storewanderer wrote:HEB will go after the lowest hanging fruit first. That is Albertsons and Tom Thumb. They have the lowest volume stores. Kroger locations typically do much higher volume. A Kroger doing $600,000 a week can afford to lose half of its business and still hang on (not well but at least hang on). An Albertsons doing $250,000 a week or a Tom Thumb doing $350,000 a week cannot afford to lose even 40% of its business and still hang on and HEB knows it. Kroger may be sitting on some of those $250,000-$350,000 a week locations also but those are mostly in dying areas with little growth and little risk of HEB entering; maybe risk of some new Save a Lots or Aldis but not HEBs.
The Market Streets all running similar volumes to the typical Kroger should also be able to hang on.
Albertsons everyday shelf pricing is terrible and that does not seem to be changing. In NorCal it is getting worse.
I wouldn't be that pessimistic. First off, in Cleburne, Albertsons, H-E-B, and Kroger all compete, much like the situation in College Station used to be. Secondly, the market situation in Dallas-Fort Worth is vastly different than the situations elsewhere.
In San Antonio, H-E-B was always the top dog since it has its founding there. Kroger pulled out in the early 1990s with Albertsons (a mainstay since the Skaggs Albertsons days, which were sent to Albertsons) closing in 2002.
In Austin, H-E-B has also maintained a presence since at least the 1950s (if not earlier). I'm not sure when Albertsons came in, but they left in 2006-2007. Randalls today maintains a distant 2nd place and is amalgamated from Tom Thumb (which it bought and rebranded the Dallas stores) and Safeway (which were later AppleTree, which Randalls closed and reopened under their name), which all happened in the early 1990s. Kroger left years earlier.
In Waco-Temple-Killeen, Albertsons never had much of a major presence. The one in Waco was a former Skaggs store and never penetrated the market. Once again, H-E-B dominated because it was always there. I'm not sure there even
was a Kroger in those cities.
In College Station-Bryan, Kroger and Safeway had a presence in the 1980s and before (much like Houston), but Albertsons came in during the early 1990s with both a new store and a purchase of a former Skaggs Albertsons (which back with Skaggs). H-E-B Pantry came in around that time but it was small, and H-E-B built its first store in 2002. Albertsons closed one of its three stores in 2006 (a 2002 location in Bryan in a redeveloped shopping center, even Walmart Neighborhood Market couldn't make a go of it), the next one in 2008 (because Wal-Mart bought it for expansion of their store, they would end up demolishing part of it and using it for storage), and finally the last and largest one in 2011 when it was sold as a package deal to H-E-B (when H-E-B wanted the Kerrville store), as by that time there wasn't one in miles around.
In Houston, Albertsons entered a crowded market in the mid-1990s, where it was fighting against Randalls, H-E-B Pantry, Kroger, Rice Epicurean, and Fiesta. It may be easy to blame H-E-B on Albertsons' demise, but the first one came in January 2001 and no more than six more opened that year, while Albertsons had over 30-40 stores. It had become obvious by late 2001 that Albertsons wasn't going to work out in Houston, even though full-sized H-E-B stores hadn't reached market penetration.
In Dallas-Fort Worth, Albertsons has been there since the mid-1980s and weathered the cuts by Albertsons LLC, with Tom Thumb there even longer. Blitzing the market with no-frills stores to be upgraded later will not work for H-E-B in Houston, nor are they on their home turf where they can use that as leverage against new competitors. It's unlikely that H-E-B will fail spectacularly and get run out of town, but all they've got is word of mouth both good and bad. They've got Central Market there, which is a fantastic grocery store (though with a crazy layout and a too pretentious product line-up). The worst thing that could happen is that people get their hopes up, H-E-B shortchanges them with "C" grade stores for their neighborhoods (they've got internal store layouts and product mixes) while Tom Thumb and Albertsons upgrade their offerings. Just as people would like to see H-E-B in town, others aren't too impressed, and others are unhappy that H-E-B basically has a monopoly in San Antonio, a significant part of Austin, and Waco-Temple-Killeen and would rather keep their grocery market mix.