The History: Aldi has its origin in a small store set-up by Anna Albrecht in Germany back in 1913. After WW2 Anna handed over the store to her two sons who turned it into a chain and then split it into two companies. The companies reported combined net sales of around $95 billion over 2021. Here's how Aldi got there. #aldi #aldinord #aldisud #history #usa #growth #discounters #tradeperformance #smartdiscount #discountfoodretail #discounter #discount #foodretail #retail #drc #discountretailconsulting #retailconsulting #consulting #consultancy Aldi's history includes a kidnapping, stringent cost-cutting measures, and an argument over cigarettes Shoppers in front of an Aldi store in Frankfurt am Main in 1980. The myth claims that the German discounter rivals Aldi and Lidl were founded by two brothers. That isn't true. Both grocery store empires were founded by different families. Instead, it's actually Aldi's massive global empire that was split into two, with half owned by one brother and half by another. Aldi is now a leading grocery chain in the West, with more than 11,000 stores spread across countries in Europe, USA, UK and Australia. In 2021, it reported around $95 billion in net sales globally. Here's the story of Aldi's growth, from a small corner shop in Germany to a grocery chain loved by bargain hunters, college students, and middle-income shoppers alike. The Albrecht brothers took over their mother's small store after fighting in World War II Aldi's origins date back to 1913, when Karl Albrecht Sr., a former coal miner, started trading in baked goods. The next year, his wife, Anna Albrecht, set up a small store in Essen, western Germany, once a major industrial hub. In 1919, they bought a new property nearby and expanded the store. The New York Times reported that in the 1930s, Karl got sick with emphysema and could no longer work, so Anna ran the store to support their family. Their sons, Karl and Theo, took over the business when they returned from serving during World War II. Theo had been taken as a prisoner of war by Allied troops, while Karl was wounded and then captured. The brothers then started franchising the business and opening other stores. By the end of 1948, there were already four stores, trading under the family name Albrecht. From the start, Aldi was profit-focused In the aftermath of the war, "scarcity and necessary frugality demanded the avoidance of waste," Dieter and Nils Brandes wrote in their book "Bare Essentials: The Aldi Success Story." "The principle was: less is better than too much. This applied to capital, personnel, size of stores," they continued. Over the years, the brothers opened dozens more stores. By 1954, there were 77 stores. Because of its below-average price model, Aldi was able to slowly dominate the market in Germany. The brothers had a clear vision for the business. They decided to sell only non-perishable items that had a proven demand, and didn't want to spend money on decorations, advertising, or inventory that wasn't selling. What was surprising to shoppers at the time was the self-service nature of the store, introduced in the mid-1950s; customers were able to take products off the shelves themselves, in stark contrast to other retailers, where goods were generally kept behind the counter. "We wanted our stores to be like other retail outlets, offering a wide range of groceries," Karl said in 1953, as quoted in "Bare Essentials: The Aldi Success Story." "But then we did not follow up on this after all, because we recognised that with our narrow range of products we could also run a successful business and that, compared with other businesses, our expenses remained very low and this was largely due to our narrow range of products. This insight became the basic principle of our business." The brothers split the Aldi empire after a fight over cigarettes In 1961 – when Aldi had more than 300 stores across West Germany – the brothers split the business into two divisions after a disagreement about whether to sell cigarettes. Theo wanted to sell them, but Karl thought they would attract shoplifters. Karl got control of Aldi Süd, which ran stores in the southwest of West Germany, while Theo took over Aldi Nord, which operated stores in the northern part of West Germany. Though the business was divided, both parts of it worked together closely. Aldi began its international expansion In 1962, the first store under the name of Aldi – short for Albrecht Diskont (Discount) – was opened, offering a small selection of goods being sold straight out of the pallets. The whole Aldi network was then switched to this store model. In 1968, Aldi expanded internationally by buying the Austrian chain store Hofer, which had around 30 branches. Aldi opened its first US Aldi store in Iowa in 1976. It currently has around 2,200 stores across 38 states with over 25,000 employees. In 1979, an Albrecht family trust reportedly attached to Aldi Nord bought Trader Joe's, which now has more than 500 stores across the US selling low-cost groceries. Aldi Süd runs stores in the US, UK, Australia, and eastern Europe, while Aldi Nord operates stores in western and southern Europe. Aldi is still cutting costs Aldi still operates with the same cost-cutting measures. It sticks largely to private-label products, meaning it can keep prices low by ordering in bulk and spending less on marketing and packaging. It also sells products straight from the shipping pallets they're delivered in, keeps its stores compact to maximize efficiency, and avoids what it deems unnecessary services like banking and pharmacies. Aldi Nord and Aldi Süd both say their German stores carry only around 1,700 items. But the products lines have changed massively since the brothers took over in the post-war years. In 1984, Aldi Süd started introduced fridges to its stores, which allowed it to sell a bigger range of products, and also started offering customers fresh fruit and vegetables. Organic and low-fat products were introduced in the 2000s. Nils Brandes, the co-author of the book "Bare Essentials: The Aldi Success Story," previously told Insider that Aldi ensures that the quality of its own-brand products are "at least as good as the quality of the commercial brands." The company has said that one in three of its Aldi-exclusive branded products that's nationally distributed in the US, excluding produce, have won awards. For super fans, though, Aldi is perhaps best-known for its range of time-limited products, creating a "treasure hunt" for shoppers. The items can range from food, housewares, clothes, and seasonal items to gardening equipment, electronics, and pet accessories, and encourage shoppers to visit regular to see what that week's bargains are. This includes Aldi selling its first computers in 1995. The Albrecht family is notoriously reclusive Though they count among the wealthiest people in Germany, the Albrecht family has always been notoriously reclusive. Theo died in 2010 at age 88 with a net worth of close to $17 billion, while Karl died four years later aged 94. Forbes estimates that Karl's children Beate Heister and Karl Albrecht Jr. are worth $36.8 billion, while it puts the wealth of Theo's son, Theo Albrecht Jr., and his family at $18.7 billion. In 1971, Theo Sr. was kidnapped at gunpoint. The Albrecht family paid an estimated $3 million for his ransom, which at the time was Germany's biggest-ever ransom payment, and he was released after being held in a wardrobe in Dusseldorf for 17 