Crucial times for Shoppers

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BatteryMill
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Re: Crucial times for Shoppers

Post by BatteryMill »

mjhale wrote:If Supervalu put Shoppers up for sale who would be buying? Shoppers does have large stores inside the Beltway so they might make sense for someone like Giant or Safeway. Giant could take the Seven Corners store as Safeway has a nearby location. And Safeway could take Potomac Yards since Giant just built a replacement for the Del Ray store close to the lower end of the Potomac Yards developments. However, outside the Beltway becomes a bit more challenging. Giant and Safeway already have stores near most of the existing Shoppers locations. Exceptions I can think of would be the White Flint and Fair City Mall (Fairfax) stores. Kroger is already in town with Harris Teeter and they seem to be going for new construction in "upscale" and transit oriented neighborhoods. There doesn't seem to be a Shoprite owner who wants to take a shot at the Washington DC market as much as I would love one of them to come down here. The only other major grocer who is in expansion mode is Publix. But based on comments elsewhere on Retail Watchers and comments on Flickr photos Publix would not go for an existing union shop. They are non-union, hire their own staff and don't want to be mixed up in a mess over the UFCW claiming a store must continue as union even with a new operator. Publix has told the Martins employees of the stores they are purchasing in Richmond that they must reapply with Publix. No jobs carry over. It has been strongly rumored that Publix is looking towards Northern Virginia as their next stop going north. The ironic thing is that if Publix could get a hold of existing Shoppers locations, without worry over the union and who Publix hires, Publix would be getting stores in solidly middle class, stable neighborhoods. Sure they aren't the super high end places that the image of Publix seems to gravitate towards. However these are neighborhoods that have basically had a triopoly of Giant, Safeway and Shoppers for many years. I would think they would welcome a new and highly regarded grocer to the neighborhood.
I'm not anybody in the business, but I wouldn't mind someone snapping up Shoppers to actually make a difference. All along, this really seems as if they should compete in the eyes of the beholder. Those who have wound up in the company, of course. What if the SuperValu executives saw overnight success to their stores, placing them on the top-rate grocers list next to Wegmans and Publix? At least maybe they'd want Shoppers to be the way it would be. That also evokes an earlier posts of disintegrating Shoppers for Safeway.

Publix, I don't know, maybe they can chomp some stores out, but otherwise, I don't know. Reminds me of a concept my other Flickr buddy made of actually selling Shoppers to Kroger in actuality and using them as a low-price arm (compared to Harris Teeter... :P). All as long as the donuts stay.
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Re: Crucial times for Shoppers

Post by pseudo3d »

mjhale wrote:If Supervalu put Shoppers up for sale who would be buying? Shoppers does have large stores inside the Beltway so they might make sense for someone like Giant or Safeway. Giant could take the Seven Corners store as Safeway has a nearby location. And Safeway could take Potomac Yards since Giant just built a replacement for the Del Ray store close to the lower end of the Potomac Yards developments. However, outside the Beltway becomes a bit more challenging. Giant and Safeway already have stores near most of the existing Shoppers locations. Exceptions I can think of would be the White Flint and Fair City Mall (Fairfax) stores. Kroger is already in town with Harris Teeter and they seem to be going for new construction in "upscale" and transit oriented neighborhoods. There doesn't seem to be a Shoprite owner who wants to take a shot at the Washington DC market as much as I would love one of them to come down here. The only other major grocer who is in expansion mode is Publix. But based on comments elsewhere on Retail Watchers and comments on Flickr photos Publix would not go for an existing union shop. They are non-union, hire their own staff and don't want to be mixed up in a mess over the UFCW claiming a store must continue as union even with a new operator. Publix has told the Martins employees of the stores they are purchasing in Richmond that they must reapply with Publix. No jobs carry over. It has been strongly rumored that Publix is looking towards Northern Virginia as their next stop going north. The ironic thing is that if Publix could get a hold of existing Shoppers locations, without worry over the union and who Publix hires, Publix would be getting stores in solidly middle class, stable neighborhoods. Sure they aren't the super high end places that the image of Publix seems to gravitate towards. However these are neighborhoods that have basically had a triopoly of Giant, Safeway and Shoppers for many years. I would think they would welcome a new and highly regarded grocer to the neighborhood.
I've always thought that Farm Fresh would be a better fit for Publix geographically. However, there is an article on SN that SuperValu would like to hold out hope that a buyer to its stores would keep it as a wholesale partner, the likelihood of that happening to any of its brands (save for maybe Hornbacher's and a few Cub Foods stores) is slim to none. Anyone who buys Shoppers or its parts, whether it be Kroger, Albertsons, Publix, Ahold Delhaize, or Weis, are going to remake the stores in their image.
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Re: Crucial times for Shoppers

