-By PG Staff
In a year in which headlines are sure to be more dramatic than
usual across the country, you can also be sure supermarket
operators will be creating their own share of headlines in 2009.
The expanding pressures of a contracting economy will doubtless
drive the retail news over the course of the year, and Progressive
Grocer will be there to record the highs and lows as this pressure
cooker affects the industry. What follows is our best estimate of
which supermarket industry players are most likely in this volatile
climate to make news, good or bad, in the coming year.
The trends to watch will include escalating price wars, expanding
private label programs, decelerating store openings and cap ex
strategies, and sadly, the real potential for layoffs to spread as
pressures for cost cuts continue.
The food retail world will also be closely watching the face-off
between global corporate giants Tesco and Walmart as they brandish
their latest weapon of choice, the small, fresh-focused store
format. The bill reads: Fresh & Easy vs. Marketside, a battle
royal for the hearts and wallets of Phoenix shoppers.
Indeed, shoppers--most of whom are under just as much pressure as
grocers, if not more--and the decisions they make as they seek to
feed themselves and their families, will drive the most important
news for grocers in 2009, whether they make the headlines or not.
Ahold USA
Ahold USA has managed to keep comps rising, despite a tanking
economy, and a considerable bite taken out of its second-quarter
margins last year by the ongoing Value Improvement Program (VIP) at
U.S. banners Stop & Shop and Giant-Landover. The key to this
has been that its price investments have allowed it to stay
competitive in its markets.
No doubt the division's recently restructured leadership, including
the appointments of Carl Schlicker, formerly Giant-Carlisle's
president and c.e.o., to the helm of Stop &
Shop/Giant-Landover, and Sander van der Laan, onetime e.v.p.
marketing and merchandising at Albert Heijn, to head up
Giant-Carlisle, will continue to keep business fresh.
Also expected to bear fruit in 2009 is Stop &
Shop/Giant-Landover's projected three-year store-base makeover,
which was introduced last year and encompasses such features as new
logos, staff uniforms, product selections, and in-store
technology.--Bridget Goldschmidt
 |
| Albertsons |
Albertson's, LLC
Albertsons spent the past year getting into fighting trim--shedding
excess pounds and developing a more focused right hook. In May it
sold 72 convenience stores and fueling kiosks to fuel marketer and
convenience store operator Valero Energy Corp. The reason for the
divestment, according to Boise, Idaho-based Albertsons, was so it
could focus its energies on core grocery and pharmacy
businesses.
Then in June the privately held company sold 49 of its Florida
stores to Publix Super Markets, Inc.
This year the grocer may indeed hit its ideal weight. With c.e.o.
Bob Miller now on the FMI board of directors, the slimmer, more
agile company might just start doing some fancy footwork.--Joseph
Tarnowski
 |
| Aldi's |
Aldi, Inc.
Although the credit crunch has put on a damper on many retailers'
bottom lines, it's clearly turned into a sales boon for entrenched
discount grocer Aldi, which in recent months has been vigorously
touting its ability to help consumers stretch their food
bucks.
The historically and notoriously media-shy Aldi is in the midst of
a high-visibility campaign hyping what it calls its affordable,
high-quality signature offerings. Batavia, Ill.-based Aldi's also
turning up the heat on its "Special Purchases" program, which
offers "limited-time, while-supplies-last" products.
You can expect Aldi to be on the move this year. It now operates
nearly 1,000 U.S. stores in 29 states out of its Chicago-area U.S.
headquarters, and has dramatically stepped up its American
expansion--particularly in Florida and Texas, two traditional
strongholds for Walmart.
The small-format discounter has opened a DC in Haines City, Fla. to
support some 25 new stores. It also recently confirmed some details
for its Texas strategy, which calls for opening 25 stores in the
Dallas-Fort Worth area, including the conversion of former
freestanding Albertsons and Super 1 Foods stores, and a $40
million, 500,000-square-foot facility in Denton, Texas, its DC in
the Southwest.--Meg Major
Bashas' Supermarkets
Bashas' enters the New Year with a fresh new format--literally. The
Chandler, Ariz.-based chain's new concept store features an
innovative food court that offers fresh Italian, Asian, and
American cuisine available for takeout or dine-in.
The new concept is a positive note for the grocer, which otherwise
hit some bumps in the road in 2008; the tough economy led to the
shuttering of its home delivery operations, as well as trims to its
administrative staff. It has also been enduring a prolonged and
aggressive unionization campaign that's sure to have ramifications
for 2009. What's more, its home turf has become ground zero for a
format battle between Walmart and Tesco (see the Fresh & Easy
entry below).--J.T.
 |
| BJ's Laura Sen |
BJ's Wholesale Club
After a solid year of comparable-club sales increases and a
flourishing food business, particularly in perishables, BJ's
Wholesale Club now welcomes new leadership at the top: Laura Sen,
the retailer's president and c.o.o. since January 2008, has been
elevated to c.e.o., effective Feb.1 of this year.
Predecessor Herb Zarkin, who took the position of interim c.e.o. to
turn the company's fortunes around after the departure of Mike
Wedge in late 2006, notes: "Laura has done an outstanding job of
managing our day-to-day operations for the past year. Our business
has never run more smoothly. Laura and her team have improved our
members' experience by providing better merchandise quality, and
value, and by raising operating standards in our clubs."
Sen's challenge as c.e.o. will doubtless be to keep that robust
growth coming in a bleak economic climate.
Additionally, as Zarkin noted in December, the company will move
ahead in 2009 with its multiyear plan to upgrade and replace many
of its technological reporting systems.--B.G.
 |
| Food Lion |
Food Lion, LLC
In December 2008 Rick Anicetti, Food Lion, LLC's c.e.o., said his
company's brands were positioned for success in a down economy. The
Salisbury, N.C.-based regional grocer, a leading division of the
Delhaize Group, will focus this year on connecting with the
customer and "providing value and comfort to all consumers," notes
Anicetti.
In 2008 the grocer slated 150 stores for remodel, and "relaunched"
58 stores in Georgia and Alabama. New Food Lion units are planned
for the Atlanta area, while a few stores at the end of leases, such
as one in Asheville, N.C., were closed.
The grocer also opened a new prototype for its Bottom Dollar Food
format, based on "right-sizing" the footprint, while the group's
Bloom format continued to be profitable.
Food Lion's business model for 2009 focuses on delivering low
prices by reducing costs and managing brands, segments, and
clusters in a low-cost environment. The company will invest in
pricing to increase traffic and basket size, and support
profitability. Growth in 2009 will be "within the four walls"
through assortment renewal, new store openings in existing and new
markets in the current geography, and market renewals in Daytona,
Fla. and Columbia, S.C.