days. He listed the ransom payment as a business expense so he could apply for tax relief. After the incident, Theo drove to work in an armoured car and took a different route every day, and figured out the best escape route when staying in hotels, The Guardian reported. After that, Theo steered clear of the press. The largely media-shy family has hit the headlines over a series of rows and resultant legal filings related to how much influence the family has on the boards controlling Aldi Nord. In September 2020, one of Theo's grandchildren filed a criminal complaint against his mother, at least two of his sisters, and their lawyers, accusing them of embezzling millions of euros, German newspaper Die Süddeutsche Zeitung reported. Aldi now has more than 10,000 stores globally Aldi Nord and Aldi Süd operate as separate legal entities. "The groups have family links and exploit synergies in areas like buying, own-brand design, quality assurance and marketing," Aldi Nord says. Between them, the companies now have more than 11,000 stores in 20 countries, with their biggest footprints in the US and Germany. Real-estate company JLL listed Aldi as the fastest-growing grocer in the US in 2021 for the third year running and reported that it was the third-largest grocery retailer in the US by store count after Kroger and Walmart. It's also ranked as the UK's fourth-biggest supermarket with a nearly 10% share in the grocery market. It's also experimenting with new store formats. In January, Aldi unveiled its first autonomous store in London, which allows shoppers to pick items up from the shelves and place them directly in their bags without needing to scan them or be served by a cashier. It also debuted an eco concept store in England which has a zero-waste station, letting customers refill jars of coffee beans and tubs of nuts. Aldi Süd, which is the biggest of the two companies with close to 7,000 stores, says its 2021 net sales hit 64 billion euros ($67.9 billion). Aldi Nord says its net sales that year were 24.7 billion euros (around $26.3 billion). Discount rival Lidl, meanwhile, reported 100.8 billion euros ($106.9 billion) in sales in 2021, a 4.7% increase year-over-year. It has more than 12,000 stores worldwide across 31 countries. The sales for both Aldi and Lidl pale in comparison to the $573 billion Walmart reported in revenues in 2021, but as the world prepares for a global recession in 2023, more shoppers could flock to discount chains. Aldi's US arm said in the summer that soaring inflation was pushing more customers to its stores. Source: www.businessinsider.com/aldi-history-albrecht-family-karl-theo-grocery-store-shop-retail-2022-12?international=true&r=US&IR=T#the-albrecht-family-is-notoriously-reclusive-7

B&M European Value Retail S.A. ("the Group"), the UK's leading variety goods value retailer, today provides a trading update for the third quarter ("Q3") of its current financial year ("FY23"), relating to the 13 week period from 25 September 2022 to 24 December 2022. HIGHLIGHTS Group revenue growth in the quarter of 12.3% year-on-year ("YoY") to £1,567m (+12.3% constant currency basis)1 Total B&M UK fascia2 revenue in Q3 up 10.3% YoY, with one-year like-for-like3 ("LFL") revenue increasing by 6.4%. Customer transaction numbers remained strong and positive YoY Very good performance across all B&M UK categories, both in grocery and general merchandise. Excellent sell-through in key general merchandise ranges supporting improved gross margin performance Stock disciplines remained robust and allowed stock reduction of circa £100m YoY Trading momentum in B&M France has continued through Q3, with revenue up 24.9% YoY Trading momentum in Heron Foods has continued through Q3, with revenue up 22.5% YoY B&M's sourcing model and its flexibility provides a strong point of differentiation. The supply chains across the three businesses executed well in the quarter FY23 Group adjusted EBITDA4 (on a pre-IFRS16 basis) now expected to be in the range of £560m to £580m, ahead of current analysts' consensus estimate of £557m5 Consistent with our capital allocation framework, the Board intends to declare a special dividend of 20.0p per Ordinary Share to be paid on 3 February 2023 to shareholders on the register at 13 January 20236. The ex-dividend date will be 12 January 2023 "Our strong momentum throughout the Golden Quarter across the businesses demonstrates the strength of our unchanged strategy to relentlessly focus on price, product and excellence in retail execution. Despite the challenging macroeconomic environment, we will continue to work hard to help both existing and new customers manage the cost-of-living crisis. The business has exited the quarter well and will remain focused on disciplined execution," says a spokesman. #bm #homestore #uk #discounters #tradeperformance #smartdiscount #discountfoodretail #discounter #discount #foodretail #retail #drc #discountretailconsulting #retailconsulting #consulting #consultancy Source : B&M European Value Retail S.A. www.insightdiy.co.uk/news/bm-posts-strong-q3-trading-update/11943.htm

Discount Retail Chain Lidl Spain (owned by the German Schwarz Group) has acquired a plot of about 158,000m2 in the Leon municipality of Villadangos del Páramo to build a new logistics platform and take another important step forward to ensure its sustainable expansion in northwestern Spain. This project, which "will generate wealth and local employment" through some 300 jobs, is part of the supermarket chain's firm commitment to continue growing throughout the territory. The project was announced on Tuesday at a ceremony with the Minister of Economy and Finance of the Junta de Castilla y León, Carlos Fernández Carriedo; the Minister of Environment, Housing and Territorial Planning of the Junta de Castilla y León, Juan Carlos Suárez-Quiñones; the General Director of Infrastructures and Environmental Sustainability of the Junta de Castilla y León, José Manuel Jiménez; the territorial delegate in León of the Board, Ester Muñoz; and the mayor of Villadangos del Páramo, Alejandro Barrera, among other political authorities. Lidl's future warehouse in Villadangos del Páramo will allow the company to continue adapting its logistics resources to face its national expansion plan with guarantees, an objective for which it plans to open four other warehouses in the coming years: two in Escúzar (Granada) and Parla (Madrid) both under construction, on plots that exceed 132,000m2 and 145,000m2, respectively and two others in Martorell (Barcelona) and Constantí (Tarragona) pending in both cases to start the works on plots of more than 126,000m2 and 185,000m2, respectively. Currently, and as reported from the supermarket chain, Lidl already has a network of 11 logistics platforms in Spain. From Cheste to Villadangos "In recent years we have been significantly expanding our presence throughout Spain by opening new stores, a reality that allows us to be closer to the consumer but also requires us to constantly increase our logistics infrastructures with new facilities from which to efficiently manage our assortment of products", commented the regional director of Expansion and Real Estate of Lidl Spain, Albert Lavín, who added that "since 2019 we have launched three warehouses in Cheste (Valencia), Agüimes (Las Palmas) and Nanclares de la Oca (Vitoria), and in the future we plan to do the same with five more: Escúzar, Parla, Martorell, Constantí and Villadangos del Páramo. In total, up to