Supermarkets Top Alternative Formats (Part 1)

1 2016alternativeformats

Now more than ever, alternative formats like mass merchandisers, natural food retailers, dollar stores and even drugstores are encroaching on supermarket food sales. The following companies from the 2016 Top 75 list of U.S. and Canadian retailers represent the alternative formats with the most food sales.

1Walmart

1. Wal-Mart Stores

Annual sales: $247.5 billion (estimated, consumables only)

2costco

2. Costco Wholesale Corp.

Annual sales: $69.4 billion (consumables only)

3CVS.jpg

3. CVS Health

Annual sales: $44.4 billion (estimated, consumables only)

4Target.jpg

4. Target Corp.

Annual sales: $34.2 billion (estimated, consumables only)

5Walgreens.jpg

5. Walgreen Co.

Annual sales: $28.3 billion (estimated, consumables only)

6Meijer_0.jpg

6. Meijer, Inc.

Annual sales: $16.9 billion (estimated)

7WholeFoods.jpg

7. Whole Foods Market

Annual sales: $15.4 billion

8DollarGeneral.jpg

8. Dollar General Corp.

Annual sales: $15.3 billion (estimated, consumables only)

9_7Eleven.jpg

9. 7-Eleven

Annual sales: $13.3 billion (estimated, consumables only)

10TraderJoes.jpg

10. Trader Joe’s Co.

Annual sales: $13 billion (estimated)

2015 Top 50 Small Chains and Independents.

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    1. Fareway Stores 2015
    2. Inserra Supermarkets 2015
    3. Marsh Supermarkets 2015
    4. Northgate Gonzalez Market 2015
    5. Lowe’s Market 2015
    6. PAQ 2015
    7. Rouses Enterprises 2015
    8. Vallarta Supermarkets 2015
    9. Cardenas Markets 2015
    10. Redner’s Warehouse Markets 2015
    11. Festival Foods 2015
    12. Fairway Market 2015
    13. Jerry’s Enterprises 2015
    14. King Kullen Grocery Co. 2015
    15. Niemann Foods 2015
    16. Homeland Stores 2015
    17. Harps Food Stores 2015
    18. Foodland Super Market 2015
    19. Dierbergs Markets 2015
    20. Lund Food Holdings 2015
    21. Lewis Food Town 2015
    22. Cosentino’s Food Stores 2015
    23. Glass Gardens 2015
    24. Roche Bros. Supermarkets 2015
    25. Kings Food Markets 2015
    26. Natural Grocers by Vitamin Cottage 2015
    27. Heinen’s 2015
    28. Martin’s Super Markets 2015
    29. Gelson’s Markets 2015
    30. All American Quality Foods 2015
    31. Ball’s Food Stores 2015
    32. Reasor’s 2015
    33. Sedano’s 2015
    34. Harmons 2015
    35. Brown’s Super Stores 2015
    36. Pyramid Foods 2015
    37. Perlmart 2015
    38. Fred W. Albrecht Grocery Co. 2015
    39. Haggen Inc. 2015
    40. Good Food Holdings 2015
    41. Miner’s 2015
    42. RoNetco 2015
    43. Stew Leonard’s 2015
    44. Earth Fare 2015
    45. B&R Stores 2015
    46. Tawa Supermarket 2015
    47. E&H Food Group 2015
    48. Mi Pueblo Food Centers 2015
    49. Town & Country Grocers 2015
    50. C&K Market 2015

Walmart leads 2015 Top 25 Global Retailers.

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A shifting focus toward smaller retail formats and the strong U.S. dollar influenced Planet Retail’s list of the Top 25 Global Retailers, on which Walmart, Costco and Carrefour took the top three spots, respectively.

The ranking is based on 2015 sales in U.S. dollars, which Planet Retail has forecast for the year while taking into account historic performance, store opening projections (which are reflected in store counts provided) and an estimated comparable store growth rate.

With a projected $527.8 billion in sales, Wal-Mart Stores bests all other international retailers by a wide margin, according to Planet Retail.

“Walmart remains by far the leading player but will not rest on its laurels,” noted Robert Gregory, head of advisory for London-based Planet Retail. “In fact, there are a number of key strategic initiatives it is pursuing at home and abroad.”

These include restoring performance in some faltering international markets and focusing on e-commerce around the world.

“Walmart was initially slow to embrace e-commerce, but is making up ground fast with global e-commerce sales growing at more than 20% per annum,” Gregory said.

While the Bentonville, Ark.-based retailer has online operations in most countries in which it operates, its key markets for digital sales are the U.S., U.K., Brazil and China, according to Gregory. Walmart considers Asda in the U.K. and Yihaodian in China to be best-in-class for e-commerce, he said.

