator based in Springfield, N.J., said it is acquiring one Stop & Shop location in Galloway, N.J., on the border of Absecon, where it already operates a store. The acquired store will reopen as ShopRite “no sooner than mid-September,” Kevin Begley, chief financial officer, Village, told SN. He said the company will keep open its existing Absecon location because it serves a separate neighborhood.
Begley said the front end-equipment at the acquired store will be replaced, but he said he wasn't sure yet how much additional work needed to be done.
Village had been looking at sites in that fast-growing area, just north of Atlantic City, for some time, he said.
“It's a relatively immature area,” he said, “but I think there's a lot of growth to come there. I'm not sure if we're slightly early going in there.”
According to reports, Ammons Supermarkets, another ShopRite operator, was planning to acquire the Stop & Shop in Harrison Township, N.J.
Industry sources said it's also likely Wakefern is looking at new geographic areas to broaden its membership base. One New England observer told SN Wakefern has been prospecting for new members in central New England — “not just southern New England, where it's been looking in the past, but farther afield,” the observer noted.
Burt P. Flickinger III, president of Strategic Resource Group, New York, said Wakefern's signing of Grade A Supermarkets, Fairfield, Conn., as a new member a couple of years ago resulted in increased sales for the retailer, “and that was noticed by other operators throughout New England, who might consider switching to Wakefern as a result.”
Concerning Wakefern's quest for non-member distribution business, another Northeast observer told SN it was “interesting, simply because it's a departure from the typical cooperative-only strategy, and it may give A&P a little leverage following its merger with Pathmark as it renegotiates its supply agreement with C&S Wholesale Grocers.”
Flickinger said Wakefern should do well finding customers for its private-label line and possibly other offerings.
Additional reporting: Elliot Zwiebach