eight new logistics platforms in a few years that will make it possible for us to continue clearly boosting our business in the country with new stores, new stable and quality jobs, and more purchases of national and regional products". Present in Castilla y León for 27 years, Lidl today has 25 stores and a workforce of about 520 people in the Community. The company maintains a firm commitment to the agri-food industry in this region, where it makes product purchases worth 290 million euros per year from more than 40 Castilian and Leonese suppliers, exporting up to 40% of these to thirty countries. In recent years, Lidl has also become a decisive player for the economic and labour development of Castilla y León. In this sense, the opening of new stores, the creation of jobs and the purchases of more and more regional product, have allowed it to increase its impact on GDP and employment in this autonomous community by up to 14% in just three years. In this same period (2019-2021), the activity of the supermarket chain in this region accumulated more than 990 million euros contributed to GDP and increased by more than 900 the direct, indirect and induced jobs generated. Thanks to this, the impact of Lidl in Castilla y León is currently around 350 million euros per year contributed to GDP (0.66% of the regional total) and around 7,400 direct, indirect and induced jobs generated (0.75% of the regional total). See here for more: Lidl joins the Villadangos del Páramo industrial estate in León with a logistics center and 300 jobs (elmundo.es) #smartdiscount #spain #lidl #scm #warehouse #dc #expansion #growth #drc #discountretailconsulting #discountretail #retail #discountretail

Another great sales period for the discounters and continuing strong growth of own label are the headlines from the Kantar UK data for 12 w/e 25th Dec 2022, released at 04.01.2023: 12-wk sales are up 7.6%, increasing from +5.2% from the last period, and the sixth period of positive market value growth. Kantar report value growth accelerated in the last 4 weeks to +9.4%, with Christmas sales hitting a record high of £12.8bn. Inflation hit 14.2%, meaning the market is in volume decline. Kantar claims this is down by 1%, but the numbers would suggest a much larger decline of over 6%. The 14.2% inflation rate has fallen slightly from the previous 14.6% reported, perhaps driven by retailers holding back price increases before the festive trading period, combined with some aggressive pricing on Turkeys and vegetables especially from the discounters. Aldi had the highest year on year growth at +27% followed closely by Lidl at +23.9%. Between the two leading discounters they have added +2.3% market share in 12 months; to put that in perspective that is half the sales of Waitrose Aldi’s success over the past four weeks is of no surprise. Yet again, they offered the most amazing and diverse seasonal range, in particular in the week leading up to Christmas Day with fresh offers such as British Wagyu Rib Joints, Game Selection Boxes and Raspberry & Madagascan Vanilla Panna Cotta Stars. Their message on price was relentless, ensuring they always offered the equal lowest price on British Whole Turkeys and Turkey Crowns, and they came out the cheapest in the IPLC survey of 30 key Christmas Dinner products. All of the big three saw growth, but all lost market share, down a combined -0.8%. Iceland seems to have had a very good trading period showing growth of +10.2% and increasing market share by +0.1%, perhaps benefiting from consumers moving into frozen as highlighted by Tesco's CEO Ken Murphy in his recent interview on BBC News. Private label continues to see very strong growth at +13.3% vs. brands at +4.7%. Consumers were still prepared to trade up so that Premium Tier PL recorded sales of £700m, growing at 10.2%. Online sales account for 11.6% of the market, slightly down year on year but significantly up on its pre-pandemic level of 7.4% Next 4-week outlook: January always sees price campaigns from the established retailers. This week we have already seen Morrison's announce price cuts across half of their private label value tier range “Savers”, likely to be in response to Asda's very successful extended Just Essentials range. Without doubt, private label will remain a key strategic battle ground throughout 2023 as retailers push the “value for money” message in a bid to retain customers. Despite the price led marketing campaigns, we will see many prices rising further, as cost increase pressures have not disappeared and new negotiations commence between suppliers and retailers. Source: Kantar and Paul Stainton #aldi #lidl #uk #discounters #iplc #kantar #marketshare #growth #smartdiscount #discountfoodretail #discounter #discount #foodretail #retail #drc #discountretailconsulting #retailconsulting #consulting #consultancy

There were chaotic scenes at some discounter Aldi stores as shoppers tried to get their hands on Prime Hydration, a sports drink created by two YouTube stars. Giant queues formed outside of Aldi stores up and down the country after the supermarket revealed bottles of Prime, created by two of the world’s biggest influencers, Logan Paul and KSI, would go on sale last week. However, videos soon emerged on social media of shoppers pushing and shoving in order to get one of the coveted drinks. Twitter user Mark Hall said there was “absolute carnage” at his local store, while another social media user posted similar scenes from the Chelmsford store. See here for more: ‘Absolute carnage’ at Aldi as shoppers battle to buy viral Prime drink - Retail Gazette #smartdiscount #aldi #uk #prime #energydrink #hype #drc #discountretailconsulting #drc #discount #retail #consulting #discountretail #PrimeHydration #youtube

Discount Non-food Retail Chain Dollar General (ETR: 7DG) expands its offerings to help eliminate food deserts. About 100 miles north of Mississippi’s capital, Jackson, sits Itta Bena. Nestled in the Mississippi Delta and home to fewer than 2,000 residents, the rural community proudly boasts several small businesses and Mississippi Valley State University (MVSU). Itta Bena also has something in common with thousands of similar communities across the country: It is a food desert. According to data collected by the U.S. Department of Agriculture (USDA) in 2021, 53.6 million U.S. residents have limited access to fresh fruits, vegetables, and meats, which means they live more than one-half mile from a supermarket or large grocery store in urban areas, or more than 10 miles in rural areas. For Itta Bena residents seeking these foods, the only choice is to shop in neighboring communities. That is, until Dollar General invested in their community. With approximately 75% of the U.S. population living within five miles of a Dollar General store, the company’s expansive real estate footprint uniquely positions Dollar General to help address food insecurity by offering affordable and convenient access to nutritious foods. Customers can find healthier options, including frozen and canned vegetables, canned fruits, grains, dairy products, lean proteins, and more, on the shelves and in the coolers of the retailer’s nearly 19,000 stores. To further provide customers with healthier options, Dollar General partnered with a registered dietician and nutritionist to develop its “Better For You” program, which includes at-shelf labels signifying healthier products. This partnership also helped launch the company’s Good & Smart™ line, which