But is it enough?
Stop & Shop, once the darling of Northeastern grocery chains, recently announced it would close 32 underperforming stores in its New England, New York and New Jersey service area by November. That could be a sign of trouble brewing: The chain, owned by Dutch grocery giant Ahold Delhaize and managed out of Quincy, will operate just 359 stores after the current wave of closures. It already operates 20 fewer stores than it did in 2018, according to its annual reports.
In a May quarterly earnings call, JJ Fleeman, CEO of Ahold Delhaize USA, said Stop & Shop is “not where we want or need to be” and that “the value proposition and pricing just aren’t strong enough.”
These developments are fueling fears that the chain could follow the path of other once-popular and forgotten grocers such as Grand Union and A&P.
“This isn’t my first time at this rodeo,” said John Niccollai, president of the United Food & Commercial Workers Union, which represents Stop & Shop workers in New Jersey. “I’ve seen a lot of companies go into a downward spiral, and this is just the beginning.”
But Stop & Shop President Gordon Reid believes a reinvention is underway.
The company intends to upgrade most of its roughly 300 stores, with more than 190 already completed. New branches are opening, including a store in Acton that is scheduled to be completed later this year. And Stop & Shop is “investing in price,” as Reid often puts it, expanding digital coupons, 99-cent deals and other promotions to help inflation-stricken shoppers save money — and convince them the chain is worth visiting.
As for the closures, Reid points out that many of the closed stores also had leases expiring soon.
“We’ve been in business for 110 years,” he said. “The market changes. The world changes. Competition changes, and at some point you get to a situation where it’s just not profitable to do some stores anymore. That’s always been part of the way we do business.”
But there are other challenges.
In a climate of ever-increasing competition, said food consultant David Livingston, Stop & Shop suffers from a lack of personality as a “sterile, mediocre grocery store.” The company hasn’t done enough to maintain service and selection to compete with Roche Brothers, Big Y and others, he said, while corporate giants invest in supermarkets — Aldi or Amazon-owned Whole Foods, for example — and undercut Stop & Shop’s prices.
Stop & Shop continues to dominate visit share across Southern New England, according to February data from Placer.AI. In Massachusetts, Stop & Shop accounts for 25 percent of customer visits, the most in the state and two percentage points more than Market Basket.
According to experts, Stop & Shop has been reacting to Pressure on profit margins from closing the fresh meat counter, eliminating high-paying union jobs in the butcher and fish departments, and raising prices. This can lead to a smaller selection of products from fewer suppliers.
Stop & Shop is in danger of losing major customers who the lifeblood of grocery stores, says Burt P. Flickinger III, managing director of Strategic Resource Group, a retail consulting firm. It’s people stocking up on $100 groceries for the week that keep the chains alive, not the “$35 snack stop.”
“If consumers see new stores that are not so commercially clinical, but have more depth and variety, especially in fruits and vegetables, and a return to freshly cut custom meats, they may come back,” Flickinger said. “But there’s no guarantee. People can still leave and go to Big Y, Roche Brothers, Target, BJ’s, Costco or Aldi and see better prices and faster shopping.”
While the company said the renovations increased sales at the redesigned stores, Flickinger pointed out that the appeal of a new-look store only lasts for a limited time.
“It’s not a long-term strategy,” he said.
And renovations don’t always go as planned. Since 2018, Reid said, Stop & Shop has spent between $250 million and $300 million annually on remodels. But that slowed during the COVID-19 pandemic, and increased construction costs since then mean that money doesn’t go as far as it once did. The slowdown in remodels contributed to a loss of market share in early 2022, according to a company presentation.
In 2023, Stop & Shop completed only 19 store renovations, compared to 45 renovations the year before.
Other problems go back further. The 2019 strike by 31,000 unionized Stop & Shop workers resulted in over $200 million in net sales losses for the company, and the pandemic brought new challenges soon after. The chain’s sales growth rose 21 percent in the second quarter of 2020, but Stop & Shop is now adjusting, with some difficulty, to its predictably slow growth after years of ups and downs.
Ahold Delhaize does not release Stop & Shop numbers, but said comparable sales growth at its overall U.S. stores – about a fifth of its stores in the United States are Stop & Shops – has collapsed since the start of 2023 and has been negative in two of the last three quarters. They now estimate that the Stop & Shop closures would reduce overall sales by $550 million to $575 million next year.
In November last year, Ahold Delhaize announced plans to sell the online grocery service FreshDirect, which it hoped it would boost sales at Stop & Shop in New York City, to Getir. It’s a step back from online sales, though the chain still offers delivery through Instacart and DoorDash.
Now Ahold Delhaize is planning a series of strategic price reductions to win back customers. The company estimates the cost of this at one billion dollars. Stop & Shop, Hannaford and three other grocery chains that will be part of the company over the next four years could be in crisis. This could be a crucial moment for Stop & Shop, which has received poor reviews from its European leadership.
As Frans Muller, the Netherlands-based CEO of Ahold Delhaize, said in a conference call in May, executives are “not yet satisfied” with Stop & Shop’s performance.
“There is still more to do.”
Diti Kohli can be reached at [email protected]. Follow her @ditikohli_.
