COVER STORY THE SLOW SH A K E O U T Internal consolidation By Al Urbanski takes over as Pro g re s s i ve GRO C E R, com- grocery companies piled the Super 50 from its database of 32,776 super- seek their m a rk e t s . ergers and acquisitions we re rightful places A l b e r t s o n ’s , w h i c h f ew among chains populat- on the d ropped one place to No. 3 ing PRO G R E S S I V E GRO C E R’s on this ye a r’s Super 50, Super 50 list this ye a r, but food chain. began a compre h e n s i ve re - consolidation within these e valuation of its business last organizations did play a sig- year under the direction of a nificant role in shaping our n ew chief exe c u t i ve, Ge n e r a l list of the top 50 supermarket chains in the United States. As Wa l - Ma rt Electric veteran Larry Johnston. Aside from selling off 80 Osco Dru g continues to spread its price-dominance across the land, conve n t i o n a l St o res in New England, the Boise-based company shed 80 unpro f- Ms u p e r m a rket chains are picking their spots and wholesalers are trim- itable operations in the aftermath of its American St o res acquisition. ming their retail operations in an all-out effort to compete with gre a t e r At least that many more are slated for closing, and the chain focus and efficiency. It is a time when hard choices are being made and announced plans to leave large markets in Texas and Te n n e s s e e . acted upon, when large retail operations are undergoing internal “We must pre p a re ourselves for a new ord e r,” Johnston told fellow shakeouts as they determine the size and scope of the supermark e t s u p e r m a rket chief exe c u t i ves at this ye a r’s FMI Midwinter Confer- i n d u s t ry in the early 21st century. ence in Phoenix. “This time the change will be significant and per- “ It’s a consolidation in which major chains are pulling back not manent. The industry must make bold, tough decisions and add new for immediate financial considerations, but in order to make more business disciplines. It’s time for Joe Albertson to meet Jack We l c h . ” money with fewer stores,” observes Hal Clark, president of Tr a d e Jacksonville, Fla.-based W i n n - D i x i e ( No. 8) is one of the chains Dimensions. The Wilton, Conn.-based operation, a sister company of d e c i s i vely paring operations, even though its acquisition of about half W W W. G R O C E RYNETWORK.COM APRIL 15, 2002 • PROGRESSIVE GROCER • 17 COVER STORY of Jitney Ju n g l e’s stores bro u g h t c . e . o. Joseph Fi s h e r. Almost half the Kmart business to rival Fl e m- Disappointing results at the its 2001 store total to 1,141, a of the No.23 chain’s 200-plus ing, perhaps a serendipitous move Cincinnati-based chain could f ew more than it had on last ye a r’s s t o res—including the banners Bi g in light of Kmart’s recent tro u- stem more from its significant list. Long an adve r s a ry of the Be a r, P&C Foods, and Qu a l i t y bles). Of the 550 stores still ru n nonfoods operations, such as its Bentonville gang in its southern Ma rk e t s — h a ve gotten Eu ro - s t y l e by Su p e rvalu, nearly a third are Fred Me yer stores and jewe l ry base, Wi n n - Dixie has decided to remodels heavy on fresh pro d u c e , under the Sa ve-A-Lot and Sh o p shops. Fo l l owing the company’s battle price with increased serv- high-end baked goods, and ’n Sa ve banners, limited-assort- t h i rd quart e r, c.e.o. Joseph Pi c h- ice. It pulled unprofitable loca- organic offerings (see PG, Fe b. ment discount formats that go ler announced layoffs tied to poor tions from troubled regions and 15). Fisher also hailed the posi- over well with consumers in the sales in general merchandise, jew- The internal consolidators The share-grabbers The niche-exploiters Many chains are putting the finishing touches Some strong chains have taken the Chains that cater to special niches — on the consolidation of their expanded sta- opportunity to expand and rei n f o r ce their such as health food or limited assortment bles, trimming a number of unprofitable stores market shares . value — increased their pres e n c e . and regions over the past two years. No. of Stores 19 9 9 20 0 1 No. of Stores 19 9 9 20 0 1 No. of Stores 19 9 9 20 0 1 Win n - D i x i e 1, 1 8 8 1, 1 4 1 Kroger 2,328 2,429 Aldi 599 755 Safeway 1,445 1,568 Su p e r v a l u 64 8 55 0 Smart & Final 184 221 Delhaize 1,286 1,464 A& P 54 5 51 9 Whole Foods 104 130 Wal-Mart 721 1,103 Fl e m i n g 29 1 11 6 Meijer 131 153 Penn Tra ff i c 25 9 22 1 Bashas’ 92 128 Giant Eagle 18 9 12 0 Harris Tee t e r 14 9 14 3 Nash Finch 13 8 12 3 Eagle Food Centers 88 64 remodeled other stores to fit its t i ve results of Penn Tr a f f i c’s holi- c u r rent economic climate. e l ry, and floral operations. Wi n n - Dixie Ma rketplace con- day merchandising programs, pri- Bigger retail playe r s — t h e The value equation work e d cept. Larger than conve n t i o n a l vate label sales, and new cost biggest, in fact—are riding the well for niche players A l d i a n d s u p e r m a rkets, they proffer serv- reduction pro g r a m s . t rend, too. Although it re c e n t l y Smart & Final, both limited ices such as pharmacies, photo- Wholesale companies, which announced that its fourt h - q u a rt e r a s s o rtment chains with fore i g n finishing, and food court s . for years shored up their busi- earnings we re off 5 percent fro m roots that posted strong grow t h Added services and enhanced nesses by acquiring stores, are also the previous ye a r, No. 1 K ro g e r last ye a r. Sm a rt & Final, ow n e d appearances in-store seem to be easing away from operating simultaneously declared it would by French retailer Casino having a resuscitating effect up s u p e r m a rk e t s — c o n ve n t i o n a l - go ahead with plans to open 45 Gu i c h a rd - Perrachon, jumped 12 No rth as well. Left for dead thre e s i zed ones at least. Eden Pr a i r i e , Food 4 Less stores. Many of the spots on the Super 50 to No. 32. years ago, Syracuse, N.Y. - b a s e d Minn.-based S u p e rv a l u ( No. w a rehouse-style, discount opera- Aldi, short for Albrecht Di s c o u n t Penn Tr a ff i c is now about 40 10) cut back its retail operations tions will reside mostly in the and owned by the billionaire s t o res lighter and has shed nearly by more than 15 percent in the Chicago market, including one A l b recht brothers of Ge r m a n y, $1 billion of debt under new last two years (and also gave up in a former Do m i n i c k’s store . Continued on page 24 18W• WPROGRESSIVE W. G R O C E RYNETWORK.COM GROCER • APRIL 15, 2002 APRIL 15, 2002W W• W.PROGRESSIVE G R O C E RY N EGROCER T W O R K . C• O18 M A M E R I C A’S 50 LARGEST SUPERMARKET CHAINS 2001 Full-Time No. of Supermarket Square Feet Equivalent Chief Supermarkets Sales Selling Area No. of Store-Level Trading Areas Store Company Name ($2M+ sales) (millions) (thousands) Checkouts Employees (No. of stores) Formats 1 Kroger 2,429 $46,726 88,292 27,391 231,881 Pacific (655) Conventional (2,284) 1 Cincinnati, Ohio East North Central (499) Supercenter (145) Joseph A. Pichler, c.e.o. Mountain (369) 2 Safeway 1,568 31,451 56,553 15,040 118,382 Pacific (845) Conventional (1,564) 2 Pleasanton, Calif.