created tasty recipes for breakfasts, lunches, dinners, and desserts that are made entirely with products sourced from Dollar General stores. “WE BELIEVE OUR CUSTOMERS, ESPECIALLY THOSE IN RURAL COMMUNITIES, SHOULD HAVE AFFORDABLE AND NEARBY ACCESS TO THE INGREDIENTS THEY NEED TO CREATE A NOURISHING MEAL FOR THEMSELVES AND FOR THEIR FAMILIES.” says Emily Taylor, Executive VP and CMO, DOLLAR GENERAL. “We believe our customers, especially those in rural communities, should have affordable and nearby access to the ingredients they need to create a nourishing meal for themselves and for their families,” says Emily Taylor, Dollar General’s executive vice president and chief merchandising officer. “We know offering healthier options is something they need and expect of us, and we’re proud to be able to bring that to life in many different ways.” THE IMPACT OF PRODUCE IN ITTA BENA As a company constantly working to meet its customers’ needs, Dollar General began adding a curated produce assortment to traditional stores in 2017. Consumers requested healthier and affordable options, and in response, Dollar General’s produce set offers the top 20 items sold in grocery stores and represents approximately 80% of categories that grocers offer. Itta Bena’s Dollar General was among the first location to offer expanded produce options. Four years later, in 2021, Dollar General announced plans to expand its produce offerings and formally committed to provide fresh fruits and vegetables in more than 10,000 stores in the coming years, with a meaningful number of them located in USDA-defined food deserts. The retailer is currently on track to make that commitment a reality in 3,000 stores by the end of fiscal year 2022. In Itta Bena, store manager Carlos Smith sees the positive impact that fresh offerings provide the community. “Dollar General has been a huge benefit to the folks of Itta Bena. Previously, the city didn’t have anything that provided healthier options,” he says. “Residents would have to drive 25 or 30 minutes to go to a grocery store. But now, they have somewhere clean and comfortable to shop right in town.” After the positive response to the new produce offerings, in 2021, Dollar General invested in its Itta Bena location again by remodeling the store into its new Dollar General Market format, which added fresh meat options and an expanded produce section. For many of Smith’s customers, the Dollar General Market can be a lifeline. “One of my customers has diabetes, and after the remodel, she was so happy,” he says. “She told me, ‘Carlos, you don’t know how this has helped me. I really need these fruits and vegetables.’” MVSU president, Jerryl Briggs Sr., Ph.D., recalls a buzz of excitement when Dollar General first remodeled its Itta Bena location, which sits across the street from the university’s campus. Before the produce pilot in 2017, some students relied on weekly shuttles to a supermarket 10 miles away for access to fresh produce. Now, they can go to Dollar General Market at their own convenience to purchase healthier snacks and ingredients for meals. “Our dining hall hours don’t always align with students’ schedules,” says Briggs. “Being able to run across the street to Dollar General and access a wide range of options, according to their own timelines, has helped students immensely.” The store’s fresh produce also supports MVSU’s goal of promoting healthy eating, which includes university-led programs centered on nutrition to help students better understand that what they eat matters. “A healthy body leads to a healthy mind,” Briggs says. “Healthy eating plays a big role in sustaining our lives, and that is the message we try to convey at the university. Having a Dollar General so close to campus has really helped us further the work we’re doing here, and as a community, we’re grateful to have them.” As Dollar General continues to expand fresh produce access through new store openings and remodeling projects across the country, other communities, like Itta Bena, are experiencing similar benefits of more convenient and affordable access to healthier foods. “Our customers are responding very well to the availability and accessibility of the fresh fruits and vegetables that we’re able to provide in these stores,” Taylor says. “We’re excited to continue to expand and bring these benefits into more communities and to more customers.” See here for more: A nourishing neighbor: Dollar General expands its offerings to help eliminate food deserts (fortune.com) #smartdiscount #dollargeneral #proximity #fooddeserts #assortment #growth #drc #discountretailconsulting #discount #retail #consulting #discountretail

Discount Retail Chain Rema 1000 (owned by Norwegian Rema-Reitan) becomes Denmark's largest grocery chain after the acquisition of German discounter Aldi. But a number of challenges await the Norwegian low-cost giant. It has been a few weeks since it became known that Rema 1000 is making a significant splash on the Danish grocery market. The acquisition of 114 stores from the German chain Aldi's Danish operations will probably make the Norwegian discount chain the largest, at least in terms of market share, also in Denmark. Cut into the sea Odd Reitan (owner of the Rema-Retain), his son Ole Robert Reitan, who is also one of the top members of the company, and the rest of the delegation are shown into the store. One of the first things Reitan senior notes, and comments on, is the light. "You have very nice light here. It makes the goods shine. "It's nice to hear," says merchant Max Skov Hansen, showing father and son further into the store. Rema 1000 started cautiously on the Danish market in 1994. It was not until just over ten years later that the initiative gained momentum. Now the chain has 363 stores spread throughout Denmark (a country that in area is smaller than the old Finnmark county). Professor at Copenhagen Business Scholl, Mogens Bjerre, points to two challenges Rema 1000 must solve: They need a permit from Konkurrence- og Forbrugerstyrelsen in Denmark because the acquisition will make them dominant in the market. In a relatively short time, they must find 114 people spread across the country who are willing to invest time and money in building a new store. "We see that Rema 1000 is created in places that otherwise would not have a store if you were to hire a store manager because it simply would not be financially viable. The merchants often work 70-80 hours a week, which is part of the reason why Rema 1000 can establish itself where they actually do," says Bjerre. Strong brand name But Rema 1000 must be said to be a Danish success story already. In recent years, they have topped a number of awards. Among other things, as Denmark's strongest brand name that is, stronger than, for example, Ikea, Lego, Arla, DR and all other competitors in the grocery market. "We're trying to create a small convenience store for people who live in a big city. We are people's pantry most people do not have large refrigerators and large freezers at home and therefore many often shop in the store. We will get to know the customer and know what goods it is important for them that we have in the store, explains the merchant at the Rema store in Valby. Odd Reitan listens attentively. He thinks that philosophy is part of the reason why Rema 1000 has had a great success in Denmark. That, as well as the fact that local merchants themselves invest in and own the stores. "We have organized the Rema chain