Sale 'a difficult decision,' CEO Robert Ukrop says

The Ukrop's grocery chain -- so very Richmond and known for its family values and small-town customer service -- will now be part of a worldwide conglomerate.

And some of its trademark business practices -- staying closed on Sundays and not selling beer and wine -- likely will be a thing of the past.

Ukrop's Super Markets Inc., known worldwide for its customer service, innovative merchandising and creative products, is selling 25 of its stores to the U.S. unit of Dutch supermarket conglomerate Royal Ahold NV.

The sale means the name on those stores eventually will change to Martin's Food Markets -- probably in a year or two, though no definitive decision has been made as to when, or what the name will be.

And eventually, the stores likely will be open on Sundays and sell beer and wine.

The $140 million deal is expected to be completed in early February.

Employees and managers working at the 25 stores will be kept by the new owners. It's uncertain what will happen to the approximately 140 employees at the Ukrop's corporate offices in Henrico County.

The chain's Joe's Market in Richmond's West End -- a specialty food market named after the company's founder -- and a store in Fredericksburg will close, unless new owners can be found in the next month or so.

"Leaving the grocery retail business was a difficult decision for our family," said Robert S. "Bobby" Ukrop, the chain's chairman, president and chief executive officer, who was visibly choked up at times during a news conference yesterday.

"We concluded that now is the right time," he said. "There is a time for everything. When one door closes, another window opens.

"We really have had a long run in the retail food business. We, as a company, probably played much bigger than we really are. And hooking our wagon to this organization provides us an opportunity to continue in the food business, even though we won't be involved in retail."

While the stores will be under new ownership, part of the company's legacy will live on under Ukrop family ownership.

The chain's signature baked goods and prepared foods will operate as a separate company operated by Bobby Ukrop.

The new business will use the Ukrop's name on the food products and serve as a supplier to the chain's new owners -- and possibly other grocery retailers. The company already sells some of its food products to a handful of grocers, including Harris Teeter.

"This is a beginning of an era," James E. "Jim" Ukrop, chairman of the family-controlled First Market Bank and former chairman and CEO at the grocery chain, said after yesterday's announcement.

The family is selling the 25 stores -- 24 in the Richmond area, one in Williamsburg and possibly a piece of property in western Henrico County off Nuckols Road for a future store -- to Ahold's Giant-Carlisle division, which operates 152 stores in the mid-Atlantic, including 26 stores under the Martin's Food Markets name. Nine Martin's stores are in Virginia, including one that opened this year in Culpeper.

"These are very sophisticated merchants that have a good feel for local markets," said Jeffery W. Metzger, publisher of Food World, a publication that tracks the grocery industry in the mid-Atlantic. "They are very aggressive with their pricing because of their merchandising philosophy."

Another Ahold division owns the Giant chain in the Washington area, which had operated stores in the Richmond market.

"We're excited for this opportunity," said Rick Herring, president of the Giant-Carlisle division. "We look forward to combining our strengths with the strengths of the Ukrop's brand and enhancing the shopping experience and the affordability for our customers."

The new owner, with its worldwide reach, will be able to compete better than midsized Ukrop's could, Jim Ukrop said.

Ukrop's held the No. 1 spot in local market share since 1986 until this year, when Food Lion took the lead position.

"Our size limits our ability to succeed today in the increasingly competitive market," Jim Ukrop said.

The new owners will be able to compete better against grocery giants including Wal-Mart Stores Inc. and Kroger, experts say.

Bobby Ukrop said Ahold's Giant-Carlisle division is "a lot like us: similar values, similar culture."

The Ukrop's chain had been rumored to be looking for a buyer since July. But neither company would say yesterday how long they had been talking about a deal.

The sale provides for Giant-Carlisle to buy the inventory and take over the lease agreements and equipment at those 25 stores.

Employees at those stores will be hired by the new company.

It is uncertain what will happen to the 140 employees working at the Ukrop's corporate headquarters. Bobby Ukrop said many of those employees will continue to work for his venture. And Herring said Giant-Carlisle will maintain some regional operations here.

It's also unclear whether the new owners will continue some of the chain's popular programs and services, including taking groceries out to customers cars, the Golden Gift program, fuelperks! and charitable giving.

Herring said the Giant-Carlisle division is committed to community involvement and has given more than $15 million this year. The company's motto is "Living Here, Giving Here."

Over the next several months, the company will be closely looking at all of Ukrop's operations -- including the name change, opening on Sundays and selling beer and wine -- and make decisions based on what they find, Herring said.

First Market Bank, which is mostly owned by the Ukrop family and the grocery chain, is scheduled to merge with Union Bankshares Corp. during the first quarter.

While the bank has branches inside 23 Ukrop's stores, First Market CEO David J. Fairchild said the sale will not affect its operations.

"Ukrop's has informed us that there will be no impact on our in-store bank operation in connection with this sale," Fairchild said.

Several of the Ukrop family members who attended yesterday's news conference looked somber.

Bobby Ukrop said he and family members had spent the afternoon telling store managers and other employees the news of the sale.

"We've been announcing to people who we have grown up with, and to look into their eyes and faces and see their disappointment . . . and know they are going to be facing change," Bobby Ukrop said. "There is a certain amount of uncertainty of the unknown."

Contact Gregory J. Gilligan at (804) 649-6379 or ggilligan@timesdispatch.com.

Contact Louis Llovio at (804) 649-6348 or LLLovio@timesdispatch.com.

Staff writer Emily C. Dooley contributed to this report.