Business: Market Jitters
Unfortunately for Acme, there are several reasons people are choosing not to shop at its stores. For one, the company’s prices are perceived as too high. Competitors like ShopRite and Giant, which both gained market share this year, “are offering a stronger pricing program and creating a better overall value perception,” says Jeff Metzger, publisher of Food Trade News. “Acme’s not doing enough to defend its turf.” Spires admitted as much when, during Acme’s recent union negotiations (which ended with an 11th-hour contract-signing in July), she wrote a blunt letter to associates: “Our business is under attack by the competition now. If we don’t change, our competitors will win. That’s not good for you or our business.”
The union squabble was big summer news in Philadelphia. There were threats of walkouts (union) and final offers (management). It was all very unsettling, particularly for the thousands of local Acme employees, but at the end of the day, when the customers have gone and the employees have clocked out, Spires answers to Acme’s corporate parent, Supervalu. The Minnesota-based company is having troubles of its own, evidenced by a top-management shake-up and falling share prices. When it bought Acme three years ago, Supervalu was a successful wholesaler trying to expand its retail business, a transition that’s been rocky. There might be some good news, though it’s too soon to tell: In May, Supervalu replaced its CEO with Craig Herkert, who had a stint as Acme president in the late ’90s and most recently was at (surprise!) Walmart.
Even one of Acme’s traditional strengths — the fact that it has some of the most convenient locations in the region — is less of a boon these days. Not only is location not as important as it used to be; many Acme stores are (attention, South Philly shoppers) … well, let’s just say headquarters isn’t the only thing that could use a face-lift. Spires points out that Acme remodeled 20 stores this year, has plans to take on 22 more next year, and will eventually get to all 125 stores. But the market-share clock is ticking, and, says Metzger, “Remodelings are not new stores. ShopRite, Giant and Wegmans have opened and will open new stores.”
Then there’s the slip-sliding matter of just who is shopping at Acme and who’s shopping elsewhere. To a generation raised on brand imaging, your supermarket says something about you. Just as Whole Foods conjures up a picture of a progressive, health-conscious person who’s got a few extra dollars to burn, Walmart brings to mind someone looking for the best deal as if his very life depends on it. To many people, Acme conjures up an image of Grandma.
“Why wouldn’t people think ‘That’s where my mother shopped’ when it is where my mother used to shop?” says John Stanton, chair of the food marketing department at St. Joseph’s University. “I’m sure there are people who shop there because their mothers shopped there. But more and more people are entering the marketplace, young households, and their mothers didn’t shop there. What’s [Acme’s] focus? I’m not sure.”