The delineation between traditional supermarkets and discount retailers (in all channels) has never been more clear. Except for the COVID years (2020-2023) when eating-at-home and inflation benefited virtually every retailer, the discounters have continued to nibble away share from the conventional supermarkets in every individual market in our 48th annual market study.
And as affordability becomes an even more visceral issue for an increasing number of consumers, traditional supermarkets (which still control the landscape in most Mid-Atlantic marketing areas) are less in control of their own destinies than ever before.
Non-discount operators like Trader Joe’s and Wegmans continue to outperform their peers, but neither merchant has a commanding presence in any individual market that we cover. A more likely scenario throughout the region stacks discounters such as Walmart, Aldi, Costco and BJ’s battling (and mostly winning) against Giant Food, Safeway and Kroger/Harris Teeter.
We’re not talking about game changing market share shifts. However, every year the discounters generally continue to post the best comp store sales increases and open the most locations in any given market in our nearly $65 billion marketplace.
There are also other factors at play besides overstoring and differentiated competition. The significant reduction in SNAP benefits has created a void that many retailers can’t replace. And as I noted last year, market expansion for most supermarket retailers has been very challenging. Real estate continues to be both scarce and expensive. And with the average cost to build a 60,000 square foot supermarket today running somewhere north of $30 million, it’s no wonder that most retailers are prioritizing remodeling their stores rather than gambling on building new units. Of the top 10 supermarkets in the Food World marketing area, only Publix and Whole Foods have at least five new stores planned during the next three years. That’s a far cry from 15 years ago when Giant, Safeway, Kroger/Harris Teeter, Food Lion and The Giant Co. would average about three new stores a year. Conversely, Aldi, Lidl, Trader Joe’s and Sprouts have more than between eight and 15 new stores planned for that time period.
As for this past year, for the 48th time, here’s my annual analysis of the market leaders in Food World’s largest trading area, the Baltimore-Washington market:
Giant Food – With concerns about the economy and the riffing of tens of thousands of federal jobs in the last year, the B-W market ain’t what it once was: recession-proof. Once again, Giant’s modus operandi was to play defense against the discounters (primarily Walmart and Aldi) while trying to make inroads against traditional supermarket competitors Safeway and Harris Teeter. After decades of significant growth in America’s fifth largest market, Giant’s progress is now measured in tenths of a percentage point. The B-W area has become so overcrowded and diversified with no open lane to in which to accelerate that the market’s perennial leader since the 1970s now must now settle for small victories. Giant will open a new store later this year in Berlin, MD (outside the B-W market) and hopes it can acquire some Shoppers Food units if and when that company’s remaining 14 stores become available.
Safeway – Safeway’s strength remains its great locations, particularly in the Washington area. But that’s no longer enough for them to hold serve. Ever since Albertsons acquired the company in 2015, it seems like Safeway’s supermarkets are stuck in some sort of time vacuum. The stores are aging (with limited cap-ex devoted to major remodelings), its everyday pricing remains the highest of any chain in the market, and it has not opened a new store in years. However, there is something new happening at the executive level: Susan Morris was promoted to CEO (replacing the retired Vivek Sankaran). One of her first moves was to shift former Mid-Atlantic president Tom Lofland to a similar post at Jewel-Osco in Chicago and name newcomer Sean Thompson to pilot the Mid-Atlantic region. Thompson inherited a full-plate – virtually every retailer has cut into Safeway’s market share in recent years and if the company’ believes that its heavy reliance on digital marketing and advertising is a game changer, I’d have someone review those notes. Morris knows the fundamentals of retail success very well; however, the hurdles she faces in trying to change the perception of a stale enterprise might be too difficult to overcome. Of course, if Albertsons wins its multi-million dollar lawsuit against Kroger, things could change rapidly
Walmart – It’s been quite a productive 12 months for the world’s largest retailer. The progress that the “Bentonville Behemoth” made was achieved without opening a single new store in the Mid-Atlantic. At the corporate level, veteran company executive John Furner was named CEO replacing the legendary Doug McMillon who retired. Furthermore, for the first time in its history, a large nearly 10-year investment finally paid off and its e-commerce business became profitable. From a sales growth perspective, Walmart made significant gains nationally on strong comp store revenue, which was also reflected at its 157 Mid-Atlantic stores. McMillon’s prescient words still hold true: “Price leadership drives our business.” That quality rings especially true in challenging economic times, which also helps to explain the big chain’s continuing success. With 61 stores in the region slated for remodeling in the next 12 months, Walmart won’t need to open any new stores to remain dominant and grow its market share.
