The present and future of Randalls

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Re: The present and future of Randalls

Post by wnetmacman »

pseudo3d wrote:Interesting. Getting to the topic post-Harvey, I realized that perhaps the one thing that could ensure Randalls' future in the Houston area is buying Fiesta, currently in the hands of an investment group. Steps would have to be taken to make this actually work properly, but what it would allow is Fiesta to do what it has generally failed to do, is connect with different demographics of Houston that Randalls can do and Fiesta can't, and vice versa. It would suddenly bolster the market share of the two companies to compete better with H-E-B and Kroger, allow banner swaps in areas where it needs to be, etc., plus it will end up putting former Safeway stores back in the hands of Albertsons Cos. :lol:
Knowing what we know about Albertsons in the past, they will have ZERO interest in purchasing FIesta. It is a concept FAR FAR outside their wheelhouse. The stores are all different and for different reasons.

I find that Fiesta can be very hit or miss, with some stores being exceptionally huge and having large bakery and deli-type departments, with other stores being equally huge but carrying large lines of general merchandise including clothing. I wouldn't say they fail to connect with their demographic, because the demographics change with each store. If anything, Albertsafeway misses hugely with Randalls and its ever shrinking store base. The ONLY thing a combination of these two would do is make each worse, but give Fiesta a larger merchandising capability. It would be a massive, MASSIVE failure.
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Re: The present and future of Randalls

Post by architect »

wnetmacman wrote:
pseudo3d wrote:Interesting. Getting to the topic post-Harvey, I realized that perhaps the one thing that could ensure Randalls' future in the Houston area is buying Fiesta, currently in the hands of an investment group. Steps would have to be taken to make this actually work properly, but what it would allow is Fiesta to do what it has generally failed to do, is connect with different demographics of Houston that Randalls can do and Fiesta can't, and vice versa. It would suddenly bolster the market share of the two companies to compete better with H-E-B and Kroger, allow banner swaps in areas where it needs to be, etc., plus it will end up putting former Safeway stores back in the hands of Albertsons Cos. :lol:
Knowing what we know about Albertsons in the past, they will have ZERO interest in purchasing FIesta. It is a concept FAR FAR outside their wheelhouse. The stores are all different and for different reasons.

I find that Fiesta can be very hit or miss, with some stores being exceptionally huge and having large bakery and deli-type departments, with other stores being equally huge but carrying large lines of general merchandise including clothing. I wouldn't say they fail to connect with their demographic, because the demographics change with each store. If anything, Albertsafeway misses hugely with Randalls and its ever shrinking store base. The ONLY thing a combination of these two would do is make each worse, but give Fiesta a larger merchandising capability. It would be a massive, MASSIVE failure.
I completely second Wnetmacman. Although a Fiesta acquisition would add to Albertsons' overall revenue, it would generate very little cost efficiency for the combined company as so much of Fiesta's product base is vastly different from Albertsons/Safeway. In addition, managing the unique merchandising and product mix of Fiesta would be a huge distraction in fixing the overall operational issues at Albertsons. Overall, Fiesta's format growth potential is somewhat limited due to the fact that they have failed multiple times in skewing mainstream (as most recently evidenced in DFW), and their locations in core Hispanic-dominant neighborhoods are mostly built out at this point.
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Re: The present and future of Randalls

Post by pseudo3d »

architect wrote:
wnetmacman wrote:
pseudo3d wrote:Interesting. Getting to the topic post-Harvey, I realized that perhaps the one thing that could ensure Randalls' future in the Houston area is buying Fiesta, currently in the hands of an investment group. Steps would have to be taken to make this actually work properly, but what it would allow is Fiesta to do what it has generally failed to do, is connect with different demographics of Houston that Randalls can do and Fiesta can't, and vice versa. It would suddenly bolster the market share of the two companies to compete better with H-E-B and Kroger, allow banner swaps in areas where it needs to be, etc., plus it will end up putting former Safeway stores back in the hands of Albertsons Cos. :lol:
Knowing what we know about Albertsons in the past, they will have ZERO interest in purchasing FIesta. It is a concept FAR FAR outside their wheelhouse. The stores are all different and for different reasons.

