Scrambling For Market Share Genuardi's Has Made Impressive Gains In The Last Few Years. But Acme Is Losing Its Sluggishness.

Posted: July 07, 2000

Once an Acme customer, Jacki Menard now shops several times a week at the Genuardi's supermarket at the St. Davids Square Shopping Center.

The Acme where she used to shop had "awful management" and "the stores were seedy and run-down," the Villanova resident said.

Acme seems to know what she meant: Earlier this year, the company announced a 24-store improvement project.

But for Menard, it was too late. She had converted to Genuardi's, citing better customer service, a cleaner store, and a better shopping environment.

"This is my store," Menard said.

It is new shoppers such as Menard who have helped Genuardi's Markets Inc., a family-owned Norristown company, establish itself in an industry where some analysts thought you had to be a big conglomerate to succeed.

Since 1996, the company's share of the eight-county Philadelphia area's $7.2 billion supermarket business has increased faster than that of any other chain, according to the 2000 regional survey published last month by Food Trade News, a Conshohocken industry publication.

"Genuardi's is on the march," said Bob Ingram, an industry analyst and an editor of Supermarket Business magazine. "And they certainly don't mind competing with Acme."

The company's market share, as measured by sales, increased from 8.5 percent in 1996 to 11.7 percent this year. Sales rose from $574 million in 1996 to $839 million for the 12 months ended March 31.

Aiding the increase, industry analysts say, was the company's 1997 acquisition of Zagara's, an upscale food chain based in Marlton, N.J., that is still operated under that name. Analysts also point to Genuardi's emphasis on customer service, the clean appearance of its stores, and its ready-to-eat meals.

The 32-store Genuardi's/Zagara's chain, which operates exclusively in the suburbs, now ranks third in revenues locally.

Acme Markets Inc., number one with 91 stores, had $1.9 billion in sales for the 12 months ended March 31, giving it 26.7 percent of the market. Number-two ShopRite, with 28 stores and $870 million in revenue, had a 12.1 percent share.

Although it retains a commanding lead, Acme's market share has fallen from 28.4 percent in 1996. On the other hand, ShopRite has grown from 9.3 percent that year.

Like Acme, number-four Pathmark, a Carteret, N.J., subsidiary of Supermarkets General Holding Corp., has seen its market share tumble over the past four years, down from 10.8 percent in 1996 to 9.3 percent this year. Revenues, which were $725 million in 1996, have dropped to $666 million.

Industry analysts have characterized the Philadelphia market as one of the most competitive in the country. Some have said that the area is "over-stored," with more rivals than in many metropolitan areas.

"As far as the whole market is concerned, Philly is like a rugby scrum," said Jeff Metzger, the publisher of Food Trade News. "Everyone is diving into the pile, and no one wants to give up their share of the ball."

Industry analysts cite Acme's hesitation to invest in its stores as a reason for its decline. That changed, they say, when Albertson's Inc., of Boise, Idaho, bought the company in 1998.

"Acme held the door wide open for Genuardi's," said Meg Major, an editor with Supermarket Business magazine, adding that Acme is unlikely to be a doorman much longer.

"In the midst of what has been the most intensely competitive climate, Acme has finally gotten new leadership," Major said. "Acme has begun to turn it around to the point where Acme is a formidable competitor."

About half of Acme's planned upgrading will involve building new stores or expanding existing ones, while others will undergo complete makeovers.

"We are growing everywhere, and that is not a reaction to any specific competitor but to all competitors," Walt Rubel, Acme's director of government relations and community affairs, said this week.

Genuardi's also will be adding stores this year, said Alan Tempest, the company's director of marketing services. Tempest said the company planned to open five stores beginning in August, and five more next year."It's our goal to continue to offer what Genuardi's offers the best way we can," Tempest said. "By virtue of doing that, we will increase our market share."

Benjamin Y. Lowe's email address is blowe@phillynews.com

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