Crains New York - April 15, 2013 - (Page 4)

IN THE Family-owned supermarkets MARKETS dig in as Fairway preps IPO Grocers boost amenities to take on new upscale rivals As Fairway Market readies its initial public offering, which is expected this week, competitors are watching closely to see how much money the 12-store chain will raise, part of which will be used for its expansion plans. But at least some grocers—the scrappy, family-owned businesses that have survived for several generations (and are similar to Fairway in that way)—are confident that their stores will weather yet another food behemoth’s ambitions. There are about a half-dozen of these grocers left in the city, including Morton Williams, Westside Market and D’Agostino. They have outlasted the invasion of Grand Union, Pantry Pride and Food Fare, which are either defunct or no longer operate in the city, and they have withstood the onslaught over the past decade of high-end gourmet supermarkets Trader Joe’s, Whole Foods and Fairway. “They are the top families in the city and they are doing well, beating back these Goliaths,” said Mitchell Klein, vice president of Krasdale, a Bronx-based wholesale grocer. ali elkin BY LISA FICKENSCHER GOING PUBLIC: Fairway is expanding rapidly. While they are not impervious to their competitors,the families say the key to their longevity is their handson approach to every aspect of their business, their nimbleness to react to shifting market conditions—and, quite simply, hard work. “I work six days a week, and I’m 73 years old,” said Morton Sloan, co-owner with other family members of the 11 Morton Williams stores. The business’s roots date back to the 1950s, when Mr. Sloan’s father and uncle owned several Associated supermarkets. Mr. Sloan cut ties with the independent chain nearly 10 years ago, when he developed the Morton Williams brand. The competition, he added, “has pecked at us. It’s annoying and has had its effect, but all of our stores are operating profitably.” In fact, the chain is opening its 12th location next year, is negotiating a lease for a 13th, and last year opened its most ambitious store, on West 57th Street, where it counts among its neighbors the Russian Tea Room and Carnegie Hall. The industry as a whole faces significant challenges. Drugstore chains regularly outbid supermarkets for large spaces—about 10,000 square feet—and carry more and more grocery items. Meanwhile, the superstores continue to proliferate. About six years ago, Morton Williams sold a store at West 26th Street and Eighth Avenue when the owners learned that Whole Foods would be moving in a block away and that Costco had purchased an entire block nearby. “High rents have created an impediment to our growth,” said Mr. Williams, adding that all of his leases have at least 10 years to run. Westside Market, established in 1965 and owned by the Zoitas family, is also looking at new locations. There are four stores on the West Side of Manhattan and one in New Jersey. Chief Executive George Zoitas, 30, is eyeing the East Side. “My goal is to have a presence all over Manhattan,” he said. See FAMILY on Page 20 bloomberg news by Aaron Elstein Russia is coming, Russia is coming B ack in 2007, the government of Russia declared its goal was to make Moscow into an international center of finance. That plan got stalled by the global market crash a year later. Another reason it didn’t get out of the gate is that wealthy Russians have yanked at least $120 billion out of the country over the past two years and parked it in places like Switzerland, the U.K. or Cyprus. Amid that backdrop, it was interesting to see an entourage of Russian finance officials, bankers and corporate leaders descend upon New York last week and try to persuade a crowd of Wall Street pros to invest in their country. “The Russian government is taking steps to modernize and change regulations after a decade of talking about it,” Alexey Yakovitsky, CEO of VTB Capital, an investment bank that sponsored the meet-andgreet at the Waldorf Astoria Hotel, assured the audience. A few hardy souls are defying the exodus and investing in the oiland mineral-rich nation. U.S. investors bought $49 billion worth of Russian debt last year, more than double the previous year’s total, Andrey Solovyev, VTB’s global head of debt capital markets, said in an interview with Crain’s. Russian bonds offer higher yields than many other kinds of emergingmarket debt, which of course reflects the risk of putting money in a country where investors fear the government could change the rules of the road at any time. Still, a stream of officials from Russia’s central bank, Finance Ministry and stock exchange did their best to make the case they are becoming more welcoming to outside investors. One particularly helpful reform that may be coming down the pike is a change in the law that says it’s illegal for managers of Russian pension money to post losses in any given year. If they do lose money, the fund managers have to dip into their own pockets to make up the difference, even if that means selling their houses or other personal possessions. Of course, no pension fund manager in his or her right mind would risk investing in stocks when the stakes are so high, and Russian government officials said they recognize the situation is hindering development of the nation’s equity market. Deputy Finance Minister Alexey Moiseev said fund managers may soon be given five years to recoup losses before they have to pay up. “Before making things perfect,” one attendee told the dignitaries, “could you make them better?” Ⅲ THE DECLINE in the value of bitcoins as of midday Friday. The virtual currency peaked at $266 a coin last Wednesday, a day before the Winklevoss brothers, early investors in Facebook, revealed a large position. After that news, the world’s leading bitcoin exchange halted trading for 12 hours to settle down the frenzied market, but speculators still fled for the exits. 74% 4 | Crain’s New York Business | April 15, 2013 http://crainsnewyork.com/events-mayornyc

Table of Contents for the Digital Edition of Crains New York - April 15, 2013

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
CORPORATE LADDER
OPINION
STEVE HINDY
GREG DAVID
REAL ESTATE DEALS
REPORT: SMALL BUSINESS
THE LISTS
CLASSIFIEDS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - April 15, 2013