DFW Grocers Market Share 2021

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DFW Grocers Market Share 2021

Post by architect »

https://www.dallasnews.com/business/ret ... hakes-out/

Article may be behind a paywall for non-subscribers, but the Dallas Morning News just released their latest annual summary of market share for DFW-area grocers, prior to H-E-B's impending market entry next year. The article contains a variety of perspectives from regional leaders at Albertsons, Kroger, and Sprouts. The key takeaway is the latest market share data, listed here:

Image

Walmart's share has fallen by a couple of percentage points, while Kroger's has increased slightly from last year. The two most notable movers are Target, which increased to 7.8% (reportedly fueled by COVID-induced one stop shopping), and Tom Thumb, which sits at 7.4% and when combined with Albertsons' 3.8%, shows a substantial drop since the Safeway-Albertsons merger six years ago. The Tom Thumb brand has held relatively steady, but it seems that much of this has come at Albertsons' expense via the rebranding of the banner's more successful stores and the closing of other locations where both banners had stores in close proximity to one-another.

And as a consolation prize, the Albertsons' rep also mentions "The industry is definitely behind the growth in D-FW. And we have stores in Houston and Austin. We should be growing." There's quite a difference between "should be growing" and actually growing.
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Re: DFW Grocers Market Share 2021

Post by storewanderer »

Looks like Market Street is failing in Dallas.

When you have over twice the stores and less market share than "Savers Cost Plus" ... that is a big ouch.

Albertsons is going to need to make some difficult decisions in Dallas I suspect. Seems the difficult decisions have already been made in Houston but aren't quite finished yet, but it is clear where it is going...
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Re: DFW Grocers Market Share 2021

Post by pseudo3d »

-7 percentage points against Kroger is beyond a margin of error in elections, and it's not looking good for Albertsons/Tom Thumb/Market Street. Not that Kroger has a lot to cheer about, with Walmart in the mix, they've officially fallen to 3rd place in Houston (that's still better than Randalls).

"We should be growing" is either confusion or denial, and things will only get worse in Texas if they don't stop the bleeding, especially with H-E-B continuing to grow. I'm not sure how putting out the fires would work, but if it were up to me:
1. Trade Market Street's Dallas stores back to the Southern division (they just cannibalize each other and Market Street doesn't have great penetration into the market) and start a new sub-division in Houston for United to try to turn around the Randalls stores
2. Drop the shopper's card for the Texas market, it would take away a major advantage H-E-B has
3. Experiment with 80k-100k square feet stores in this market
4. Come up with a longer-range plan for the Louisiana market
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Re: DFW Grocers Market Share 2021

Post by storewanderer »

pseudo3d wrote: September 24th, 2021, 3:39 am -7 percentage points against Kroger is beyond a margin of error in elections, and it's not looking good for Albertsons/Tom Thumb/Market Street. Not that Kroger has a lot to cheer about, with Walmart in the mix, they've officially fallen to 3rd place in Houston (that's still better than Randalls).

"We should be growing" is either confusion or denial, and things will only get worse in Texas if they don't stop the bleeding, especially with H-E-B continuing to grow. I'm not sure how putting out the fires would work, but if it were up to me:
1. Trade Market Street's Dallas stores back to the Southern division (they just cannibalize each other and Market Street doesn't have great penetration into the market) and start a new sub-division in Houston for United to try to turn around the Randalls stores
2. Drop the shopper's card for the Texas market, it would take away a major advantage H-E-B has
3. Experiment with 80k-100k square feet stores in this market
4. Come up with a longer-range plan for the Louisiana market
As long as they push the California Safeway formula in Texas (Randalls/Tom Thumb format), they will fail. It is plain and simple. They need a different format. Albertsons in the late 90's had #1 market share in Dallas (it was about the only place besides Boise where they had #1 market share). So they had a winning formula for that market at that point in time. I find it curious the merged company has decided to favor the Safeway formula in Texas where it has failed continually.

