Breaking: Randalls Houston DC set to close

[architect]

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.

Personally, I think that this latest move in Houston is a win-win for Albertsons. On on hand, it could allow operational efficiency to be improved and ultimately lead the Houston market towards a financial turnaround (or at least towards stability). On the other hand, it could also make the Houston-area stores more attractive to sell off without the headache of a potential buyer deciding what to do with a large division office which may not be needed. I don't think the writing is on the walls for Randalls yet, but I think that the next year or two as part of the Southern division is critical. With HEB infilling into many of Randalls strongest markets within the inner areas of Houston, a potential loss of traffic at these stronghold stores could tilt the Houston-area operations to the point that the are no longer profitable.

[storewanderer]

There has been some flip flop over the years on Dallas/Houston divisions. With Safeway Randalls/Tom Thumb, everything was being run from Houston. With Kroger, they used to have two separate divisions, combined them in the 00's, then unbundled them again more recently.

Are the Dallas and Houston markets really that different that they should be in a different division, with different merchandising and marketing plans? It seems to be something the chains can't quite decide.

Based on the store photos posted that Houston Division looked like dead division walking. As some of the other divisions have become more spirited and independent in their marketing plans and store appearance, this Houston Division seemed to stick with the old ways. The stores look like textbook lifestyle stores straight out of NorCal. That works when you are in NorCal and in a lot of cases, the competition is either not present or an absolute joke, but it isn't going to work when you have actual competitors...

[pseudo3d]

There has been some flip flop over the years on Dallas/Houston divisions. With Safeway Randalls/Tom Thumb, everything was being run from Houston. With Kroger, they used to have two separate divisions, combined them in the 00's, then unbundled them again more recently.

Are the Dallas and Houston markets really that different that they should be in a different division, with different merchandising and marketing plans? It seems to be something the chains can't quite decide.

The big problem of the Dallas/Houston markets is that you've got two big, distinctive urban markets but neither one is really enough to justify its own division and too few things in between to really justify it. It sort of worked for Albertsons in the early 2000s, as Dallas-Fort Worth had stores into Oklahoma and stretching down to Waco-Temple-Killeen (where it had one store each...Waco for instance was never a good market for Albertsons, a second store only lasted a few years in the early 1990s, and until they closed in 2002, Winn-Dixie had more stores...today the market is dominated by H-E-B), the San Antonio market, which included stores from Austin all the way to the border, and the Houston market, which went from close to Mississippi to College Station.

Today, however, if you look at the map of where Albertsons/Safeway stores are, whereas in the West Coast up to around NM, they've got a decent spread (except notably Utah), the Texas stores are all clustered in Austin, Dallas, and Houston. Same with Kroger, they only have maybe five or six stores (that's a generous estimate) between Houston and Dallas, with only a few in Louisiana, and absolutely none along the I-35 corridor. But their markets for Houston and Dallas are both very strong, and even before the division split, both had their own distribution centers.

If Albertsons and Kroger were willing to go into smaller markets (which the original Safeway did do), they wouldn't be flip-flopping on divisions so much.

[cathandler]

Here's more coverage from Dallas; they're claiming that the Houston office is closing altogether insteaad of downsizing
http://www.dallasnews.com/business/reta ... ty-roanoke

[architect]

Here's more coverage from Dallas; they're claiming that the Houston office is closing altogether insteaad of downsizing
http://www.dallasnews.com/business/reta ... ty-roanoke

This article is not accurate. The physical office is not closing, but staff is being dramatically downsized and the Houston division as a separate entity will no longer exist. As Pseudo3D said, this will closely mirror the consolidation of many management functions into the Houston offices from Dallas under Safeway's leadership (though ironically, it is Houston which is loosing clout this time around).