I find that Fiesta can be very hit or miss, with some stores being exceptionally huge and having large bakery and deli-type departments, with other stores being equally huge but carrying large lines of general merchandise including clothing. I wouldn't say they fail to connect with their demographic, because the demographics change with each store. If anything, Albertsafeway misses hugely with Randalls and its ever shrinking store base. The ONLY thing a combination of these two would do is make each worse, but give Fiesta a larger merchandising capability. It would be a massive, MASSIVE failure.
I completely second Wnetmacman. Although a Fiesta acquisition would add to Albertsons' overall revenue, it would generate very little cost efficiency for the combined company as so much of Fiesta's product base is vastly different from Albertsons/Safeway. In addition, managing the unique merchandising and product mix of Fiesta would be a huge distraction in fixing the overall operational issues at Albertsons. Overall, Fiesta's format growth potential is somewhat limited due to the fact that they have failed multiple times in skewing mainstream (as most recently evidenced in DFW), and their locations in core Hispanic-dominant neighborhoods are mostly built out at this point.
I was mostly thinking a mutual benefit for Randalls and Fiesta, as both can go where the other can't, but you're right, there are too many logistical problems. Some notes, though...

1. The integration between Albertsons and Safeway hasn't really been particularly encouraging. I wouldn't quite say "worst of both worlds" exactly but bad ideas ended up cross-pollinating instead of being disposed of. This included keeping the card.
2. However, I don't think that Fiesta is a bad acquisition choice. It's not a "traditional" grocer but it does have decent market share in Houston, and Albertsons did in fact try a Hispanic-oriented spin-off under Larry Johnston. Plus, it does follow in Albertsons' stated desire to expand the markets that they are in.
3. Fiesta's vast differentiation in store sizes may not be a bad thing, I believe I said here that this was one of H-E-B's strengths, and Fiesta stores range from 22,000 square feet (a small store they built in Conroe) to around 100,000 square feet (a former FedMart and a Globe).
4. Switching Randalls over to Grocers Supply Co. (and by extension, the Louisiana Albertsons, those though can remain under South) could be a cost saver instead of trying to truck all that from Dallas-Fort Worth.
5. Anti-trust issues may crop up in Midtown, but it would be a bigger problem in Dallas-Fort Worth, so those might have to be divested. The ones that aren't could be merged in with United, and be rebranded as Amigos.
6. The expansion of the Fiesta name outside their core areas failed for different reasons, but if it was the name, then the Randalls name could help them work in more affluent areas.
7. Miller has stated wanting to buy more companies with semi-autonomous control like United.
8. Moving more control of Randalls into Fiesta could jeopardize the future of both companies.

That all being said, I believe it could really work out if they played off each others benefits and adopted best practices for a better, reformed division. The reality is, unfortunately, that they don't. Maybe it could work out better if it was a deal where Randalls was sold to Fiesta for an ownership stake, much like Safeway and Vons, to buy back later.
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Re: The present and future of Randalls

Post by storewanderer »

I think they already have a hispanic format over at United don't they? If they wanted to get this sort of a format and expand it, why aren't they using that one?

I don't think they would move Randalls to a secondary wholesaler under any circumstances. Over the years they have stopped doing that and have taken control of supply in-house. Sort of like those FL Stores which, for a while, were supplied by Supervalu after LLC whittled it down to a dozen stores and closed Plant City, FL Distribution, but then at some point shifted to being supplied by Dallas (maybe after it was only 3 remaining stores), then Randalls, now Eastern...
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Re: The present and future of Randalls

Post by pseudo3d »

storewanderer wrote: I don't think they would move Randalls to a secondary wholesaler under any circumstances. Over the years they have stopped doing that and have taken control of supply in-house. Sort of like those FL Stores which, for a while, were supplied by Supervalu after LLC whittled it down to a dozen stores and closed Plant City, FL Distribution, but then at some point shifted to being supplied by Dallas (maybe after it was only 3 remaining stores), then Randalls, now Eastern...
Even in the early 1990s Albertsons was self-distributing to two-thirds of its stores (Florida was not one of them--they bought Plant City in 1993 from Prudential, which had bought it in 1990 after Ames closed it). I guess they must have achieved close to 100% just prior to meltdown in 2002 (that's not a good comparison to make, considering the state the company was in), but it seems even now that they can't control prices with trying to self-distribute, so they need to cut costs and find third party suppliers for some. During said meltdown, they sold the DC and by extension the store distribution of Great Plains to Fleming, because the warehouse was operating at 60% capacity. [http://caselaw.findlaw.com/us-3rd-circuit/1267914.html]

