The return of the true "Albertsons Express"

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Re: The return of the true "Albertsons Express"

Post by pseudo3d »

kr.abs.swy wrote: December 22nd, 2017, 6:20 pm Some of you may have better information about the performance of the convenience stores, but I was always under the impression that the reason that SuperValu sold the Albertsons Express stores had more to do with SuperValu needing to raise cash than with the performance of the convenience stores. Given a need to raise money, it seems logical that they decided to liquidate stores that were less core than the supermarkets.

I didn't perceive that these stores performed any worse than a typical convenience store. I don't recall seeing any locations that closed after SuperValu sold them, although I don't doubt that there are a few.
This is probably true. Albertsons LLC had divested the stores in 2008 as part of their overall strategy on slimming down the company to profitability. On the other hand, SuperValu announced it was focusing on the fuel centers with a remodeling program in those days, but by the time they sold it off in 2011 SuperValu's stock was tanking and they had begun to sell off a lot of the company (including bigg's and Bristol Farms) as well as closing down a number of stores. Remember, over the course of just about 7 years, SuperValu lost nearly a quarter of the Albertsons stores they bought (22%, if we take the 877 stores LLC re-acquired versus the 1,124 they acquired in 2006).
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Re: The return of the true "Albertsons Express"

Post by storewanderer »

There are locations that either closed or turned into, should we say, very low end convenience store operations. Some of that, maybe even most of that, happened because the grocery operation accompanying the store in the parking lot went out of business or was sold to a less effective operator.

However my general observation was the Albertsons Express operations were pretty low volume. Gas pricing was typically not very competitive and while they seemed to do a good job with the c-stores themselves, the low gas traffic doomed them.
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Re: The return of the true "Albertsons Express"

Post by babs »

Let's remember why grocery stores install gas pumps. It's either a key part of their loyalty program or convenience. Selling gas on it's own is a low margin business. Little wonder Albertson's got out of the business. Most traditional gas stations make much of their profit selling coffee, soda, hot dogs, lottery, etc... Grocery stores get challenged with their c-stores. Do they jack up the prices to make the gas station profitable? Or do they keep prices lower, in line with their regular store, thus eliminating the biggest profit center of a gas station?

Kroger, Costco and old Safeway all viewed gas as a way to drive traffic to their traditional store. The more you shop at the store, the more points you earn that can be redeemed for cheap gas. It's worked really well for Kroger. Costco does the same thing by selling gas near cost.

Unless I am mistaken, Albertsons in the pre-Safeway days, sold gas at some stations but did not give gas discounts. Without the gas stations driving store traffic, most customers had little reason to go there. And if they did, they probably didn't make any more in the c-store if they were keeping pricing consistent with the main store. No wonder they sold out.
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Re: The return of the true "Albertsons Express"

Post by pseudo3d »

babs wrote: December 22nd, 2017, 10:46 pm Let's remember why grocery stores install gas pumps. It's either a key part of their loyalty program or convenience. Selling gas on it's own is a low margin business. Little wonder Albertson's got out of the business. Most traditional gas stations make much of their profit selling coffee, soda, hot dogs, lottery, etc... Grocery stores get challenged with their c-stores. Do they jack up the prices to make the gas station profitable? Or do they keep prices lower, in line with their regular store, thus eliminating the biggest profit center of a gas station?

Kroger, Costco and old Safeway all viewed gas as a way to drive traffic to their traditional store. The more you shop at the store, the more points you earn that can be redeemed for cheap gas. It's worked really well for Kroger. Costco does the same thing by selling gas near cost.

Unless I am mistaken, Albertsons in the pre-Safeway days, sold gas at some stations but did not give gas discounts. Without the gas stations driving store traffic, most customers had little reason to go there. And if they did, they probably didn't make any more in the c-store if they were keeping pricing consistent with the main store. No wonder they sold out.
I do know that one of the managers in a local H-E-B told me that the gas station actually loses money but drives traffic to the main store. It too was not a convenience store operation (H-E-B has convenience store operations, including one co-located with a Whataburger, but by and large the stores do not have stores). H-E-B also did not have any sort of loyalty program.

The heavy focus on coffee (which is typically not sold by the cup in stores) and high-margin prepared food items do seem like they want to actually sustain the convenience store as a profit-making operation.
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Re: The return of the true "Albertsons Express"

Post by storewanderer »

babs wrote: December 22nd, 2017, 10:46 pm Let's remember why grocery stores install gas pumps. It's either a key part of their loyalty program or convenience. Selling gas on it's own is a low margin business. Little wonder Albertson's got out of the business. Most traditional gas stations make much of their profit selling coffee, soda, hot dogs, lottery, etc... Grocery stores get challenged with their c-stores. Do they jack up the prices to make the gas station profitable? Or do they keep prices lower, in line with their regular store, thus eliminating the biggest profit center of a gas station?

Kroger, Costco and old Safeway all viewed gas as a way to drive traffic to their traditional store. The more you shop at the store, the more points you earn that can be redeemed for cheap gas. It's worked really well for Kroger. Costco does the same thing by selling gas near cost.