No. 2 retailer, Issaquah, Wash.-based Costco Wholesale Corp., with a projected $127.9 billion in sales, has about 70% of its 687 outlets in the U.S., according to Gregory who said it is scheduled to open 24 new stores by fiscal year 2015.

“While the growth of ancillary businesses and an expanded service offering should boost domestic sales, international club expansion will drive new member growth, which will propel a stronger bottom line,” he said. “The first store in France is scheduled for 2016, following on from entry into Spain in 2014.”

French retailer Carrefour is No. 3, with $119.8 billion in sales when converted to U.S. dollars, and 12,965 outlets.

Gregory noted that despite increasing sales in their local currency, many European and Japanese retailers declined their ranking on the list due to currency exchange rates to the U.S. dollar.

Kroger, with $116.4 billion in sales and 3,750 stores takes the No. 4 spot, followed by Tesco.

The U.K.-based retailer is coming off a “nightmare year, rocked by leadership changes, the accountancy scandal, negative like-for-like sales and a record loss,” according to Gregory. “Further disposals are likely [such as Dunnhumby] and international markets such as South Korea, as it looks to rebuild its balance sheet and generate funds to invest in the U.K.”

While the outlook for Tesco and its 7,990 stores isn’t all doom and gloom, it still has a fair amount of challenges ahead.

“Tesco is currently on a journey and recent trading has actually improved and it is actually performing stronger than rivals such as Walmart’s Asda,” added Gregory. “However, it will be a long journey and with like-for-likes at its hypermarkets continuing to decline and with store openings being scaled back, Tesco is likely to fall further down the global ranking in the coming years.”

7-Eleven parent Seven & I, is the No. 6 retailer with $101.4 billion in sales across 38,009 outlets which include its retail banners and its nonfood offerings such as department stores.

U.S. invasion

It’s followed in the ranking by Lidl parent, Schwarz Group, with $99.7 billion in sales. Earlier this summer, Lidl confirmed plans to expand beyond Europe for the first time, to the U.S., but these stores are not expected to open in the near-term and therefore did not factor into Planet Retail’s projections. Schwarz Group has also announced market entries in Serbia (Kaufland, Lidl) and Lithuania (Lidl), according to Gregory.

With $96.2 billion in sales, U.S.-based Walgreens Boots Alliance is ranked No. 8. Its position was boosted by Walgreen’s acquisition of the remaining 55% of Alliance Boots that it did not own, to form the first global pharmacy-led, health and wellbeing enterprise and the largest purchaser of prescription drugs in the world.

Japanese retailer Aeon is No. 9 on the list with $92.1 billion in sales and 19,171 total outlets. And rounding out the top 10 is Aldi, which, according to Gregory, is among the retailers who’ve slipped down the ranking due to an unfavorable EUR-to-USD exchange rate.

Aldi’s expansion plans include new stores in a range of markets including some in Western and Southern Australia and West Coast and Southern California stores in the U.S. In addition to acquiring the Bottom Dollar chain from Delhaize, it hopes to more than double its stores in the U.K. by 2022, according to Gregory.

Minneapolis-based Target Corp., No. 11 on the list, “will accelerate small-box and urban expansion, via TargetExpress and to a lesser extent CityTarget,” said Gregory. “After having opened its first TargetExpress location last summer in its home market of Minneapolis, Target is set to open eight additional locations in 2015, more than half of its total planned store openings for the year.”

With $79.9 billion in sales, France-based Auchan is the 12th ranked retailer, followed by Metro Group (No. 13) with $77.9 billion in sales.

No. 14 on the list, CVS, with $70.5 billion in sales and 7,923 stores will continue to expand organically as well as benefit from the store-within-a-store concept that will result from its purchase of Target’s 1,660 in-store pharmacies and 80 in-store clinics, Gregory said.

“A clear trend amongst all players on the ranking is the shifting focus towards smaller formats,” he told SN. “Even the likes of Walmart are trying to decrease the proportion of sales from big-box stores as they look to embrace smaller formats, such as Walmart to Go and Walmart on Campus.

“In addition, investing in stores to make them a more integral part of the online shopping experience has become a priority with all leading players introducing click and collect facilities across their store networks. Clearly, this will be part of their attempts to reinvent the weak performing big-box stores, as well as measures such as improved service, greater use of in-store technology and trying to cater to the mobile shopper in the stores.”

Other notable retailers on the list include No. 19 Albertsons, with $56.8 billion in sales, whose ranking was boosted as a result of its merger with Safeway, and No. 22 Ahold, whose $46.7 billion sales projection does not include its forthcoming merger with Delhaize, according to Gregory.

Safeway to sell first Fair Trade seafood.

