Giant Eagle’s decision to sell its GetGo franchise to focus on its role as a leading grocer is indicative of increasing competition from national retailers, an industry expert said.
Quebec-based Alimentation Couche-Tard, parent company of Circle K convenience stores, announced the purchase of GetGo on Aug. 19.
Giant Eagle CEO Bill Artman told TribLive the sale sharpens the company’s focus on its supermarket and pharmacy businesses.
Cranberry-based Giant Eagle lost its spot as the region’s top grocer to Walmart two years ago, according to data from industry publication Chain Store Guide.
“They’re going to come under more and more pressure,” said Phil Lempert, an analyst and editor at SupermarketGuru.com. “If you look at Walmart now leading in online groceries, you’ve got some heavy competition coming down the pike.”
Beyond Walmart and similar stores such as Target, Giant Eagle competes for shoppers with Trader Joe’s, Aldi and Whole Foods, as well as Dollar General’s ever-growing footprint.
“There have also been rumors of stores like Wegmans moving into the Pittsburgh area,” said Ravi Madhavan, the Alcoa Foundation International Faculty Fellow at the University of Pittsburgh’s Katz School of Business. “I’m sure that’s on the radar of Giant Eagle leadership. Those are two serious competitors. Giant Eagle will need a lot of financial resources to upgrade and compete with a company like that.”
On the same day as the GetGo purchase announcement, it was reported the owner of 7-Eleven convenience stores and other retail chains received a buyout offer from Couche-Tard.
Japan’s Seven & i Holdings said a special committee composed of outside directors has been formed to review the bid but released no other details. 7-Eleven is the biggest operator in the U.S. convenience retail store space with a 14.5% share of the market in 2023, the Associated Press reported.
Capitalize on investment
The time is right to capitalize on Giant Eagle’s investment in GetGo sites, Artman said.
The gas and convenience stores employ about 3,500 people across Pennsylvania, Ohio, West Virginia, Maryland and Indiana. It is the fifth-largest convenience store chain in Pennsylvania, with 106 locations.
“Couche-Tard came to us as an international company that was really interested in what GetGo had to offer,” Artman told TribLive. “We’ve built it up with items that customers really love, seasonal food, good, clean, high-standard sites. They came to us and said, ‘Look, we’ve experienced this market for ourselves, and you have a really good thing going here.’”
Jeffrey Inman, the Albert Wesley Frey Marketing Chair at the Katz School, said the deal is an indication nearly three decades of investment in the GetGo brand has paid off.
“Obviously, they’re doing well. Otherwise, a buyer wouldn’t have come looking,” Inman said. “They’re under some pressure nowadays from Walmart, Aldi and places like that. (Artman) sort of hinted at focusing on their prices, and this will perhaps help them do that.”
Giant Eagle’s entrance into the convenience/fuel market was fairly unique, Inman said.
“A lot of grocery stores have partnered with existing gas stations, but Giant Eagle kind of chose to go out and do it on their own,” Inman said. “That was a differentiator because promotions at the store could get you discounts at the pump.”
The deal could be a way to extract cash from the business, he said. Neither Giant Eagle nor Couche-Tard provided details on the financial particulars of the deal.
“Perhaps they think it’ll be more efficient to just partner with this chain,” he said.
Giant Eagle and Couche-Tard officials were keen to keep the brand intact, Artman said.
“It’s something they were very interested in, as well as keeping the (MyPerks) loyalty program going,” he said. “So it is really a win-win for all involved.”
Items such as Giant Eagle prepared foods will continue to appear in GetGo coolers, Artman said.
“That will continue and most likely expand into some of the other, non-GetGo locations,” he said. “We haven’t quite gotten that far yet, but business continuity was something that’s very important for us. We wanted to make sure customers could get the same quality of service and products.”
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The offer from Couche-Tard might have been too good for Giant Eagle to pass up, Lempert said.
“If you look at Costco, Amazon, add to that the potential Kroger-Albertsons merger that we’ll see about in the next few weeks, it’s tough for a Giant Eagle to compete against those,” he said. “The more strength and the more assets they can put toward their core business, the better.”
Giant Eagle’s revenue of about $11.45 billion ranks 11th in Southwestern Pennsylvania, and nearly 11,000 of its 36,000 employees are in the region, which makes it a significant economic driver, said Stefani Pashman, CEO of the Allegheny Conference on Community Development, an economic development agency.
“For Pittsburgh, it’s really encouraging that they’re positioning themselves for the future here,” she said. “They’re competing against Amazon and Walmart, and they’re now positioned for growth in the market. They’ll have cash from this transaction and opportunities to get back to their core business.
“Low-cost operations really matter. That’s where Walmart has distinguished itself, and Giant Eagle has to compete in that market with companies that have a much larger scope and economy of scale.”
On the opposite side of the deal, Pashman said, the conference welcomes a multi-national such as Couche-Tard expanding beyond its handful of Circle K stores in the Pittsburgh market.
“It means we’ve got some significant expertise in the convenience store market coming into the area,” she said.
From the convenience store side of the deal, Lempert said, there are potential benefits for customers.
“When you have a couple hundred stores,” he said, “your buying power is not going to be the same as a company like Couche-Tard that has thousands.”
Patrick Varine is a TribLive reporter covering Delmont, Export and Murrysville. He is a Western Pennsylvania native and joined the Trib in 2010 after working as a reporter and editor with the former Dover Post Co. in Delaware. He can be reached at pvarine@triblive.com.