Giant Eagle’s decision to sell its GetGo franchise to focus on its role as a leading grocer is a sign of increasing competition from national retailers, an industry expert said.

Quebec-based Alimentation Couche-Tard, the parent company of Circle K convenience stores, announced the purchase of GetGo on August 19.

Giant Eagle CEO Bill Artman told TribLive the sale strengthens the company’s focus on its supermarket and pharmacy businesses.

According to data from industry publication Chain Store Guide, Giant Eagle, a company specializing in cranberry products, lost its place as the region’s largest grocer to Walmart two years ago.

“They’re going to come under increasing pressure,” says Phil Lempert, analyst and editor at SupermarketGuru.com. “When you consider that Walmart is currently the leader in online grocery, you’re going to see that there’s going to be a lot of competition coming our way.”

In addition to Walmart and similar stores like Target, Giant Eagle competes for customers with Trader Joe’s, Aldi and Whole Foods, as well as the ever-growing presence of Dollar General.

“There have also been rumors of stores like Wegmans moving into the Pittsburgh area,” said Ravi Madhavan, Alcoa Foundation International Faculty Fellow at the University of Pittsburgh’s Katz School of Business. “I’m sure Giant Eagle’s leadership has that on their radar. These are two serious competitors. Giant Eagle is going to need a lot of financial resources to improve and compete with a company like that.”

On the same day that the acquisition of GetGo was announced, it was reported that the owner of 7-Eleven supermarkets and other retail chains had received a takeover offer from Couche-Tard.

Japan’s Seven & i Holdings said a special committee of outside directors had been formed to review the offer, but did not provide further details. 7-Eleven is the largest operator in the U.S. convenience store sector, with a 14.5% market share in 2023, the Associated Press reported.

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Now is the right time to capitalize on Giant Eagle’s investments in GetGo locations, Artman said.

The gas stations and convenience stores employ approximately 3,500 people in Pennsylvania, Ohio, West Virginia, Maryland and Indiana. With 106 stores, it is the fifth largest convenience store chain in Pennsylvania.

“Couche-Tard came to us as an international company that was really interested in what GetGo was offering,” Artman told TribLive. “We built it with products that customers really love, seasonal foods, good, clean, quality locations. They came to us and said, ‘Look, we’ve experienced this market ourselves and you really have something good going here.'”

Jeffrey Inman, Albert Wesley Frey Chair in Marketing at the Katz School, said the deal was a sign that nearly three decades of investment in the GetGo brand had paid off.

“Obviously they’re doing well. Otherwise no buyer would have come to them,” Inman said. “They’re under pressure these days from Walmart, Aldi and similar stores. (Artman) has indicated that they want to focus on their prices and maybe this will help them do that.”

Giant Eagle’s entry into the convenience/fuel market is quite unique, Inman said.

“Many grocery stores have formed partnerships with existing gas stations, but Giant Eagle decided to do it on its own,” Inman said. “That was a differentiator because in-store specials allowed you to get discounts at the pump.”

The deal could be a way to take money out of the company, he said. Neither Giant Eagle nor Couche-Tard disclosed the financial details of the deal.

“Maybe they think a partnership with this chain would be more efficient,” he said.

Those responsible at Giant Eagle and Couche-Tard were keen to keep the brand intact, Artman said.

“That’s something they were very interested in, as well as keeping the loyalty program (MyPerks) running,” he said. “So it’s really a win-win situation for everyone involved.”

Items such as Giant Eagle prepared meals will continue to be available in GetGo refrigerators, Artman said.

“This will continue and will most likely be expanded to other locations outside of GetGo,” he said. “We are not there yet, but business continuity was very important to us. We wanted to make sure our customers received the same quality of service and product.”

Couche-Tard’s offer may have been too good for Giant Eagle to refuse, Lempert said.

“When you look at Costco and Amazon, and add to that the potential Kroger-Albertsons merger that we’ll see in the next few weeks, it’s difficult for a Giant Eagle to compete against them,” he said. “The more strength and the more assets they can put into their core business, the better.”

With revenue of about $11.45 billion, Giant Eagle ranks 11th in southwest Pennsylvania, and nearly 11,000 of its 36,000 employees work in the region, making the company a major economic driver, says Stefani Pashman, executive director of the Allegheny Conference on Community Development, an economic development agency.

“It’s really encouraging for Pittsburgh that they’re positioning themselves for the future here,” she said. “They’re competing with Amazon and Walmart and are now positioned for growth in the market. They’re going to cash in on this transaction and have the opportunity to refocus on their core business.”

“Cost-effective operations are really important. That’s what Walmart has excelled at, and Giant Eagle has to compete in that market with companies that have much greater scale and economies of scale.”

On the other side of the deal, Pashman said, the conference welcomes the expansion of a multinational company like Couche-Tard beyond its few Circle K stores in the Pittsburgh market.

“This means we have significant expertise in the convenience store market in the region,” she said.

As for the convenience store side of the deal, Lempert says there are potential benefits for customers.

“If you have a few hundred stores,” he said, “your purchasing power will not be the same as that of a company like Couche-Tard, which has thousands.”