Hannaford, Food Lion's sister company in Delhaize, announced job
cuts in December, which begs the question of whether the ax may
fall at the Lion as well.--D. Gail Fleenor
 |
| Fresh & Eash |
Fresh & Easy Neighborhood Market
Tesco-owned Fresh & Easy won't hit its original target of 200
stores in the western United States by February, and it faces a
direct challenge from its American-based counterpart, Walmart's
Marketside, in the crucial test lab of the Phoenix market. However,
it still had a strong run during the past year, celebrating its
100th store opening Nov. 12.
More importantly, the grocer has managed so far to evolve its small
format continually in trying to adapt to a market that, for all of
Fresh & Easy's pre-launch homework, it's still only learning
how to service.
Fresh & Easy in 2009 promises more green initiatives, including
such sustainable practices as the solar panel installation at its
California distribution center, which provides nearly
three-quarters of the facility's energy. The company is a pilot
member of the Leadership in Energy and Environmental Design (LEED)
volume certification program, recycles or reuses all of its display
and shipping materials, and voluntarily discloses its greenhouse
gas emissions.
So while it may not be growing as fast as initially intended, this
year will still see plenty of action from Fresh &
Easy.--J.T.
 |
| Giant Eagle |
Giant Eagle, Inc.
After carefully orchestrating concepts geared to foodies, drivers
looking for gasoline discounts, and convenience-oriented shoppers
in search of quick and easy pop-ins, Pittsburgh-based Giant Eagle
is discreetly tipping its talons into yet another market--that of
discount foods, with the new Valu King format in suburban
Cleveland, Ohio.
The privately held chain already runs 157 corporate stores, with
another 69 independently owned and operated franchises, plus 120
fuel and c-stores throughout western Pennsylvania, Ohio, north
central West Virginia, and Maryland. According to its front office,
Giant Eagle will take an arm's-length approach to this latest
concept, with no fuelperks! discounts and no advantage card
incentives included in the Valu King offering. Valu King's
autonomous management team says it will closely monitor the
inaugural store's progress to determine future directions as demand
dictates.
Meanwhile Giant Eagle continues to introduce new twists on its
popular fuelperks! gasoline discount rewards program, including a
move in Columbus, Ohio to transpose the loyalty program with
grocery discounts for those who buy gas at the chain's companion
Get Go c-store outlets. The chain says a further expansion of the
foodperks! test might come next. Its first-ever LEED Gold award in
the "New Construction" category, for a supermarket in northeast
Columbus, has also spurred Giant Eagle to keep its environmentally
friendly store design a top priority.--M.M.
Great Atlantic & Pacific Tea Co.
Exciting new store formats continued to be the name of the game for
A&P last year--and should be this year, too. In addition to its
Pathmark Sav-A-Center Price Impact format, which debuted last year
in New Jersey and the Philadelphia area and was described by
A&P president and c.e.o. Eric Claus as "a template for a
massive Pathmark refresh between now and the end of 2009," the
company also opened its first Best Cellars wine store and revealed
additional plans for standalone units and branded grocery
aisles.
Also on tap for this year, according to Hans Heer, general manager
of A&P's upscale The Food Emporium banner and an s.v.p. at
Montvale, N.J.-based A&P, is a standalone version of The Food
Emporium's popular "Food to Go" prepared food concept.
While dreaming up new formats, however, the company hasn't
neglected to tweak its older ones: New iterations of its
tried-and-true fresh stores, now showcasing a European market
design, continue to roll out.--B.G.
 |
| Hannaford |
Hannaford Supermarkets
Bouncing back from a near-disastrous computer data breach in March
2008 that compromised thousands of customer credit and debit card
numbers, Scarborough, Maine-based Hannaford is resolutely looking
ahead. The grocer faced the problem head-on, first by creating
bag-stuffers apologizing to its shoppers, and then unveiling its
intention to roll out sophisticated firewall technology over the
next 18 months.
Meanwhile the chain is dealing in a similarly forthright manner
with the recent announcement that it is asking for voluntary
resignations at its corporate headquarters, with the aim of
restructuring the business for greater cost-effectiveness.
On the unequivocally positive side, Hannaford's acclaimed "Guiding
Stars" nutrition rating system continues to flourish: The program
is not only in place at the grocer and its fellow Delhaize America
banners, but is also now broadening its reach to include Delhaize
locations in Europe, as well as such partners outside the grocery
channel as schools, health care providers, restaurants, and
regional and national food manufacturers.--B.G.
 |
| HEB/b> |
H.E. Butt Grocery Co.
San Antonio-based H.E. Butt Grocery Co. recently opened its
"greenest" store, the chain's first but not last to be LEED
certified. Alon Market, a 128,000-square-foot new store format in
San Antonio, featuring the chain's largest selection of kosher food
and elements of HEB's upscale Central Market and HEB Plus! big-box
concepts, has debuted. A mammoth HEB Plus! opened in the chain's
hometown in November. At 178,500 square feet, this next-generation
store is designed to compete with big-box stores.
The Texan grocer appears to have a handle on the economy for 2009,
when it comes to serving shoppers. HEB offers meals for under $10
aimed at consumers who, in a good economy, ate out more
often.
"HEB is well positioned for today's economy because of their very
strong price positioning," says Neil Stern, partner at
Chicago-based McMillan/Doolittle. "They should gain share as
customers look to more value alternatives. We also see them
emphasizing their private label more, which is in sync with
consumer shifts occurring."--D.G.F.
 |
| HyVee |
Hy-Vee, Inc.
As one of the most progressive grocers in the nation, West Des
Moines, Iowa-based Hy-Vee, Inc. is gearing up to unveil a
long-awaited smaller store concept, called Heartland Pantry, that
will feature roughly 20,000 square feet.
The 225-store chain's choice of the Heartland Pantry name harkens
back to its now defunct c-store operation in Iowa, which it
divested in 1999. Larger than a c-store but smaller than Hy-Vee's
flagship metro stores, the format will adopt a limited-assortment
merchandising approach. "There is a value in developing a smaller
store model with a limited assortment of merchandise," says Ric
Jergens, c.e.o. of the well-respected employee-owned chain. "It was
important to us to come up with a format that would be intriguing,
practical, and successful. We think we've found one."
At the other end of the spectrum, the chain is also keeping the
wheels spinning on a larger store blueprint that features attached
wine and spirits shops, ample eat-in and takeout dining options,
drive-up pharmacies, digital photo labs, gourmet salads, club rooms
for classes and meetings, and in-store dietitians.--M.M.
 |
| Kroger |
The Kroger Co.
