2024 Retail Predictions?

[ClownLoach]

I consider SoftBank the Japanese version of BlackRock….fingers into everything (they already control Gannett along with other US companies like Fortress)

SoftBank is not going to buy Albertsons. If the merger falls through what you're most likely to see is Cerberus sell their very large chunk of shares to Apollo who is already deeply invested. Why would SoftBank bail out Apollo and Cerberus? Makes no sense.

[arizonaguy]

And I can't understate the fact that the new grocery industry boogeyman is going to become Aldi. Nobody took them seriously before, but their seemingly endless supply of cash and incredible cost controls mean they are going to replace Amazon as the biggest threat to the industry. The Winn-Dixie acquisition and future gutting is going to be their new growth strategy. They will start to pick up smaller chains and repeat the plan. Remember, it doesn't take much for their stores to break even due to their cost model, which means they have all the time in the world to build and wait for customers who inevitably do arrive.

I don't understand Aldi. One opened up near my house a few years ago and I find the store ridiculously underwhelming. I've only been in a couple of times and don't really see any reason to return. Their product mix is, uh, interesting. Their pricing isn't significantly lower than others and they don't really offer anything "unique" other than a handful of German products.

I'm not convinced Aldi, with it's current format, is as big of a threat as made out to be. The real winners in this Winn Dixie purchase will be Walmart and Publix.

[HCal]

Again, why would Albertsons abandon Texas? The state is growing, California isn't. I have no idea why you have it out for the South division that comes with every post.

Perhaps because they have better market share in California. Safeway is dominant in NorCal and Vons/Albertsons is I believe #2 in SoCal. In Texas they are behind HEB, Walmart, and Kroger, and aren't going to be catching up any time soon. They may be better off investing where they are strong.

[ClownLoach]

And I can't understate the fact that the new grocery industry boogeyman is going to become Aldi. Nobody took them seriously before, but their seemingly endless supply of cash and incredible cost controls mean they are going to replace Amazon as the biggest threat to the industry. The Winn-Dixie acquisition and future gutting is going to be their new growth strategy. They will start to pick up smaller chains and repeat the plan. Remember, it doesn't take much for their stores to break even due to their cost model, which means they have all the time in the world to build and wait for customers who inevitably do arrive.

I don't understand Aldi. One opened up near my house a few years ago and I find the store ridiculously underwhelming. I've only been in a couple of times and don't really see any reason to return. Their product mix is, uh, interesting. Their pricing isn't significantly lower than others and they don't really offer anything "unique" other than a handful of German products.

I'm not convinced Aldi, with it's current format, is as big of a threat as made out to be. The real winners in this Winn Dixie purchase will be Walmart and Publix.

Yet their stores all open the same way. They enter a market and stores are slow for about a year. During that time they gather data on what sells, what doesn't, and they plug in unique assortment SKUs until they've tested about 1,000 select store items. Then they finalize the product mix and sales start to increase. Before you know it, the store is about two or three years old and established, with consistent traffic that continues to grow for the next decade. Meanwhile, their cost structure is so low that they can make money almost anywhere. And they allegedly don't have any debt which once again makes them a formidable threat. They break even at a point so low it would bankrupt their competition.

What has changed is that they are now willing to pay to close their competitors. That is behavior we have not seen before. Realize that they do not care if they convert a Winn-Dixie that currently brings $10M a year into an Aldi that only brings in $5M a year, because they will have a larger bottom line profit in the Aldi format. Yes, some sales will move to competition, but then they'll add additional stores that bleed off more sales.

This is why they're finally going to be a threat where they weren't before. Everyone thought California would be their end, instead they are finally delivering consistent traffic and building fill-in 2nd/3rd wave stores to take additional share in existing markets.

[ClownLoach]

Again, why would Albertsons abandon Texas? The state is growing, California isn't. I have no idea why you have it out for the South division that comes with every post.

Perhaps because they have better market share in California. Safeway is dominant in NorCal and Vons/Albertsons is I believe #2 in SoCal. In Texas they are behind HEB, Walmart, and Kroger, and aren't going to be catching up any time soon. They may be better off investing where they are strong.

There is no reason to leave Texas.

You must recognize the mindset of Wall Street and corporate executives that want to keep their heads.

Texas is delivering considerable population growth nearly everywhere. Population growth virtually guarantees positive comp sales.

Wall Street demands comp sales over all else in retail. As a result, a market that has positive comps will be placed on a pedestal, even if it is not profitable or less profitable than the rest of the chain. Even money losing stores will be kept open and continue to be invested in as long as they deliver positive comps. Market share is not relevant either as long as there are positive comp sales.

