Four years after emerging from bankruptcy, Tops Markets is staging a comeback.
Tops is spending $120 million over four years to update many of its stores in the Buffalo market, where the Amherst-based grocer originated 60 years ago.
It's a sign of better times for the once debt-strapped company that for the most part put remodeling its stores on hold in 2017 and declared bankruptcy a year later.
Now, Tops is in a better position. It merged with Price Chopper/Market 32, owned by the Golub family, giving it a more solid financial base. Its latest upgrades are not only improving its look and product offerings, but also updating its technology and reducing electricity costs by using solar farms to provide renewable energy to many of its stores.
The project, which began in 2019, includes renovating 32 of its stores, most of them in Western New York. Twenty-two of them have already been completed, with two more in Buffalo slated to be done this year.
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These days, the grocer is committing between 5% to 7% of its sales revenue on capital expenditures – one of the highest amounts of any food retailer in the industry, according to Burt Flickinger, the managing director at Strategic Resource Group and an expert in grocery retail.
In Western New York’s competitive grocer marketplace, which will soon include a Costco coming to Amherst, it is essential that Tops – and every supermarket chain – make substantial investments in its stores to keep them attractive to shoppers.
“It was time for us to invest in the stores in Western New York and come back home,” said John Persons, president of Tops. “It had been a while since we had come this way.”
Flickinger said he’s encouraged by the investment, part of what he describes as Tops' “transformational turnaround out of bankruptcy.” Typically, grocery retailers spend 1% to 2% of sales profits on capital expenditures, he added.
“Tops is spending double or triple what is being spent by those very capable and well-capitalized supermarket competitors and it really takes the clock back to Tops’ great days between the 1970s and '90s,” Flickinger said.
What are renovations doing
Tops’ footprint in Western New York is significant, with 3.4 million square feet of retail covering eight counties.
But Tops' financial struggles took a toll on the supermarket chain. It spent nothing on capital improvements in 2018, Frank Curci, Tops chairman and CEO who now leads the merged company, told The Buffalo News in 2019. Struggling to manage its suffocating debt load, Tops virtually ran out of cash just before its bankruptcy filing.
Now, Tops is trying to catch up. The company ideally likes to remodel its stores every seven years, but many of its Buffalo stores had gone far longer without a makeover.
The investment into the store remodel program being undertaken has been fueled solely by Tops’ internal performance, Persons said.
Merged – but separate
Tops and Price Chopper continue to operate as separate and distinct companies, he added.
Tops operates 150 grocery stores in New York, Pennsylvania and Vermont, including five that are run by franchisees, while Price Chopper/Market 32, based in Schenectady, operates 130 grocery stores and one Market Bistro.
Renovations in the Buffalo area have reconfigured space in many of the stores with fresh foods in mind, such as produce, deli offerings, prepared foods and bakery products. There’s also been more of an emphasis on freezer space for frozen foods.
“It’s not that the traditional grocery aisles are shrinking, per se, in terms of sales, but the demand from consumers now really is in other areas,” Persons said.
Technological capabilities have also been added in the refurbished stores.
Included in that has been the implementation of shop and scan, a phone app that allows customers to pay as they shop so they can bypass the register.
Also, there have been 260 self-scan registers rolled out, helping provide shoppers with a quicker, more modern way to pay for groceries.
Persons said Tops officials realized the importance of adding these limited interaction and limited touch elements during the pandemic.
“We’ll continue to roll those out,” he said.
It has also been important to create a new look and feel for customers.
A complete remodel was undertaken at the Transit and North French roads store in Amherst about two years ago, according to Michelle Marcilliott, the store’s manager.
In addition to updates made to the outside of the building, a brighter décor scheme and color package was added inside. A Spot Coffee with a seating area also came to the store.
“ When you look around, everything old is new again,” said Marcilliott, who’s been with Tops for 28 years.
The changes in the store layout has made it easier to shop, and updates to technology are getting customers in and out of the store faster, Marcilliott said.
“I think customers appreciate that,” she said. “It’s just been that much easier for them to streamline their shopping experience.”
Competition is stiff
The retail grocery market is competitive in Erie and Niagara counties. There’s local powerhouse Wegmans, as well as Walmart, Aldi, Dash's, Save a Lot, BJ’s Wholesale Club, Trader Joe’s, Super Target and Market in the Square, just to name some, and now Costco is coming to the Western New York marketplace.
So Tops has focused on ways to separate itself from the competition, most notably with its promotion-focused pricing strategy in a market where everyday pricing is widespread.
“It is absolutely necessary to make sure we’re giving our customers and consumers a comfortable and up-to-date shopping experience and added elements that they’re looking for,” Persons said.
One way has been to solidify its offerings of hometown brands throughout the state and not just focusing on private labels, according to Flickinger.
Persons said many of Tops’ growers, suppliers and manufacturers are local, including most of the producers it uses for dairy products.
“This where we were born and where we grew up and we know how important that is,” Persons said.
Tops is also offering enhanced loyalty programs, including its discounted gasoline program.
“Unfortunately, the times are such that the gas points are that much more valuable to consumers,” Persons said.
The pandemic has not slowed Tops from either a sales or renovation perspective. A number of stores were still being remodeled during some of the worst days of Covid-19 in 2020, according to Persons. It has, however, backed up the end date for the completion of the Buffalo-area renovations.
Tops officials intend to be done with these stores by the end of 2023 before moving on to projects in Syracuse. Renovations at Tops' Rochester stores will begin this year as well.
Included in the refurbishing of the Maple Road store in Amherst was the creation of the True Blue Café, a place for neighboring University at Buffalo students to gather. Persons, a UB graduate, said it’s an example of Tops understanding what’s going on in the market they serve.
“Connecting with our local shoppers and customer base is very important to us,” he said.
Move toward sustainable energy
As part of the recent investment in its stores, there has been an effort toward improving sustainability.
That has included stores getting new LED lighting and energy management systems. Tops also is switching to a fleet of natural gas trailers, which saves over 1 million gallons of diesel fuel per year.
Tops has also created partnerships to help reduce food waste, including with Flashfood, an interactive in-store food waste program available at 50 locations that allows customers to purchase items nearing their sell-by date at up to 60% off.
In addition, more than half of the stores began using solar energy this year as part of a partnership with Convergent Power + Energy.
It can be a costly upfront endeavor, but Persons said in the long run it’s been the best approach to take.
“There has been this effort made toward making sure we are a good community partner and corporate citizens as well. And that won’t stop,” Persons said.
Flickinger said Tops has been aggressive in investing in sustainable power. The investment in renewable energy is significant, because for grocery stores, power and electricity are their second-highest costs after labor.
Flickinger anticipates that Tops will be able to save about 40% on its power and electricity costs, and could pass some of those savings on to customers.