Unless I am mistaken, Albertsons in the pre-Safeway days, sold gas at some stations but did not give gas discounts. Without the gas stations driving store traffic, most customers had little reason to go there. And if they did, they probably didn't make any more in the c-store if they were keeping pricing consistent with the main store. No wonder they sold out.
I know at the end, under Supervalu, there was some kind of gas discount program in place with Albertsons. But I think in the late 90's and early 00's, there was no gas discount program in place. Maybe they had something (one of those old spend x, get a printout on your receipt to save a few cents per gallon etc.). I also think in 2000 they very very briefly did a Fuel Rewards Program where you got "cents toward fuel" when purchasing certain items but that program ended almost as fast as it started.

The old Albertsons culture of the 90's and early 00's was very profit focused. So they wanted to turn a profit at every turn. Those gas pumps needed to turn a profit. So did the convenience store. Every department in the store was concerned with its gross profit percentage and it was in their culture to sacrifice sales for profit. Based on how their stores smelled back then, I think it was also in their culture to sacrifice freshness, specifically in seafood, or food flavor, specifically not changing the oil in the deli chicken fryer as often as it should have been, as well, as well in order to keep expenses down and keep the department gross profit percentages up. That is the culture that led to the company ultimately being dissolved though.

Most grocers do not view fuel as a profit center, as pointed out already here. It is there to drive traffic and drive some top line growth. Those gas pumps in front of various retailers generate an awful lot of revenue; it would be interesting to see retail sales figures for a number of "top US retailers" if you took out fuel revenue since the big ones are all pretty heavy in the fuel business.

Kroger has by far the best fuel reward program in the grocery business. Their stations are priced very low to begin with, in most (though not all) cases. Their stations are large with many pumps and very easy to use. Shell as a partner has made for a ton of additional redemption locations. Circle K in Arizona is another partner which again has made for a ton of additional redemption locations. In some territories in the mountain states, the Kroger convenience stores also helped give redemption options during the years where Kroger was still building fuel stations in the supermarket parking lots. I am hopeful that whatever happens with the Kroger convenience stores, that whoever the buyer is, leads to an even stronger alliance for their fuel rewards program. I think it is a very important element of their loyalty program, especially being in a market where they have both Smiths and Quik Stop and the cross redemption (as well as cross points earning between the two) is very helpful.
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Re: The return of the true "Albertsons Express"

Post by pseudo3d »

storewanderer wrote: December 23rd, 2017, 12:02 am
babs wrote: December 22nd, 2017, 10:46 pm Let's remember why grocery stores install gas pumps. It's either a key part of their loyalty program or convenience. Selling gas on it's own is a low margin business. Little wonder Albertson's got out of the business. Most traditional gas stations make much of their profit selling coffee, soda, hot dogs, lottery, etc... Grocery stores get challenged with their c-stores. Do they jack up the prices to make the gas station profitable? Or do they keep prices lower, in line with their regular store, thus eliminating the biggest profit center of a gas station?

Kroger, Costco and old Safeway all viewed gas as a way to drive traffic to their traditional store. The more you shop at the store, the more points you earn that can be redeemed for cheap gas. It's worked really well for Kroger. Costco does the same thing by selling gas near cost.

Unless I am mistaken, Albertsons in the pre-Safeway days, sold gas at some stations but did not give gas discounts. Without the gas stations driving store traffic, most customers had little reason to go there. And if they did, they probably didn't make any more in the c-store if they were keeping pricing consistent with the main store. No wonder they sold out.
I know at the end, under Supervalu, there was some kind of gas discount program in place with Albertsons. But I think in the late 90's and early 00's, there was no gas discount program in place. Maybe they had something (one of those old spend x, get a printout on your receipt to save a few cents per gallon etc.). I also think in 2000 they very very briefly did a Fuel Rewards Program where you got "cents toward fuel" when purchasing certain items but that program ended almost as fast as it started.

The old Albertsons culture of the 90's and early 00's was very profit focused. So they wanted to turn a profit at every turn. Those gas pumps needed to turn a profit. So did the convenience store. Every department in the store was concerned with its gross profit percentage and it was in their culture to sacrifice sales for profit. Based on how their stores smelled back then, I think it was also in their culture to sacrifice freshness, specifically in seafood, or food flavor, specifically not changing the oil in the deli chicken fryer as often as it should have been, as well, as well in order to keep expenses down and keep the department gross profit percentages up.
That I can believe, I think I've said before how my local Albertsons always had a weird funk to it, especially in seafood.

But at the same time, the late 1990s/early 2000s Albertsons was more focused on expansion than anything else, including some terrible locations and a bunch of acquired stores that were forcibly made into Albertsons stores, both downscale and upscale. When LLC took over, that first wave of closures in 2006 were unprofitable stores that probably couldn't be made workable no matter what. Most of them do not even operate as supermarkets anymore.

Personally, I think that the gas stations were more a victim of the company going off the rails than anything else.
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Re: The return of the true "Albertsons Express"

Post by storewanderer »

In one regard, you could say the old gas stations were at least sellable, which counts for something. They were bought by legitimate operators (Corner Store to the LLC Stations and a variety of parties for the SVU Stations including Tesoro, Circle K, and Holiday).

Let's say, for instance, Kroger or Costco decided to exit the parking lot fuel center business (not something I see happening). Who would buy those? I don't think anyone would. Not much value in a large set of gas pumps and a little booth that may or may not sell cigarettes and a few other small items unless it is attached to a larger store that draws customers in and has a super low gas price.
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