From the Buffalo News: 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.
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.
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.
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. Another way has been to solidify its offerings of hometown brands throughout the state and not just focusing on private labels, according to Flickinger.
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.
Strategic Resource Group is the lead retail and brand CPG consulting firm throughout the United States and the globe. With more than three decades of experience, our team strategically collaborates with top retail chains, wholesalers, suppliers, and investment firms. Our retail industry experts are highly skilled at illuminating retail trends, identifying opportunities to increase consumption, and growing retail sales.