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Finding prosperity in the 'Bermuda Triangle.

As Supermarkets General Corp. enters its second quarter century of operation, its status is enough to make investors cheer-and competitors weep.

The Woodbridge, N.J.-based SGC is in record form. Sales and earnings for the ninth year in a row are at new highs and big new stores are coming on line. Plus SGC is jumping into a new major market through the acquisition of Purity Supreme, the second largest food chain in the Boston area.

SGC is the 23rd largest retailer in the United States. Its Pathmark division is the nation's 10th largest food chain and its Richel Home Centers are ninth largest in the do-it-yourself market. Only SGC's department stores, accounting for about 6% of volume, are a drag on the company's otherwise scintillating performance.

Purity Supreme should more than make up for the deficiency, however. Operating as an independent division of SGC, Purity Supreme with its 28 supermarkets, 14 Heartland Warehouse stores, and 23 Pharmacity and Heartland drug outlets is expected to handily exceed the $750 million in sales it generated in 1983.

For sheer merchandising muscle, few supermarketers can match SGC. Pathmark supermarkets average about 44,000 square feet, about 35% more than the average. However, annual sales average about $24 million, almost 2-1/2 times the industry average. Sales per food of selling space are almost twice the industry average and sales per labor hour are about 15% greater.

These figures are headed even higher. Pathmark today has 81 Super Centers, which average more than 48,000 square feet, 34,000 of that in selling space. Leonard Lieberman, president and CEO, says, "For us, the size of the Super Centers and the per store volume levels they achieve afford significant eonomies of scale and greater market flexibility in terms of pricing, merchandising innovations and variety."

The Super Centers are "loaded," featuring huge assortments of grocery and frozen foods, extensive dairy and deli departments and specialty departments such as bakeries, cheese shops, horticulture departments and large scale general merchandise departments. The result is 25% higher average volumes than even the already above-average Pathmarks. Lieberman says two-thirds of SGC's supermarket volume is being done in the Super Centers, which he calls "our most dynamic growth vehicle."

In 1983 Pathmark added 350,000 square feet of new supermarket space and extensively remodeled 360,000 square feet in older stores. Together with Pathmark's 17 freestanding drugstores, competitors are now looking at almost four million square feet of stores carrying the familiar red, white and blue Pathmark logo.

For fiscal 1984 a record $110 million, 15% more than the year before, has been earmarked for capital expansion. When the ribbons are cut, 400,000 more square feet will have been added. Pathmark's core territory encompasses the densely populated areas of New Jersey, New York, Pennsylvania, Delaware and Connecticut, one of the nation's toughest areas of competition. As Lieberman points out, "We have succeeded here where several first class operators--Safeway and Stop & Shop, among others--have fled.

"For still others--Penn Fruit, Bohack, Pantry Pride and Hills--this marketplace has been something of a Bermuda Triangle. But for Pathmark," he adds, "it has always been our land of opportunity and it will continue, substantially, to be so."
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Title Annotation:Pathmark
Publication:Progressive Grocer
Date:Oct 1, 1984
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