Valu Food Plans Giant Leap

January 16, 1995|By Jay Hancock | Jay Hancock,Sun Staff Writer

Valu Food's Louis Denrich speaks large. "Our goal is to be No. 1" in Baltimore-area food sales, he said last week.

"It's not going to happen soon. But we think eventually we will get there. We think by the end of next year, we will be No. 2 in the market. I don't see anybody that's really growing fast -- except us."

This is vintage material, as longtime Denrich watchers can vouch. The voluble Mr. Denrich has been uttering No. 1 ambitions for Valu Food since 1991.

So far, Giant Food Inc. is in no danger of losing its 42-store, $1 billion, 29 percent grip on Baltimore's supermarket trade.

But Valu, Baltimore's price-bragging, deal-cutting guerrilla grocer, is indeed catching up. Next month it will open its 18th store, a 20,000-square-foot market in the Ames-Edgewood Shopping Center in Edgewood.

Valu President Mr. Denrich, 45, also has a letter of intent to put a store on the site of the old Eastern High School on East 33rd Street in Baltimore, although the tentative project must pass city approval and other obstacles. He has a "handshake" deal to move into a former Ames store in Hampstead. He's looking at sites in Glen Burnie and in the Padonia area of Baltimore County.

The aim is to open two stores this year, including the one in Edgewood, one next year and more later. And Mr. Denrich said he's had very preliminary talks about buying another small, Baltimore-area supermarket chain. He won't say which one.

"We're not crazy" about growing through acquisition, he said. "So it would have to be something very exciting."

Whatever the method, Valu Food's growth plans come despite continued tough grocery competition and industry speculation about the company's wherewithal to keep its pace.

Since 1991, Valu has grown by 50 percent in stores and 45 percent in annual sales, to $209 million. A year ago the company held 5.79 percent of Baltimore-area grocery-store sales -- No. 4 behind Giant, Metro/Basics and Super Fresh, according to Food World, a Columbia-based trade monthly.

Giant said it doesn't expect to be passed. "We don't comment on competitors, but Giant's growth in the Baltimore area speaks for itself," said spokesman Barry F. Scher.

But Valu Food is not tapped out, Mr. Denrich said. It has a "strong relationship" with its lender, Chase Bank of Maryland, he said. And it has tried to reduce its debt by leasing expensive equipment and store fixtures instead of buying them, he added.

Mr. Denrich declined to reveal details about the family-held company's balance sheet or profits. Sales in the company's established stores grew by 7 percent or 8 percent last year, he said -- a period when there was little food inflation to pad the results.

"Lou is doing pretty well," said Jeff Metzger, Food World's publisher. "Lou has really been able to expand his operation through a lot of determination and a lot of work and a lot of grit."

Grit is not a word that is conjured up on meeting Mr. Denrich. The expensive ties, the designer suits with jet-wing lapels, the hTC fashionably long, if thinning, hair, the silver Mercedes -- all suggest executive sleekness many steps removed from the freezer cases and truck docks.

In fact, Mr. Denrich "puts his helmet on and plays the game every day," Mr. Metzger said.

Mr. Denrich returns food vendors' phone calls promptly. He goes to trade shows. He gets involved in store-layout issues. He's a hawk on lease negotiations.

More than anyone else, he's responsible for Valu's growth from a one-store operation at Paca and Lexington streets in Baltimore, industry watchers said -- although he likes to spread the credit to employees.

Polish immigrant Stephen Denrich, Louis' father, opened the Paca Street store, long since sold. The company added locations after Louis, who graduated from the Johns Hopkins School of Hygiene and Public Health with a microbiology degree, came to management. Stephen Denrich retired several years ago and lives in Florida.

Valu Food has grown by being aggressive, flexible and promotional. Unlike some chains with "cookie-cutter" designs requiring the same-size building for each new supermarket, Valu will jam its groceries into a 20,000-square-foot store or spread them over a 50,000-foot one, as long as the neighborhood's right.

It draws shoppers with loss leaders -- juice, tissue, detergent or other popular items that are sold below cost and loudly advertised. Valu is one of the most promotional operators in Baltimore, holding "half-price months" and stacking merchandise to the ceiling in the "Wall of Valu."

Recently the company was selling color TVs along with the Cheerios and ketchup because it got a good deal on them.

Food manufacturers like Valu because it applies their promotional payments straight to a product's price, Mr. Metzger said. In some stores, pharmacies, deli counters and bakeries add variety to Valu's low-price-tag act.

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