Post by BillyGr »

mjhale wrote:There doesn't seem to be a Shoprite owner who wants to take a shot at the Washington DC market as much as I would love one of them to come down here.
Not sure if they would do that, but the corporate part of ShopRite could run stores if they wanted to (as they already do in a few areas, like much of NY state outside the city areas).
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Re: Crucial times for Shoppers

Post by mjhale »

pseudo3d wrote:I've always thought that Farm Fresh would be a better fit for Publix geographically. However, there is an article on SN that SuperValu would like to hold out hope that a buyer to its stores would keep it as a wholesale partner, the likelihood of that happening to any of its brands (save for maybe Hornbacher's and a few Cub Foods stores) is slim to none. Anyone who buys Shoppers or its parts, whether it be Kroger, Albertsons, Publix, Ahold Delhaize, or Weis, are going to remake the stores in their image.
This sounds sort of what Supervalu is trying to do with the Food Lion stores they purchased and rebranded as Shop and Save. According to some of the articles I have read Supervalu has been working with some of their wholesale customers to see if there is any interest in the stores. My interpretation is that Supervalu is trying to sell off the stores to independents who have Supervalu as their supplier which keeps everything in the family. As you said any existing grocer coming in is going to want to keep their existing distribution contracts in place. Why would any grocer want to jeopardize their existing wholesale and supply relationships to get into a deal that would mean they'd have to use a competitor supplier, in this case Supervalu.

Personally if I was Supervalu I would sell off all of the retail operations and focus on the food distribution business. The proceeds from the retail operations sales could be used to pay down Supervalu's debt which has been said to be quite large. My fear though would be there would be no takers for a lot of Supervalu's retail operations because they just don't seem to be that attractive. Plus there just aren't that many grocers in expansion mode. I forgot about Weis when I was writing about who might want Shoppers. But they just took on a huge increase in stores with all of the Food Lion locations they now own. By the way I was in one of the Food Lion turned Weis in Montgomery County, MD over the weekend. The store was busy for a weekend evening and seemed to be brighter and have more energy than when it was a Food Lion. Otherwise, Weis has done zero to the store in terms of decor except put up a Weis sign on the front and bring in their own products. The store still has the latest Food Lion interior. The other Food Lion Weis picked up in Montgomery County I believe still had the Bloom interior. I'll be checking out that store this weekend. I've heard that Weis typically waits to see how an acquired store does before dumping money into it for a full remodel.
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Re: Crucial times for Shoppers

Post by mjhale »

BillyGr wrote:
mjhale wrote:There doesn't seem to be a Shoprite owner who wants to take a shot at the Washington DC market as much as I would love one of them to come down here.
Not sure if they would do that, but the corporate part of ShopRite could run stores if they wanted to (as they already do in a few areas, like much of NY state outside the city areas).
I wasn't aware that Wakefern operated any Shoprite stores. There are Pricerite stores in the DC area so there is distribution from the co-op coming down to the DC area. I would welcome Wakefern to jump in though I wonder how much traction they would get if they didn't have a good mass of stores down here. Thinking about it if the local Magruders chain hadn't wanted totally out of the retail business perhaps they could have joined Wakefern instead of closing. But at the time of its closing Magruders didn't have any of the big, super high volume, crazy busy stores Shoprite seems to be known for...
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Re: Crucial times for Shoppers

Post by pseudo3d »

mjhale wrote: But at the time of its closing Magruders didn't have any of the big, super high volume, crazy busy stores Shoprite seems to be known for...
I can't imagine any of the Shoppers stores being particularly high-volume enough that Wakefern or its associates would want to buy them. They only bought maybe a dozen A&P/Pathmark stores, most of them Pathmark.
This sounds sort of what Supervalu is trying to do with the Food Lion stores they purchased and rebranded as Shop and Save. According to some of the articles I have read Supervalu has been working with some of their wholesale customers to see if there is any interest in the stores. My interpretation is that Supervalu is trying to sell off the stores to independents who have Supervalu as their supplier which keeps everything in the family. As you said any existing grocer coming in is going to want to keep their existing distribution contracts in place. Why would any grocer want to jeopardize their existing wholesale and supply relationships to get into a deal that would mean they'd have to use a competitor supplier, in this case Supervalu.

