business news in context, analysis with attitude

A couple of stories offer a kind of post mortem on last week’s news that Ahold was buying most of the Ukrop’s Super Markets business for $140 million, ending months of speculation about when and to what company the longtime independent icon would finally be sold.

• The Richmond Times Dispatch has an interview with Rick Herring, president of Ahold’s Giant Carlisle division, who is responsible for the integration of Ukrop’s into the global retailer’s system.

"Ukrop's is a great company and an institution in Richmond, and we recognize that," Herring tells the paper. "I have great respect for Ukrop's and the Ukrop family. Believe me, I can't be Bobby Ukrop, but I am hoping that we have a connectivity with our customers and our associates here like he does."

Changes in store for the company, according to the story: “The name on those stores eventually will change -- possibly to the company's Martin's Food Markets banner, though Herring would not say for sure. The division operates 26 stores under the Martin's Food Markets name, including nine in Virginia. The former Ukrop's stores likely will be open Sundays and eventually sell beer and wine,” though Herring says that specifics and timing are still up in the air.

• The Times Dispatch also had another story examining the facts of the sale, with some notable information:

1. It was about a year ago that the Ukrop family decided that their business model was not sustainable, because of both competition and economic realities.

2. In addition, the third generation of family members was largely uninterested in running the business on an ongoing basis (though some were involved in the business).

3. About a half-dozen companies were approached by Ukrop’s about a possible sale. The sale to Ahold was agreed to because the company said that it would do the most to prevent layoffs and take care of existing employees.

4. “Not included in the sale is Joe's Market on Libbie Avenue in Richmond's West End and the Ukrop's store in Fredericksburg,” the paper writes. “The (Ukrop) brothers hope to find buyers for the two stores. Some employees have shown some interest in buying the Joe's Market location, they said ... One way to get out of the retail side of the business and still satisfy family members' interests was to create a separate operation under Bobby Ukrop’s leadership that would continue to make and sell the chain's signature lines of baked goods and prepared foods. Those products will be sold to Giant-Carlisle's stores here.”

And here’s the fascinating coda:

“The family is selling the grocery chain for about $140 million.

“But the entire sum is not going to the family, the brothers said. They declined to say how much.

“Much of the sale proceeds, they said, will go toward paying off liabilities, including debt, taxes, workers' compensation claims, obligations to employees and professional fees.

“And the brothers want to give some of the money to employees, though they are still working out details to figure out a method that is fair, especially for the chain's career employees.

"’There's not that much left after that,’ Jim said.”
KC's View:
I guess the question that has to be asked - though I do not have the answer - is whether this path was inevitable, or avoidable.

What, if anything, could Ukrop’s have done do avoid a decline that got the company to the point where its business model was not sustainable? Or in today’s marketplace, is it simply impossible for a company such as Ukrop’s to survive?

And the corollary is this. If Ukrop’s had taken steps to create a more sustainable business model, would the company - at its cultural core - still have been Ukrop’s?

It is true that Ukrop’s for many years was an iconic, legendary retailer. But it also is true that you have to earn those titles every day...and that sometimes, that requires not just the nurturing of an image, but the reinvention of a brand.