Against a backdrop of what will likely rate among the most
challenging cycles in the history of modern supermarket retailing,
The Kroger Co.'s exemplary performance in 2008 is the benchmark by
which all other supermarket chains will be judged in 2009.
Progressive Grocer's 2008 Retailer of the Year is wisely using its
healthy cash stream to leverage capital investments, debt
reduction, and dividend payments. Indeed, its flush cap ex purse,
excluding acquisitions, totaled $604 million in its most recent
third quarter, which resulted in 14 new, expanded, or relocated
stores and 55 remodels. In the near term, the chain expects to
open, expand, or relocate approximately 60 stores and complete
between 165 and 180 store remodels during fiscal 2008. But it's the
company's much-touted "Customer 1st" game plan that that will
optimize the talents and commitment of its base of over 320,000
associates.--M.M.
Meijer, Inc.
With the majority of its 185 stores situated in one of the
hardest-hit economic regions of the country, supercenter pioneer
Meijer, Inc. is going to great lengths not only to help shoppers
stretch their dollars, but also to keep them loyal and engaged. Its
highly visible price-drop program, overlaid atop its weekly
specials that regularly target staples, aptly reinforces the Grand
Rapids, Mich.-based retailer's aggressive promotional
mindset.
Customers have come to count on this, but it's also clear that
Meijer is working double-time to simultaneously adapt to shoppers'
changing needs via timesaving conveniences. Case in point: its
Grocery Express service that debuted last September in Meijer's
Knapp's Corner store, in Grand Rapids. Melding the convenience of
online shopping with the ease, speed, and attention offered by a
personal shopper, the service allows shoppers to select grocery and
HBC products on an eponymous Web site, and then have them delivered
to their car at a designated location within the store's parking
lot.
The new online scheme aptly underscores Meijer's leadership in
maximizing its online presence as well. Meijer now also offers
shoppers a chance to buy grocery and dry goods in bulk via its
"Grocery by the Case" program. Featuring over 2,000 products with
an estimated 5 percent savings, the service, which ships free with
orders of $150 or more, plays up Meijer's cornerstone grocery roots
and serves as a logical extension of its established
brand.--M.M.
 |
| Penn Traffic |
Penn Traffic Co.
2008 was a tough year for Syracuse, N.Y.-based Penn Traffic, as the
regional grocer struggled to salvage its core business through such
means as the closing of its Penny Curtiss bakery division and
several underperforming stores, and similar struggles in this time
of recession are all too likely in 2009 as well.
On a cheerful note, however, the grocer was able to reach a
settlement with the SEC, finally bringing to a conclusion the
commission's investigation into Penn Traffic's accounting practices
and policies from fiscal years 2001 through 2003.
The company's recent agreement to sell its wholesale business
segment to C&S Wholesale Grocers also bodes well for the
future: Said Penn Traffic president and c.e.o. Gregory J. Young:
"Now, with the significant deleveraging of the balance sheet, we
expect to accelerate our progress toward rebuilding the company,
restoring profitability, and positioning Penn Traffic for long-term
success. While the divestiture will lower Penn Traffic's total
revenues in the short term, the transaction is designed to
dramatically improve the company's capital structure,
profitability, and operating cash flows, and it enhances our
strategic focus on grocery retail for the long term."--B.G.
 |
| Publix |
Publix Super Markets, Inc.
This has been a year of growth for Publix. The Lakeland,
Fla.-based, privately owned grocer announced it would acquire 49
Florida stores from Albertson's, LLC, with conversion of the stores
scheduled for completion in 2009. To handle additional volume from
the acquisition and the 63 new stores built this year, Publix will
open new distribution facilities.
"The economy has not affected or delayed our scheduled/projected
store openings with the acquisitions or in any of our operating
states," says Publix spokeswoman Maria Brous. Publix is opening new
stores in Alabama, the first in 10 years, and plans nine new units
in the Atlanta metro area.
Publix added a new GreenWise Market and one new Sabor store to its
lineup in 2008. The grocer also entered areas with limited land by
building multilevel units with parking below. The chain's store
count will reach 1,000 in early 2009, according to
Brous.--D.G.F.
 |
| Roundy's |
Roundy's Supermarkets Inc.
Having cleared numerous hurdles on a six-year journey to transform
itself from a wholesale- to a retail-driven organization, Roundy's
Supermarkets, Inc. today is a formidable, self-distributing
regional force on the grocery scene in the upper Midwest.
The Milwaukee-based company leapfrogged from roughly 50 stores to
the present 152 corporately owned units, turning $4 billion in
sales, under the tenure of Robert Mariano, who took the helm as
chairman/c.e.o. in June 2002. (For more details on Roundy's
strategy, see our coverage on the company as one of PG's
Outstanding Independents.)
Mariano's operating model, a back-to-basics approach of "serving
the customer one at a time," is so far producing positive results
in the areas of merchandising, store operations, category
management, and marketing.
As a relatively new supermarket chain, on the other hand, Roundy's
has its work cut out for it, especially in the hotly competitive
Chicago market. But many industry observers believe Mariano--with
the capable assistance of many of his former longtime Dominick's
colleagues--is fully capable of doing whatever it takes to deliver
the goods.--M.M.
Safeway, Inc.
With its massive Lifestyle remodel program slated to finish this
year, Safeway's immediate future will be determined by the answer
to the question: "What will life after Lifestyle be like for
Safeway?"
According to chairman, president, and c.e.o. Steve Burd, profits
may beat Wall Street expectations in 2009, thanks to the results of
recent and continuing cost cuts and shifts in offerings to address
price-conscious shoppers. Last month Burd said he expects Safeway
to earn $2.34 to $2.44 per share in fiscal 2009.
"We are focused on growing our business in this tough economic
environment, as well as in the long run," noted Burd. "With the
freshest asset base in the supermarket industry, a differentiated
offering, and ongoing investments in everyday price, we believe we
are very well positioned to improve our sales momentum in
2009."
The big grocer also continues to think big with potential
high-growth segments outside of the grocery industry, a strategy
typified by its mostly lucrative Blackhawk gift card
division.
The Pleasanton, Calif. chain's latest high-growth venture is real
estate. While Burd has kept the details of this initiative close to
the vest--as he did initially with the gift card business--he told
investors in December 2008 that the company was already involved in
36 projects, with more to come in 2009.--J.T.
Spartan Stores, Inc.
On track to reach $3.2 billion in annual sales by 2010, Spartan
Stores has set a busy, productive pace in recent years, capped by
record fiscal results, continued business expansion, and completion
of several significant milestones.
Look for the Grand Rapids, Mich.-based, acquisition-rich
distributor to continue to focus on winning over more customers
with its fleet of 85 corporate Family Fare, Glen's, D&W Fresh
Markets, and Felpausch Food Centers.
