SCHENECTADY — Price Chopper/Market 32 and Tops Markets announced Monday they will merge.
The deal will bring large regional grocery chains headquartered in eastern and western New York together as a single entity with more than 30,000 employees running nearly 300 supermarkets.
The new parent corporation will be headquartered in Schenectady, at the current home of Golub Corp., which operates Price Chopper and Market 32 stores. With limited overlap between the two companies’ existing supermarkets, there are no plans at this point for any store closures or workforce reductions.
The move is designed to increase operating efficiency and competitive strength, Golub CEO Scott Grimmett said Monday. The two companies feel they can better accomplish that together, and discussions have been underway for more than a year on how to make that happen.
The merger is expected to be completed in a matter of months, after regulatory review and standard closing procedures are completed.
Golub has 130 stores and 18,000 employees in six states. Tops has 159 stores and 14,000 employees in three states.
Golub has no supermarkets west of Syracuse; Tops is based in Williamsville, just outside of Buffalo, and has a large presence in western New York.
“We have very, very little overlap,” Grimmett said. “In fact, the footprint is almost contiguous.”
He said some Tops supermarkets are located in less-populated areas than Golub typically chooses to place a supermarket, and those stores tend to be smaller than the typical Price Chopper or Market 32.
Some of these Tops locations are on the outskirts of the greater Capital Region, in Bolton Landing, Corinth, Greenville, Hoosick Falls, North Creek, Northville, and Warrensburg.
Of these communities, only Warrensburg also has a Price Chopper.
Asked if stores in close proximity would both continue to operate — eliminating duplication is a fundamental way to improve efficiency and save money after a merger — Grimmett said the individual market analyses for all 290 stores have not been completed, but there are no plans for any closures now.
Other things not decided or not ready for disclosure: The name of the new parent company, and the exact makeup of its leadership.
There will be a sprinkling of current leaders from both companies, said Grimmet, who will be CEO of the new parent company and sit on its board of directors. Tops Markets Chairman and CEO Frank Curci also will serve on the board of directors of the new parent company and as a consultant to assist in the transition.
For the shopping public, few signs of the merger are expected to be immediately apparent — the various store brands operated by the two companies will retain their own identities.
“We don’t think anything will really change much at all in the stores, in either company,” Grimmett said.
The two will operate as separate businesses under the new parent company. Blaine Bringhurst, Price Chopper/Market 32’s executive vice president of merchandising, marketing and store operations, will lead the Price Chopper/Market 32 business and be based in Schenectady. John Persons, Tops Markets president and chief operating officer, will lead the Tops Markets business out of Williamsville.
Both companies have deep roots in their respective regions. What is now Tops was begun as a grocery story by an Italian immigrant in Niagara Falls and has had a succession of owners and names since then. Price Chopper/Market 32 goes back to 1902, when Russian immigrant Lewis Golub started a food warehouse in Schenectady. His sons Bill and Ben opened the first retail store in 1932. The retail locations have changed names since then but the parent company retains the family name.
Their industry has changed as well: Small and midsized operators are now squeezed by competition from large national and giant multinational corporations, as well as e-commerce.
As the merger progresses toward completion, Golub Corp. is being advised by PJ Solomon. Scott Moses, a managing director of the New York City investment bank, cited this competition in an emailed comment:
“As Amazon/Whole Foods, Walmart/Sam’s, Target, Costco, BJ’s, Aldi, Dollar General, Dollar Tree/Family Dollar, Walgreens, CVS and Ahold/Hannaford continue to use their enormous size and very low cost of capital to make extraordinary investments in their powerful, ubiquitous store and online grocery ecosystems, it is ever more critical for regional grocers to build the scale required to enable them to also invest in price, people, marketing, technology and growth, albeit far less given their relative size. This transaction is a clear reflection of that imperative.”
In less than three years, Moses advised on six other supermarket mergers and acquisitions, including Fairway Markets, a venerable New York City brand that went into Chapter 11 bankruptcy after 90 years of operation.
Several other privately held grocery chains have filed for Chapter 11 protection in recent years, including Tops.
Golub Corp. reportedly was in business discussions a few years ago with Albertsons, the No. 2 U.S. supermarket operator, but never would comment on the rumors. The discussions, if they happened, ended without a deal.
Supermarket industry analyst Jon Springer, executive editor of Winsight Grocery Business, said the Golub/Tops announcement Monday was not surprising.
“The supermarket industry today is on this long march to bigger and fewer companies and more efficient operations,” he said. “You could say that both of these brands have needed something like this for a long time.
“They’ll be able to spread the marketing and advertising and behind-the-scenes stuff that they do across twice the number of stores as before.”
Both companies are privately held and neither disclose financial data. But Price Chopper/Market 32 brings in more revenue than Tops, despite having fewer stores than Tops, Springer said, citing industry estimates.
“I don’t know if that matters all that much,” he added. “Both stores, big or small, would carry Cheerios and bananas.”
The larger entity might be able to leverage better supply costs for cereal and fruit, he explained, and market them less expensively.
In their news releases from a few years ago, Tops said it had over 16,000 employees and Golub said it had 21,000. The news release that accompanied Monday’s announcement placed the totals at 14,000 and 18,000, respectively.
The union representing 10,000 Tops employees remarked on workforce stability in a news release Monday.
“UFCW Local One members from Tops Friendly Markets are not immune to changing management groups over the past 15 years. They have certainly been on a roller coaster ride hanging on in fear of what would happen to their job at each management milestone,” said Frank C. DeRiso, President of UFCW Local One.
“This is a marriage of a totally union operator, Tops Friendly Markets, with a totally non-union operator, the Golub Corporation,” the news release stated. (Golub warehouse employees rejected UFCW representation by wide margins in voting in 2000 and 2001.)
“We will use every legal measure to make sure our members are treated fairly, and we look forward to working with the new management, as we always have, to ensure our members have stable employment,” DeRiso added.
The supermarket industry operates on a thin margin — a net profit after taxes of just 1% in 2019 by the estimate of FMI, a food industry association.
Supermarkets saw a jump in business in 2020, however, as people bought food for preparation at home during the COVID pandemic and its restaurant restrictions.
From January 2020 though mid-July, total sales climbed 11.6%, led an increase of 14.6% in edibles, according to Progressive Grocer Magazine.
Grimmett said what happens in 2021, as the nation hopefully gets a handle on COVID and ends the pandemic, is hard to guess.
Even during economic booms through the rest of their lives, many of those who lived through the Great Depression were careful with a dollar, he said.
After COVID, will people keep on cooking at home instead of going to restaurants? Order delivery instead of shopping in person?
“We all sit around and pontificate around what it could be,” Grimmett said.
“I think we’re going to retain some of [the increased sales]. How much I don’t know.”
BY THE NUMBERS
Some details about Golub Corp. and Tops Markets, which are planning to merge:
- Founded by sons of a Russian immigrant
- Retail operations began in 1932 in Green Island
- 18,000 employees
- Schenectady headquarters
- 130 stores in Connecticut, Massachusetts, New Hampshire, New York, Pennsylvania, Vermont
- One of the largest private-sector employers in the Capital Region
- Founded by an Italian immigrant
- Retail operations began in the 1920s in Niagara Falls
- 14,000 employees, 10,000 of them unionized
- Williamsville headquarters
- 162 stores in New York, Pennsylvania and Vermont
- Largest for-profit private-sector employer in western New York region