Albertsons buys stake in Garland-based El Rancho Supermercado

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Albertsons buys stake in Garland-based El Rancho Supermercado

Post by architect »

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Re: Albertsons buys stake in Garland-based El Rancho Supermercado

Post by pseudo3d »

architect wrote: November 16th, 2017, 7:56 pm A very interesting move: https://www.dallasnews.com/business/ret ... pen-stores
This is very interesting! Some remarks that I have to make:

- Remember, I had discussed the possibility of Albertsons joining forces with Fiesta and no one thought it was realistic. Now obviously it's not Fiesta (though I wouldn't be surprised if Fiesta had been approached) but it's still somewhat close to that.
- Albertsons still owns that investment in Casa Ley, I had figured that if they were going to try the "Hispanic supermarket" angle it would be via them.
- On that note, the other potential vehicle would've been United's Amigos.
- El Rancho's website advertises them as "El Rey de Los Precios Bajos" (The King of Low Prices), which is in contrast to Albertsons current reputation.
- One of El Rancho's two stores in Austin is in a former Safeway/AppleTree/Randalls store out on the east side. Just looking at their website, it seems like El Rancho has settled into some former Albertsons.
- They mention "growing across Texas" and I can see them "lending" some Tom Thumb/ABS sites to build but Houston and San Antonio have a lot of similar markets in number (even Fiesta has been locked out of San Antonio). I can see Bryan or Waco(-Temple-Killeen) getting it though.
- The fact that it's only a stake indicates that Albertsons isn't quite sure if they want to pursue that, and probably just wants an easier way to distribute Mexican products throughout the combined chain to lower prices, much like how SuperValu is getting into that in Florida.
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Re: Albertsons buys stake in Garland-based El Rancho Supermercado

Post by wnetmacman »

architect wrote: November 16th, 2017, 7:56 pm A very interesting move: https://www.dallasnews.com/business/ret ... pen-stores
This is not a surprise, other than that Albertsons still has some money to invest. It's a potentially good move, if they don't squander it, because they aren't making any headway against Fiesta.
pseudo3d wrote: November 16th, 2017, 9:07 pm - Remember, I had discussed the possibility of Albertsons joining forces with Fiesta and no one thought it was realistic. Now obviously it's not Fiesta (though I wouldn't be surprised if Fiesta had been approached) but it's still somewhat close to that.
- Albertsons still owns that investment in Casa Ley, I had figured that if they were going to try the "Hispanic supermarket" angle it would be via them.
- On that note, the other potential vehicle would've been United's Amigos.
The only problem with Fiesta is that Albertsons most likely couldn't afford the price. Fiesta is a pretty good market, even with all its inconsistencies. They make a good amount of money off each of their stores for a reason.
Casa Ley is a Mexican company; it may not translate well here.
Amigos is really a dead banner that United is keeping alive on only one or two stores.
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Re: Albertsons buys stake in Garland-based El Rancho Supermercado

Post by pseudo3d »

wnetmacman wrote: November 17th, 2017, 7:04 am
architect wrote: November 16th, 2017, 7:56 pm A very interesting move: https://www.dallasnews.com/business/ret ... pen-stores
This is not a surprise, other than that Albertsons still has some money to invest. It's a potentially good move, if they don't squander it, because they aren't making any headway against Fiesta.
pseudo3d wrote: November 16th, 2017, 9:07 pm - Remember, I had discussed the possibility of Albertsons joining forces with Fiesta and no one thought it was realistic. Now obviously it's not Fiesta (though I wouldn't be surprised if Fiesta had been approached) but it's still somewhat close to that.
- Albertsons still owns that investment in Casa Ley, I had figured that if they were going to try the "Hispanic supermarket" angle it would be via them.
- On that note, the other potential vehicle would've been United's Amigos.
The only problem with Fiesta is that Albertsons most likely couldn't afford the price. Fiesta is a pretty good market, even with all its inconsistencies. They make a good amount of money off each of their stores for a reason.
Casa Ley is a Mexican company; it may not translate well here.
Amigos is really a dead banner that United is keeping alive on only one or two stores.
In terms of Fiesta, Acon Investments actually owns it. I'm sure they could've afforded it, but either Acon Investments wasn't willing to sell, or they would have to untangle distribution from C&S, or even potentially anti-trust issues. Plus, in the article, they mention El Rancho had its own distribution center and even some manufacturing facilities. Given the relatively small spread of stores (16), I'm guessing that it's more of a way for Albertsons to add more ethnic products to its own existing stores (Miller mentioned the company benefits as a whole, not specifically the Texas stores) while in return giving El Rancho funding for other markets. This is interesting wording as the collapse of Albertsons left some pretty major holes in the Texas market, and if this is all some sort of bigger backdoor plan that would let El Rancho be the genesis of "real" stores coming back to B/CS, Waco-Temple-Killeen, Beaumont, etc.