Harris Teeter – This once-great regional chain seems to be suffering from “Krogeritis.” As I noted last year, when Harris Teeter entered Washington in 1999, the upscale merchant seemed on a mission: replicate the service and consumer image that Giant had under the halcyon years of former CEO Izzy Cohen. And for many years it succeeded, the stores were beautiful, the staff was well trained, and HT spent plenty of money developing expensive new stores in urban and suburban locations. But something happened during and after COVID. The expansion effort slowed, the stores are getting older and its everyday retails could be a lot more competitive. Where are the new stores? What became of the high-powered corporate energy and why is the in-store culture so blah?
Wegmans – One of the better comp store performers against all channels and particularly strong when measured against other supermarkets. But then again, Wegmans is hardly an ordinary supermarket. During the past year, the Rochester-based retailer opened a new store in Rockville, MD and continued to differentiate itself from all others by its sheer skill and size. As I have previously noted, a hidden part of Wegmans’ success is its site planning and demographics research. While all economic strata have been impacted by the uncertain economic conditions, the company’s great (and very, very expensive) store locations – in addition to size, selection, overall product mix and execution – have protected it against major slumps. When you’re averaging more than $90 million per store in sales annually, you are doing a lot of things right.
Amazon Grocery – “Godzilla’s” brick-and-mortar “Grocery” division now only consists of one brand – Whole Foods – which had a very solid year, opening four new “natural and organic” stores and posting healthy comp store sales. Extinct as the dodo is Amazon’s former physical store grocery operation Amazon Fresh, which no longer exists after the parent firm acknowledged it was a loser. One of Whole Foods’ new store formats is its miniature model – Daily Shop – which debuted in Arlington, VA earlier this year. Although Amazon Fresh (and Amazon Go and Amazon Books and Amazon Style and Amazon 4-Star and Amazon Pop Up Shops) failed, the world’s largest online merchant is not giving up. Next up on the project docket is Project Kobe, the company’s brick-and-mortar answer to Walmart’s SuperCenter. Set to debut as early as next year in suburban Chicago and with other locations tabbed for Cherry Hill and Edison, NJ why not go big (or not go at all)? I mean, if the company couldn’t grasp operating 25,000 square foot grocery stores, what would make anybody think that opening stores 10 times that size featuring food and general merchandise would be much easier? Then again, the sheer earnings return from Amazon Web Services and its burgeoning advertising division alone could support multiple more failures. That why they’re Godzilla.
Aldi – My words of last year ring true again as the German-owned discounter put together another stellar year, combining new units with strong comp store sales. Those words were: if we could award a “best in class – small store division” trophy, Aldi would win. Its model is not for all shoppers and it’s still tough to buy one’s total weekly purchases in a footprint that’s typically smaller than 25,000 square feet, but for what it is, Aldi scores very highly. There’s enough product diversity to fill most of one’s shopping cart and its relationship with its private label vendors is strong, yielding high-quality products. Strong management, excellent store design solid in-store execution and deep corporate pockets make Aldi a top-tier food retailing powerhouse for today and in the future.
