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Frozen Over

In losing Ukrop's, Richmond is left searching for an identity.



Fresh snow offered a temporary reprieve from the sadness, the long-anticipated but brutal reality that Ukrop's Super Markets is no more. Promises of continuity and partnerships and heritage be damned: Ahold USA's $140 million purchase of Ukrop's represents the end of not only a venerable, locally owned grocery chain but also Richmond's commercial independence, its last retail identifier.

As matters of civic and business pride, the demons saved the most heart-wrenching kill for last. Circuit City Stores, Reynolds Metals, Best Products, CSX Corp., all the downtown banks and the brokerage houses — none represent anything close to losing Ukrop's, which embodied the cultural and social spirit of the city.

“Ukrop's is one of the finest retailers we've analyzed anywhere in North America,” says Burt Flickinger, managing director of Strategic Resource Group in New York, which specializes in supermarket consulting.

Flickinger has studied the Richmond market extensively, and teaches retail marketing at Cornell University. He often uses Ukrop's as a case study in the classroom, and speaks highly of Ahold, in particular the company's Giant-Carlisle subsidiary. “Ukrop's-Giant will be raising the standard of living for everyday Richmonders,” he says, adding that Ahold “is a superbly run company.”

Not everyone agrees. The Netherlands-based Ahold, with 6,500 stores worldwide, has struggled with its acquisitions and has a mixed reputation as a grocery retailer, according to some analysts.

“They go in and buy a company, and the first thing they do is significantly reduce the labor [force],” says supermarket consultant David Livingston, based in Milwaukee. “It's a whole different philosophy from Ukrop's.”

Livingston says Ahold has a reputation for overpaying for its acquisitions. The company is paying $140 million for 25 Ukrop's stores. (Ahold says it isn't assuming Ukrop's $92.9 million debt load, which means the Ukrop Family will net less than $50 million in the deal.) Ahold certainly knows how eke out profits, and has been one of the better grocery industry performers in the United States and abroad during the recession. It's just that the company isn't much of innovator, Livingston says.

“Ahold has never bought a company and actually improved it,” he says.

But Netherlands-based Dow Jones reporter Anna Van Der Meulen says the company has installed a new management team and appears to have learned from past mistakes — including an accounting scandal in 2003.

“They did a lot of random acquisitions all over the world,” she says of Ahold's missteps, adding: “They are one of the better-run retailers across the [United States] right now, despite the recession.”

Most analysts seem to think the physical transition — changing over the Ukrop's banner to either Giant or Martin's — will take place in about a year. The stores will eventually open on Sundays and sell alcohol, a no-brainer, which may allow Ahold to stave off the typical 15-percent drop in business after the acquisition. In fact, Flickinger says he's forecasting that Ahold will see a 3- to 5-percent increase in sales by the end of 2010.

“I don't believe there will be a significant drop-off in sales because Ahold will become very competitive on price,” he says, generally singing the company's praises. “Ahold has done extremely well with its U.S. acquisitions overall.”

That didn't help to cheer up spirits on Thursday, Dec. 17, the day of Ukrop's dreaded announcement that the family had finally sold the business. The mood at the news conference is funereal.

Set against a looming, pleated mass of black velvet curtains and flanked on either side by cheap plastic topiary potted shrubs, the podium at the Sheraton Richmond West Hotel in Henrico County doesn't seem like a suitable spot for an urn.

Robert S. Ukrop, president and chief executive of Ukrop's, enters the room flanked by his older brother, James E. “Jim” Ukrop, and two executives from the Dutch grocery conglomerate, and grips the sides of the podium as a wide smile spreads across his narrow, angular face.

At points during the afternoon conference, both Ukrop brothers appear to fight back emotions. For much of his speech, Robert Ukrop's eyes are ringed with red, even as he smiles and cracks weather jokes.

This is the end, and it seems only fitting that it should come as the National Weather Service forecasts a major winter storm bearing down — which eventually drops about a foot of snow — on a town that can't do without its Ukrop's when snow is in the air.

Jim Ukrop takes the podium briefly to give what seems like an apologetic explanation for the family's decision — societal “lifestyle changes” and “new competitors … “selling all pretty much the same products we did” — abruptly ending his remarks to return with a slight stumble to his seat.

The next morning, on a Friday, the Ukrop's on Brook Road teems with snow-crazed shoppers buying canned goods, milk and toilet paper. But not all visitors are here to shop. Two men and a woman stand near the front of the store chatting amicably with a couple of the store's management staff. They hand one manager a thick manila envelope and talk about benefits. All three of these strangers wear Martin's grocery store nametags.

A stock boy near the dairy aisle lets out a long sigh when asked about the mood of the store in the wake of the previous day's announcement that the brothers Ukrop would be leaving.

“Crazy,” he says, shaking his head.

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