very much based on self-interest, where we have merchants who run their own store on contract with us. This is part of the reason for the success both in Norway and in Denmark. And it suits Danish culture, you know, to run for oneself to be one's own merchant," says Odd Reitan. The Germans who went bankrupt Now comes the biggest expansion in the Danish market. The German grocery chain Aldi has been in Denmark for 45 years. But the last few years have been heavy financially. In 2021, the deficit was almost DKK 400 million (US$57.5mn). They cannot afford to lose this and have therefore decided to close down operations in Denmark. And then Odd Reitan was ready with the checkbook to buy vacant store premises. But in the 70s, everything was different. Odd Reitan tells about the study trip to Germany that was the start of Rema 1000 in Norway. At that time he ran some convenience stores in Trondheim. He didn't think he was very successful, but had heard of the brothers Karl and Theo Albrecht who were constantly gaining market share with the Aldi chain. "They had succeeded tremendously. So I thought that here I have to go down and watch, so we went to Germany to visit Aldi and it was a great experience. That was the turning point for me. Then it was about absorbing as many impulses as possible there and then going home and translating it into Norwegian. And it eventually became Rema 1000," he says enthusiastically. Think the Danes like to try something new Odd Reitan tells about how the store manager in Germany presented his strategy to cut the cost of operations in order to push prices down. "I remember the store manager picking up his arm like that," Reitan says, using his fist and holding his right hand up in the air. "Like he was holding meat. He also said: "You see, Reitan loses, that here it is a matter of cutting the costs all the way to the bone. Then you can sell cheap," he says, pretending to lead a knife into the imaginary meat. Odd Reitan went home and created what is now Norway's and becomes Denmark's largest grocery chain. STUDY TRIP: Odd Reitan tells about the study trip to Germany that laid the foundation for the Rema 1000 chain. A success that receives attention also in the academic communities. Mogens Bjerre has done a lot of research on the grocery chains. He believes much of the reason why Rema 1000 succeeds is the business model. Local merchants who own large parts of the store and work on contract for Rema 1000. Bjerre also believes Rema 1000 has succeeded in becoming a chain that most people like. "The Danes are also curious about new concepts, and we probably also have a greater openness to foreign chains here," says Bjerre. "There are also stories about Rema 1000 merchants who know their customers by their first names and they also have a reputation for being good at looking after their employees," he says. Hope he makes money Reitan himself has, at least not as it appears, any particular concern related to growth in Denmark. Nor the fact that he is taking over retail space where the business has run at a thunderous deficit in recent years. He will continue to run his race. And stay true to its concept. "We are planning for the Rema concept that is in Denmark. We're not making any changes to that. Then we'll see what it does to the turnover. "We hope that it will increase. We expect it," he says laughing. Aldi will withdraw from Denmark in January. If permission for the acquisition is granted, redevelopment of the stores could start fairly quickly in 2023. See here for more: Rema-Reitan buys the chain that was his role model: "You have to cut costs all the way to the bone" – NRK Urix – Foreign news and documentaries #smartdiscount #rema1000 #expansion #growth #denmark #norway #drc #discount #retail #consulting #discountretail #discountretailconsulting

Discount Retail Chain Aldi Netherlands (German family owned) is back. While other supermarket chains advanced and the German super was overtaken on all sides, in 2019 it was time for a plan of attack. Aldi Netherlands marketing director Nienke van de Streek has been the inspired leader of a marketing team of more than 50 people at Aldi for more than six years now. A conversation about the love for retail, boundless ambitions, the pyramid of Giep, the pleasure of budgeting, the German mother, the internal marketing mission and the competition. 'We will never do funny plays with celebrities. With us you will find real life.' At the same time, it marks an important moment in the history of Aldi that for a long time was known as a simple box pusher without any recognizable positioning. Van de Streek and her team are now bringing out the best of 'the Sailor among the supers' with marketing. In addition to the well-known action commercials, Aldi is now also visible for the first time with brand films on TV, with the necessary humor on all social channels 'Aldi on Instagram? Of course it is!' and with remarkable activations such as recently with a real 'Pieper' paradise at Hoog Catharijne. Aldi and marketing, so that wasn't a natural combination for a long time? "No, not exactly. Aldi is a family business that has been around for 100 years and has in fact always been run by operators who were mainly concerned with the logistics operation. In that process, attention has always been paid to increasing efficiency: what can be improved in the chain? Marketing was a strange word for a long time. When I came here there were two people who were involved in leaflet promotion and now there are 51. All top people, make no mistake, but marketing is really still in its infancy here. I am working on an internal mission in which you explain in all layers, from HR and Finance to logistics and store staff, why marketing, customer research, target group determination and positioning are essential for your long-term strategy. That requires a lot of energy and sometimes the necessary discussions, but everyone is now convinced that we need this.' It was also badly needed given the declining market share of Aldi? 'Aldi stood at a market share of 5.9% in 2019 and that percentage fell to 5.2 in the corona years. During corona, we were severely bothered by online and the fact that we are not a primary supermarket in the eyes of the customer. We currently have a market share of 5% and we are heading fast towards the 6. The stated ambition is to become discounter number 1 in the Netherlands again, because that's what we once were. The cause is difficult and has several sides, but the main reason is that we have continued to focus too much internally. With full courage we continued to raise the bar, but in the meantime, everything was happening outside and new formulas came up that customers took away from us. It was a huge wake up call for us. Did we wake up too late? I find it difficult to say, as a company you also have to be ready to take the next step. Also internationally. We have that much better on track now. There is much closer cooperation with Germany and other European countries and we are making immense strides in the field of marketing. To give an example, our customer service has recently become completely centralized. Previously, the six regional companies had their own customer service, including phone number. We can now respond much better to all kinds of customer questions and wishes. Anyway, the fact remains that perhaps we should have acted earlier. In the end, it was now or never.' Just about the German mother, how big is her influence? 