Spartan recently broke ground on an environmentally friendly,
38,000-square-foot concept Glen's Market set to open this summer in
Manistee, Mich.--the first newly constructed unit for the banner in
seven years, as well as the first of as many as 10 new or
replacement stores eyed for completion in the next three
years.
Company president Dennis Eidson--who took on additional c.e.o.
responsibilities in October from chairman Craig Sturken--will
continue to be instrumental in keeping Spartan moving in a positive
direction.
The key to doing so, says Eidson, will be through a dual focus on
organic growth and prudent acquisitions, the most recent of which
was VG's Food and Pharmacy, Spartan's third significant acquisition
of an independent operator in less than three years.
Moreover, by positioning itself as "the exit strategy of choice"
for many of its distribution customers, Spartan's ongoing '09 plans
will further highlight major store remodels and new fuel centers,
the latter of which the company considers to be great
traffic-builders for fuel-purchasing customers who are taking
advantage of cross-promotions between the stores and its gas
stations.--M.M.
 |
| Supervalu |
Supervalu, Inc.
Armed with a new national branding campaign--"Good things are just
around the corner"--to help win over economically stressed
consumers, Minneapolis-based Supervalu is angling to unite its
disparate retail operations under a common theme, while reinforcing
the unique things that make each local banner relevant to its
respective markets.
The new national branding effort is but one of many key initiatives
Supervalu is bent on pursuing this year in a bid to accelerate the
pace of progress since bringing the premier Albertsons banners into
the fold two and a half years ago. This year it's raising the bar
on the shopper experience by improving in-store execution, with key
numerators including speed of checkout, overall store appearance
and cleanliness, and associate friendliness.
While some progress has been made, management is acutely aware that
much work remains to be done, especially at divisional levels,
where Supervalu's ongoing transition to a centrally led, locally
focused merchandising organization will seek to develop more
aggressively stronger vendor partnerships.
Supervalu's various regional price-impact banners, and especially
its extreme-value, limited-assortment Save-A-Lot stores, are
particularly well positioned to capture more action among
economically stressed consumers this year. But there also remains a
need to be smarter about how and where it invests in price in the
categories that people buy every day, to reap the greatest
rewards.--M.M.
 |
| Tops |
Tops Markets, LLC
Ever since Williamsville, N.Y.-based Tops, a former Ahold USA
banner, was acquired by Morgan Stanley Private Equity in December
2007, it's been busy remaking itself as the ubiquitous hometown
retailer it was in its pre-Ahold days, and more differentiating
moves can be expected in 2009.
With a revamped management team headed by c.e.o. Frank Curci, a
company veteran, Tops is making such winning moves as instituting a
locally grown produce program and teaming up with area businesses
to boost the regional economy, in addition to enhancing the
shopping experience by offering Tim Hortons quick-serve restaurants
or kiosks in its stores.
Additionally, Curci has said that the company will be growing its
footprint over the next few years in such key markets as Rochester
and Buffalo, N.Y. According to mid-December press reports, Tops is
considering opening seven to 10 new stores, and plans to spend $150
million on renovations to its existing stores.--B.G.
 |
| Wal-Mart China |
Wal-Mart, Inc.
Bentonville, Ark.-based Walmart's stores (the company drops the
hyphen when it speaks of its U.S. retail operations) have
inevitably become even more attractive to consumers in tough
economic times. Sales for the giant retailer rose this year;
however, Walmart cut both its outlook for 2009 and its number of
new store openings. Other reactions by the retailer to the slumping
economy included new rollback prices and ad campaigns demonstrating
what shoppers could save by shopping at Walmart.
The chain's first Marketside stores rolled out this year in
Phoenix, and the retailer revealed a new supercenter format focused
on convenience. Both store strategies should figure in plans for
2009 and beyond.
For 2009, the influence of new c.e.o. Mike Duke, who replaces Lee
Scott, should be felt as the economy still struggles.
"Wal-Mart is extremely well positioned for 2009 as the country
deals with unprecedented economic issues," says Neil Stern, partner
at Chicago's McMillan/Doolittle. "They have carved out price
leadership and have made a compelling case for consumers as an
effective one-stop shop, and are one of the few winners in today's
climate. Marketside is still clearly in test mode. We would expect
to see a few tweaks in 2009, but doubt there are any significant
plans for rollout yet."--D.G.F.
 |
| Whole Foods |
Whole Foods Market
Austin, Texas-based organic and natural food grocer Whole Foods
Market had a bumpy 2008, to put it mildly. First, the Federal Trade
Commission's antitrust case against Whole Foods' merger with
competitor Wild Oats was revived. Next, the grocer, which prides
itself on quality, recalled E. coli tainted meat. As the economy
worsened, some consumers began to bypass the upscale grocer's
organic offerings, prompting Whole Foods to offer weekly customer
tours promoting value.
Negative Q3 financials caused Whole Foods to reduce its planned new
store openings in 2009 to 15 and cut cap ex by 50 percent, leaving
some potential landlords holding the lease. Prior to releasing more
negative results for Q4 2008, Whole Foods announced that private
equity firm Green Equity Investors had bought preferred company
shares for $425 million, yielding a 17 percent stake in the
company. The grocer is using the funds to pay down debt and
maintain long-term liquidity in the down economy.
Whole Foods continued its many innovative and philanthropic efforts
throughout the year, including green initiatives and low-cost loans
to small food producers. The grocer became the first company in the
United States to generate 100 percent of its electricity needs
on-site using recycled cooking oil from its commissary kitchen and
store locations. Awards included the highest ranking of U.S.
supermarkets for availability of humanely labeled products.
Whole Foods' 2009 outlook is more vulnerable in a down economy than
most supermarkets, although its cash transfusion should help keep
it healthy.--D.G.F.
Winn-Dixie, Inc.
The Southeastern grocer continued to progress under Peter Lynch's
leadership in 2008, with a new corporate brand and an ambitious
store remodel program. The company says these factors will help
improve its profitability in fiscal 2009.
"We made significant progress with the company's strategic
initiatives, which gives us a stronger foundation and added
confidence as we head into fiscal 2009," noted Lynch.
While the grocer posted net losses in its last two fiscal quarters,
the loss in fiscal Q4 2009 was smaller than expected by analysts,
and Winn-Dixie stuck by its full-year forecast. Both sales and
identical-store sales rose 3 percent in the quarter. The regional
grocer said its sales benefited from customers' stocking up on food
ahead of several hurricanes and tropical storms. Winn-Dixie added
it was able to reopen its stores quicker than its rivals after
storm-related power outages.
