How Tops Friendly Markets is transforming

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How Tops Friendly Markets is transforming

By Lawrence Aylward - 11/21/2019
Tops’ key leaders — (from left) Nicky Walsh, John Persons, Kristen Hanson and Diane Colgan — realize the importance of delivering innovative and exclusive private branded products.

Thanks to a four-month remodeling project that began earlier this year, the Tops Friendly Markets store in Cheektowaga, N.Y., near Buffalo, has been transformed and rejuvenated. And it’s not the only Tops’ store receiving an extreme makeover.

On June 4, the Cheektowaga store celebrated a grand reopening to show off its new and modern look, including a major floor-to-ceiling interior renovation and updated exterior facades. It was the first of many stores the Williamsville, N.Y.-based retailer — which operates 159 supermarkets with five additional franchise stores in New York, northern Pennsylvania and western Vermont — has updated or will update to contemporize its stores while meeting the current demands of its customers. Tops Markets LLC, the retailer’s parent company, is investing about $40 million into the stores.

“The response we’ve received from putting money into the stores is really gratifying,” says Frank Curci, Tops’ CEO, who has worked in the grocery arena for more than 40 years. “It’s like something I’ve never seen before in this business. Tops is a big part of the community, and people want to see us succeed. They have responded in a positive way.”

For Curci and other top executives, including President and Chief Operating Officer John Persons, who has worked at Tops since he was a teenager, it’s like the retailer has been reborn. Tops underwent Chapter 11 reorganization last year — obviously a challenging time — but it emerged in late 2018 with a stronger balance sheet, including reducing its debt by about $445 million and gaining $100 million in liquidity. The financial restructuring has allowed Tops to do the things it must do to compete in the ever-competitive grocery market. 

“Everything is going well,” Curci says in an upbeat tone. “If you look at the past, it really wasn’t our business that was the problem. It was our balance sheet and our debt structure that was the problem.”

With the financial restructuring in the rearview mirror, Tops is pushing forward. And the retailer’s private brands are playing a key role in its resurgence.

THE FRESH FACTOR
Like most all other grocers, Tops is dealing with consumers’ increasing demand for more fresh products, which has spurred store brand development in the area. While fresh offerings differ from store to store to meet the needs of their respective clienteles, most of the stores have or will increase their square footage and refrigeration devoted to fresh.

At the Cheektowaga store, Tops doubled the size of its deli and Carry Out Cafe departments and is now selling an increased variety of grab-and-go items such as meals to go, pre-sliced and pre-packaged meats, sandwiches, hot meals, signature pizzas and pre-made salads to appease consumers who want fresh food but who want to get in and out of the store quickly.

“Convenience is growing in every way and every category,” says Jeff Culhane, Tops’ senior vice president of sales and merchandising. “Customers are busier than ever, yet still desire the products they love. But they don’t want to spend a lot of time waiting for them. So speed, consistency and selection are the keys to success.”

Tops is placing more of an emphasis on grab-and-go fresh products.

The produce section is also larger and pops with vivid and radiant colors. Ditto for the bakery, which now offers more freshly baked breads and an expanded line of gourmet desserts as well as donuts that are fried fresh on site. And throughout the perimeter, shoppers continue to find the Tops’ fresh store brand staples, including its popular fried chicken, Buffalo wing dip and signature breakfast pizza.

During a visit to the renovated Cheektowaga store, Persons was beaming as he scanned the revamped fresh areas. He pointed to a fresh fruit and vegetable station on the sales floor, where shoppers can also buy produce and have it sliced and packaged for them in minutes.

“That area has become a destination in the store,” Persons says. “Largely, we wanted to open up the fresh space to make the shopping experience as easy and effective as it could be.”

The “open up” strategy is working. Sales are up 30% to 40% in certain areas on the store’s perimeter thanks to the new format.

One of the fresh areas emphasizes locally sourced and farm fresh foods. To further differentiate, Tops is focusing more than ever on increasing such items. Tops partners with more than 200 local farmers in-season to attain its produce.

“The product is literally coming out of the fields and going into the stores in many instances within 48 hours,” says Diane Colgan, Tops’ senior vice president of marketing and decision support.

A few farmers grow crops only for Tops, including one farmer that supplies the retailer with Amaize sweet corn, a naturally bred white corn known for its sweet taste. Tops is the only retailer in its area that sells the corn, which is available for two to three weeks in the late summer.

The retailer’s private brand line of cage-free brown organic eggs, which it introduced last year, comes from a farm about six miles from its headquarters.

“Many times the eggs are actually laid in the morning, and they are in our stores in the afternoon. How much fresher can you get?” Colgan says.

Kristen Hanson, Tops’ vice president of center store sales and merchandising, says the retailer is reaching out to more local partners, including those from consumer packaged goods, because it presents a win-win situation.

“People like to buy local products,” she says. “Local helping local is extremely important to who we are and how we go to market.”

