The Hands of Time
When I graduated from U.C. Berkeley with a bachelor’s degree in History, then-governor of California Jerry Brown said at our commencement, “History. Well, it’s just one damn thing after another.”
What was the retail world like 15 years ago? You can look at your brand portfolio. Stuff that goes into the shopping cart has morphed into new categories and new flavors. “Who would have ever thought,” says beverage-industry expert Hedy Halpert, ”that people would actually be buying plain water — in a bottle!”
NOW AND THEN
The total number of supermarkets, the core of the packaged goods go-to-market structure, is 31,500 today. That includes supercenters like Wal-Mart, Kmart, and Target (but not their conventional-format stores). In 1987, there were 30,400 outlets.
While the number of stores hasn’t changed that much, almost everything else has. Chain stores have increased their dominance, increasing from 16,700 stores to 20,300. And the average chain store sales area expanded 45 percent.
Today’s top accounts are:
Kroger: 2,429 stores; $46.7 billion in sales
Safeway: 1,568 stores; $31.5 billion
Albertson’s: 1,713 stores; $30.2 billion
Wal-Mart: 1,103 superstores; $28.2 billion
Ahold: 1,245 stores; $24.1 billion
Delhaize: 1,464 stores; $15.2 billion
Publix: 687 stores; $14.6 billion
Winn-Dixie: 1,141 stores; $13.0 billion
A&P: 519 stores; $8.5 billion
SuperValu: 550 stores; $7.4 billion
That represents $219 billion and accounts for 51 percent of supermarket all-commodity volume (ACV).
Most of these retailers had some presence in 1987’s top 10. The largest chain then, Safeway, had just 1,568 stores and $18.3 billion in sales. No. 3 American Stores is now part of Albertson’s; No. 6 Lucky Stores also is now mostly part of Albertson’s, except for pieces that were sold off; No. 8 Supermarkets General Corp. is now Pathmark (and bankrupt); and No. 9 Stop & Shop is part of Ahold.
I LOVE L.A.
Los Angeles is an interesting study in retail consolidation. In 1987, ABC Foods, Albertson’s, Alpha Beta, Boys Markets, Cala Foods, Food 4 Less, Hughes, Jurgensen’s, Kroger, Lucky, Market Basket, Ralph’s, Safeway, Viva, and Vons all tussled for survival. Those banners have now consolidated into either Ralph’s (operated by Kroger), Vons (operated by Safeway), or Albertson’s — and have 64 percent of the city’s designated marketing area.
No one characterizes these dynamics better than Al Maresaca, former head of Ralph’s. “We had five owners during my tenure,” he remembers. “When I went to lunch I would tell my secretary, ‘If my boss calls while I’m out, find out who he is!’”
GRAND UN-UNIFIED
This year’s “Who owns me now?” story is in the Northeast. Grand Union was riding high back when “You Can Call Me Al” was on the radio in 1987: The chain ranked No. 13 with more than 300 stores. When they tumbled in 2001 into the unwelcome hands of their major supplier, Brattleboro, VT-based C&S Wholesaler, they had only 189 stores. Of those, 48 closed and 47 still do business as Grand Union under the GU Markets account operated by C&S; 56 were sold to Ahold, with 36 becoming Stop & Shops and 20 Tops. Also, 17 are now Shaw’s, six Pathmark, six Hannaford Brothers, and two Price Chopper. Seven switched trade classes, six becoming CVS and one Marshall’s.
DOES IT MEAN ANYTHING?
“Well before 1987, supermarkets had dropped trading stamps and emphasized competing on price,” says Ed Townsend, my colleague and director of research at Trade Dimensions. “In 1988, Wal-Mart opened its first supercenter, competing on price, and went from zero to fourth place in 15 years.
“This is the future: the retailers that can trim costs from operations will survive and grow while competing on price,” Townsend predicts.
If you don’t think that sucking costs out of the system is a big deal, look at Kmart’s current woes.
If we knew then what we know now, who knows what we won’t know in the future based on what we think today. Right?
Stores come and go, retailers shrink and grow. But one thing is for sure: everyone’s got to eat.
One damn thing after another.