It's nothing to be ashamed of, according to the documentation I have regarding Safeway before the closures of Genuardi's and Dominick's, Genuardi's was supplied by C&S (and no, not the C&S-operated Safeway DC that did the rest of the Eastern division). It's definitely a path they can take to restore profitability without doing mass closures, and they still have that option (unlike Winn-Dixie, which contracted out its distribution to C&S several years ago).

Biggest problem I see with that is that GSC in Houston always seems to have cheap but dubious-looking produce. Maybe under C&S that's changed. I don't know.

As for Amigos, I don't know why United never did more of it. There are only four, and of those, at least half of them were conversions. It's clearly not a growth vehicle for the company, even divorced of Albertsons' influence. I suppose another thing that could happen is that they could rebrand the Dallas stores to Carnival (a former Minyard brand, they still have one operating as such even though it's a Fiesta in all but name) and sell them off...but again, that's all hypothetical.
Off Topic
In terms of Fiesta closing stores, looking at their stores post-early 1990s (prior to this no stores were closed), one was in Deerbrook that was later a Randalls that also closed, one was on FM 1960 that survived into the late 1990s when it was bought by Randalls at a price they couldn't refuse (Randalls would close around two years later), their Clear Lake flagship closed in 1993 because the hydroponic garden feature was far too expensive to maintain, and the Sugar Land store closed partly because that Fiesta never really tried to connect with the neighborhood like the others did, and of course, it closed. That and the store was pretty small. Dallas ones are probably a different story...I'm guessing the MSFM stores they bought were doing so badly nothing could save them.
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Re: The present and future of Randalls

Post by wnetmacman »

pseudo3d wrote:I was mostly thinking a mutual benefit for Randalls and Fiesta, as both can go where the other can't, but you're right, there are too many logistical problems. Some notes, though...

1. The integration between Albertsons and Safeway hasn't really been particularly encouraging. I wouldn't quite say "worst of both worlds" exactly but bad ideas ended up cross-pollinating instead of being disposed of. This included keeping the card.
The problem with cross-pollenization is that, as they say in the Facts of Life theme song, "You take the good, you take the bad...". That's what's happening. More of the bad is coming through than the good is. And folks notice bad first.
pseudo3d wrote:2. However, I don't think that Fiesta is a bad acquisition choice. It's not a "traditional" grocer but it does have decent market share in Houston, and Albertsons did in fact try a Hispanic-oriented spin-off under Larry Johnston. Plus, it does follow in Albertsons' stated desire to expand the markets that they are in.
Where is that Hispanic-oriented spinoff? Is it still open, and did it survive SuperValu or LLC? Also, sometimes expanding for the sake of expansion isn't always good, especially if you can't master what you DO know. Randalls is a very solid #4 in Houston, behind Kroger, HEB and Walmart. They need to figure out how to move up before they move out.
pseudo3d wrote:3. Fiesta's vast differentiation in store sizes may not be a bad thing, I believe I said here that this was one of H-E-B's strengths, and Fiesta stores range from 22,000 square feet (a small store they built in Conroe) to around 100,000 square feet (a former FedMart and a Globe).
Randalls/Tom Thumb also operate stores of varying sizes throughout Texas. Doesn't mean that they could do it with Fiesta.
pseudo3d wrote:4. Switching Randalls over to Grocers Supply Co. (and by extension, the Louisiana Albertsons, those though can remain under South) could be a cost saver instead of trying to truck all that from Dallas-Fort Worth.
I agree with Storewanderer on this one; changing suppliers, especially now, wouldn't be a good idea for either. Randalls doesn't have near the ethnic experience that Fiesta does, and their DC isn't equipped for it.
pseudo3d wrote:5. Anti-trust issues may crop up in Midtown, but it would be a bigger problem in Dallas-Fort Worth, so those might have to be divested. The ones that aren't could be merged in with United, and be rebranded as Amigos.
I don't believe that anti-trust will be an issue unless the FTC were to label both as traditional grocers. Also, United wouldn't be tapped to run these; they're too far outside of their wheelhouse, and they aren't expanding their Amigos format. I think they only use it for stores that are beyond major capital improvements, but stuck in a lease so they would lose out if they didn't operate it.
pseudo3d wrote:6. The expansion of the Fiesta name outside their core areas failed for different reasons, but if it was the name, then the Randalls name could help them work in more affluent areas.
It failed because the stores that have failed weren't true Fiesta stores; too much rigidity in the format.
pseudo3d wrote:7. Miller has stated wanting to buy more companies with semi-autonomous control like United.
But buying right now doesn't work with ABS's balance sheet. They need to become profitable.
pseudo3d wrote:8. Moving more control of Randalls into Fiesta could jeopardize the future of both companies.
Never a truer statement.
pseudo3d wrote:That all being said, I believe it could really work out if they played off each others benefits and adopted best practices for a better, reformed division. The reality is, unfortunately, that they don't. Maybe it could work out better if it was a deal where Randalls was sold to Fiesta for an ownership stake, much like Safeway and Vons, to buy back later.
[/quote]