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Safeway plans to offer Fair Trade Certified seafood, starting with wild-caught tuna.

The tuna will initially be available in stores in the retailer’s Northern California, Portland and Seattle divisions in March. Safeway will expand the program to other areas once more supply becomes available.

“Safeway recognizes its responsibility to help protect our oceans in an effort to maintain the availability of seafood for future generations and the health of our planet,” Buster Houston, group director of seafood at Albertsons Safeway, said in a press release, “and this unique offering, beginning with frozen tuna steaks and burgers has the added benefit of being a Fair Trade Certified product.”

 By the end of 2015, Safeway hopes to achieve its goal for all its fresh and frozen seafood to be caught or farmed sustainably.

Haggen to begin rebannering stores.

Haggen-Store-Front-1_0

Haggen will begin converting the 146 Albertsons and Safeway stores it acquired to its own banner beginning next week, with all stores expected to be converted within 120 days, an industry source with knowledge of the company’s operations told SN.

Company officials could not be reached for comment.

According to SN‘s source, some re-merchandising is scheduled to occur as banners are changed — including updating fresh departments and making some changes in the product mix — but the process of making the stores fully Haggen could take more than a year.

Haggen, an 18-store chain based in Bellingham, Wash., formally acquired the divested stores at the end of January, including 46 Albertsons and Safeways in Washington and Oregon — the Pacific Northwest area in which it already operates — and 100 in the Pacific Southwest, encompassing 83 in California, 10 in Arizona and seven in Nevada that have been operating under the Albertson, Vons and Pavilions banners.

“Everything is in flux and moving very fast,” the source told SN. “The first priority is getting the Haggen banner on the stores and getting the stores open with some product added. But it will take a long time to change the mix completely — probably more than a year.”

Related story: Haggen executive optimistic, observers skeptical (click on photo)

Related story: Haggen executive optimistic, observers skeptical (click on photo)

Haggen said Monday it has selected an advertising agency to facilitate its move into the Southwest — Pitch, a Culver City, Calif.-based company that said it will launch “a strategic positioning” for the chain beginning in the first half of the year across a wide range of media, including television, radio, outdoor, print, in-store, digital, direct, experiential and social.

In a press release Bill Shaner, CEO of Haggen’s new Southwest division, said, “Our move into the Southern California, Arizona and Nevada markets is very ambitious and unprecedented. We’re confident that, with Pitch, Haggen will shine through in the marketplace.”

The 46 stores Haggen acquired in the Pacific Northwest will be rebranded first, with the 100 stores in Southern California, Arizona and Nevada to follow, at an anticipated rate of six to eight locations per week after an initial handful of stores have been rebannered, the source told SN.

The first store scheduled for rebranding next week is an Albertsons in Monroe, Wash., he said.

The first Southern California store set for rebranding — in about five or six weeks, the source noted — will be an Albertsons in Carlsbad, in the San Diego area. The 10 stores in Arizona and seven in Nevada will be converted last, he added.

The source said the conversions are scheduled to take place on a rolling schedule in “a resource-based cadence” that will be dependent on personnel, signage availability and general contractor availability.

The company’s new Pacific Southwest ad agency, Pitch, said it “creates ideas worth talking about,” noting that its clients include Burger King, Meineke, Living Spaces and Closet Factory.

Rachel Spiegelman, president of Pitch, said Haggen has created a relationship with customers in the Northwest “who have come to expect fresh and local offerings, genuine service and homemade quality. Pitch will bring that expectation and close relationship to consumers in Southern California and beyond.”

Albertsons, Safeway complete merger controled by Cerberus Capital.

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Safeway and Albertsons owner AB Acquisition LLC, controlled by an investor group led by Cerberus Capital Management, completed their proposed merger Friday, the companies announced.

The merger will create a network of 2,230 stores, 27 distribution facilities and 19 manufacturing plants with over 250,000 employees across 34 states and the District of Columbia.

“We plan to be the favorite local supermarket in every community we serve,” said Safeway president and CEO Robert Edwards, who becomes president and CEO of the newly combined company, effective immediately, in a statement. “We will do this by knowing, listening to, and delighting our customers; providing the right products at a compelling value; and delivering a superior shopping experience. We will also continue to be active members of our local communities.”

Albertsons CEO Bob Miller who will become executive chairman characterized the day as “transformative” for both companies.

Bob Miller

Bob Miller

“This merger creates a unified, strong organization that is dedicated to bringing a better shopping experience to more customers across the country,” said Miller, in a statement. “Our combined geographic footprint, vast range of brands and products, and service-oriented staff will enable us to meet evolving shopping preferences.”

