Dive Brief:
- Gelson’s, the upscale chain that operates 27 stores in Southern California, is being sold to Japanese retailer Pan Pacific International Holdings (PPIH), according to a press release. Financial terms of the acquisition between PPIH and Gelson’s parent company, TPG Capital, were not disclosed.
- Gelson’s has made significant market share gains as of late and operates stores in fast-growing population centers, according to a financial release from PPIH, which noted Gelson’s had $872 million in net sales in 2020. The companies expect the transaction to close in the second quarter.
- Gelson’s built 10 new locations under TPG’s ownership, which began in 2014, and PPIH said it plans to fund additional new stores for the chain.
Dive Insight:
Gelson’s is set to continue growing under its ambitious new overseas owner.
The upscale chain, which celebrates its 70th anniversary this year, has become popular with affluent Californians who appreciate its gourmet selection and pampering services like wine bars and personal shopping. Previous owner TPG invested in stores and grew the chain modestly over seven years, and PPIH brings in added scale, retail experience and a drive to expand its overseas operations.
In its financial release, PPIH said it intends for overseas retail operations to become a “third pillar of earnings” for the company, along with its discount stores and general merchandise outlets — indicating the company sees Gelson’s as a growth vehicle in a U.S. market where PPIH has made gradual inroads over the past 15 years.
“[Gelson’s] business area and the surrounding areas continue to experience ongoing population growth, a large portion of which is in communities with consumers seeking high quality products,” the release stated. “We therefore see potential for continuous growth to be achieved by opening new stores and attracting new customers at existing stores.”
PPIH began acquiring local U.S. retailers in 2006 and now operates Marukai and Tokyo Central stores in California along with Times, Big Save and Marukai stores in Hawaii. The company also owns the Don Quijote retail chain — known in Japan as “Donki” — which is famous for its overflowing assortment of festive and eclectic products. Don Quijote currently has three stores in Hawaii.
PPIH has planned a new store format for the U.S. with “Don Quijote-ism at its core,” former CEO Koji Ohara said in a 2019 interview with the Asian Nikkei Review. It's unclear whether those plans are still in place, though they further underscore the company's focus on the U.S.
According to that report, PPIH has been eager to reach a broader base of U.S. shoppers than its other stores, like Marukai, serve. The company said in its financial statement this week that Gelson’s will be a “powerful asset” in helping it penetrate the North American market.
PPIH said it anticipates synergies across management and procurement practices that should boost efficiency for Gelson’s. It also said it intends to explore stocking more Japanese products inside the stores as part of an effort to boost Japan's exports.
Gelson’s, whose stores span just more than 200 miles from San Diego to Santa Barbara, stocks a wide selection of prepared foods, wine and locally sourced products. It also features events like an annual Hatch chili roasting festival. In 2019, Consumer Reports ranked Gelson's the No. 4 supermarket in the nation out of 96 grocers.