I think the Louisiana market has some of the better performing stores in the group...


It seems like Market Street should be the format they use in Dallas. The fact that format is getting such low market share does not bode well at all. Seems like the only concept they have that has ever been successful in Dallas- is the Albertsons concept. But that was 20+ years ago and times have changed. Yet they are moving stores away from it to the proven failure Safeway California formula (Tom Thumb).

They already put a United person in charge of Houston right after the merger with Safeway (Sidney Hopper) and we see how that ended: FL Stores were transferred to East Safeway Division and closed within a few years, numerous closures in Houston, a handfull of remodels but no new stores...
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Re: DFW Grocers Market Share 2021

Post by HCal »

storewanderer wrote: September 24th, 2021, 11:54 pm
As long as they push the California Safeway formula in Texas (Randalls/Tom Thumb format), they will fail. It is plain and simple. They need a different format. Albertsons in the late 90's had #1 market share in Dallas (it was about the only place besides Boise where they had #1 market share). So they had a winning formula for that market at that point in time. I find it curious the merged company has decided to favor the Safeway formula in Texas where it has failed continually.
What do you mean by "formula"? Albertsons didn't have much of a formula before the merger, they were a dying company that had closed hundreds of stores and were relying on Supervalu for everything from IT to private label, so it made sense for them to adopt Safeway's systems.

Last I went to Randall's, they seemed to have improved on pricing and specials, just like Vons has done after the merger. But I couldn't see too much beyond that.
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Re: DFW Grocers Market Share 2021

Post by storewanderer »

HCal wrote: September 25th, 2021, 12:10 am
What do you mean by "formula"? Albertsons didn't have much of a formula before the merger, they were a dying company that had closed hundreds of stores and were relying on Supervalu for everything from IT to private label, so it made sense for them to adopt Safeway's systems.

Last I went to Randall's, they seemed to have improved on pricing and specials, just like Vons has done after the merger. But I couldn't see too much beyond that.
I don't know what "formula" they had in the late 90's in Dallas when they had #1 market share there with the Albertsons banner. I was always rather perplexed they had such a high share in that market given it has always been very competitive. Perhaps it was just a fluke. But they must have been doing something right. They didn't exactly saturate the place with store count... they did have quite a few stores, but not what I'd call a saturation, and it seemed like they were larger than average sized stores running high volumes.

That #1 share in Dallas was long gone even before the company got Larry-ed (and Larry ensured there was no going back on share there when converting a large number of stores to Super Saver) and long before Supervalu was doing anything for them.
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Re: DFW Grocers Market Share 2021

Post by DFWRetaileWatcher »

My uneducated hypothesis on Market Street is that their pricing is simply way out of line.

They've made a good effort at trying to execute a H-E-B / Wegman's-like experience in DFW, but want to charge a Whole Foods / Central Market-like premium for that experience.

Conversely, compare it to WinCo Foods which manages to bring in over 4 times the amount of revenue despite a nearly identical store count. Despite being a no-frills store, it's competitive with Walmart on pricing and thus siphons off some of its customer base that's simply seeking affordable food.

Unfortunately, with H-E-B choosing to enroach on Market Street's main territory in Collin County first, I don't think the future bodes well for it.
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Re: DFW Grocers Market Share 2021

Post by storewanderer »

DFWRetaileWatcher wrote: September 25th, 2021, 3:45 pm My uneducated hypothesis on Market Street is that their pricing is simply way out of line.

They've made a good effort at trying to execute a H-E-B / Wegman's-like experience in DFW, but want to charge a Whole Foods / Central Market-like premium for that experience.

Conversely, compare it to WinCo Foods which manages to bring in over 4 times the amount of revenue despite a nearly identical store count. Despite being a no-frills store, it's competitive with Walmart on pricing and thus siphons off some of its customer base that's simply seeking affordable food.