In reverse, a store can make plenty of bottom line profit and even have decent sales volume, but if it falls onto a negative comp pattern it will be closed, guaranteed.

Comps rule all, and nearly every company I know currently has their best comps in the state of Texas.

[brendenmoney]

Here is what I expect to happen with Kroger and Albertsons, since this is a hot topic:

SoCal: Hypothetically if the Albertsons/Kroger merger goes through, which I'm not quite sure it will at this point, Kroger and Albertsons will be required to sell more stores than initially planned to C&S, which in turn C&S over the next five years will sell the bulk of divested stores to Stater Bros and Save Mart, but also a few locations each to Smart & Final, Gelsons and Whole Foods in more upscale areas, and Walmart Neighborhood Market, and Save Mart will revive the Lucky name in SoCal just like the Bay Area, with both Stater and Save Mart buying the stores in waves just like how Publix bought waves of Albertsons stores in Florida over time until there were none left. Kroger in turn will slowly convert stores to either the Ralphs and Vons banner (or just throwing it out there, Safeway), eliminating multiple banners, along with Fresh Fare stores being converted to Pavilions, and keep existing Pavilions as they are. It would evidently be the end for the Albertsons banner in California forever.

If the merger doesn't go through, I expect Albertsons to narrow most of SoCal down to the Albertsons and Pavilions banners, converting Vons stores to either of those banners, with the exception the Vons stores particularly in West LA since it is one of the markets where the Vons banner is much stronger. The rest of SoCal will be converted, and people may be upset about the change at first, but will get over the banner change over time just like the Lucky/Albertsons merger. Kroger will continue to shed Ralphs stores, particularly exiting the Inland Empire, Temecula, Coachella Valley, and the Central Coast, selling the stores to Stater, Albertsons, and Save Mart. I can also see either Stater and/or Save Mart give the Central Coast a try in the near future. However, maybe Ralphs will build new/rebuild older stores in LA throughout the future in turn to strengthen their stronger CA markets with their weaker markets in the rearview mirror.

In either scenario, Food 4 Less gets sold wholly to Save Mart or PAQ Inc, or split between both with some being converted to FoodMaxx and some being franchised by PAQ Inc. along with the Food 4 Less stores throughout Central and NorCal not owned by Kroger.

Central and NorCal: Merger or no merger between Albertsons and Kroger, Kroger will sell all the remaining FoodsCo stores to Save Mart, and they will be converted either to FoodMaxx or Lucky. If the merger goes through, Kroger will have an even greater reason since they will own Safeway, and FoodsCo will no longer be their sole presence in NorCal. The Fresno Vons locations, as well as Oakhurst, Bishop, and Mammoth Lakes will be converted to Safeway and be given remodels regardless of whether the merger happens or not.

Las Vegas and Arizona: Definite elimination of Vons banner in Las Vegas and elimination of Albertsons banner in Arizona, since Albertsons only exists in large Arizona metro areas at this point, it is no longer present statewide.

PNW: Just a continuation of what is already happening, the Albertsons banner eventually disappears from Washington and Northern Oregon, and an expansion of the Albertsons banner in Idaho and Montana. If the merger goes through, I expect new Albertsons store banners in the country to be limited to their strongest markets, which are Montana, Idaho, and maybe Southern Oregon and the Dakotas. Albertsons will likely stick around New Mexico and El Paso for a while, but that's a wild card, as I'm not really sure what would happen there. Albertsons will be just a fever dream everywhere else.

Texas and Louisiana: Albertsons won't completely exit Texas, but will sell Albertsons-bannered stores in the state to Kroger if merger does not happen, and convert maybe a few more busy Albertsons stores they want to keep to Tomb Thumb, with the exception of El Paso which will stay as it is. Louisiana stores without the merger will be sold to Kroger or Publix, with the merger, remaining Albertsons stores will be re-bannered as Kroger since there isn't much of a reason to keep the name on so little stores in an area.

Northeast: Without the merger, Kroger may buy some or most of the East Coast Safeway stores and convert them to Harris Teeter, since they have a presence in that market, the rest of the East Coast, remaining Safeway locations, ACME, Star, and Shaws, will not be bought by Kroger, but slowly picked up by existing competition in the area. Not quite sure what Krogers intentions are in the Northeast if the merger does go through.

Denver: Also not quite sure what happens here, but most likely, it's either the merger, or C&S will acquire the stores in this division without the merger, but gain the rights to the Safeway name instead of Albertsons.

