Supervalu Inc., the nation's largest grocery distributor, yesterday completed its $1.5 billion acquisition of Richfood Holdings Inc., owner of Shoppers Food Warehouse supermarkets.
Executives with Minneapolis-based Supervalu hope the company's deep pockets will speed up the expansion of Shoppers Food Warehouse and heat up the ongoing fight for market share in the Washington area.
With 12.6 percent of the Washington area's supermarket sales, Shoppers ranks a distant third behind Giant Food Inc. and Safeway Inc., according to industry publication Food World in Columbia.
In recent years, Lanham-based Shoppers has been hurt by Food Lion Inc.'s expansion in the Washington area and Giant Food's efforts to win back customers after a Teamsters strike in the winter of 1996-97. Moreover, Giant's new owner, Dutch grocery conglomerate Royal Ahold NV, has made it clear that it will also be looking for more opportunities to expand in the region.
Shoppers, however, has been been slow to open new stores, in part because company officials barely had time to catch their breath as the chain went through three owners in three years.
The Herman family founded Shoppers in 1956 and sold the chain to the Haft family's Dart Group in 1997. Dart then sold Shoppers to Richfood, a Richmond-based grocery wholesaler.
"That's a lot of change," said Michael Wright, Supervalu's chief executive. "Sometimes you're focusing on things other than opening stores."
Supervalu executives say they do not intend to make drastic changes to Shoppers Food Warehouse's 37 stores.
"The thing we keep preaching is that we like Shoppers Food," said William Bolton, chief operating officer of Supervalu's retail division. "I'm sure they're skeptical, but we like the plans they have in place."
But Supervalu, like Ahold, will be looking for more efficient ways of doing business as it attempts to grab market share. For instance, the distributor says it wants to use the Richfood brand in its other grocery stores. It also will ask Shoppers and its other chains, including Cub Foods and Laneco, to work together to spot opportunities to improve.
Supervalu's chains, for example, will be able to lend their experience in operating pharmacies as Shoppers opens more drugstores, Bolton said. Shoppers may be able to give advice on its strengths, such as ethnic foods and seafood, he said.
Richfood had raised the possibility that Shoppers may end its long-standing practice of having customers bag their own groceries.
"We're looking to improve customer service," Bolton said.
The Richfood acquisition gives Supervalu a much larger presence in the mid-Atantic region, including 55 Shoppers and Metro stores in the Baltimore-Washington market and 39 Farm Fresh stores in the Tidewater area. Food World estimated Shoppers had supermarket sales of $891.7 million in the 12-month period that ended March 31.
Wright, the company's chief executive, has said Supervalu will continue to make acquisitions on both the wholesale and retail sides of the business. But a wave of supermarket acquisitions has taken the most desirable chains off the market.
"The chains coming up for sale are becoming more scarce," said Andrew Wolf, an analyst with Scott and Stringfellow Inc. in Richmond. "I think people are taking a break."