Weis Markets – Enjoyed an excellent year as it continued to increase market share in and around the fringes of the $37.9 billion market. Most of those gains were achieved on the strength of opening five new stores – one in Frederick County and four in southern Maryland. In fact, the Sunbury, PA regional chain fared better around the DC area than it did in its own backyard of Northeast and Central PA. Weis also has a new store planned for Clarksburg, MD (northern Montgomery County). Over the past decade, Weis has become a more disciplined retailer with better merchandising and improved store operations. Its new supermarket model is handsome and efficient and Weis understands that if it wants to continue to succeed in B-W, it needs to stay on the edges of the battle zone, where costs are more reasonable and overstoring is generally a bit less of a factor.
Shoppers Food – RIP (almost). This once-great company has been in hospice for so long, it’s time for parent firm UNFI to call Jack Kevorkian’s wife.
‘Round The Trade
Walmart continued its strong run by posting excellent Q1 results highlighted by a 4.1 percent gain in same-store sales at its U.S. stores. All of the “Behemoth’s” numbers were strong: overall sales grew 7.3 percent; e-commerce jumped 26 percent; and its U.S. advertising business (including retail media), an important growth spur, increased 36 percent. Operating income for the period ended April 30 was up 5 percent to a healthy $7.5 billion. “Our results reflect our continued focus on delivering across the enterprise – better shopping experiences, a broader assortment, and faster delivery. Our teams are adopting innovative technologies, driving productivity through automation, and growing higher margin commerce solutions. It’s a disciplined approach that’s helping us grow the business and strengthen returns,” said John Furner, president and CEO. Internally, in the race to cut jobs as a result of the efficiencies of AI, Walmart confirmed it has eliminated about 1,000 jobs as it places greater focus on AI development. According to an internal memo written by Suresh Kumar, chief technology and development officer, and Daniel Denker, executive VP-AI acceleration product and design (who might be the most unpopular guy in Bentonville), the changes are being made “to simplify how the work is organized, make ownership clearer, and better align roles to the work and skills we need going forward. In some cases, we’ve had different teams working on similar problems.” The memo also noted that Walmart had moved from organizing separately for Walmart U.S., Sam’s Club, and its international markets to building in a unified way on a single, shared platform over the past year, according to the memo. As for AI, you can love, hate or fear it, but know it’s never going to go away. More Walmart news: three key veteran Walmart executives will be leaving the company by the end of this month. At its Sam’s Club unit, Tom Ward, COO, will be retiring and Diana Marshall, executive VP and chief experience officer, is resigning. Also exiting mothership Walmart will be Cedric Clark, executive VP-U.S. store operations. No replacements for the three executives, whose combined experience with the mega-merchant totals more than 45 years, have yet been named…we’ve got more recent financials to discuss including Walmart’s chief rival Target’s first quarter. The Minneapolis-based mass merchant posted some of its best revenue numbers in more than two years. Comp store sales increased 5.6 percent and e-commerce volume grew 8.9 percent. Part of the surprising recent success of the company (when compared to recent sales and earnings reports) is the growth in its food and beverage business, which added 3,000 new grocery items during the 13-week period. On the profit side, there’s more work to do as adjusted operating income was $1.1 billion, a 22.9 percent decrease from prior-year GAAP (Generally Accepted Accounting Principles) operating income and a 29.1 percent increase from prior-year adjusted operating income. The sales trend is encouraging and is the first full period under the leadership of Michael Fiddelke, who replaced Brian Cornell as CEO on February 1…at Costco, the strongest financial performer since 2019, happy days continue. Net sales skyrocketed 11.6 percent for its third quarter and same-store revenue vaulted 6.6 percent (ex-gas). Every metric at the Issaquah, WA-based club dynamo increased including e-commerce sales up 21.5 percent; net income rose 15 percent to $2.19 billion; and membership fees were $1.37 billion, a 10.7 percent growth rate. Costco’s discounted fuel prices sparked a large part of the big jump. Costco officials