[pseudo3d]

Could be both actually. What I think will go on is that the 3663 Westpark office will be closed, but the remaining staff will be moved to a store with excess office space...not a hard logic leap since a number of Flagship stores (that are still open) were built with second levels that are clearly not used anymore for their original purposes anymore (the Flagship stores included full-service restaurants I've heard). That would be more fitting. Again, though, the Houston Division post-Albertsons buyout was never big enough to justify the whole DC and the division office. If it had been closer to the original Houston Albertsons or Safeway divisions, with at least 20 more stores in the immediate Houston area alone, two or three in College Station-Bryan, dotting the smaller towns between the cores (like, say, Beaumont), and other stores than it would be justified in having its own division. But it doesn't, and the only way to really expand in Texas is to buy a bottom-feeder like Food Town or Market Basket, neither of which would give Randalls some really prize locations.

[architect]

Could be both actually. What I think will go on is that the 3663 Westpark office will be closed, but the remaining staff will be moved to a store with excess office space...not a hard logic leap since a number of Flagship stores (that are still open) were built with second levels that are clearly not used anymore for their original purposes anymore (the Flagship stores included full-service restaurants I've heard). That would be more fitting. Again, though, the Houston Division post-Albertsons buyout was never big enough to justify the whole DC and the division office. If it had been closer to the original Houston Albertsons or Safeway divisions, with at least 20 more stores in the immediate Houston area alone, two or three in College Station-Bryan, dotting the smaller towns between the cores (like, say, Beaumont), and other stores than it would be justified in having its own division. But it doesn't, and the only way to really expand in Texas is to buy a bottom-feeder like Food Town or Market Basket, neither of which would give Randalls some really prize locations.

This is an interesting thought, and that would make sense from a real estate standpoint. This is not unprecedented either, as under Safeway, the Dallas offices were consolidated into the Skillman/Abrams store, and then later the Preston/Royal store upon the former's closure.

On another note, if this did happen, loyalty cards for both Randalls and Tom Thumb would have to be reissued or replaced since they have the Westpark address listed on the back. Otherwise, shoppers' lost keys could potentially be mailed to an office location which no longer exists.

[pseudo3d]

Could be both actually. What I think will go on is that the 3663 Westpark office will be closed, but the remaining staff will be moved to a store with excess office space...not a hard logic leap since a number of Flagship stores (that are still open) were built with second levels that are clearly not used anymore for their original purposes anymore (the Flagship stores included full-service restaurants I've heard). That would be more fitting. Again, though, the Houston Division post-Albertsons buyout was never big enough to justify the whole DC and the division office. If it had been closer to the original Houston Albertsons or Safeway divisions, with at least 20 more stores in the immediate Houston area alone, two or three in College Station-Bryan, dotting the smaller towns between the cores (like, say, Beaumont), and other stores than it would be justified in having its own division. But it doesn't, and the only way to really expand in Texas is to buy a bottom-feeder like Food Town or Market Basket, neither of which would give Randalls some really prize locations.

This is an interesting thought, and that would make sense from a real estate standpoint. This is not unprecedented either, as under Safeway, the Dallas offices were consolidated into the Skillman/Abrams store, and then later the Preston/Royal store upon the former's closure.

On another note, if this did happen, loyalty cards for both Randalls and Tom Thumb would have to be reissued or replaced since they have the Westpark address listed on the back. Otherwise, shoppers' lost keys could potentially be mailed to an office location which no longer exists.

Skillman and Abrams was a Simon David IIRC and did have an underutilized upper level, so yes. Speaking of Simon David, it's still on the cards despite the fact that Safeway closed the last store. Maybe this will convince the powers that be to no longer use a card for Randalls and switch it exclusively to J4U. One can always hope.

[storewanderer]

I don't see much difference between the cards and Just 4 You. It is the same system the Just 4 You just requires a phone number and logging into a website, but those are still a loyalty card. No difference.

[pseudo3d]

I don't see much difference between the cards and Just 4 You. It is the same system the Just 4 You just requires a phone number and logging into a website, but those are still a loyalty card. No difference.

There is. You can be part of the "loyalty" card but not J4U, and the card is required on most items (whereas J4U tends to be very promotional). It's complicated and it sucks and they can at least be pushed along in the right direction by eliminating one.