Winn-Dixie's launch of its new corporate-brand program appears to
be a positive move, with the grocer reporting a private label
penetration rate of 22 percent. The chain emphasized its commitment
to store-specific merchandising through its neighborhood marketing
and multicultural programs.
Less than 18 months after announcing its remodel initiative,
Winn-Dixie celebrated its 100th store remodel. Plans are for the
500-plus-store chain to remodel 75 additional units in fiscal 2009,
with all remodels slated for completion by the end of fiscal
2013.--D.G.F.
FEATURE: Current Events: Retail newsmakers
Jan 12, 2009
-By PG Staff
In a year in which headlines are sure to be more dramatic than usual across the country, you can also be sure supermarket operators will be creating their own share of headlines in 2009. The expanding pressures of a contracting economy will doubtless drive the retail news over the course of the year, and Progressive Grocer will be there to record the highs and lows as this pressure cooker affects the industry. What follows is our best estimate of which supermarket industry players are most likely in this volatile climate to make news, good or bad, in the coming year.
The trends to watch will include escalating price wars, expanding private label programs, decelerating store openings and cap ex strategies, and sadly, the real potential for layoffs to spread as pressures for cost cuts continue.
The food retail world will also be closely watching the face-off between global corporate giants Tesco and Walmart as they brandish their latest weapon of choice, the small, fresh-focused store format. The bill reads: Fresh & Easy vs. Marketside, a battle royal for the hearts and wallets of Phoenix shoppers.
Indeed, shoppers--most of whom are under just as much pressure as grocers, if not more--and the decisions they make as they seek to feed themselves and their families, will drive the most important news for grocers in 2009, whether they make the headlines or not.
Ahold USA
Ahold USA has managed to keep comps rising, despite a tanking economy, and a considerable bite taken out of its second-quarter margins last year by the ongoing Value Improvement Program (VIP) at U.S. banners Stop & Shop and Giant-Landover. The key to this has been that its price investments have allowed it to stay competitive in its markets.
No doubt the division's recently restructured leadership, including the appointments of Carl Schlicker, formerly Giant-Carlisle's president and c.e.o., to the helm of Stop & Shop/Giant-Landover, and Sander van der Laan, onetime e.v.p. marketing and merchandising at Albert Heijn, to head up Giant-Carlisle, will continue to keep business fresh.
Also expected to bear fruit in 2009 is Stop & Shop/Giant-Landover's projected three-year store-base makeover, which was introduced last year and encompasses such features as new logos, staff uniforms, product selections, and in-store technology.--Bridget Goldschmidt
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| Albertsons |
Albertson's, LLC
Albertsons spent the past year getting into fighting trim--shedding excess pounds and developing a more focused right hook. In May it sold 72 convenience stores and fueling kiosks to fuel marketer and convenience store operator Valero Energy Corp. The reason for the divestment, according to Boise, Idaho-based Albertsons, was so it could focus its energies on core grocery and pharmacy businesses.
Then in June the privately held company sold 49 of its Florida stores to Publix Super Markets, Inc.
This year the grocer may indeed hit its ideal weight. With c.e.o. Bob Miller now on the FMI board of directors, the slimmer, more agile company might just start doing some fancy footwork.--Joseph Tarnowski
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| Aldi's |
Aldi, Inc.
Although the credit crunch has put on a damper on many retailers' bottom lines, it's clearly turned into a sales boon for entrenched discount grocer Aldi, which in recent months has been vigorously touting its ability to help consumers stretch their food bucks.
The historically and notoriously media-shy Aldi is in the midst of a high-visibility campaign hyping what it calls its affordable, high-quality signature offerings. Batavia, Ill.-based Aldi's also turning up the heat on its "Special Purchases" program, which offers "limited-time, while-supplies-last" products.
You can expect Aldi to be on the move this year. It now operates nearly 1,000 U.S. stores in 29 states out of its Chicago-area U.S. headquarters, and has dramatically stepped up its American expansion--particularly in Florida and Texas, two traditional strongholds for Walmart.
The small-format discounter has opened a DC in Haines City, Fla. to support some 25 new stores. It also recently confirmed some details for its Texas strategy, which calls for opening 25 stores in the Dallas-Fort Worth area, including the conversion of former freestanding Albertsons and Super 1 Foods stores, and a $40 million, 500,000-square-foot facility in Denton, Texas, its DC in the Southwest.--Meg Major
Bashas' Supermarkets
Bashas' enters the New Year with a fresh new format--literally. The Chandler, Ariz.-based chain's new concept store features an innovative food court that offers fresh Italian, Asian, and American cuisine available for takeout or dine-in.
The new concept is a positive note for the grocer, which otherwise hit some bumps in the road in 2008; the tough economy led to the shuttering of its home delivery operations, as well as trims to its administrative staff. It has also been enduring a prolonged and aggressive unionization campaign that's sure to have ramifications for 2009. What's more, its home turf has become ground zero for a format battle between Walmart and Tesco (see the Fresh & Easy entry below).--J.T.
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| BJ's Laura Sen |
BJ's Wholesale Club
After a solid year of comparable-club sales increases and a flourishing food business, particularly in perishables, BJ's Wholesale Club now welcomes new leadership at the top: Laura Sen, the retailer's president and c.o.o. since January 2008, has been elevated to c.e.o., effective Feb.1 of this year.
Predecessor Herb Zarkin, who took the position of interim c.e.o. to turn the company's fortunes around after the departure of Mike Wedge in late 2006, notes: "Laura has done an outstanding job of managing our day-to-day operations for the past year. Our business has never run more smoothly. Laura and her team have improved our members' experience by providing better merchandise quality, and value, and by raising operating standards in our clubs."
Sen's challenge as c.e.o. will doubtless be to keep that robust growth coming in a bleak economic climate.
Additionally, as Zarkin noted in December, the company will move ahead in 2009 with its multiyear plan to upgrade and replace many of its technological reporting systems.--B.G.
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| Food Lion |
Food Lion, LLC
In December 2008 Rick Anicetti, Food Lion, LLC's c.e.o., said his company's brands were positioned for success in a down economy. The Salisbury, N.C.-based regional grocer, a leading division of the Delhaize Group, will focus this year on connecting with the customer and "providing value and comfort to all consumers," notes Anicetti.
In 2008 the grocer slated 150 stores for remodel, and "relaunched" 58 stores in Georgia and Alabama. New Food Lion units are planned for the Atlanta area, while a few stores at the end of leases, such as one in Asheville, N.C., were closed.
The grocer also opened a new prototype for its Bottom Dollar Food format, based on "right-sizing" the footprint, while the group's Bloom format continued to be profitable.
Food Lion's business model for 2009 focuses on delivering low prices by reducing costs and managing brands, segments, and clusters in a low-cost environment. The company will invest in pricing to increase traffic and basket size, and support profitability. Growth in 2009 will be "within the four walls" through assortment renewal, new store openings in existing and new markets in the current geography, and market renewals in Daytona, Fla. and Columbia, S.C.
Hannaford, Food Lion's sister company in Delhaize, announced job cuts in December, which begs the question of whether the ax may fall at the Lion as well.--D. Gail Fleenor
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| Fresh & Eash |
Fresh & Easy Neighborhood Market
Tesco-owned Fresh & Easy won't hit its original target of 200 stores in the western United States by February, and it faces a direct challenge from its American-based counterpart, Walmart's Marketside, in the crucial test lab of the Phoenix market. However, it still had a strong run during the past year, celebrating its 100th store opening Nov. 12.
More importantly, the grocer has managed so far to evolve its small format continually in trying to adapt to a market that, for all of Fresh & Easy's pre-launch homework, it's still only learning how to service.
Fresh & Easy in 2009 promises more green initiatives, including such sustainable practices as the solar panel installation at its California distribution center, which provides nearly three-quarters of the facility's energy. The company is a pilot member of the Leadership in Energy and Environmental Design (LEED) volume certification program, recycles or reuses all of its display and shipping materials, and voluntarily discloses its greenhouse gas emissions.
So while it may not be growing as fast as initially intended, this year will still see plenty of action from Fresh & Easy.--J.T.
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| Giant Eagle |
Giant Eagle, Inc.
After carefully orchestrating concepts geared to foodies, drivers looking for gasoline discounts, and convenience-oriented shoppers in search of quick and easy pop-ins, Pittsburgh-based Giant Eagle is discreetly tipping its talons into yet another market--that of discount foods, with the new Valu King format in suburban Cleveland, Ohio.
The privately held chain already runs 157 corporate stores, with another 69 independently owned and operated franchises, plus 120 fuel and c-stores throughout western Pennsylvania, Ohio, north central West Virginia, and Maryland. According to its front office, Giant Eagle will take an arm's-length approach to this latest concept, with no fuelperks! discounts and no advantage card incentives included in the Valu King offering. Valu King's autonomous management team says it will closely monitor the inaugural store's progress to determine future directions as demand dictates.
Meanwhile Giant Eagle continues to introduce new twists on its popular fuelperks! gasoline discount rewards program, including a move in Columbus, Ohio to transpose the loyalty program with grocery discounts for those who buy gas at the chain's companion Get Go c-store outlets. The chain says a further expansion of the foodperks! test might come next. Its first-ever LEED Gold award in the "New Construction" category, for a supermarket in northeast Columbus, has also spurred Giant Eagle to keep its environmentally friendly store design a top priority.--M.M.
Great Atlantic & Pacific Tea Co.
Exciting new store formats continued to be the name of the game for A&P last year--and should be this year, too. In addition to its Pathmark Sav-A-Center Price Impact format, which debuted last year in New Jersey and the Philadelphia area and was described by A&P president and c.e.o. Eric Claus as "a template for a massive Pathmark refresh between now and the end of 2009," the company also opened its first Best Cellars wine store and revealed additional plans for standalone units and branded grocery aisles.
Also on tap for this year, according to Hans Heer, general manager of A&P's upscale The Food Emporium banner and an s.v.p. at Montvale, N.J.-based A&P, is a standalone version of The Food Emporium's popular "Food to Go" prepared food concept.
While dreaming up new formats, however, the company hasn't neglected to tweak its older ones: New iterations of its tried-and-true fresh stores, now showcasing a European market design, continue to roll out.--B.G.
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| Hannaford |
Hannaford Supermarkets
Bouncing back from a near-disastrous computer data breach in March 2008 that compromised thousands of customer credit and debit card numbers, Scarborough, Maine-based Hannaford is resolutely looking ahead. The grocer faced the problem head-on, first by creating bag-stuffers apologizing to its shoppers, and then unveiling its intention to roll out sophisticated firewall technology over the next 18 months.
Meanwhile the chain is dealing in a similarly forthright manner with the recent announcement that it is asking for voluntary resignations at its corporate headquarters, with the aim of restructuring the business for greater cost-effectiveness.
On the unequivocally positive side, Hannaford's acclaimed "Guiding Stars" nutrition rating system continues to flourish: The program is not only in place at the grocer and its fellow Delhaize America banners, but is also now broadening its reach to include Delhaize locations in Europe, as well as such partners outside the grocery channel as schools, health care providers, restaurants, and regional and national food manufacturers.--B.G.
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| HEB/b> |
H.E. Butt Grocery Co.
San Antonio-based H.E. Butt Grocery Co. recently opened its "greenest" store, the chain's first but not last to be LEED certified. Alon Market, a 128,000-square-foot new store format in San Antonio, featuring the chain's largest selection of kosher food and elements of HEB's upscale Central Market and HEB Plus! big-box concepts, has debuted. A mammoth HEB Plus! opened in the chain's hometown in November. At 178,500 square feet, this next-generation store is designed to compete with big-box stores.
The Texan grocer appears to have a handle on the economy for 2009, when it comes to serving shoppers. HEB offers meals for under $10 aimed at consumers who, in a good economy, ate out more often.
"HEB is well positioned for today's economy because of their very strong price positioning," says Neil Stern, partner at Chicago-based McMillan/Doolittle. "They should gain share as customers look to more value alternatives. We also see them emphasizing their private label more, which is in sync with consumer shifts occurring."--D.G.F.
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| HyVee |
Hy-Vee, Inc.
As one of the most progressive grocers in the nation, West Des Moines, Iowa-based Hy-Vee, Inc. is gearing up to unveil a long-awaited smaller store concept, called Heartland Pantry, that will feature roughly 20,000 square feet.
The 225-store chain's choice of the Heartland Pantry name harkens back to its now defunct c-store operation in Iowa, which it divested in 1999. Larger than a c-store but smaller than Hy-Vee's flagship metro stores, the format will adopt a limited-assortment merchandising approach. "There is a value in developing a smaller store model with a limited assortment of merchandise," says Ric Jergens, c.e.o. of the well-respected employee-owned chain. "It was important to us to come up with a format that would be intriguing, practical, and successful. We think we've found one."
At the other end of the spectrum, the chain is also keeping the wheels spinning on a larger store blueprint that features attached wine and spirits shops, ample eat-in and takeout dining options, drive-up pharmacies, digital photo labs, gourmet salads, club rooms for classes and meetings, and in-store dietitians.--M.M.
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| Kroger |
The Kroger Co.