acknowledged that the final five weeks of Q3 (ended May 28) were the best in the company’s 43-year history. And there’s UNFI. After posting its first profit in more than five years (a mere $33 million on sales of $7.7 billion) during its third quarter, the Providence-based wholesaler/retailer announced a 4.2 percent decline in sales, which it blamed primarily on transition costs associated with the closure of its Allentown, PA distribution center in 2025. That DC, which was built exclusively to supply Key Food, had no use after the Matawan, NJ-based co-op and UNFI parted ways last year. But to UNFI chief executive “Sandy” Douglas, the situation continued to be sunshine and lollipops. “Through disciplined execution of our value creation strategy, we delivered underlying sales growth, higher profitability and strong free cash flow, which strengthened our balance sheet and increased our financial flexibility,” he noted after the release of its financials. As I’ve been saying for more than two years: Sandy, talk to your independent retail customers and see if they’re feeling that same “kumbaya” vibe…Amazon’s “Prime Days” will now be a four-day event commencing on June 23. According to consumer insights firm Numerator, the online shopping bonanza could yield more than $11 billion in sales and attract 59 million households. Not to be left in the dark, Walmart’s “Deals” summer sale will run from June 22-28 and Target’s “Circle Deal Days” will begin on June 22 (for Circle 360 members) and end on June 26…more supporting evidence on how challenging the economy is currently, both from a statistical perspective and a “mood” view. Last month the CPI reached an inflationary level of 4.2 percent, up from 3.8 percent in April. Soaring fuel costs are the primary culprit but higher gas prices impact every level of transportation – individual and business. Climate conditions and foreign influences are also a factor. And just in the food segment, lettuce rose 16 percent from April, and tomatoes prices are up about 40 percent from a year ago, and beef prices have increased 13 percent from a year ago, continuing a trendline that began in 2023. From the “mood view, comes data from a new Gallup poll, in which U.S. consumers rate the economy as ‘poor,” a level not seen since COVID. Of those polled, 75 percent believe the economy is getting worse. Moreover, the Gallup “economic confidence index” now sits at negative 45; the highest possible rate is +100. Ouch! OK, kiddies, I want to reveal my new word of the month: screwworm. Think about it!
Local Notes
Kudos to our friends at Giant Food for their continued commitment to providing food and services to communities and cities that are needful. The Landover, MD-based regional chain recently released its sixth annual “Better Neighbor Report,” highlighting the company’s efforts throughout 2025 to help its communities, customers, and associates thrive. “As a community grocery store, it is our responsibility to show up for our associates, customers, and community and to provide them with the resources and services that help them live their best life,” said Ira Kress, president of Giant Food. “The Better Neighbor Report demonstrates exactly that. Community connection is a foundation that has shaped Giant Food for 90 years and continues to guide everything we do.” Among the charities and contributions made were: 6,364,106 meals totaling more than 7 million pounds of food to Giant’s Feeding America food bank partners; $960,000 to support programs that fight against hunger through the Giant Family Foundation; $1.84 million to help fund research at John Hopkins Medicine and The Children’s Cancer Foundation Inc. Additionally, the large Ahold Delhaize USA brand: provided more than 338,000 vaccinations services for COVID-19, boosters, flu and non-flu, and hosted 1,336 community clinics; and raised $224,991 for 904 nonprofits through its Bags4MyCause charity fundraising program. Positive initiatives inside Giant featured the addition of 22 new or promoted store managers; 78 new or promoted assistant managers; and 218 new or promoted department managers. The chain also completed more than 328,243 hours of in-person or online training, encompassing the areas of leadership development and functional skills development, while also providing $182,000 in scholarships and grants to 53 Giant associates or their children. This in addition to more than $220,700 provided for tuition reimbursement or to earn a GED. At other ADUSA brands, Geoff Waldau, executive VP-merchandising at Food Lion, retired on June 6 after nearly 39 years the parent organization (he came from the Delhaize America branch), including a stint at