In the fresh meat section, Tops struck a deal earlier this year with Georgia-based chicken processor Springer Mountain Farms to co-brand its antibiotic-free, non-GMO and certified humanely raised products. On the packaging, which includes 100% recyclable trays, Tops shares its logo with Springer Mountain Farms.

Persons calls the line “a gem that has enhanced our portfolio.”

Tops' premium products now include frozen pizza that's made in Italy.

EMBRACING PREMIUM IN CPG
Tops offers several lines of private brands within its consumer packaged goods portfolio. The anchor brand is the mainstream TOPS brand, which features mostly national brand equivalent or better products and accounts for about 80% of sales.

“It is our No. 1 brand,” Hanson says. “To me, it’s important to protect that name because that’s also the name on the building.”

Tops has paid loads of attention to the brand in the last three years. In 2016, it began a major reformulation of the TOPS line to simplify product ingredients and offer cleaner labels and to improve quality and packaging. The three-year project touched about 2,200 products. Tops also introduced about 250 new products during that time.

Three years might seem like a long time, but it wasn’t, Colgan says, considering that many products were completely overhauled from packaging to ingredients to flavors. The goal was to create a more modern packaging design and to rid products of undesirable ingredients and make them more nutritious without sacrificing taste.

While Tops doesn’t offer a separate premium line, it’s steadily introducing more premium products with premium packaging under the TOPS line and will continue to do so.

In the ice cream sector, the retailer recently introduced a premium ice cream line that has become its best-selling line. The all-natural ice cream is made by a local company and features several distinct flavors, including Dirt Pile (chocolate ice cream with chocolate chunks and swirls of chocolate cookie crumbs), Rainbow Unicorn (bubblegum ice cream in fun colors) and Coconut Dream (sweet coconut ice cream with fudge flakes and fudge-coated almonds).

“Our ice cream was kind of run of the mill before,” Curci says. “The new line is much more innovative.”

Last year Tops debuted a premium line of frozen pizzas made in Italy under the TOPS line. The wood-fired pizzas feature a hand-made thin and airy crust and contain 100% natural ingredients and contain no artificial colors and preservatives. Priced at $4.99, they are selling well. Also imported from Italy, Tops recently introduced three varieties of gelato bars.

The retailer also partners with Topco Associates LLC, a retail group food purchasing organization that offers an assortment of private brands, to sell Topco’s Full Circle organic line and its premium Culinary Tours line.

Tops has had ongoing success with Full Circle, which Hanson says continues to experience double-digit growth with no signs of slowing down. Tops and Topco are consistently communicating on potential new products for the line and adding to it. Tops also recently added a website, topsorganic.com, for consumers to purchase Full Circle and other natural and organic products online.

Tops added Culinary Tours to its mix about two years ago. In some categories, the retailer doesn’t have the volume to justify introducing its own line of niche premium products, but Culinary Tours has filled that void. The store brand’s “taste of the world” products cross an array of categories, including sweet snacks; frozen appetizers, entrees and sides; condiments; pasta; and sauces.

“We really see the need for premium indulgent products,” says Nicky Walsh, director of business development for Daymon, a Stamford, Conn.-based company that specializes in building successful private brands programs for its retail partners. Although an employee of Daymon, Walsh has worked exclusively with Tops for the past 11 years and is responsible for all facets of private brands.

Walsh says Tops is willing to take chances on new products like these. “Many of them have done extremely well,” she adds.

Tops also offers a value line of staple products that it recently changed its name from ValuTime to That’s Smart. The retailer also sells Topco’s TopCare line, which features health and beauty products, and recently switched from offering its own line of household products to offering Topco’s Simply Done line of products, which includes plastic bags and wraps; disposable tableware; cleaning supplies and laundry care; household paper supplies; and home and kitchen supplies.

“These changes allow us to offer a wider breadth of products than we did before,” Hanson says. “The customer adoption rate has been very good.”

"Local helping local" is a growing theme for Tops.

A BALANCING ACT
Tops’ private label penetration rate is about 25.5% and on the rise. Curci says store brands are critical to Tops’ overall growth and vital to how consumers perceive the retailer.

“Private brands are part of our identity,” he adds. “They are how people view us. So it was important to do all the things we’ve done to upgrade them.”

Tops’ main competitors are Wegmans Food Markets, based in nearby Rochester, N.Y., Walmart and ALDI.

“They are all private brands-oriented retailers,” Persons says. “So it’s incumbent upon us to be able to compete in that arena, but also to make sure that we are the national brand option for our customers. So for us it’s about making sure we have the right balance. We don’t have to say we are only going to be this or only going to be that. We can be both. Our private brands penetration is very healthy. Do we intend on growing it? Absolutely.”

While offering a choice is vital, Hanson notes, the opportunity to differentiate through private brands is just as crucial.

“Private brands have to be — and will be — a strong go-forward for us,” she adds. “While we need to have a good mix of private brands and national brands, we will differentiate with our own brands.”

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