Breaking: Randalls Houston DC set to close

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Breaking: Randalls Houston DC set to close

Post by architect »

Breaking: Albertsons has announced that the Randalls distribution center in Houston is set to close soon, along with much of the Houston division office. Operations are to be consolidated into the Southern division in DFW. Could this be setting the stage for a Houston market exit down the road?

http://www.houstonchronicle.com/busines ... 981428.php
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Re: Breaking: Randalls Houston DC set to close

Post by pseudo3d »

I didn't read about the division office closing, but let's be serious here, the DC was too big for the relatively small and spread-out number of stores it had to service. It would've been better to sell the DC and rely on outsourcing for the remaining stores (such as Louisiana) business-wise. I don't know what they'll do about Louisiana. It would be handy for the Louisiana stores to rely on C&S and their Winn-Dixie distribution centers (like the one in Hammond, convenient to the Baton Rouge stores), which is closer to the SuperValu warehouse they were using during the LLC days.
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Re: Breaking: Randalls Houston DC set to close

Post by wnetmacman »

pseudo3d wrote:I didn't read about the division office closing, but let's be serious here, the DC was too big for the relatively small and spread-out number of stores it had to service. It would've been better to sell the DC and rely on outsourcing for the remaining stores (such as Louisiana) business-wise. I don't know what they'll do about Louisiana. It would be handy for the Louisiana stores to rely on C&S and their Winn-Dixie distribution centers (like the one in Hammond, convenient to the Baton Rouge stores), which is closer to the SuperValu warehouse they were using during the LLC days.
I believe the C&S contract with Winn Dixie may state that the center can't sell to other companies. It could also mean a market exit for Louisiana, possibly by sale to another operator. They delivered to these stores from Supervalu's Indianola, MS center prior to the Safeway merger, so distributing to them from Dallas wouldn't be completely unheard of.
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Re: Breaking: Randalls Houston DC set to close

Post by pseudo3d »

wnetmacman wrote:
pseudo3d wrote:I didn't read about the division office closing, but let's be serious here, the DC was too big for the relatively small and spread-out number of stores it had to service. It would've been better to sell the DC and rely on outsourcing for the remaining stores (such as Louisiana) business-wise. I don't know what they'll do about Louisiana. It would be handy for the Louisiana stores to rely on C&S and their Winn-Dixie distribution centers (like the one in Hammond, convenient to the Baton Rouge stores), which is closer to the SuperValu warehouse they were using during the LLC days.
I believe the C&S contract with Winn Dixie may state that the center can't sell to other companies. It could also mean a market exit for Louisiana, possibly by sale to another operator. They delivered to these stores from Supervalu's Indianola, MS center prior to the Safeway merger, so distributing to them from Dallas wouldn't be completely unheard of.
Who would they sell to? Rouses? Kroger? Winn-Dixie? Rouses is still digesting stores (don't want to kill it off), Kroger hasn't any interest in expanding in southern Louisiana, and Winn-Dixie hasn't built any new stores in Louisiana in a while (I think they built one sometime in the late 2000s in New Orleans). A quick check a while back revealed that Indianola was closer to Dallas, but farther away from Houston.

In all honesty, the Houston DC needed to be sold off or closed but outsourcing that to DFW isn't the answer, at least for Houston and Louisiana. C&S (taking over Grocers Supply Co.) also has a large presence in Houston (though the reviews are poor). Either way, I don't think that it's time to write off the Houston Division entirely.
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Re: Breaking: Randalls Houston DC set to close