'There is always the idea that we are strictly controlled from Germany, but that is absolutely not the case. We really have a lot of freedom of action. Together with the CEO, my fellow directors of Category Management, Sales and Supply chain, I have a solid position in the MT as marketing manager. Together we form the commercial heart of the company. There is no checkout culture here, but of course we all have our KPIs. Even more important is the overall felt ambition in all layers of the company to become the best discounter in the Netherlands. Aldi International in Germany supports us in this. The collaboration with them has intensified and recently I sat at the head office with all marketing directors in Essen and there we learn a lot from each other, from best practices to how we deal with topics such as sustainability, pricing policy and the improvement of quality.' How did the marketing plan ultimately take shape? 'We started with the marketing booklet, so to speak, together with advertising agency Indie, which we selected after an extensive pitch. The starting position was that if we wanted to achieve our ambition, we really had to start from scratch. We are a fan of Giep Franzen, professor and advertising strategist, who builds the strategy from the pyramid with substructure and superstructure or first the functional description and then the emotional promise. Functional factor was important to remove the prejudices about us in particular. We had to clearly explain what Aldi is and does and why. Our philosophy is no frills, no fuss, we want to show real life. That means very concretely: we are cheap, but we do deliver quality and offering a limited range means no choice stress. The fact that you, as a customer, take out boxes yourself means that you are cheaper. Offering one kind of ketchup and not ten, that creates clarity and keeps things simple. Overall message: you get value for money, always and you eat just as well, but cheaper.' And after the functional, action-based TV commercials came the brand films in early 2022. 'The fact that we came on television with commercials was already a big step, but the introduction of branded films at the beginning of this year meant a revolution for us! After research with customers of Aldi, it turned out that they now understood the functional message. The reason for going to Aldi was clear, but what set us apart from the rest? The brand needed to be given more emotional relevance and a clear positioning. The brand films with glimpses into the lives of ordinary people struck the right chord. No fun plays with celebrities, but everyday life, such as the life that continues after the holidays and everyone gets back to work. In that life belong groceries, affordable and nothing fancy. The action communication always goes hand in hand with the brand film and is therefore butter with the fish. The pay-off 'Of course yes' was an instant hit, certainly also in combination with the voice-over of actor Diederik Ebbinge. You can put so much into it and it is the wonderful self-evidentness that we want to convey, the core of the brand, namely simplicity, responsible and reliable.' Indie as an agency I find quite remarkable, I had not directly linked to you. 'The funny thing is that Indie has no real retail experience. Real retail agencies such as TBWA were on our longlist, but they quickly dropped out for understandable reasons such as competition clauses. We got a sympathy for Indie because they were on the right approach route very quickly. We also learn a lot from each other. As I said, we as a marketing club are also very searching and they are new to retail. In this way, we bring out the best in each other.' As a real 'retail animal', how do you look at the competition? 'The nice thing about retail for me is that it's never boring. Everyone is fighting for their percentage point of market share extra. Of course I look with a lot of attention at what they do and why and how it fits the brand or not at all. We look at it, sometimes we learn from it and sometimes I'm glad that Aldi is not on that particular course. In that respect, I am happy with our underdog position! You have to guard against exaggeration, they are basically just groceries. On the other hand, people, especially now, bring a lot of money to the supermarket and every carton of milk they buy from us, they do not get from market leader Albert Heijn. The game is to pull out all the stops to entice the customer to come to you. With the immense inflation at the moment we are doing good business, yes, you can say that. We see a lot of new customers who realize that our peanut butter is just as tasty.' What do you think of the level of advertising in the Netherlands? 'Let me first say that I always enjoy advertising, I'm really a fan of the commercial break. Yes, level? Bad advertising can also work well, I often think. If it has an effect, who am I to say it's bad advertising? Aldi is also on TikTok. What is the rationale behind that? "Aldi as a brand needs this, the medium can really add something. Customer surveys showed that we have quite an old-fashioned image. One of the comments was: Did you move with the times? With our arrival on TV and on TikTok, you show that as a brand you are moving with the times. The logo? No, not at all. But that remains very strong. We recently refreshed it with that red line and strong A. Leave everything out and the logo still stands like a house. No, never arrive!' Where does the marketing profession go? 'I'm not a seasoned marketer, I've only been dedicated as marketing director for three years, but what strikes me is the breadth of the profession. In the past, advertising campaigns, say the creative side, were the core of marketing for many. In 2022, marketing is so comprehensive, it concerns the entire company in all its facets. From sustainability to responsible entrepreneurship and from your position in society and what you do in it. You are constantly under the scrutiny of the consumer. Do I hit the string right, am I not going to stand on toes? As a brand, you want to do it all right. The profession is therefore becoming more and more interesting, gets more dimensions.' And the customer is becoming more and more critical. 'Yes, that is an extension of this. I certainly welcome that and as Aldi we can respond smartly to it. Take sustainability and the fact that we are a discounter as an example. For many customers that does not go together, while we do very well in that area and often better than other supers. Nobody expects that and that is something that we have to propagate much more. This is our story and we have claimed this position. It is a matter of continuing to repeat our core values and making it clear that it is good if you take a critical look at your own buying behavior. It may well be a notch less, there do not have to be 21 pancake mixes in the store. Two is also fine. That is better for the chain, for society and the world itself and ultimately also for the customer.' What else is a challenge for you as a CMO? 'We are in the middle of the discussion about price, which is really a current topic. As a consumer, you have little to spend and where do you shop? We offer the lowest price compared to the competitor and quality is not always comparable, while our peanut butter is also of the level A brand. The challenge is to get that story clear to the customer, because cheap is unfortunately still synonymous with poor quality for many people. I think that's a real challenge, especially because it's becoming more and more relevant.' What success and blunder can I note? 