Chicago: This is what I think may be one of the main reasons Kroger wants this merger with Albertsons, a greater foothold in the Chicago market, and access to Albertsons crown Jewel (pun intended). However, without the merger, I expect that Kroger will continue to attempt to enter the Chicago market, not with Mariano's, but I believe it would be one of the few places outside of the core markets of Kroger that they would build new Kroger-bannered superstores that they are building to replicate Walmart Supercenters, such as Texas and Ohio. While the Kroger name is not present in the Chicago market, they do have stores in the state of Illinois, so it is not out of familiarity, and there is no doubt Kroger is willing to spend the money to make their way into the market and gain market share from Jewel if they cannot acquire Jewel themselves. I also expect Kroger along with their own bannered stores to open more Food 4 Less stores in the market, as well as remodel existing ones, but change the concept to something that more replicates Walmart Neighborhood Market.

In general, without the merger, the only major expansion I see from Kroger is the Chicago market, as well as expansion in their core markets. Maybe Kroger will clean up non-core markets like SoCal, but they likely won't be interested in nationwide expansion beyond their current markets without the acquisition of Albertsons current store base. I don't think Kroger is that desperate for a national expansion to compete with Walmart as they are making it out to be. I also think Kroger is gonna give up on Florida any day now, as their only presence is through online delivery, but there is no store base that brings brand awareness to Florida, so eventually Publix will once again dominate another competitor trying to take over their home turf. Kroger will continue to expand their hypermarket concept in favor of supermarkets in their core markets, and slowly replace traditional supermarkets with hypermarkets, or AKA, a Kroger Walmart Supercenter. Kroger will also shift focus away from QFC in the PNW to a further expansion of Fred Meyer.

Albertsons without the merger will trim up their fleet and focus on their more successful markets. I can see Albertsons making an expansion in their existing markets to further gain market share in their strongest markets.

With other chains:

Publix will continue to expand west, as well as north, eventually competing directly with Wegmans in the Washington D.C. market. If Krogers merger does not go through, maybe Publix will buy some ACME stores in Jersey so they can continue to expand further north, and Publix, as stated, will continue it's natural expansion west past Kentucky. Publix is another competitor I can see one day looking to enter the Chicago market to challenge Jewel, but that is only a dream, it may not be completely reality, at least for a while.

Hy-Vee and H-E-B will also continue to expand and dominate the Southeast and Midwest grocery market.

Target will shift their focus to full-size stores once again, and maybe they will start opening new-build Super Target store again particularly in the Southeast and Midwest to combat Krogers expansion of their hypermarket model. Target won't necessarily get rid of all their smaller-sized stores, but there will be significantly less expansion of that concept, and will be focused in places like SoCal and NYC where smaller stores have seen more success.

Walmart, well... is just Walmart, they will continue to open new stores, but as a company will likely not change much. However, I do see them spending a significant amount of cash to bolster Sam's Clubs store count, and eventually be a much stronger competitor against Costco than they ever were. However, Costco isn't going anywhere despite the expansion of Sam's Club. Eventually, Sam's Club will spin off to become a separate company.

Amazon will eventually dump the Fresh stores. While the Fresh stores are a cool concept, they are losing Amazon money. I can see some more profitable stores being converted to Whole Foods, but the rest will be sold, not to traditional supermarkets, but likely to discount retailers like Ross and T.J.Maxx/Marshalls, and those that were carved out from existing Kohls locations being sold back to Kohl's, as I don't think other supermarket chains are gonna pick them up. I don't see Amazon selling Whole Foods, as they have always been somewhat profitable unlike Fresh. I do see the technology Fresh stores used being experimented in other supermarket chains in the future.

Rite Aid will solely focus on their West Coast store base if it come out of bankruptcy, and sell remaining midwest and east coast stores, or particularly any store outside CA, OR, WA, and maybe ID, to CVS and Walgreens. All stores in the Seattle area will be converted to Bartell, and the company will continue on for several more years before Walgreens makes another merger attempt with the now-smaller Rite Aid, but will choose to keep the Rite Aid and Bartell banners in their core markets.

Walgreens as a company in the US is likely not going anywhere anytime soon, but they will certainly split from Boots Alliance.

Maybe BJ's Wholesale Club also decides to expand further west to jump on the bandwagon with Sam's Club?

By the end of the year, Sears will somehow still be in existence, now outlasting Bed Bath and Beyond, Christmas Tree Shops, Sports Authority, and other chains that were definitely considered more popular.

[HCal]

There is no reason to leave Texas.

You must recognize the mindset of Wall Street and corporate executives that want to keep their heads.

Texas is delivering considerable population growth nearly everywhere. Population growth virtually guarantees positive comp sales.