Post by wnetmacman »

pseudo3d wrote:Who would they sell to? Rouses? Kroger? Winn-Dixie? Rouses is still digesting stores (don't want to kill it off), Kroger hasn't any interest in expanding in southern Louisiana, and Winn-Dixie hasn't built any new stores in Louisiana in a while (I think they built one sometime in the late 2000s in New Orleans). A quick check a while back revealed that Indianola was closer to Dallas, but farther away from Houston.
I could see Kroger using Lafayette and Baton Rouge better this time around. Rouses most likely wouldn't want them due to the close proximity to other stores. WD has built two stores in Louisiana since 2010; one in Covington, and another in New Orleans. I went to the Covington store and was not impressed.
pseudo3d wrote:In all honesty, the Houston DC needed to be sold off or closed but outsourcing that to DFW isn't the answer, at least for Houston and Louisiana. C&S (taking over Grocers Supply Co.) also has a large presence in Houston (though the reviews are poor). Either way, I don't think that it's time to write off the Houston Division entirely.
DFW-Houston isn't that long of a haul, in the long run. DFW to Lafayette is a 6 hour drive, one way. Baton Rouge adds another hour. AWG just recently opened a DC in Slidell; Albertsons could potentially use them instead of Supervalu.
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Re: Breaking: Randalls Houston DC set to close

Post by architect »

pseudo3d wrote:I didn't read about the division office closing, but let's be serious here, the DC was too big for the relatively small and spread-out number of stores it had to service. It would've been better to sell the DC and rely on outsourcing for the remaining stores (such as Louisiana) business-wise. I don't know what they'll do about Louisiana. It would be handy for the Louisiana stores to rely on C&S and their Winn-Dixie distribution centers (like the one in Hammond, convenient to the Baton Rouge stores), which is closer to the SuperValu warehouse they were using during the LLC days.
The portion of the story regarding the division closure may not be visible to you due to a paywall (I just tried to load the article on another device and could not read it in it's entirety). The division office isn't completely closing, but a substantial portion of the staff is being laid off and the operations are being merged into the Southern division. The Houston division will no longer exist formally, and only a Houston-area office and small local staff are being retained. Although I agree that the Houston DC was far underutilized based on the number of stores it was serving, I question whether running trucks all the way from DFW will make the economics of maintaining a store base in Houston even profitable, considering their suppressed market position. According to the article, Randalls store count in Houston is down to 29, compared to the 64 Tom Thumb and 44 Albertsons locations in the DFW area, and the only real investment we have seen in the Houston market is the expansion/renovation of the Midtown store. A similar question could be posed regarding the Louisiana stores, though my guess is that these could be sold as a block if they get to the point where they are barely breaking even (possibly either to Kroger or a westward expanding Publix). I don't see Albertsons returning to outside distribution like they did in the 2000's, as they have invested too much into the development of their private-label products and the optimization of operations to make sense of running stores in an isolated market with little growth potential. Though as I say that, this is the same company which continues to run three isolated stores in the State of Florida, hundreds of miles from any of their other store base.
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Re: Breaking: Randalls Houston DC set to close

Post by storewanderer »

This is pretty significant. I expect they will keep getting smaller in Houston and eventually it will get to the point there are so few stores left, most will assume they are gone. As it is, they have so few stores, and they don't even do that great of volumes, that they are basically a non-factor.

I suppose they will stay in Houston as long as they want to. Just like they are staying in Florida... at some point you have to know when to fold them.

Houston survived a lot longer than it would have, had Safeway stayed on its own...
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Re: Breaking: Randalls Houston DC set to close

Post by pseudo3d »

