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Gelson's Markets, the 27-unit specialty food store chain in Southern California, is being sold by private equity group TPG Capital to Japan-based Pan Pacific International Holdings.

Terms of the deal, expected to be finalized in the second quarter, were not disclosed.

In a prepared statement, Rob McDougall, president-CEO of Gelson’s, said, "As we look to the future, we are excited about opportunities for new growth and partnerships under PPIH, while remaining focused on our longtime commitment to the highest standards of quality, value, and unsurpassed customer service. PPIH leadership has visited every one of our locations and has been incredibly complimentary of our stores and teams, as well as our customer service philosophy.” 

The announcement notes that "Gelson’s was acquired by TPG Capital in 2014. The brand has grown significantly over the seven-year partnership, expanding its footprint from 17 to 27 stores from Santa Barbara to San Diego."

Pan Pacific is described in the release as "a global retailer with 638 international stores, 582 of them in Japan. The company was founded over 40 years ago by entrepreneur and innovator Takao Yasuda and is particularly known for their famous Don Quijote store brand. PPIH also operates stores in the U.S. in Hawaii and California, as well as in Singapore, Hong Kong, Thailand, and Taiwan."  The company has been talking about expanding its US presence for close to a decade.

Late last year, Bloomberg reports, Pan Pacific was in the news for less positive reasons - its former CEO, Koji Ohara, was arrested for insider trading.

KC's View:

It is interesting that Southern California's two major specialty food store chains, Gelson's and Bristol Farms, are both now owned by Asian companies;  Bristol Farms is part of Good Food Holdings, which is owned by Emart, South Korea’s largest retailer.

Both Emart and Pan Pacific have expressed interest in broader expansion within the US.  Emart has seemed focused on the west coast specialty food segment - it also owns Metropolitan Markets in Seattle and New Seasons Markets in Portland.  If Pan Pacific pursues a similar strategy, whether on the west coast or elsewhere in the US, then it might be a good time for such businesses to be considering a sale - in part because it might be a seller's market, and in part because they might find themselves competing against better-funded entities with their eyes on the same customer.

(If I were such a retailer considering a sale I'd be getting on the phone with Scott Moses at PJ Solomon, who specializes in such deals and is one of my favorite people on the planet.  This is an unsolicited plug - Scott will be surprised when he reads this.)