Personally if I was Supervalu I would sell off all of the retail operations and focus on the food distribution business. The proceeds from the retail operations sales could be used to pay down Supervalu's debt which has been said to be quite large. My fear though would be there would be no takers for a lot of Supervalu's retail operations because they just don't seem to be that attractive. Plus there just aren't that many grocers in expansion mode.
At the right price, SuperValu can divest its operations. They can try to do what Albertsons did in Florida and sell the remaining Cub Foods stores out to Hy-Vee (they can do what they want to do with the stores), they can divvy up Shoppers as they see fit, and they can probably get at least a billion if they negotiate their cards somewhat well.

Unfortunately, SuperValu wants it both ways. It doesn't want to operate the stores but still want to be its supplier. This will scare off any moneyed larger corporations who might be willing to buy but have their own DCs in place, and will leave the brands to rot and die out, which is a terrible business decision. If that were the case, they need to cut their losses in that department, and look for new accounts. For instance, they should try shacking up with Albertsons again and take over the Florida stores' distribution so it's less of an impact on the Eastern Division.
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Re: Crucial times for Shoppers

Post by wnetmacman »

pseudo3d wrote:At the right price, SuperValu can divest its operations. They can try to do what Albertsons did in Florida and sell the remaining Cub Foods stores out to Hy-Vee (they can do what they want to do with the stores), they can divvy up Shoppers as they see fit, and they can probably get at least a billion if they negotiate their cards somewhat well.

Unfortunately, SuperValu wants it both ways. It doesn't want to operate the stores but still want to be its supplier. This will scare off any moneyed larger corporations who might be willing to buy but have their own DCs in place, and will leave the brands to rot and die out, which is a terrible business decision. If that were the case, they need to cut their losses in that department, and look for new accounts. For instance, they should try shacking up with Albertsons again and take over the Florida stores' distribution so it's less of an impact on the Eastern Division.
In our current time, there are three main ways a supermarket can be serviced (aside from DSD items):

1. Self Distribution
2. Serviced by a co-op that they are a member of and owner
3. Serviced by a third party independent distributor

All of the larger chains, and some surprising smaller ones do #1. It's the best way (though expensive) to make sure you're getting the items in your store you want. #2 is pretty popular regionally, and helps with recognition. Associated Grocers of Baton Rouge is one example of this. All the member stores display the AGBR logo out front. Name recognition.

Supervalu is one of many examples of #3, as are C&S, Associated Wholesale Grocers and several others. The upside with this model is you're getting the buying power of the company. The downside is whether or not that company has store expertise. AWG has several banners to choose from, and they own stores under a few of them. C&S does some of the same. Supervalu owned several banners.

I would be uncomfortable being supported, as a grocer, by a wholesaler that doesn't do at least some retailing on their own. Not being able to pass that expertise on to your customers could be a bad precedent. It says 'we can supply you, but don't ask for help'. I know that the co-op model isn't much different, but in the co-op, the owners are the stores, so they can share some information amongst themselves.
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Re: Crucial times for Shoppers

Post by pseudo3d »

wnetmacman wrote:
pseudo3d wrote:At the right price, SuperValu can divest its operations. They can try to do what Albertsons did in Florida and sell the remaining Cub Foods stores out to Hy-Vee (they can do what they want to do with the stores), they can divvy up Shoppers as they see fit, and they can probably get at least a billion if they negotiate their cards somewhat well.

Unfortunately, SuperValu wants it both ways. It doesn't want to operate the stores but still want to be its supplier. This will scare off any moneyed larger corporations who might be willing to buy but have their own DCs in place, and will leave the brands to rot and die out, which is a terrible business decision. If that were the case, they need to cut their losses in that department, and look for new accounts. For instance, they should try shacking up with Albertsons again and take over the Florida stores' distribution so it's less of an impact on the Eastern Division.
In our current time, there are three main ways a supermarket can be serviced (aside from DSD items):

1. Self Distribution
2. Serviced by a co-op that they are a member of and owner
3. Serviced by a third party independent distributor

All of the larger chains, and some surprising smaller ones do #1. It's the best way (though expensive) to make sure you're getting the items in your store you want. #2 is pretty popular regionally, and helps with recognition. Associated Grocers of Baton Rouge is one example of this. All the member stores display the AGBR logo out front. Name recognition.