architect wrote:
pseudo3d wrote:I didn't read about the division office closing, but let's be serious here, the DC was too big for the relatively small and spread-out number of stores it had to service. It would've been better to sell the DC and rely on outsourcing for the remaining stores (such as Louisiana) business-wise. I don't know what they'll do about Louisiana. It would be handy for the Louisiana stores to rely on C&S and their Winn-Dixie distribution centers (like the one in Hammond, convenient to the Baton Rouge stores), which is closer to the SuperValu warehouse they were using during the LLC days.
The portion of the story regarding the division closure may not be visible to you due to a paywall (I just tried to load the article on another device and could not read it in it's entirety). The division office isn't completely closing, but a substantial portion of the staff is being laid off and the operations are being merged into the Southern division. The Houston division will no longer exist formally, and only a Houston-area office and small local staff are being retained. Although I agree that the Houston DC was far underutilized based on the number of stores it was serving, I question whether running trucks all the way from DFW will make the economics of maintaining a store base in Houston even profitable, considering their suppressed market position. According to the article, Randalls store count in Houston is down to 29, compared to the 64 Tom Thumb and 44 Albertsons locations in the DFW area, and the only real investment we have seen in the Houston market is the expansion/renovation of the Midtown store. A similar question could be posed regarding the Louisiana stores, though my guess is that these could be sold as a block if they get to the point where they are barely breaking even (possibly either to Kroger or a westward expanding Publix). I don't see Albertsons returning to outside distribution like they did in the 2000's, as they have invested too much into the development of their private-label products and the optimization of operations to make sense of running stores in an isolated market with little growth potential. Though as I say that, this is the same company which continues to run three isolated stores in the State of Florida, hundreds of miles from any of their other store base.
- I think I might have mentioned that the indications of some internal paperwork being labeled as "South" even 12 months ago might have precipitated this a while back. Maybe this was the plan all along.
- The Dallas-Fort Worth trip is only about 3-4 hours on I-45, and that's not too bad as far as distribution is concerned. It's good for Austin but it's worse for Louisiana, but if they get AWG as a partner, it may work out.
- The chances of Albertsons selling the Louisiana stores to Publix is pretty much zero at this point, even if a real Publix is 200 miles away. Same with Kroger.
- The Eastern Division of Safeway was entirely outsourced by C&S which Safeway only recently took back. Genuardi's was also C&S, and C&S kept the DC (at least for a while). Just because they use a third party DC doesn't mean third party labels.
storewanderer wrote: Houston survived a lot longer than it would have, had Safeway stayed on its own...
Most definitely! Safeway's original Houston division was really comprehensive. They not only were well-spread throughout Houston (Randalls only hangs around suburbs and the ones that haven't dropped off, at that) but also on the fringe of development (like rings of a tree, you can see where the development of Houston reached in the late 1980s), including The Woodlands. They had a huge DC complex including a bakery and a dairy...and they had stores in even all the small towns surrounding the area (not the ~5000 pop. small towns, but they had one in Huntsville, Lake Jackson, several in Beaumont, FOUR in Bryan-College Station, etc.)
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Re: Breaking: Randalls Houston DC set to close

Post by arizonaguy »