'In fact, Aldi is my only marketing success for the time being (laughs). If it's a success at all, then. I was always on the formula side and that's really different from marketing. The advantage of this is that I have always understood the business side of a company very well. How is your revenue model and what contribution do you make to it? Every marketer should. If you as a marketer do not have that sharp, then no one takes you seriously. You are much more involved in the daily business. The blunder took place when I was just working at Aldi. At the opening of a pilot store, I enthusiastically told a colleague/former colleague about the plans we had with the concept. It turned out that a shrewd journalist was listening and he obviously wanted to publish this whole story, but the matter was then very sensitive within the company and we were still very closed to the media. I really had to move heaven and earth to make the journalist refrain from publication.' See here for more: [CMO] Nienke van de Streek (Aldi): 'Marketing makes Aldi more relevant and self-evident' | MarketingTribune Food and Retail #aldi #smartdiscount #marketing #netherlands #growth #drc #discount #retail #consulting #discountretailconsulting #discountretail #consulting

Sainsbury and Tesco still face strong competition from the German discounters Aldi and Lidl due to the inflationary environment according to French Lineaires magazine. The full-service supermarkets keep on continuing a price war with their price match campaigns. Source: www.lineaires.com/la-distribution/tesco-va-fermer-ses-derniers-stands-coupe #tesco #sainsbury #aldi #lidl #uk #discounters #pricewar #aldicampaign #pricematch #pricematchcampaign #smartdiscount #discountfoodretail #discounter #discount #foodretail #retail #drc #discountretailconsulting #retailconsulting #consulting #consultancy

Portugal-based private equity firm C2 acquires Spanish Clarel drugstore from Grupo Dia. DIA wants to focus solely on proximity food retailing. The deal includes all 1,015 Clarel stores and three distribution centres in Spain. Dia has decided to sell its perfume chain Clarel to C2 Private Capital for 60 million euros, with an expected negative accounting impact of 22.5 million euros in its consolidated income statement at the end of December 31, 2022, as announced by the company to the National Securities Market Commission (CNMV). Specifically, the agreement reached between the parties includes, among other assets, 1,015 Clarel stores distributed throughout the country and three distribution centers. The amount that Dia Retail, a subsidiary of Dia, will receive for the operation and that may vary depending on certain parameters is estimated at around 50 million euros net, to which is added a debt of 10 million, which would result in total funds of 60 million euros. The price will be payable in cash to Dia Retail at different times according to the milestones established in the contract. The company plans to allocate the resources obtained to accelerate the implementation of its strategic plan by completing the process of remodeling the proximity stores of its current network in addition to the acceleration of new openings within this same format. "Proximity is the essence of Dia and our great lever of success. In this new stage of acceleration of growth, we want to focus and effort on what we know how to do best: local food distribution," said the CEO of Grupo Dia, Martín Tolcachir. Clarel's business, today, has a positive performance, improving its profitability year after year in recent times, according to the company. "This is a strategic decision. Clarel operates in a very attractive retail sector with great growth potential. Given Dia's strategic orientation, it is best to put Clarel in the hands of new investors who focus on its future development," said Tolcachir. The operation, subject to the fulfilment of a series of conditions, including obtaining the relevant competition authorization, is expected to be completed by mid-2023 and is part of the strategy of targeting the proximity food distribution business that Dia group is carrying out, "cornerstone since its foundation more than 40 years ago," according to the company. Grupo Dia has been advised by Arcano Partners, Herbert Smith Freehills and Deloitte, while C2 Private Capital has been advised by Baker & Mckenzie. #spain #c2 #dia #grupodia #clarel #acquisition #drugstore #smartdiscount #discountfoodretail #discounter #discount #foodretail #retail #drc #discountretailconsulting #retailconsulting #consulting #consultancy

Grocers are adapting to the ongoing consumer quest for value, according to a new Colliers report. TOP TAKEAWAYS some 61.3% of consumers said they would switch to private label if inflation persists private label will reach 21.6% of sales in 2026 consumers across all incomes report shopping at value grocers, including 48.2% of middle-income and 17.6% of high-income shoppers The grocery sector is likely to weather economic weakness heading into the new year as consumers focus more spending on essentials and as retailers meet their customers’ demands for value, according to a report from Colliers. The real estate firm’s Winter 2022 Retail Report highlights many of the steps retail grocers have been taking as consumers have felt the pressures of rising prices and become more cautious in their shopping. Consumers will increasingly switch to private label and trade down to less expensive brands and products if inflation persists, the report found. Citing research from a GlobalData consumer panel, the report noted that 61.3% of consumers said they planned to switch to private label if prices keep rising, and 61% said they would buy cheaper brands or products. In addition, more than half (53%) said they would use coupons more. Other changes in behavior included: shopping more in value stores (34.7%) buying fewer food and grocery items (29.8%) paying for groceries using a credit card (27.4%) buying in bulk to save money (23.7%) The trend toward increased private label consumption is seen as continuing into the coming years. After a surge in private label growth this year, Colliers predicts that the growth rate will slow in the next few years, but private label will continue to grow as a share of overall sales. After posting 15.9% growth in sales this year, and reaching 18.9% of total sales, private label sales will grow another 9.3% in 2023, reaching 19.9% of sales, and continue to grow between 6.1% and 6.8% for the next three years, reaching 21.6% of total sales in 2026, according to the report, citing GlobalData analysis and data. About 78% of Americans currently purchase in-store brand products, the report found. In addition, 61% are buying more private-label pantry items, and 58% are buying more private-label household merchandise. The increasing penetration of private label comes pressure grown on traditional, middle-market grocers that are being squeeze by value-oriented formats on one end and premium players on the other, according to the report. The popularity of value players, such as Aldi, has been increasing across all income brackets, the report found. While 71.4% of low-income consumers reported shopping a value stores in 2008, that number jumped to 86.3% in 2021. Even larger increases were reported among middle-income and high-income consumers, according