In the documents that Tops filed with the bankruptcy court, Michael Buenzow, their chief restructuring officer, outlined the difficult marketplace Tops faces.
You can read the documents here, but here are some highlights. In the documents, both Company and Debtors refers to Tops:
- "The supermarket industry, including within the Company’s market areas in Upstate New York, Northern Pennsylvania, and Vermont, is highly competitive...
- "Adding to this competitive pressure is the recent growth in consumer demand for a 'gourmet' shopping experience, complete with offerings of natural, organic, and gluten-free foods. Some of the Debtors' competitors have expanded aggressively in marketing a range of natural and organic foods, prepared foods, and quality specialty grocery items. The Debtors have been at a competitive disadvantage to companies that have the financial flexibility to devote greater resources to sourcing, promoting, and selling the most in-demand products.
- "The challenging environment in which the Company operates has been compounded by falling produce and retail food prices, and competitors' increased willingness to engage in price-based competition. In 2016, the grocery industry encountered "food deflation" of approximately 1.3 percent, a drastic difference from the 20-year average of 2.2 percent inflation. Due to its competitive pressures, the food retail industry is characterized by slim profit margins.
- "Recently, some of the Company's competitors have attempted to increase market share through expanding their footprint and discount pricing, creating a more difficult environment... Some of the Company's competitors have greater resources and purchasing power than the Company, making it increasingly difficult for the Company to compete.
- "Additionally, as discussed above, approximately 85 percent of the Company’s workforce is unionized. The workforces of some the Company's most significant competitors are not unionized, resulting in lower labor and benefit costs than the Company faces. As a result, these competitors can offer lower prices to their customers, putting pressure on the Company to do the same, further reducing the Company’s profit margin."
Story topics: Tops bankruptcy