In terms of Casa Ley, they were supposed to sell it and give the money back to Safeway shareholders or pay back the difference, so that may be why Casa Ley is staying put.

In terms of Amigos, the format died almost as soon as Albertsons bought United (the last store opened in 2014, which was a new-build), and given the blurred lines between United and Market Street, it seems that Amigos might end up disappearing.

I really don't know, but it's still probably a better approach than the hack job Winn-Dixie stores are getting to turn them into Fresco y Mas.
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Re: Albertsons buys stake in Garland-based El Rancho Supermercado

Post by architect »

pseudo3d wrote: November 17th, 2017, 8:02 am
wnetmacman wrote: November 17th, 2017, 7:04 am
architect wrote: November 16th, 2017, 7:56 pm A very interesting move: https://www.dallasnews.com/business/ret ... pen-stores
This is not a surprise, other than that Albertsons still has some money to invest. It's a potentially good move, if they don't squander it, because they aren't making any headway against Fiesta.
pseudo3d wrote: November 16th, 2017, 9:07 pm - Remember, I had discussed the possibility of Albertsons joining forces with Fiesta and no one thought it was realistic. Now obviously it's not Fiesta (though I wouldn't be surprised if Fiesta had been approached) but it's still somewhat close to that.
- Albertsons still owns that investment in Casa Ley, I had figured that if they were going to try the "Hispanic supermarket" angle it would be via them.
- On that note, the other potential vehicle would've been United's Amigos.
The only problem with Fiesta is that Albertsons most likely couldn't afford the price. Fiesta is a pretty good market, even with all its inconsistencies. They make a good amount of money off each of their stores for a reason.
Casa Ley is a Mexican company; it may not translate well here.
Amigos is really a dead banner that United is keeping alive on only one or two stores.
In terms of Fiesta, Acon Investments actually owns it. I'm sure they could've afforded it, but either Acon Investments wasn't willing to sell, or they would have to untangle distribution from C&S, or even potentially anti-trust issues. Plus, in the article, they mention El Rancho had its own distribution center and even some manufacturing facilities. Given the relatively small spread of stores (16), I'm guessing that it's more of a way for Albertsons to add more ethnic products to its own existing stores (Miller mentioned the company benefits as a whole, not specifically the Texas stores) while in return giving El Rancho funding for other markets. This is interesting wording as the collapse of Albertsons left some pretty major holes in the Texas market, and if this is all some sort of bigger backdoor plan that would let El Rancho be the genesis of "real" stores coming back to B/CS, Waco-Temple-Killeen, Beaumont, etc.

In terms of Casa Ley, they were supposed to sell it and give the money back to Safeway shareholders or pay back the difference, so that may be why Casa Ley is staying put.

In terms of Amigos, the format died almost as soon as Albertsons bought United (the last store opened in 2014, which was a new-build), and given the blurred lines between United and Market Street, it seems that Amigos might end up disappearing.

I really don't know, but it's still probably a better approach than the hack job Winn-Dixie stores are getting to turn them into Fresco y Mas.
From another perspective, this could also be another defensive move against HEB. Whether or not HEB decides to move into DFW as has been rumored, Albertsons has to plan for a worst-case scenario. Considering that HEB is one of the few traditional grocers shown to be capable of pulling together a strong Hispanic-oriented product mix, Albertsons likely recognizes that they must beat them to the punch with the demographic (which might also discourage HEB from entering the market altogether). This stake puts Albertsons in a position to both strengthen their Hispanic foothold in DFW while also potentially expanding El Rancho into other markets.
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Re: Albertsons buys stake in Garland-based El Rancho Supermercado

Post by pseudo3d »

architect wrote: November 18th, 2017, 3:35 pm
pseudo3d wrote: November 17th, 2017, 8:02 am
wnetmacman wrote: November 17th, 2017, 7:04 am
This is not a surprise, other than that Albertsons still has some money to invest. It's a potentially good move, if they don't squander it, because they aren't making any headway against Fiesta.



The only problem with Fiesta is that Albertsons most likely couldn't afford the price. Fiesta is a pretty good market, even with all its inconsistencies. They make a good amount of money off each of their stores for a reason.
Casa Ley is a Mexican company; it may not translate well here.
Amigos is really a dead banner that United is keeping alive on only one or two stores.
In terms of Fiesta, Acon Investments actually owns it. I'm sure they could've afforded it, but either Acon Investments wasn't willing to sell, or they would have to untangle distribution from C&S, or even potentially anti-trust issues. Plus, in the article, they mention El Rancho had its own distribution center and even some manufacturing facilities. Given the relatively small spread of stores (16), I'm guessing that it's more of a way for Albertsons to add more ethnic products to its own existing stores (Miller mentioned the company benefits as a whole, not specifically the Texas stores) while in return giving El Rancho funding for other markets. This is interesting wording as the collapse of Albertsons left some pretty major holes in the Texas market, and if this is all some sort of bigger backdoor plan that would let El Rancho be the genesis of "real" stores coming back to B/CS, Waco-Temple-Killeen, Beaumont, etc.