Against a backdrop of what will likely rate among the most challenging cycles in the history of modern supermarket retailing, The Kroger Co.'s exemplary performance in 2008 is the benchmark by which all other supermarket chains will be judged in 2009.
Progressive Grocer's 2008 Retailer of the Year is wisely using its healthy cash stream to leverage capital investments, debt reduction, and dividend payments. Indeed, its flush cap ex purse, excluding acquisitions, totaled $604 million in its most recent third quarter, which resulted in 14 new, expanded, or relocated stores and 55 remodels. In the near term, the chain expects to open, expand, or relocate approximately 60 stores and complete between 165 and 180 store remodels during fiscal 2008. But it's the company's much-touted "Customer 1st" game plan that that will optimize the talents and commitment of its base of over 320,000 associates.--M.M.
Meijer, Inc.
With the majority of its 185 stores situated in one of the hardest-hit economic regions of the country, supercenter pioneer Meijer, Inc. is going to great lengths not only to help shoppers stretch their dollars, but also to keep them loyal and engaged. Its highly visible price-drop program, overlaid atop its weekly specials that regularly target staples, aptly reinforces the Grand Rapids, Mich.-based retailer's aggressive promotional mindset.
Customers have come to count on this, but it's also clear that Meijer is working double-time to simultaneously adapt to shoppers' changing needs via timesaving conveniences. Case in point: its Grocery Express service that debuted last September in Meijer's Knapp's Corner store, in Grand Rapids. Melding the convenience of online shopping with the ease, speed, and attention offered by a personal shopper, the service allows shoppers to select grocery and HBC products on an eponymous Web site, and then have them delivered to their car at a designated location within the store's parking lot.
The new online scheme aptly underscores Meijer's leadership in maximizing its online presence as well. Meijer now also offers shoppers a chance to buy grocery and dry goods in bulk via its "Grocery by the Case" program. Featuring over 2,000 products with an estimated 5 percent savings, the service, which ships free with orders of $150 or more, plays up Meijer's cornerstone grocery roots and serves as a logical extension of its established brand.--M.M.
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| Penn Traffic |
Penn Traffic Co.
2008 was a tough year for Syracuse, N.Y.-based Penn Traffic, as the regional grocer struggled to salvage its core business through such means as the closing of its Penny Curtiss bakery division and several underperforming stores, and similar struggles in this time of recession are all too likely in 2009 as well.
On a cheerful note, however, the grocer was able to reach a settlement with the SEC, finally bringing to a conclusion the commission's investigation into Penn Traffic's accounting practices and policies from fiscal years 2001 through 2003.
The company's recent agreement to sell its wholesale business segment to C&S Wholesale Grocers also bodes well for the future: Said Penn Traffic president and c.e.o. Gregory J. Young: "Now, with the significant deleveraging of the balance sheet, we expect to accelerate our progress toward rebuilding the company, restoring profitability, and positioning Penn Traffic for long-term success. While the divestiture will lower Penn Traffic's total revenues in the short term, the transaction is designed to dramatically improve the company's capital structure, profitability, and operating cash flows, and it enhances our strategic focus on grocery retail for the long term."--B.G.
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| Publix |
Publix Super Markets, Inc.
This has been a year of growth for Publix. The Lakeland, Fla.-based, privately owned grocer announced it would acquire 49 Florida stores from Albertson's, LLC, with conversion of the stores scheduled for completion in 2009. To handle additional volume from the acquisition and the 63 new stores built this year, Publix will open new distribution facilities.
"The economy has not affected or delayed our scheduled/projected store openings with the acquisitions or in any of our operating states," says Publix spokeswoman Maria Brous. Publix is opening new stores in Alabama, the first in 10 years, and plans nine new units in the Atlanta metro area.
Publix added a new GreenWise Market and one new Sabor store to its lineup in 2008. The grocer also entered areas with limited land by building multilevel units with parking below. The chain's store count will reach 1,000 in early 2009, according to Brous.--D.G.F.
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| Roundy's |
Roundy's Supermarkets Inc.
Having cleared numerous hurdles on a six-year journey to transform itself from a wholesale- to a retail-driven organization, Roundy's Supermarkets, Inc. today is a formidable, self-distributing regional force on the grocery scene in the upper Midwest.
The Milwaukee-based company leapfrogged from roughly 50 stores to the present 152 corporately owned units, turning $4 billion in sales, under the tenure of Robert Mariano, who took the helm as chairman/c.e.o. in June 2002. (For more details on Roundy's strategy, see our coverage on the company as one of PG's Outstanding Independents.)
Mariano's operating model, a back-to-basics approach of "serving the customer one at a time," is so far producing positive results in the areas of merchandising, store operations, category management, and marketing.
As a relatively new supermarket chain, on the other hand, Roundy's has its work cut out for it, especially in the hotly competitive Chicago market. But many industry observers believe Mariano--with the capable assistance of many of his former longtime Dominick's colleagues--is fully capable of doing whatever it takes to deliver the goods.--M.M.
Safeway, Inc.
With its massive Lifestyle remodel program slated to finish this year, Safeway's immediate future will be determined by the answer to the question: "What will life after Lifestyle be like for Safeway?"
According to chairman, president, and c.e.o. Steve Burd, profits may beat Wall Street expectations in 2009, thanks to the results of recent and continuing cost cuts and shifts in offerings to address price-conscious shoppers. Last month Burd said he expects Safeway to earn $2.34 to $2.44 per share in fiscal 2009.
"We are focused on growing our business in this tough economic environment, as well as in the long run," noted Burd. "With the freshest asset base in the supermarket industry, a differentiated offering, and ongoing investments in everyday price, we believe we are very well positioned to improve our sales momentum in 2009."
The big grocer also continues to think big with potential high-growth segments outside of the grocery industry, a strategy typified by its mostly lucrative Blackhawk gift card division.
The Pleasanton, Calif. chain's latest high-growth venture is real estate. While Burd has kept the details of this initiative close to the vest--as he did initially with the gift card business--he told investors in December 2008 that the company was already involved in 36 projects, with more to come in 2009.--J.T.
Spartan Stores, Inc.
On track to reach $3.2 billion in annual sales by 2010, Spartan Stores has set a busy, productive pace in recent years, capped by record fiscal results, continued business expansion, and completion of several significant milestones.
Look for the Grand Rapids, Mich.-based, acquisition-rich distributor to continue to focus on winning over more customers with its fleet of 85 corporate Family Fare, Glen's, D&W Fresh Markets, and Felpausch Food Centers.