Wall Street demands comp sales over all else in retail. As a result, a market that has positive comps will be placed on a pedestal, even if it is not profitable or less profitable than the rest of the chain. Even money losing stores will be kept open and continue to be invested in as long as they deliver positive comps. Market share is not relevant either as long as there are positive comp sales.

In reverse, a store can make plenty of bottom line profit and even have decent sales volume, but if it falls onto a negative comp pattern it will be closed, guaranteed.

Comps rule all, and nearly every company I know currently has their best comps in the state of Texas.

If that's the case, then why has Safeway been closing stores left and right all over Texas? Randalls has closed more than half its stores over the last couple decades, and during that time growth in the Houston area has been phenomenal. Tom Thumb has done somewhat better but it has also had to close many stores in DFW, again a high-growth area.

[ClownLoach]

There is no reason to leave Texas.

You must recognize the mindset of Wall Street and corporate executives that want to keep their heads.

Texas is delivering considerable population growth nearly everywhere. Population growth virtually guarantees positive comp sales.

Wall Street demands comp sales over all else in retail. As a result, a market that has positive comps will be placed on a pedestal, even if it is not profitable or less profitable than the rest of the chain. Even money losing stores will be kept open and continue to be invested in as long as they deliver positive comps. Market share is not relevant either as long as there are positive comp sales.

In reverse, a store can make plenty of bottom line profit and even have decent sales volume, but if it falls onto a negative comp pattern it will be closed, guaranteed.

Comps rule all, and nearly every company I know currently has their best comps in the state of Texas.

If that's the case, then why has Safeway been closing stores left and right all over Texas? Randalls has closed more than half its stores over the last couple decades, and during that time growth in the Houston area has been phenomenal. Tom Thumb has done somewhat better but it has also had to close many stores in DFW, again a high-growth area.

Then why keep anything open? Obviously what is kept is comp positive, and furthermore by closing stores that aren't they strengthen the comps of the market.

[storewanderer]

I don't think Albertsons will do anything g radical with banners. Continuing to take Safeway out of OR/WA and a few random Pavilions conversions in SoCal are all I see. Little chance of rebranding the northern most Vons units to Safeway. Bishop and Mammoth cannot easily be supplied by Tracy they need to be supplied by SoCal. Oakhurst and Fresno don't do all that well so maybe? I more see Oakhurst rebranded to Safeway and not really sure about the future on Fresno/ Clovis.

Aldi may open but if they do low volumes it won't mean much. Even less impact than a Grocery Outlet opening. I guess Aldi helps push prices down on staple items so for that I appreciate their efforts. But I dislike Aldi Stores attitude, assortment, quality, and do not think their pricing is as great as they make it out to be. I dislike Save a Lot even more. Ruler Foods was okay as it had a lot of Kroger brands but that format is no longer expanding. I guess that Aldi like format just isn't for me. I did like Lidl but it sounds like maybe if I experienced more Lidl I wouldn't like it as much.

[ClownLoach]

I don't think Albertsons will do anything g radical with banners. Continuing to take Safeway out of OR/WA and a few random Pavilions conversions in SoCal are all I see. Little chance of rebranding the northern most Vons units to Safeway. Bishop and Mammoth cannot easily be supplied by Tracy they need to be supplied by SoCal. Oakhurst and Fresno don't do all that well so maybe? I more see Oakhurst rebranded to Safeway and not really sure about the future on Fresno/ Clovis.

Aldi may open but if they do low volumes it won't mean much. Even less impact than a Grocery Outlet opening. I guess Aldi helps push prices down on staple items so for that I appreciate their efforts. But I dislike Aldi Stores attitude, assortment, quality, and do not think their pricing is as great as they make it out to be. I dislike Save a Lot even more. Ruler Foods was okay as it had a lot of Kroger brands but that format is no longer expanding. I guess that Aldi like format just isn't for me. I did like Lidl but it sounds like maybe if I experienced more Lidl I wouldn't like it as much.

Albertsons has no need to change any banner unless it returns comp increases. Clearly certain Pavilions and Safeway changeovers do. But changing a Vons to Albertsons won't.

I don't think Aldi is anything fantastic, but they weren't really dangerous before either. This new strategy is a bigger deal than I think we realize as they're willing to use their deep pockets to advance their "agenda" through the surgical excision of competitors. That's new. And pair that with my discussion point on comp sales - they don't have to take significant share to turn a market negative for a competitor, which means Wall Street gets irritated with the performance and demands improvements or closures. Thus it doesn't matter if they hit a home run every time, their competitors play right into their hands. It's a cynical game but Aldi is set up to play and play well with the cards they've been dealt.