Supervalu is one of many examples of #3, as are C&S, Associated Wholesale Grocers and several others. The upside with this model is you're getting the buying power of the company. The downside is whether or not that company has store expertise. AWG has several banners to choose from, and they own stores under a few of them. C&S does some of the same. Supervalu owned several banners.

I would be uncomfortable being supported, as a grocer, by a wholesaler that doesn't do at least some retailing on their own. Not being able to pass that expertise on to your customers could be a bad precedent. It says 'we can supply you, but don't ask for help'. I know that the co-op model isn't much different, but in the co-op, the owners are the stores, so they can share some information amongst themselves.
I said this before, this was probably why GSC wasn't all that good and sold out later, I only know they owned Fiesta and Food Fair, and neither of those they had much part in. C&S, I don't think, owns very many stores anymore. They bought Grand Union after its bankruptcy and slowly sold off the chain (216 to 21, and you thought Albertsons LLC did a number on their chain). They also got rid of Bruno's after they bought it out of bankruptcy, they sold off the last corporate-owned Piggly Wiggly Carolina store (in July of this year), and so on. Running stores is not their thing but they can still keep customers and run a successful business.

Now can SuperValu? That's another question.
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Re: Crucial times for Shoppers

Post by klkla »

wnetmacman wrote:
I would be uncomfortable being supported, as a grocer, by a wholesaler that doesn't do at least some retailing on their own. Not being able to pass that expertise on to your customers could be a bad precedent. It says 'we can supply you, but don't ask for help'. I know that the co-op model isn't much different, but in the co-op, the owners are the stores, so they can share some information amongst themselves.
I'm not so sure that I agree with this. There's often a conflict of interest (or perceived conflict of interest) when a wholesaler starts to compete with their customers. Companies like Fleming and SuperValu flourished when they were just wholesalers and their customers trusted them.

It also turned out that both of them were not very good retailers. I think Fleming would still be around and SuperValu would be in better shape if they had spent 100% of their resources operating companies that only supported independent grocers and small/medium sized chains instead of competing with them.
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Re: Crucial times for Shoppers

Post by pseudo3d »

klkla wrote:
wnetmacman wrote:
I would be uncomfortable being supported, as a grocer, by a wholesaler that doesn't do at least some retailing on their own. Not being able to pass that expertise on to your customers could be a bad precedent. It says 'we can supply you, but don't ask for help'. I know that the co-op model isn't much different, but in the co-op, the owners are the stores, so they can share some information amongst themselves.
I'm not so sure that I agree with this. There's often a conflict of interest (or perceived conflict of interest) when a wholesaler starts to compete with their customers. Companies like Fleming and SuperValu flourished when they were just wholesalers and their customers trusted them.

It also turned out that both of them were not very good retailers. I think Fleming would still be around and SuperValu would be in better shape if they had spent 100% of their resources operating companies that only supported independent grocers and small/medium sized chains instead of competing with them.
You know, with that in mind, while I cannot wholly applaud C&S Wholesale's methods, given that they slowly killed both Grand Union and Bruno's when they needed the most help (yes, I know they were has-beens of a sort by the time C&S took over, but let me at least say that much about their deaths under C&S), their method of wheeling and dealing properties seems like it paid off well.

That's why I don't think it was not a bad idea for SuperValu to buy the Food Lion stores they did, because they could in theory sell it to independents for a mild profit and possibly keep their distribution deal. However, while C&S did tend to sell to its own customers (they do have a pretty sweet deal with Ahold Delhaize), they didn't always adhere to that, and many Grand Union stores were sold to Shaw's, Hannaford, Price Chopper and Pathmark (as Wikipedia says), plus some drugstores and even department stores (similar to how Albertsons LLC sold a number of stores to Ross Dress for Less.

I'm not sure what Fleming's end-game plan was for its banners...it had bought Furr's in 2001 out of bankruptcy and might've made a decent profit off of it eventually had the whole business with scandal taken down the company.

The problem with SuperValu here is that it's not wheeling & dealing, clinging so selfishly onto the retail banners it has raised for many years, though that's not because anyone at SuperValu particularly loves Cub Foods or Shop n Save St. Louis or, in this case, Shoppers Food & Pharmacy, it's because they want a deal that they'll likely never get.
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