to GlobalData research. Nearly half of middle-income shoppers (48.2%) reported shopping at value stores in 2021, vs. 19.6% in 2008, while 17.6% of high-income shoppers shopped value stores in 2021, up from 4.5% in 2008. Colliers cited that foot traffic across most of Aldi’s 2,200 U.S. stores increased about 10.5% in the past year, as the retailer reported double-digit sales gains. MEASURING VALUE Interestingly, the report also detailed the importance of quality to consumers, which is a part of their value calculation when they shop for groceries. “Customers will still pay extra for high-quality products and look to purchase from brands they can feel good about,” the report said. For example, when asked what “good value for money” means to them across different types of products, 45% said high-quality products/ingredients were important when shopping for dairy products, while 30% cited low prices. A similar pattern followed for other product categories, including bakery/cereals/morning goods and alcoholic beverages. In some categories, such as savory snacks and non-alcoholic beverages, the importance of low price was closer to quality in terms of what “good value for money” means. The report also looked at the rise of ecommerce in the grocery sector, and cited data from Spryker Systems predicting that by 2024, nearly a quarter of consumers (22%) will buy most or all of their groceries online. That trend comes at a cost to supermarket operators however, the report found, noting that average margins for in-store grocery purchases are about 3.6% of sales, compared with 2.9% for online ordering with store pickup, and a loss of 3.8% for home delivery. “Online orders are particularly damaging to margins in the food and grocery sector, which is already a low-margin category,” the report said. “Retailers prefer customers to pick up multi-channel orders to avoid shipping costs, particularly in margin-sensitive categories like grocery.” In addition, the report cited the popularity of “autopilot” purchasing, in which regularly purchased items such as paper towels, dishwasher tablets and laundry detergent can be delivered on a set schedule from subscription companies such as Coterie Market, Public Goods, and Grove Collaborative. The percentage of customers who have used subscription services for grocery has increased from 11.8% in 2021 to 12.4% in 2022, according to the report. “Online buying options and the convenience of subscription services have made consumers less likely to visit the center aisles of traditional grocery stores,” the report stated. As a result, grocery shopping trip lengths are down, despite in-store traffic up 2% over the past year (while still 11% lower than pre-pandemic levels in 2019), according to report, citing data from VideoMining Grocery Shopper Insights, GSI Tracker. In response to these trends, some operators have been rethinking their store environments and experimenting with open, smaller formats in some locations, said Anjee Solanki, national director, retail services and practice groups, Colliers. Other grocers have explored layout shifts to emphasize fresh, perimeter departments. “Today, attention is on developing smaller, more suitable locations that provide consumer convenience with more weekly visits,” she said. “Smaller stores also provide customers with a more local, personal shopping experience and retailers with lower overhead costs that transfer savings to lower prices.” Source Supermarket News #usa #privatelabel #pl #ownbrand #inflation #colliers #globaldata #sprykersystems #smartdiscount #discountfoodretail #discounter #discount #foodretail #retail #drc #discountretailconsulting #retailconsulting #consulting #consultancy

The joining of The Kroger and Albertsons (both in top 3 of U.S. supermarkets) would create a truly national operator with 4,996 stores, 66 distribution centers, 52 manufacturing plants and 2,015 fuel centers in almost 50 states. The merged company also would be the fifth-largest pharmacy retailer, with 3,972 pharmacies. On the dollars side, Kroger and Albertsons generated a combined $210 billion in revenue and $3.3 billion in net earnings in fiscal 2021. Among the largest players in the grocery retail channel by total sales, Kroger-Albertsons would vault into the No. 3 spot over Costco Wholesale, which would be a distant No. 4 with 2021 sales of $141.4 billion. Only Walmart ($466.8 billion) and Amazon ($279.8 billion) would be bigger in overall sales. By store count, Kroger-Albertsons (4,996 stores) would remain at No. 8 but challenge Walmart (5,342 stores) for the No. 7 slot. Including supermarket retailers only, Kroger-Albertsons would nearly quadruple the sales of Ahold Delhaize USA, the next-largest player with $53.7 billion in fiscal 2021. By supermarket count, the merged entity would more than double No. 4 Loblaw Cos. (2,437), No. 5 Aldi U.S. (2,200) and No. 6 Ahold Delhaize USA (2,048). Like other business sectors, grocery retail is abuzz with rumors and speculation about mergers and acquisitions. Yet, the Kroger-Albertsons announcement, which came in mid-October, seemed to catch many in the industry by surprise. “For Kroger, they’ve been kind of eager to get into M&A for some time now,” said CFRA Research analyst Arun Sundaram. “They have a really clean balance sheet, lots of cash and a little debt. I just didn’t think that they would pursue an acquisition this large. A very bold acquisition, a risky acquisition, and one that looks like it will take a lot of time and work in order to get the required regulatory approval.” Kroger-Albertsons would become only the second grocery retailer, behind Walmart, to hold double-digit market share (before store divestitures). BofA Securities analyst Robert Ohmes pegged U.S. grocery market share for Kroger-Albertsons at mid- to high teens (pre-divestitures), compared with roughly 25% for Walmart (30% including Sam’s Club) and 9% for Costco at a distant third. Cincinnati-based Kroger clearly sees itself on the same playing field as Walmart and Amazon, according to Sundaram. “This merger is going to create a much larger grocery giant,” he said. “It would make Kroger a more formidable competitor to Walmart and Amazon. Amazon currently has relatively low market share, but it’s rapidly growing and investing in the grocery space. So for Kroger, they needed to do something to remain a top competitor, especially since companies like Walmart and Amazon have other aspects of their business that are very high-margin and fast-growing, whereas Kroger doesn’t really have that and is more of a traditional supermarketer. I think this was a move to really declare that they’re going to be fighting along the same lines as a Walmart and an Amazon.” The merger transaction Under the deal, Kroger plans to acquire all outstanding shares of Albertsons’ common and preferred stock for about $34.10 per share. The total value of the transaction includes the assumption of roughly $4.7 billion of Albertsons’ net debt. Plans call for Kroger’s Rodney McMullen and Gary Millerchip to continue as chairman and CEO and chief financial officer, respectively, of the combined company. In connection with the transaction, Boise, Idaho-based Albertsons was slated to pay its shareholders a special cash dividend of up to $4 billion, or about $6.85 per share, on Nov. 7. At press time, however, that payment was being held up following lawsuits by several states and the District of Columbia. “There’s a lot of strategic merit to the combination,” