As family exits Giant Eagle leadership, question of what's next remains

It’s increasingly rare for a family-owned business to survive more than 90 years — rarer still when more than one family is involved.

But Giant Eagle had done just that.

Founded by five families in 1931, the O’Hara-based grocery chain grew into a regional powerhouse whose name has been enshrined in Pittsburghese with the playful pronunciation “Jynt Iggle.”

Last month, though, the supermarket underwent a significant leadership change. Laura Shapira Karet left the company that her great-grandfather co-founded. Replacing her as CEO is the company’s first nonfamily leader. Bill Artman, a longtime employee, is interim CEO, and Lead Independent Director Bart Friedman is board chair.

The company did not say why it changed leadership, but the change will be watched closely, said David Denis, professor of finance at the University of Pittsburgh. He noted that Artman has been with the company for 40 years.

“It might be that he will remain interim and they’re planning to make a fairly large change,” Denis said. “But I think that’s what’s going to be interesting to watch — whether this is a break in the fundamental nature of how the company conducts business and that’s why they’re making the CEO change.”

It’s not unusual to see changes to top management when there are fundamental changes in the nature of the business, Denis said.

“It’s often trying to find the right match between what the company needs at that point in time and what the executive can bring,” he said.

The privately held company declined to identify the rest of the board, saying only that “Giant Eagle has a long history of including independent directors on its board to strengthen and balance the expertise, experience and viewpoints to best serve the company’s business and ultimately our team members and guests.”

‘Complex organisms’

The average life span of a family-owned business is 24 years, and about 40% of U.S. family-owned businesses transition into second-generation businesses. About 13% are passed down successfully to a third generation, while 3% survive to a fourth or beyond, according to data from Cornell University.

“Family businesses are complex organisms, and one of the reasons it’s so hard to keep them resilient through successive generations is because those transition points can feel like crisis points,” said Meredith Meyer Grelli, assistant professor of entrepreneurship and entrepreneur in residence at Carnegie Mellon University. “In a mature business like Giant Eagle, where family businesses generally feel pressure is around profits. Are the profits enough to support the wants and desires of all the family members involved — as well as communication — as ownership becomes much more distributed across growing generations?”

Karet succeeded her father, David Shapira, as CEO in 2012.

“She was the first woman in that role, and that’s a groundbreaking thing,” said Grelli, who founded and later sold two craft beverage companies, Wigle Whiskey and Threadbare Cider & Mead.

In fact, the grocery chain’s founders, Joe Goldstein, Joe Porter, Ben Chait, Hyman Moravitz and Morris Weizenbaum, had a rule that only sons or sons-in-law could join the business, which wasn’t unheard of at the time.

Goldstein, Porter and Chait founded Eagle Grocery in 1918, according to a history of the company. Kroger Co. acquired the chain, which grew to 125 stores, in 1928. One condition of the sale was that the partners not enter the grocery business for three years. Meanwhile, Moravitz and Weizenbaum had started OK Grocery in Turtle Creek. In 1931, the five met to discuss working together. As the stores grew in size, “Giant” was added to the new Eagle name.

Early on, Giant Eagle didn’t have a single leader. The founders made decisions by consensus, and each owned 20% of the company, David Shapira said in a panel discussion at Carnegie Mellon in December.

A generation later, Shapira’s father, Saul, was named chief executive.

Adapting to the market

Giant Eagle, like many of its peers, adapted to stay competitive in a market where margins are often slim and consolidation is common.

The grocer had annual revenue of $11.1 billion in the fiscal year ended June 30. It has more than 470 stores in Western Pennsylvania, Ohio, northern West Virginia, Maryland and Indiana.

Under Karet, the chain expanded into Indiana and opened Market District stores, which specialize in gourmet and organic offerings.

GetGo, the brand’s convenience store arm with about 200 locations, expanded. In 2018, Giant Eagle completed the acquisition of Indiana-based Ricker’s Oil Co., adding 56 Ricker’s convenience stores to its footprint, as well as a wholesale fuel distribution business of about 80 branded supply accounts in Indiana, Illinois and Kentucky.

In recent years, it added beer and wine sales at its supermarkets and convenience stores.

When the pandemic limited in-person shopping, grocery stores ramped up online offerings, investing heavily in delivery and curbside pickup.

The Food Marketing Institute, an Arlington, Va.-based trade group, found that 91% of retailers now sell groceries online, and 55% offer home delivery. Giant Eagle piloted its home delivery program in 2017.

Still, competition is tight.

A survey by the American Customer Satisfaction Index found Trader Joe’s topped supermarkets in customer satisfaction with a score of 84. The ACSI study is based on interviews with more than 35,000 customers between January 2022 and December 2022.

Costco and Publix were in a second-place tie at 82, and H-E-B came in at 81.

Aldi and Wegmans scored 80.

Giant Eagle came in at 73, yet still outpaced Walmart, which tracked at 71, ASCI found.

Rising prices, supply chain issues and online shopping giving consumers more chances to compare prices add more layers of uncertainty to the market.

“The one-two punch of the pandemic and subsequent inflation has had indisputable impacts on shopper behavior, as well as on how brands and retailers do business today,” consumer research firm NielsenIQ said. “Skyrocketing or otherwise unstable prices have made consumers less loyal.”

Those factors have been affecting the sector nationwide.

“The national players are getting more competitive from a price standpoint,” said Bobby Gibbs, partner with consulting firm Oliver Wyman. “However, many of the strongest regional players have continued to grow even into this year.

“Many regional grocery chains have invested heavily in their stores in the last few years with accelerated store renovation programs. These improvements have helped them consolidate customer trips and increase sales.”