Giant will buy 5 Shop 'n Save stores from UNFI

Dive Brief:

Giant Food Stores has agreed to buy five Shop 'n Save stores from United Natural Foods, Inc. (UNFI), which acquired the locations in its $2.9 billion Supervalu buy that was finalized late last month.
The stores fall along a 50-mile stretch of Interstate 81, with locations in Smithburg, Maryland; Greencastle, Pennsylvania; Berryville, Virginia.; Hedgesville, West Virginia; and Martinsburg, West Virginia. Giant officials did not disclose financials, but said they expect the sale to close in next year's first quarter. Current store employees will be able to interview for positions with Martin's.
"This acquisition demonstrates our continued commitment to the long-term growth strategy we announced earlier this year," Nicholas Bertram, president of Giant Food Stores, said in a statement. "Our Martin's associates have proudly served many of these communities for years, and we look forward to expanding the Martin's brand along the Interstate 81 Corridor and within the Eastern Panhandle of West Virginia."

Dive Insight:

For Ahold Delhaize, which oversees Giant Food Stores, this deal amounts to a reclaiming of these five store locations, which operated under Delhaize-owned Food Lion prior to 2016. After the merger that formed Ahold Delhaize, Supervalu snapped up the locations, along with 22 others, as part of the Dutch retail conglomerate's 86-store divestiture to satisfy regulators.

The stores' back-and-forth branding over the past three years is a symptom of the consolidation and deck-shuffling that's become commonplace in the industry, particularly along the volatile East Coast.

More to the point for Giant, the locations should be familiar territory for company officials. The question is how customers will react to the shift. The Martin's brand is getting investment dollars from Giant, but has struggled in places like Richmond, Virginia, where it failed to meet shopper expectations before selling off its area stores as part of the 2016 divestiture, local sources told Grocery Dive.

For UNFI, meanwhile, this deal is another step toward selling off Supervalu's retail assets. Last month, the company sold 19 stores under its St. Louis Shop 'n Save division to Schnucks, and will close the unsold 15 stores this month. The wholesaler also owns stores under the Cub Foods, Hornbacher's and Shoppers Food & Pharmacy.

Cub Foods seems the most intriguing of the remaining retail assets. Its 78 stores lead market share in a hotly contested Minneapolis/St. Paul market where Target, Hy-Vee and others have made inroads of late. UNFI and Supervalu want to sell the chain to a single buyer, according to the Minneapolis Star Tribune, but that may be challenging. Hy-Vee, for one, has said it isn't interested.