Spartan recently broke ground on an environmentally friendly, 38,000-square-foot concept Glen's Market set to open this summer in Manistee, Mich.--the first newly constructed unit for the banner in seven years, as well as the first of as many as 10 new or replacement stores eyed for completion in the next three years.
Company president Dennis Eidson--who took on additional c.e.o. responsibilities in October from chairman Craig Sturken--will continue to be instrumental in keeping Spartan moving in a positive direction.
The key to doing so, says Eidson, will be through a dual focus on organic growth and prudent acquisitions, the most recent of which was VG's Food and Pharmacy, Spartan's third significant acquisition of an independent operator in less than three years.
Moreover, by positioning itself as "the exit strategy of choice" for many of its distribution customers, Spartan's ongoing '09 plans will further highlight major store remodels and new fuel centers, the latter of which the company considers to be great traffic-builders for fuel-purchasing customers who are taking advantage of cross-promotions between the stores and its gas stations.--M.M.
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| Supervalu |
Supervalu, Inc.
Armed with a new national branding campaign--"Good things are just around the corner"--to help win over economically stressed consumers, Minneapolis-based Supervalu is angling to unite its disparate retail operations under a common theme, while reinforcing the unique things that make each local banner relevant to its respective markets.
The new national branding effort is but one of many key initiatives Supervalu is bent on pursuing this year in a bid to accelerate the pace of progress since bringing the premier Albertsons banners into the fold two and a half years ago. This year it's raising the bar on the shopper experience by improving in-store execution, with key numerators including speed of checkout, overall store appearance and cleanliness, and associate friendliness.
While some progress has been made, management is acutely aware that much work remains to be done, especially at divisional levels, where Supervalu's ongoing transition to a centrally led, locally focused merchandising organization will seek to develop more aggressively stronger vendor partnerships.
Supervalu's various regional price-impact banners, and especially its extreme-value, limited-assortment Save-A-Lot stores, are particularly well positioned to capture more action among economically stressed consumers this year. But there also remains a need to be smarter about how and where it invests in price in the categories that people buy every day, to reap the greatest rewards.--M.M.
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| Tops |
Tops Markets, LLC
Ever since Williamsville, N.Y.-based Tops, a former Ahold USA banner, was acquired by Morgan Stanley Private Equity in December 2007, it's been busy remaking itself as the ubiquitous hometown retailer it was in its pre-Ahold days, and more differentiating moves can be expected in 2009.
With a revamped management team headed by c.e.o. Frank Curci, a company veteran, Tops is making such winning moves as instituting a locally grown produce program and teaming up with area businesses to boost the regional economy, in addition to enhancing the shopping experience by offering Tim Hortons quick-serve restaurants or kiosks in its stores.
Additionally, Curci has said that the company will be growing its footprint over the next few years in such key markets as Rochester and Buffalo, N.Y. According to mid-December press reports, Tops is considering opening seven to 10 new stores, and plans to spend $150 million on renovations to its existing stores.--B.G.
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| Wal-Mart China |
Wal-Mart, Inc.
Bentonville, Ark.-based Walmart's stores (the company drops the hyphen when it speaks of its U.S. retail operations) have inevitably become even more attractive to consumers in tough economic times. Sales for the giant retailer rose this year; however, Walmart cut both its outlook for 2009 and its number of new store openings. Other reactions by the retailer to the slumping economy included new rollback prices and ad campaigns demonstrating what shoppers could save by shopping at Walmart.
The chain's first Marketside stores rolled out this year in Phoenix, and the retailer revealed a new supercenter format focused on convenience. Both store strategies should figure in plans for 2009 and beyond.
For 2009, the influence of new c.e.o. Mike Duke, who replaces Lee Scott, should be felt as the economy still struggles.
"Wal-Mart is extremely well positioned for 2009 as the country deals with unprecedented economic issues," says Neil Stern, partner at Chicago's McMillan/Doolittle. "They have carved out price leadership and have made a compelling case for consumers as an effective one-stop shop, and are one of the few winners in today's climate. Marketside is still clearly in test mode. We would expect to see a few tweaks in 2009, but doubt there are any significant plans for rollout yet."--D.G.F.
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| Whole Foods |
Whole Foods Market
Austin, Texas-based organic and natural food grocer Whole Foods Market had a bumpy 2008, to put it mildly. First, the Federal Trade Commission's antitrust case against Whole Foods' merger with competitor Wild Oats was revived. Next, the grocer, which prides itself on quality, recalled E. coli tainted meat. As the economy worsened, some consumers began to bypass the upscale grocer's organic offerings, prompting Whole Foods to offer weekly customer tours promoting value.
Negative Q3 financials caused Whole Foods to reduce its planned new store openings in 2009 to 15 and cut cap ex by 50 percent, leaving some potential landlords holding the lease. Prior to releasing more negative results for Q4 2008, Whole Foods announced that private equity firm Green Equity Investors had bought preferred company shares for $425 million, yielding a 17 percent stake in the company. The grocer is using the funds to pay down debt and maintain long-term liquidity in the down economy.
Whole Foods continued its many innovative and philanthropic efforts throughout the year, including green initiatives and low-cost loans to small food producers. The grocer became the first company in the United States to generate 100 percent of its electricity needs on-site using recycled cooking oil from its commissary kitchen and store locations. Awards included the highest ranking of U.S. supermarkets for availability of humanely labeled products.
Whole Foods' 2009 outlook is more vulnerable in a down economy than most supermarkets, although its cash transfusion should help keep it healthy.--D.G.F.
Winn-Dixie, Inc.
The Southeastern grocer continued to progress under Peter Lynch's leadership in 2008, with a new corporate brand and an ambitious store remodel program. The company says these factors will help improve its profitability in fiscal 2009.
"We made significant progress with the company's strategic initiatives, which gives us a stronger foundation and added confidence as we head into fiscal 2009," noted Lynch.
While the grocer posted net losses in its last two fiscal quarters, the loss in fiscal Q4 2009 was smaller than expected by analysts, and Winn-Dixie stuck by its full-year forecast. Both sales and identical-store sales rose 3 percent in the quarter. The regional grocer said its sales benefited from customers' stocking up on food ahead of several hurricanes and tropical storms. Winn-Dixie added it was able to reopen its stores quicker than its rivals after storm-related power outages.
Winn-Dixie's launch of its new corporate-brand program appears to be a positive move, with the grocer reporting a private label penetration rate of 22 percent. The chain emphasized its commitment to store-specific merchandising through its neighborhood marketing and multicultural programs.
Less than 18 months after announcing its remodel initiative, Winn-Dixie celebrated its 100th store remodel. Plans are for the 500-plus-store chain to remodel 75 additional units in fiscal 2009, with all remodels slated for completion by the end of fiscal 2013.--D.G.F.