If Safeway were in control, and this were the 80's, yes. Now, it wouldn't work because Albertsons wants to grow, not sell off stores.
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Re: The present and future of Randalls

Post by architect »

wnetmacman wrote:
pseudo3d wrote:That all being said, I believe it could really work out if they played off each others benefits and adopted best practices for a better, reformed division. The reality is, unfortunately, that they don't. Maybe it could work out better if it was a deal where Randalls was sold to Fiesta for an ownership stake, much like Safeway and Vons, to buy back later.
If Safeway were in control, and this were the 80's, yes. Now, it wouldn't work because Albertsons wants to grow, not sell off stores.
Do keep in mind that if Albertsons was to sell of certain divisions, there would be little guarantee that they could buy back said stores at a later date. At this point, the US grocery market is at its most competitive point with Amazon, Aldi, Lidl and Walmart, and the era of the known regional grocer is likely coming to an end in many areas. Some chains will adapt well (as has been shown by HEB, Publix and Wegmans so far) while others will become increasingly irrelevant and eventually flounder (such as the SEG banners, Food Lion, among many others). The only thing saving Randalls at this point is the fact that Albertsons is using it to keep a foothold in the Houston and Austin markets. If it became independent or was owned by a weaker operator, the stores would likely be gone in a matter of months, with the best locations being sold to other operators (much like what has happened with Minyard Sun Fresh). As recently evidenced in Dallas and previously in the Houston area, Fiesta's management cannot effectively handle stores outside of their traditional Hispanic base. Fiesta acquiring Randalls would be a death sentence for the latter, which could badly wound the former with it.
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Re: The present and future of Randalls

Post by architect »

In an interesting distribution update, last weekend I passed by a Tom Thumb-branded truck headed north on 45 around the Buffalo-Fairfield area. Typically, trucks traveling between the Albertsons/Safeway DC's in Fort Worth and Houston typically took 290>6>35>35W. I am curious if this means that the Houston DC is officially shut down, and that new distribution routes have been established?
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Re: The present and future of Randalls

Post by pseudo3d »

architect wrote: October 8th, 2017, 5:55 pm In an interesting distribution update, last weekend I passed by a Tom Thumb-branded truck headed north on 45 around the Buffalo-Fairfield area. Typically, trucks traveling between the Albertsons/Safeway DC's in Fort Worth and Houston typically took 290>6>35>35W. I am curious if this means that the Houston DC is officially shut down, and that new distribution routes have been established?
Probably. I think August was the shut down. Still never quite did figure out the convoluted Houston to Austin route, though.
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Re: The present and future of Randalls

Post by pseudo3d »

By the way, the Randalls in Katy that closed will be the home of an Asian market by years-end. Wonder if this was one of those "transitionary demographics" areas that the company is still afraid to tackle again.
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