the now defunct Kash n’ Karry/Sweetbay banners. He’ll be replaced by Gene Faller, currently senior VP-center store management for the Salisbury, NC-based brand. Faller first joined Food Lion in 1988 and also did a hitch with sister merchant, the late and not so great Bottom Dollar Food. At AD Retail Media, Bernadette “Bernie” Van Osdal, VP-sales, will be retiring on July 31 after three years with the company’s newest unit. Before joining AD Retail Media, Van Osdal enjoyed a long career in advertising and retail media…The Fresh Market (TFM), another one of those retailers that can’t seem to connect with consumers on a consistent basis, closed in Vienna, VA earlier this month. In April. TFM also closed a small-box fresh-driven store in another upscale berg, Montvale, NJ. If you’re gonna sign leases in expensive locales, the margin for error is considerably smaller because costs are higher and consumers are typically more demanding, which begs the question, what are the points of difference that The Fresh Market offers shoppers? As one of my industry buddies noted: nothing makes for a future Trader Joe’s than a closed Fresh Market…David Haaf has been named VP-fresh foods for FMI, replacing the talented Rick Stein (ex-Safeway) who retired in April after 87, er, 54 years in the grocery biz, the last 11 with the industry’s pre-eminent retail food trade association which is based in Arlington, VA. Haaf, who spent most of his career at Food City (K-VA-T), the successful family-owned regional chain based in Abingdon, VA (about as far away from Arlington as you can get and still be in the Old Dominion), is joining FMI after a three-year stint as president and CEO of Madison, WI-based International Dairy Deli Bakery Association (IDDBA) which completed its huge national show in Orlando, FL earlier this month…from the obit desk comes news of the death of Sonny Rollins, 95, one of the greatest saxophone players in music history and an iconic figure in the jazz world for 70 years. Over the course of his long career, which began commercially in 1949, Rollins’ ability to improvise helped him reinvent himself several times. He was a be-bopper, an avant-garde player and a jazz-fusion artist. He played with Miles Davis, John Coltrane, Thelonius Monk and even the Rolling Stones (three tracks from the 1981 album “Tattoo You”). I’m certainly no jazz aficionado, but when Sonny Rollins played the sax, the sound and vibe were clearly different. If you’ve never listened to Rollins, one album that I’d recommend is “Saxophone Colossus” (1956). The first track, “St. Thomas,” is simply great…and in my continuing quest to highlight other musicians who recently passed away and were great at their craft but sadly were underrated or unsung during their careers, I note the death of the great R&B singer Clarence Carter, who left us last month at the age of 90. Carter, who was the son of sharecroppers and was born blind in Montgomery, AL, learned how play guitar as a child and later attended the Alabama School for the Blind in Talladega, where he learned to transcribe musical arrangements in Braille. Carter’s deep baritone voice and soulful delivery made you take notice of his talent and with hits like “Slip Away” (1968) and “Patches” (1970), he became a star. And then there was his ribald side, penning such underground hits as “Back Door Santa” (1968) and “Strokin’” (1986). A truly gifted musician, Clarence Carter’s raw talent made you pay attention to his voice and lyrics…also passing away last month was one of the greatest wide receivers in the history of the NFL, Raymond Berry. At 6’ 2” and 185 pounds with below average speed, Berry likely wouldn’t even be considered as an NFL player today. But with tremendous hands and great footwork, Berry was the best route runner in his day and partnered with the greatest quarterback of his era, Johnny Unitas (imagine if Johnny U played today with rules now heavily favoring offenses). In his 13-year career, all with the Baltimore Colts, Berry led the NFL in receptions and receiving yards three times and twice led the league in receiving touchdowns and receiving yards per game. He played in six Pro Bowls and, when he retired in 1967, he held the all-time record for passes caught (631) and receiving years gained (9,275). Both of those marks have long been surpassed. After he packed up his shoulder pads, Berry served as an assistant coach for five NFL teams including the Patriots where he was also head coach for nearly six years (he led the Patriots to a Super Bowl in his first year, 1986, where they were trounced by a great Chicago Bears team, 40-16). Raymond Berry was elected into the NFL Hall of Fame in 1973.