In terms of Casa Ley, they were supposed to sell it and give the money back to Safeway shareholders or pay back the difference, so that may be why Casa Ley is staying put.

In terms of Amigos, the format died almost as soon as Albertsons bought United (the last store opened in 2014, which was a new-build), and given the blurred lines between United and Market Street, it seems that Amigos might end up disappearing.

I really don't know, but it's still probably a better approach than the hack job Winn-Dixie stores are getting to turn them into Fresco y Mas.
From another perspective, this could also be another defensive move against HEB. Whether or not HEB decides to move into DFW as has been rumored, Albertsons has to plan for a worst-case scenario. Considering that HEB is one of the few traditional grocers shown to be capable of pulling together a strong Hispanic-oriented product mix, Albertsons likely recognizes that they must beat them to the punch with the demographic (which might also discourage HEB from entering the market altogether). This stake puts Albertsons in a position to both strengthen their Hispanic foothold in DFW while also potentially expanding El Rancho into other markets.
In terms of other Texas markets cited, where can they really go? San Antonio is almost a lock-out at this point and Houston is another face in the crowd unless they were to buy another small chain. I suppose other places along I-35 might work as well as B/CS but I don't know. Since it's technically still independent I think that the mutual benefits is in terms of items offered but merchandise mix is one of Albertsons' weakest points.
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Re: Albertsons buys stake in Garland-based El Rancho Supermercado

Post by storewanderer »

The key will be to see what happens. Will El Rancho start to source items from Albertsons? Move onto the Safeway systems? Start to do combined marketing?

Or is this simply an "investment" to enable more expansion. Similar to the Kroger/Lucky's Market thing. There is zero Kroger merchandise, systems, or even involvement in operations there, it seems to be an investment and nothing more.

Of course the story of either above case could change as time goes on, that remains to be seen.
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Re: Albertsons buys stake in Garland-based El Rancho Supermercado

Post by pseudo3d »

storewanderer wrote: November 18th, 2017, 5:03 pm The key will be to see what happens. Will El Rancho start to source items from Albertsons? Move onto the Safeway systems? Start to do combined marketing?

Or is this simply an "investment" to enable more expansion. Similar to the Kroger/Lucky's Market thing. There is zero Kroger merchandise, systems, or even involvement in operations there, it seems to be an investment and nothing more.

Of course the story of either above case could change as time goes on, that remains to be seen.
Albertsons seemed to be fairly explicit on what they wanted to do with El Rancho (see quoted section below), and the implication that I got out of it that Albertsons' benefit was El Rancho's product line (distribution and manufacturing, though I haven't found much on the latter) that they would spread to other stores while El Rancho will get some spending money and possibly access to Albertsons' distribution systems instead of whatever third party they were getting it from previously (it seems that for a lot of the Mexican supermarket independents in Houston have some cheap produce and meat but surprisingly high center store items, though unlike them, El Rancho isn't a part of GSC).
"El Rancho has built a great business with its 16 Texas stores, and we're confident that we'll be able to leverage our combined expertise to better serve customers across the existing Albertsons Cos.' and El Rancho store bases," said Bob Miller, chairman and CEO of Idaho-based Albertsons.

Miller said in a news release Thursday that he's interested in El Rancho's distribution and manufacturing facilities specifically, adding that "we can share best practices that will reduce costs and benefit our customers."
Lucky's Market, on the other hand, was a "strategic partnership" that was pretty unclear on what the tangible benefits to Kroger was/are, but that's another topic. The thing I'm concerned about now is that so much of Albertsons' most recent history is downscaling and mainstreaming merchandise mixes, and a result, talking about acquiring El Rancho Supermercado as a way of adding new products and localizing just seems odd at best.
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Re: Albertsons buys stake in Garland-based El Rancho Supermercado

Post by pseudo3d »

Just wanted to update that I did find more on El Rancho's facilities. Seems that they're in a large distribution center facility in Garland (doing quick research it appears it was one of Flemings' facilities pre-bankruptcy), and located adjacent to the HQ (located in 2600 McCree) is BakeMex, owned by El Rancho's parent Mexico Foods. Others include La Bodega Meat & Produce (separate facilities, Produce is located near the corporate headquarters) and Fixture Max (supermarket and restaurant equipment distribution--talk about vertical integration).
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