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Pathmark, A&P Remodels Proceed in Merger's Shadow

Pathmark, A&P Remodels Proceed in Merger's Shadow

The two chains, which are undergoing store remodel programs, have key things in common. They operate in similar market areas. They each revamped managements about two years ago. They are focused on enhancing fresh foods perceptions and better training for in-store service employees.

But there's one link that will eventually outweigh the others: The two retailers, A&P and Pathmark, are poised to become part of the same company. A&P is expecting to acquire Pathmark upon completion of a review by the Federal Trade Commission and following approvals by shareholders of both companies.

That brings up the logical question of what will happen to the two separate efforts after the merger. Which visions will survive? Stories about both chains' remodeling programs appear in this issue (Pages 28 and 31).

In short, A&P's latest fresh store takes the concept to a new level, with a European fresh market layout and new merchandising strategies. Pathmark's new look adopts high-end touches in prepared foods that borrow from American and European sources and represent a big departure for the chain.

There are good reasons to think that A&P's fresh strategy will carry more influence, and not just because A&P is the acquirer. First, A&P's program has had more time to evolve than Pathmark's. Second, A&P's executive chairman, Christian Haub, recently said his company views Pathmark primarily as a price-impact format where “the consumer is not necessarily seeking the fresh solution but wants a competitive shop and a full-store offering.”

Nevertheless, I spoke to the CEOs of both retailers, and each expected the post-merger company would benefit by incorporating the best practices of each fresh format. Indeed, A&P's CEO, Eric Claus, has underscored that his company is keeping an open mind about the eventual integration.

It's important to note that A&P's decision-making process has shifted. Claus noted that the organization has changed from a banner strategy to a format strategy. A&P looks to see what type of format is best for each market, such as price impact or fresh. If the answer is fresh, let's say, it then determines which of its fresh banners has the most equity in that market. One can imagine that much of the same thinking will apply when Pathmark becomes part of the family.

No matter what happens, these two remodel programs show how conventional food retailers are attempting to upgrade their merchandising through fresh food enhancements. Chains are schooling associates in how to handle better products and become more service-oriented. A&P, for instance, has been certifying associates to ensure product knowledge. Retailers are striving for improvements without going so far upscale that they turn off shoppers — a concern that led Pathmark to nix some early blueprints.

It's clear both A&P and Pathmark have given a lot of thought to all these factors, and the completed formats reflect that. All of which bodes well for whatever strategy goes forward.