Consistency of Raley's Stores versus Safeway

[storewanderer]

Is there a way to split off the messages when they started to go off topic and move those pre-existing messages to a new thread?

[submariner]

Is there a way to split off the messages when they started to go off topic and move those pre-existing messages to a new thread?

Done.

[pseudo3d]

With so many rinky-dink Raley's stores, why not take the third option and convert them to a Food Source?

[lake]

With so many rinky-dink Raley's stores, why not take the third option and convert them to a Food Source?

Food Source isn't a very successful operation other than it's core stores being Mack Road & 99, Broadway, Pittsburg, and Rio Linda. There aren't actually too many "rinky-dink" stores left. Raley's has never done well in rough areas and has closed (or converted) almost all of these stores (Rancho Cordova (two stores), Mack Road (not Food Source) , North Highlands, Reno.) The stores that Raley's has left are a core of medium to top performing stores with a few "project" stores Raley's has half heartedly tried to fix with the belief that they are viable. Stores such as the Sparks one mentioned host community events and promotions such as wine tasting, Seafood Roadshow, and Hatch Chili Roasting which is sure to draw in customers, but the store can't look like it does to keep them. Raley's is a store that delegates a lot of responsibility to the store manager and this can either be very positive or negative. A store near me has completely turned itself around with the introduction of new management and it's volume has increased significantly despite it being on one of the most competitive corridors in the Sacramento region. It has gone from usually having one or maybe two checkstand open during the mid day to four with lines. It's possible to turn stores around, especially when the NorCal/Nev grocery market is as turbulent as it is, but it takes more than half-heartedly having the Seafood Roadshow trailer pop up in your store frequently.

[storewanderer]

Food Source is not a successful discount store format for the most part. Actually I think Food Source has gotten quite a bit better over the past few years than it ever was, but it is still not great. I think a better move would be for them to exchange those stores with Save Mart and take some of Save Mart's poor volume stores in upper middle class areas off their hands. That would be a win-win for both parties. It would cost Raleys a little share around Sacramento but Save Mart has so little share there they will never be much above 3rd or 4th place in marketshare even after such an exchange.

Raleys tried to convert two poor stores in Elk Grove and in Fallon to Food Source and both closed within about 3 years. I am not really sure all of the remaining Food Sources will make it but I think they are trying to drive sales in those and make changes as needed that will make them into a somewhat profitable operation.

I think Raleys still has 15-20 low performers but some closures and other things have helped them, including some competitive closures. Some more competitive closures will likely provide them additional help.

For what it's worth I almost never see the store manager in these Reno Raleys locations out on the sales floor. I see lower managers but not the store manager. Specifically at the Wedge Parkway location which is the one I go to the most, I sometimes peek into the office and always see him sitting in there. I also used to frequently go to the Mayberry Drive Raleys and never, ever saw the store manager visible in there either. I have seen the store manager visible in the North Hills location. Most of my visits are either early in the morning, late in the afternoon or mid afternoon. Maybe they are more visible on the sales floor at other times. I typically find at the best run the stores, the store manager is visible and active in the 3 PM to 6 PM range on the sales floor walking their floor and talking to customers and employees since that tends to be a very busy time, fewer vendors around, etc.

[lake]

Yep, the store manager can make a huge difference in the operations of a store. At the store I mentioned above, the old manager was a guy who had 30+ years with the company so the store certainly wasn't mismanaged, but it was your typical store, run exactly the same way for the 10 or so years he was at it. Now, the new manager has stepped in and is everywhere. You'll see him walking the floor shaking customer's hands, talking about common hobbies he has with customers, retrieving the carts if the courtesy clerks are busy, and just about everything else. The store is also starting to do community events such as movie nights and music on a stage that the manager had built. Yesterday I was in the store and it had four checkstands open each with three or four customers deep. One of the cashiers was attempting to call someone up but had no success so the manager literally ran out of his office opened up a fifth checkstand and operated it for 10-15 minutes while I was in the store. This guy is awesome and the increase in traffic at the store is a testament of this.

I don't think Raley's has any more plans in closing stores though. Right around the change of ownership last year, they closed quite a few stores and if I recall said that that was it. I think Joyce Teel was really interested in keeping stores such as Mack Road and Winnemucca open because they legacy stores that were truly a part of the community, but Michael Teel is more of a businessman who saw no future in these stores and decided to pull the plug. I agree that Raley's has 10 or so stores that are underperformers, but I think the company has plans to turn these around rather than close them. Fremont for example is undergoing a very large remodel currently ( https://scontent-sjc2-1.xx.fbcdn.net/v/ ... e=585A5E61 ) that actually looks very interesting. Also appears that they are downsizing the store as well which is a good idea since those 80s Superstore prototypes are just too large for the California market today.