pseudo3d wrote:
architect wrote:
pseudo3d wrote:I didn't read about the division office closing, but let's be serious here, the DC was too big for the relatively small and spread-out number of stores it had to service. It would've been better to sell the DC and rely on outsourcing for the remaining stores (such as Louisiana) business-wise. I don't know what they'll do about Louisiana. It would be handy for the Louisiana stores to rely on C&S and their Winn-Dixie distribution centers (like the one in Hammond, convenient to the Baton Rouge stores), which is closer to the SuperValu warehouse they were using during the LLC days.
The portion of the story regarding the division closure may not be visible to you due to a paywall (I just tried to load the article on another device and could not read it in it's entirety). The division office isn't completely closing, but a substantial portion of the staff is being laid off and the operations are being merged into the Southern division. The Houston division will no longer exist formally, and only a Houston-area office and small local staff are being retained. Although I agree that the Houston DC was far underutilized based on the number of stores it was serving, I question whether running trucks all the way from DFW will make the economics of maintaining a store base in Houston even profitable, considering their suppressed market position. According to the article, Randalls store count in Houston is down to 29, compared to the 64 Tom Thumb and 44 Albertsons locations in the DFW area, and the only real investment we have seen in the Houston market is the expansion/renovation of the Midtown store. A similar question could be posed regarding the Louisiana stores, though my guess is that these could be sold as a block if they get to the point where they are barely breaking even (possibly either to Kroger or a westward expanding Publix). I don't see Albertsons returning to outside distribution like they did in the 2000's, as they have invested too much into the development of their private-label products and the optimization of operations to make sense of running stores in an isolated market with little growth potential. Though as I say that, this is the same company which continues to run three isolated stores in the State of Florida, hundreds of miles from any of their other store base.
- I think I might have mentioned that the indications of some internal paperwork being labeled as "South" even 12 months ago might have precipitated this a while back. Maybe this was the plan all along.
- The Dallas-Fort Worth trip is only about 3-4 hours on I-45, and that's not too bad as far as distribution is concerned. It's good for Austin but it's worse for Louisiana, but if they get AWG as a partner, it may work out.
- The chances of Albertsons selling the Louisiana stores to Publix is pretty much zero at this point, even if a real Publix is 200 miles away. Same with Kroger.
- The Eastern Division of Safeway was entirely outsourced by C&S which Safeway only recently took back. Genuardi's was also C&S, and C&S kept the DC (at least for a while). Just because they use a third party DC doesn't mean third party labels.
storewanderer wrote: Houston survived a lot longer than it would have, had Safeway stayed on its own...
Most definitely! Safeway's original Houston division was really comprehensive. They not only were well-spread throughout Houston (Randalls only hangs around suburbs and the ones that haven't dropped off, at that) but also on the fringe of development (like rings of a tree, you can see where the development of Houston reached in the late 1980s), including The Woodlands. They had a huge DC complex including a bakery and a dairy...and they had stores in even all the small towns surrounding the area (not the ~5000 pop. small towns, but they had one in Huntsville, Lake Jackson, several in Beaumont, FOUR in Bryan-College Station, etc.)
This really isn't out of line from what Kroger and Albertsons/Safeway currently do by distributing to their mass of stores in Las Vegas and New Mexico out of distribution centers in Phoenix. Phoenix is 4.5 hours away from Las Vegas and about 6.5 hours away from Albuquerque. Albertsons also serves its El Paso stores from Phoenix (also about 6.5 hours away) and used to distribute to the Colorado stores from Phoenix (Phoenix - Denver is closer to 13 hours).
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Re: Breaking: Randalls Houston DC set to close

Post by pseudo3d »

arizonaguy wrote:
This really isn't out of line from what Kroger and Albertsons/Safeway currently do by distributing to their mass of stores in Las Vegas and New Mexico out of distribution centers in Phoenix. Phoenix is 4.5 hours away from Las Vegas and about 6.5 hours away from Albuquerque. Albertsons also serves its El Paso stores from Phoenix (also about 6.5 hours away) and used to distribute to the Colorado stores from Phoenix (Phoenix - Denver is closer to 13 hours).
You know, I do hope that the Dallas-Houston route can increase efficiencies. They still did decide to take trucks up and through College Station instead of going through 290 to Austin, and once you got those highways from Dallas to Houston or Dallas to Austin, it's all freeways. Dallas-Houston on I-45 isn't too bad (it's a bit dated but it flows pretty smoothly), and while Austin to Dallas is a bit rougher, I-35 has been recently upgraded north of Waco (really nice). Secondly, the Houston office getting downscaled is a bit sad, but remember that under Safeway the Tom Thumb/Houston offices were all part of the Texas division HQ'd in Houston (not Dallas), so this is returning to that status quo (in a way), and the current "South" division is much powerful than the old Texas division, and almost as powerful as the "Dallas-Fort Worth" division from ten years ago (Louisiana stores, a few scattered stores leftover from the Houston division and San Antonio division, Austin stores, Dallas stores, Oklahoma stores, north Texas stores) vs. today (Louisiana stores, Houston stores, Austin stores, Dallas stores). Hopefully Randalls can benefit from the better leadership of "South" (which now has more purpose now that it's not competing with United as much), too. Basically, the situation is looking a bit rough but I wouldn't be writing off Randalls in Houston just yet.
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