Victory the Only Option for Hannaford in Massachusetts
By George Anderson
Rick Meyerkopf, Hannaford Bros. central division vice president of retail operations, said it all. ‘Hannaford is committed to becoming a major player in Massachusetts.”
The Delhaize division is now the fifth largest grocery retailer in the state having passed Whole Foods, Roche Bros. and Price Chopper in the past year. This weekend Hannaford will open its two biggest stores in Mass., according to a report in The Boston Globe.
Hannaford’s Meyerkopf believes the EDLP operator can achieve even greater market share and success in Mass. Acknowledging the intense competition that exists in the market, he said, “We feel like we have a compelling offer.”
Mike Berger, editor of the Griffin Report of Food Marketing, said, ‘Delhaize sees growth in this market and feels Hannaford is the right one to expand that can compete against Stop & Shop (the market leader) and others on price and product.”
Supervalu’s acquisition of Shaw’s, a major competitor in Mass., may further impact the competitive environment. Many industry watchers believe that Shaw’s will only improve its performance as a member of the Supervalu portfolio of retail banners.
Part of the allure of Mass. is the relatively low numbers of Wal-Mart Supercenters in the densely populated areas of the state.
“We wanted to make sure as Wal-Mart expands that we have our act together,” said Hannaford’s Meyerkopf. ‘Because when Wal-Mart comes to an area we’re in, we lose at least five percent percent of sales in the first year.”
Moderator’s Comment: What is your assessment of the grocery market in Massachusetts? –
George Anderson – Moderator
I think it’s great that Hannaford is looking to expand in Massachusetts, but I think it will take a lot more presence and focus for them to gain any traction. From what I know, the chain is struggling quite a bit with the Victory stores they acquired last year. Also, they profess to be an EDLP operator, but their retails have gone up a lot recently. They seem to be happy being equal or just slightly lower on retails than their #1 competitor. That’s great, but the competition is blowing them away with great weekly specials on key items. They are not even close to Wal-Mart EDLP retails. I think they have lost their way a little bit and need to get a little sharper on their EDLP pricing if they still want to play that trump card!!
The Massachusetts economy has been cyclical in the past and will continue to be cyclical in the future. Technology and education are major industries doing very well right now, so real estate is high and so is employment. When the cycle goes negative, the excessive multiplicity of chain grocers will cause great pain upon the players. When Wal-Mart and Costco get more aggressive by opening more locations the pain will get excruciating. Now’s a great time to merge, which reduces excessive competition, improves profit, and preserves capital. There are way too many grocery players. Rollup strategies work well when the price and leverage remain reasonable and the management executes competently. To do well through an economic slowdown and increased Wal-Mart/Costco presence requires brilliant management, not just competent management.
As a Massachusetts shopper, Mom and professional in the Grocery/CPG industry, I also welcome Hannaford’s entry to the competitive landscape! I can choose to shop Shaw’s, Stop & Shop and Hannaford since they all have stores located within 10 min of my home. The big thing Hannaford is doing right is providing very high quality perishable foods — I feel their produce and meat are the best in the area. There are two things that Hannaford needs to consider to compete in this market (and I’m sure they know this, but…):
– While I like the concept of EDLP (don’t have time to shop around chasing sale prices), but don’t see it actualized in the pricing on center store items at Hannaford. Maybe it is on produce or meat but, frankly, I can’t remember what I pay per pound for pork but I do remember what I paid for a package of diapers or 12-pack of Coke. As others remarked…Hannaford should sharpen up the EDLP pricing or bag it, and compete with the others with hotter weekly ads. I feel a little ripped off since I pay the same high everyday prices like I do at S&S, and don’t get to buy anything on sale.
– Watch product mix in the more affluent Mass. suburbs. Did you know that the Boston area has more millionaires per capita than any metropolitan area in the Northeast (yes, more than metro NY) and less blue collar workers? In some towns, it’s more than 25% millionaires!! I believe the mix in Hannaford stores in Mass. is the mostly same as their same size stores in rural Maine, NH, NY and VT. My neighborhood moms at the bus stop have actually commented on the lack of high-end product lines like Boar’s Head in the deli, out-of-stocks on the Organic Cow milk and too many private label and low end products limiting assortment on brands, scents, flavors they favor. This is a great shopper to attract to Hannaford stores, but she’s turned off in some categories by lack of availability or merchandising on the items she’s used to buying elsewhere.
Welcome Hannaford…we’re glad you’re here! Keep up the great focus on outstanding perimeter and give us a reason to buy in the center store and HBC.
I used to live in Mass., and shopped at a Victory store upon occasion as it was near my in-laws. It was a GREAT store; perimeter execution was superior, and it was a great shopping experience. Folks in the area spoke of it as fun to shop, not a chore. It was about 150 yards from a brand new Stop & Shop, and was consistently busier than the Stop & Shop.
I visited the same store last fall. Simply, Hannaford killed this store. They turned it from an example of everything that food retailers need to do in order to have a point of difference into just another supermarket. I went in on the day before Thanksgiving – they had half their registers open, and I didn’t have to wait in line. I did a large shopping trip; at no time during my visit on what should have been the busiest time ALL YEAR did I see a line at checkout. I drove past the Stop & Shop; their parking lot was PACKED.
Wal-Mart doesn’t have many SC’s yet in this market, but they are converting their Division 1 stores in the area to SC. EDLP won’t work against them; they simply execute it better. Club is well developed there, and getting stronger. Whole Foods and Stop & Shop will execute better on the perimeter, so they will succeed; Stop & Shop has said plainly that their sole advantage is in real estate, so they are working to create a point of difference with the consumer based on service and shopping experience. Shaw’s/Star will tread water while Supervalu figures out what to do with bigger divisions.
Pats could have gone to Super Bowl if not for playing sloppy in Denver; they could have won that game, but Denver simply executed better. They’ll be back next year!
Hannaford is simply taking advantage of a window of opportunity that has opened. Stop & Shop, one of the major players, is owned by Ahold. Currently, Ahold has more on its mind than running supermarkets. Ahold is just trying to stay solvent. Shaws was purchased by Albertsons so we know the light switch went out on them the day Albertsons took over. Now Shaws must go through a whole new learning curve with Supervalu. With the two largest competitors distracted, now is the time to hit them when they ain’t look’n.