[storewanderer]

I am surprised if there was underperformance in the Fremont Raleys (was it underperforming or had it just been passed up for a remodel over the years? I did not think that was an underperformer).

Part of future store closures will also depend how long it takes the upcoming crop of new stores to become profitable. If those stores turn profitable in 2-3 years then I think we will see the older underperforming stores kept open and "worked on." But if those stores take 4-5 years to turn profitable, I think we will see some of the marginal stores close.

Recall when Raleys had the union tension and wanted concessions, they said 1/3 of the stores did not turn a profit. I think the entity as a whole still turned a profit. The irony of that was when Save Mart opened its financials to the union, we see who got the concessions.

[lake]

I am surprised if there was underperformance in the Fremont Raleys (was it underperforming or had it just been passed up for a remodel over the years? I did not think that was an underperformer).

Part of future store closures will also depend how long it takes the upcoming crop of new stores to become profitable. If those stores turn profitable in 2-3 years then I think we will see the older underperforming stores kept open and "worked on." But if those stores take 4-5 years to turn profitable, I think we will see some of the marginal stores close.

Recall when Raleys had the union tension and wanted concessions, they said 1/3 of the stores did not turn a profit. I think the entity as a whole still turned a profit. The irony of that was when Save Mart opened its financials to the union, we see who got the concessions.

I think that the Fremont store is certainly in the bottom of the bunch in terms of sales versus potential, but once again that's based off of Yelp Reviews mentioning it being slower and the SE Vouchers given at the store. Using the voucher amounts certainly has it's flaws, but it is still the easiest way for me to tell the volume of stores. It is in a pretty good location though so a solid remodel and good management (which it appears to already have) should help it perform much better.

As for the statistic that 1/3 of stores don't turn a profit, this was from 2012 where the economy certainly was still very much troubled and Raley's operates in some of the hardest hit regions. The possibility of a strike also hurt them a lot, and although this figure was pre-strike, the stalled negotiations led to a lot of uncertainty at the time. I think the chain recovered quite well from the strike in 2012 and it had little affect on them long term. Although it is possible that 1/3 of there stores did not make a profit in 2012, I'd assume this figure is much lower now due to the 10 or so stores they've closed since then and the much improved economy, especially in Sacramento where 1/3 of their stores are. I think that the chain is in a very solid position now and has the cash built up that it can afford to take losses trying to turn around stores and invest in their infrastructure.

[storewanderer]

I am just not sure the best idea is to waste time and resources to turn around some of these marginal stores that sit in middle class at best areas. Frankly, I don't think some of these stores have a chance due to Raleys pricing and perimeter programs, combined with some of the surrounding competition. They are just "off the mark" in some of these neighborhoods. Too much high cost product, wrong items being promoted, promotional pricing not right, etc. Wal Mart has hurt them in Nevada more than they want to admit, and in the past 4-5 years as Smiths has improved here they have also had a very significant impact in those locations where the two compete. By some of those stores not having a chance, I am referring to a couple that photos are posted of higher up in this thread... I kind of think there may be more opportunities to build new stores in upper middle class areas that would be better long term and help them to get to a base of stores that fully fits their image. Now that they are building smaller 45,000 square foot stores they can build closer together than back in the day of the 65,000+ square foot stores...

I felt like the short strike was a little blip on their radar. I was pretty surprised it even happened. I did not expect it to.

[storewanderer]

Here are some photos of the Carson City Raleys. Standard condition for handling unused departments in Nevada. The "markdown center" was a Bank of America. The customer service area is closed but counters not removed. Sizzling Wok is closed and they removed the old hot case and put the bakery bread displays in front of it. Curiously, this store does not have a service meat/seafood department despite what is obviously ample unused space.

I thought this was a pretty solid performing store but maybe not so much. The 60k square foot 1997 Albertsons-build Save Mart across the road is dire. Closed service bakery, about 40% of service deli case not in use/covered with large lunchmeat photo decals, really shallow stocked shelves. Curiously, it still offers service meat/seafood. I have never seen a store before offer that but not service bakery. I have no idea why it is open. It was a slow Albertsons too but not nearly as slow as it is under Save Mart. There is no new competition in the area since the conversion; Save Mart's formula has simply been a failure. Maybe if (probably more of a when than if) the Save Mart closes the I estimate $125k a week or so of sales it will put up for grabs will help get the Raleys to a better level of performance.