SHELF LIFE STRIFE

NY chain’s plight reflects grocers’ hard times

Shopping at a D’Agostino supermarket is a lot like watching “The Hunger Games.”

Cutthroat competition and changing shopping habits have left the 83yearold New York Citybased company struggling to survive— the shelves increasingly bare as suppliers withhold food over the grocer’s late and missed payments.

The fourthgeneration company, which has 13 stores in Manhattan and one in Westchester, had 26 stores at its peak two decades ago and was run by more than half a dozen members of the D’Agostino clan — some of whom have since defected to competitors, including Food Emporium.

D’Agostino, which bills itself as “New York’s original grocer,” does not deny its situation is dire, nor is it alone.

“These are challenging times for everyone in the traditional supermarket business,” said Nancy D’Agostino, an executive with the company and the wife of Nicholas D’Agostino III, the chief executive and the last of five siblings left at the company.

D’Agostino’s business is getting nibbled away by behemoths like Walmart and grocery filled drugstores that are undercutting it on price, and also from higherend players like Whole Foods, Trader Joe’s and Fairway.

Independent grocers across the country are in the same bind. In Baltimore, family owned Mars Supermarkets announced four of its 17 stores would close by May; several years ago Andronico’s Community Markets in northern California filed for Chapter 11 and was sold to a private equity group to save the dozen or so stores. Today, it has fives stores.

D’Agostino’s main supplier, C& S Wholesale Grocers, requires the grocer to wire payments before deliveries because of its poor credit. Those deliveries have been nearly halved, leaving empty spaces on store shelves, with industry experts questioning how muchlonger the company can last given its high rent in pricey locations and union pay.

Another vendor, Wise Foods, got so fed up with tardy payments for its onion rings, tortilla and potato chips, it sued D’Agostino’s in November for $ 17,000. Alawyer for the potato chip company said the suit was settled in March.

D’Agostino’s contract with UFCW Local 1500 expired a year ago and the union has been operating on a month to month agreement.

“The competition has become much tougher for D’Agostino’s,” said supermarket consultant Burt Flickinger, adding that independents have not kept up with the competition.

A half gallon of Horizon organic milk, for example, costs $ 6.69 at the D’Agostino’s on East 35th Street and Third Avenue— or $ 2.20 more than at Walgreens across the street.

Gristedes billionaire owner, John Catsimatidis, said his 31 stores — down from 200 stores 15 years ago — would likely not exist if he didn’t own an oil company.

“Every drugstore today is half of a supermarket,” said the mogul, adding that Gristedes is “marginally profitable.”

According to the National Grocers Association, there were 21,000 independent or familyowned stores nationwide last year. Flickinger estimates that five years ago therewere 25,000.

“This is a difficult cycle for us,” said Nancy D’Agostino. “But at this point we are absolutely not considering selling the business.”