Albertsons-Safeway will be comprised of three regions and 14 retail divisions, supported by corporate offices in Boise, Idaho, Pleasanton, Calif., and Phoenix. Banners will include Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Albertsons, ACME, Jewel-Osco, Lucky, Shaw’s, Star Market, Super Saver, United Supermarkets, Market Street and Amigos. In December, the companies announced the sale of 168 stores to four separate buyers, as divestitures required in order to secure U.S. Federal Trade Commission approval of the transaction.

Safeway adds frozens to Celebrity Chef Mexican line

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Safeway has added frozen entrees to its exclusive  Marcela Valladolid-branded Mexican line.

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The entrees are available in eight flavors, including Pork Chile Verde, Pastel Azteca and Chicken Mole Enchiladas.

The retailer promoted the entrees with a Facebook coupon for one free product.

The line was introduced last year with ready-to-cook meats, corn and flour tortillas, cheese and snacks.

Valladolid is a Food Network chef and cookbook author.

Safeway planning to pass through more inflation.

safeíndiceSafeway said Wednesday it expects to pass through most of the inflation it is experiencing during the second quarter after seeing first-quarter income come in “slightly below plan,” partly as a result of not passing along inflation in produce, meat and pharmacy for competitive reasons.

Robert Edwards, president and CEO, said Safeway was able to drive first-quarter sales momentum as a result of several ongoing initiatives, adding the chain expects to improve second-half profitability through the direct and indirect cost initiatives it is implementing, which include center store remodels and merchandising premium, Hispanic and Asian products to meet local demographic needs.

Edwards said Safeway is also continuing to see a rapid pace of growth in organic and natural products, with its controlled-label O Organics and Open Nature growing “approximately two times faster than the rest of the market.”

Safeway reported a loss on continuing operations for the 12-week first quarter of $83.1 million, which included merger-related expenses of $2.5 million and a loss on foreign currency translation of $93.4 million; the loss for the year-ago first quarter was $59.7 million, which included a $17.2 million income-tax reduction on corporate-owned life insurance policies and a $5 million reduction of tax expense due to the resolution of federal income tax matters.

Excluding the unusual items, the loss for the quarter was $12.8 million, compared with a loss of $37.5 million last year.

Sales and other revenue increased 1% to $8.3 billion, while identical-store sales excluding fuel rose 1.8%, including a 1% increase in price per item and a 0.8% increase in volume. Second-quarter ID sales are running “well above 2%,” Edwards said.

Sobeys addresses merchandising at Safeway stores

Safeway safeíndiceSobeys said it is not only working to integrate systems at the stores it acquired from Safeway last year but is also implementing merchandising programs to address concerns with sales in some categories.

In response to a question from a financial analyst, Marc Poulin, president and CEO of Empire Co., Sobeys’ corporate parent, said same-store sales trends at the Safeway stores “were below what we would have liked,” though he was not more specific.

“But we’re taking advantage of the opportunities we have with direct merchandising programs to address our concerns in some categories, and we’re working on the overall picture — not just integrating the stores but also moving the business forward dynamically.”

Poulin spoke Thursday with analysts to discuss financial results for the third quarter and 39-week period that ended Feb. 1. The third quarter was the first full period that reflected operations from the acquisition of Safeway’s 233 Canadian stores, which boosted Empire’s sales by $1.5 billion (U.S.)

Third-quarter sales at Sobeys — which represent approximately 99% of Empire’s results — rose 40.4% to $5.4 billion (U.S.), with same-store sales down 0.2%; excluding the Safeway stores, Sobeys sales were up 2.7%. For the 39-week period Sobeys’ sales rose 14.6% to $13.6 billion, while same-store sales fell 0.2%.

Net income for Empire fell 73.7% to $400,000 for the third quarter and declined 39% to $212.2 million, with sales climbing 14.6% to $13.6 billion.

Poulin said Sobeys is on track to achieve the targeted synergies from the former Safeway stores. “We are working diligently to successfully integrate the business and are focused on securing operational efficiencies and reducing costs across the network. We remain confident in our ability to secure $200 million in annual run-rate cost synergies over a three-year period.”

BREAKING: Safeway confirms sale talks

safeíndiceSafeway on Wednesday announced that it was in discussions concerning a possible transaction involving the sale of the company.

“Although the discussions are ongoing, the company has not reached an agreement on a transaction, and there can be no assurance that these discussions will lead to an agreement or a completed transaction,” the company said in a statement.

“The company will not comment further on these discussions at this time.” The announcement confirmed widespread industry speculation and follows the company’s moves a year ago to shed its Canada and Dominick’s divisions.

The Pleasanton, Calif.-based retailer also said it would distribute the stock it owns in gift-card subsidiary Blackhawk Holdings to its stockholders and would seek a transaction to monetize its Casa Ley division operating stores in Mexico.

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