pseudo3d wrote:I was mostly thinking a mutual benefit for Randalls and Fiesta, as both can go where the other can't, but you're right, there are too many logistical problems. Some notes, though...
1. The integration between Albertsons and Safeway hasn't really been particularly encouraging. I wouldn't quite say "worst of both worlds" exactly but bad ideas ended up cross-pollinating instead of being disposed of. This included keeping the card.
The problem with cross-pollenization is that, as they say in the Facts of Life theme song, "You take the good, you take the bad...". That's what's happening. More of the bad is coming through than the good is. And folks notice bad first.
pseudo3d wrote:2. However, I don't think that Fiesta is a bad acquisition choice. It's not a "traditional" grocer but it does have decent market share in Houston, and Albertsons did in fact try a Hispanic-oriented spin-off under Larry Johnston. Plus, it does follow in Albertsons' stated desire to expand the markets that they are in.
Where is that Hispanic-oriented spinoff? Is it still open, and did it survive SuperValu or LLC? Also, sometimes expanding for the sake of expansion isn't always good, especially if you can't master what you DO know. Randalls is a very solid #4 in Houston, behind Kroger, HEB and Walmart. They need to figure out how to move up before they move out.
pseudo3d wrote:3. Fiesta's vast differentiation in store sizes may not be a bad thing, I believe I said here that this was one of H-E-B's strengths, and Fiesta stores range from 22,000 square feet (a small store they built in Conroe) to around 100,000 square feet (a former FedMart and a Globe).
Randalls/Tom Thumb also operate stores of varying sizes throughout Texas. Doesn't mean that they could do it with Fiesta.
pseudo3d wrote:4. Switching Randalls over to Grocers Supply Co. (and by extension, the Louisiana Albertsons, those though can remain under South) could be a cost saver instead of trying to truck all that from Dallas-Fort Worth.
I agree with Storewanderer on this one; changing suppliers, especially now, wouldn't be a good idea for either. Randalls doesn't have near the ethnic experience that Fiesta does, and their DC isn't equipped for it.
pseudo3d wrote:5. Anti-trust issues may crop up in Midtown, but it would be a bigger problem in Dallas-Fort Worth, so those might have to be divested. The ones that aren't could be merged in with United, and be rebranded as Amigos.
I don't believe that anti-trust will be an issue unless the FTC were to label both as traditional grocers. Also, United wouldn't be tapped to run these; they're too far outside of their wheelhouse, and they aren't expanding their Amigos format. I think they only use it for stores that are beyond major capital improvements, but stuck in a lease so they would lose out if they didn't operate it.
pseudo3d wrote:6. The expansion of the Fiesta name outside their core areas failed for different reasons, but if it was the name, then the Randalls name could help them work in more affluent areas.
It failed because the stores that have failed weren't true Fiesta stores; too much rigidity in the format.
pseudo3d wrote:7. Miller has stated wanting to buy more companies with semi-autonomous control like United.
But buying right now doesn't work with ABS's balance sheet. They need to become profitable.
pseudo3d wrote:8. Moving more control of Randalls into Fiesta could jeopardize the future of both companies.
Never a truer statement.
pseudo3d wrote:That all being said, I believe it could really work out if they played off each others benefits and adopted best practices for a better, reformed division. The reality is, unfortunately, that they don't. Maybe it could work out better if it was a deal where Randalls was sold to Fiesta for an ownership stake, much like Safeway and Vons, to buy back later.
If Safeway were in control, and this were the 80's, yes. Now, it wouldn't work because Albertsons wants to grow, not sell off stores.