Stop & Shop, a 110-year-old grocery chain, may be forced to close more than 10% of its stores across the Northeast U.S. as shoppers become increasingly resentful of what it calls excessive prices, industry experts say.
In a surprise announcement last month, the supermarket said it was “taking the difficult decision to close some of our underperforming stores”.
Additionally, JJ Freeman, CEO of Ahold Delhaize USA, the chain’s owner, said Stop & Shop will make “significant, multi-year pricing investments” to lure customers back.
“Stop & Shop’s value proposition and pricing simply isn’t strong enough,” Freeman acknowledged at the company’s annual investor conference.
Some industry watchers say Stop & Shop could close as many as 50 stores as a result, or more than 12.5% of the chain’s 397 stores across Massachusetts, New York, New Jersey, Connecticut and Rhode Island.
“I think Stop & Shop will close between 25 to 50 stores,” Brittain Ladd, a former Amazon executive and industry consultant, told The Post.
Bert Flickinger, a grocery consultant at Strategic Resource Group, who estimates that shoppers pay 12 percent to 14 percent more at Stop & Shop than at rival stores, agreed. “Right now, they’re looking at 20 to 35 stores, but they could expand to 50,” he said.
Ahold Delhaize, the Netherlands-based food conglomerate whose U.S. subsidiary also owns Food Lion, Hannaford, Giant Food and The Giant Company, said last month that it had remodeled 190 stores, nearly half its number, and that it was seeing improved performance at those stores.
Of the remaining stores, those most likely to be targeted for closure are those that primarily serve less affluent neighborhoods, said Joshua Goldberg, a New York investment banker whose family founded Stop & Shop and has run it for 72 years.
“Stop & Shop has always done well in areas where customers couldn’t care less whether a quart of milk costs $3 or $3.28,” said Goldberg, whose family is no longer involved in the business. “But there are markets where people value their pennies more, and in those markets, the stores that haven’t been remodeled yet will close.”
“Stop & Shop has great prices and great quality in nearly every market it’s in, but it will have to get tougher on prices going forward,” Goldberg added.
“Inflation has pretty much disappeared except for food, which is about 5 percent, and that’s really bothering people.”
Stop & Shop’s turmoil comes as Walmart is aggressively pursuing higher-income shoppers, a trend Wall Street analysts say has helped the discount giant gain market share and hold on to those new customers during the pandemic when inflation has soared to 9%.
Walgreens, Target and Amazon also recently announced price cuts on thousands of products, including diapers, pet food, groceries and toiletries, in an effort to lure back customers on tight budgets.
“They’re underperforming because they’re pricing things too high,” one reader wrote in response to a Washington Post report about the store closures last week. “They could do better if they lowered their prices. 4 bags of groceries at Stop & Shop = $200. 4 bags at Trader Joe’s = $150. And the quality is better here,” another shopper wrote.
Stop & Shop is also losing customers because of the quality of its meat, said John T. Nicolai, president of UFCW Local 464A, which represents workers at 60 stores in New York and New Jersey.
The company reduced the size of its meat sections in its stores several years ago after it began buying prepackaged meat from wholesalers.
These packages are treated with preservatives to keep the red color longer than the meat would be viable, said Nicolai, who was featured in Inside Edition in 2019. Packaged Meat Research Report.
“Sales in the meat department were down double digits,” Nicolai told the Post, “and after the company outsourced its butchery operations, overall store sales were down single digits.”
Stop & Shop did not respond to questions about the grocery chain’s meat department.
“We are committed to continuing to invest in our stores and prices to provide our customers with a great in-store experience and great value,” Stop & Shop said in a statement. “Stop & Shop will be making the difficult decision to close underperforming stores to ensure the long-term health and future growth of our business.”