Unfortunately, with H-E-B choosing to enroach on Market Street's main territory in Collin County first, I don't think the future bodes well for it.
The general United price structure is 10-25% lower than the typical Albertsons pricing structure that is tied to the Safeway formula on everyday aisle shelf pricing and meat (not as much difference on bakery, produce, deli and fewer "hot" sale items at United). Is Market Street on a radically higher price structure storewide or just on perimeter/fresh departments?

HEB Central Market has a higher price structure on perimeter but is ultra-competitive on center store pricing (consistent with typical HEB). It seems to follow the same formula as Wegman's and I always thought Market Street did the same thing.

In my opinion a move to the Market Street format and away from the Albertsons/Tom Thumb formats would have been in order in DFW. But clearly that is off the table as Market Street is not working. It almost looks like they need to develop a new format entirely for DFW. I don't have much confidence in these Albertsons to Tom Thumb conversions- let's see where they are at in 2-3 years. I suspect they will be in the same spot Albertsons was in and the banner change to a banner with a poor reputation that Safeway nearly destroyed and has never been a market leader in DFW, introduction of mandatory club card for sale pricing, and whatever else comes with the banner change will not result in higher sales.
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Re: DFW Grocers Market Share 2021

Post by pseudo3d »

HCal wrote: September 25th, 2021, 12:10 am
storewanderer wrote: September 24th, 2021, 11:54 pm
As long as they push the California Safeway formula in Texas (Randalls/Tom Thumb format), they will fail. It is plain and simple. They need a different format. Albertsons in the late 90's had #1 market share in Dallas (it was about the only place besides Boise where they had #1 market share). So they had a winning formula for that market at that point in time. I find it curious the merged company has decided to favor the Safeway formula in Texas where it has failed continually.
What do you mean by "formula"? Albertsons didn't have much of a formula before the merger, they were a dying company that had closed hundreds of stores and were relying on Supervalu for everything from IT to private label, so it made sense for them to adopt Safeway's systems.

Last I went to Randall's, they seemed to have improved on pricing and specials, just like Vons has done after the merger. But I couldn't see too much beyond that.
Albertsons when it entered the market in the 1980s and into the 1990s promised low prices. Obviously as the company grew and got out of control, that all changed. At this point with Dallas-Fort Worth, what matters is the store format, not the name. For the Houston and Austin markets, it's clear that Randalls has to go. If they prototyped a new store format similar to H-E-B (something a bit larger with new-builds, and more in-touch with local markets; specifically the ability to fit up or downscale) to replace Randalls, it might work. Retiring the Randalls name in favor of a new brand that can compete more effectively would certainly be interesting.
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Re: DFW Grocers Market Share 2021

Post by storewanderer »

I ignored the fact that Target's share is above Tom Thumb, yet with a lower store count. I am assuming the majority of those are not Super Target locations (but some are). The fact that Target is getting higher share with a lower store count than Tom Thumb, shows just how poorly Tom Thumb is doing.

It is well known and well documented Target's issues moving grocery products.

Back to Market Street again doing the math here it looks like their average weekly volume is $300k. That is awful for what are large modern stores in growth areas. They should be selling $100k+ a week in deli/prepared food alone (probably not even close to happening). Average Albertsons volume is about $600k and average Tom Thumb volume is about $560k. Funny they are converting stores to a less productive banner- Tom Thumb. Bad decision to spend money on expanding that banner. Need to focus efforts on a new format entirely.

Important to note this excludes pharmacy/general merchandise sales. This is another spot where I suspect Market Street is weak, Tom Thumb is weaker (thanks to the Safeway limited GM mix), but Albertsons banner would be much stronger thanks to the expanded drug/GM mix in the stores.

I also like how they break out Wal Mart Neighborhood Market which gets you to an average weekly volume there of $327k a week. Awful performance... but clearly enough volume being shaved off other players to make it worth continuing to operate them. Perhaps they move more drug/GM than average to help those numbers a bit.
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