Tuesday, June 30, 2015

Stop & Shop and Hannaford Parent Companies Annouce Merger

The Dutch company Royal Ahold NV which is the parent company of Stop & Shop, recently announced a merger agreement with the Belgian based Delhaize Group which is the Parent Company of Hannaford. There are currently just under 400 Stop & Shops with over 180 Hannaford supermarkets. The merger, which is subject to government approval, is expected to be completed in 2016.

How will this merger the impact the Bedford Stop and Shop in the Great Road Shopping Center? In cases where both companies each have stores very close to each other, they frequently will divest some of these location in order to help ensure Federal Trade Commission approval of the merger. This was the case about 20 years ago in Bedford. When Stop & Shop bought Purity Supreme, they closed the Bedford Purity Supreme (now a Whole Foods) which was less than one mile down the road from the Bedford Stop & Shop. The nearest Hannaford stores to Bedford are in Waltham and Lowell so this should not be an issue for the Bedford store.

What could be more interesting is if the new company will keep both the Hannafords and Stop and Shop brands. Unlike other industry mergers where the brands are quickly combined for additional cost savings, supermarkets have tended to keep the individual brand names. For example when Shaw's bought Star Market in 1999 they kept both brands. While the conventional wisdom still supports keeping both names, this may make less sense nowadays. Ten years ago consumer did almost all their grocery shopping at one store while now a good portion split their shopping between multiple supermarkets. The net result is more emphasis on price and service than long term brand loyalty.

The Bedford Stop & Shop is facing a lot more competition with the recent opening of the Wegman's in Burlington as well as smaller stores that sell some groceries such as Ocean State Job Mart which is expected to open just a few door down at the old Staples location. In addition, Walmart now has over 650 Walmart Neighborhood Markets. These stores are much smaller than the typical Walmart (around 40,000 square feet) and primarily focus on groceries. While there are not yet any Walmart Neighborhood Markets in Massachusetts, I would expect to see some soon as Walmart is forecast to open around 200 additional Walmart Neighborhood Markets before the end of 2016.

What do you think? Would you like the Bedford Stop and Shop to keep it's name or would you have it rebrand at Hannaford?

9 comments:

Anonymous said...

So much for preserving the small town character of Bedford that elected officials all say they want to protect. With the addition of Ocean State Job Lot (a third rate low end, low class, dump), it confirms what market demographers are seeing and project with the addition of all the high density housing that have been added. Staples was supported by professionals working from home and local small businesses. Ocean State Job Lot is the Building 19 / Dollar General demographic. Very surprised, but not shocked given all the housing approved by the Selectman, Zoning and Planning Boards. Well, the small town character of Bedford is going away. Sadly, our town leadership appears to be transforming us into something else and not something with the small town character that defined Bedford for the 280 years.

Adam Schwartz said...

Hi Anonymous,

Thanks for your comments. If you take a look at the numbers, the demographics for Bedford in terms of income has actually been increasing for the past few years. What's interesting is that Bedford seems to have a history of attracting discount chain stores. Bedford is one of the very few towns that has three different brand stores (T.J. Maxx, Marshall's and Homegoods) from off price retailer TJX. It will be interesting to see how Ocean State Job Lot does. I'm predicting it will do well.

Do you have any information on the income demographics for Ocean State Job Lot?

As far as Staples, it seemed to me that the Bedford store was never really that busy compared to other locations such as Burlington. I think the shift to e-commerce really hurt their local stores.

Anonymous said...

Staples over saturated the area. Ocean State Job Lot is a dollar store located primarily in economically depressed areas of Rhode Island

Adam Schwartz said...

Agree on Staples. With respect to Ocean State Job Lot - that might be how they got started but they seemed to have spread out quite a bit. Out of 119 stores, they only have 16 in Rhode Island. They have 47 in Massachusetts, 26 in Connecticut, 12 in New Hampshire, 9 in New York, 5 in Maine, 3 in New Jersey and 1 in Vermont.

Anonymous said...

the Stop and Shop here is disgusting, the best thing would be for it to close.

Anonymous said...

I agree about stop and shop, its a total disgrace and disgusting on multiple levels... from the quality/selection to the physical building and plant. that fact that job lot is viewed as competition speaks volumes.

also not overly excited about the job lot, will be interesting to see the demographic that pulls in. go check out the areas where they have other locations, not exactly on par with the socio-economic level of bedford. but, given the sad state of that entire shopping center property, it was likely tough to attract a decent tenant - even with the new paint job.

Adam Schwartz said...

Hi Anonymous,

Thanks for your comments. It will be interesting to see what happens with Great Road Shopping Center. Most of the older shopping centers in the area have recently been or in the process of undergoing major upgrades in an effort to stay competitive. An example is Cross Roads in Burlington - http://edens.com/centers/MA/Burlington/Burlington-Crossroads

Anonymous said...

First of all, let's not all be so stuck up and snooty! Bedford, until very recently, was always been a blue collar town. Some of us who grew up here, and were lucky enough to be able to buy and stay here, appreciate a bargain now and then. I do agree, however, that we are losing that small town feel with the increase in housing and businesses. That said, those new businesses do keep our small town government running with their taxes and incoming revenue. In any case, although I'm not a fan of Job Lot and their product lines, and I sure wouldn't consider them a competitor to Stop & Shop, it still beats a run down, empty storefront with no tenant at all.

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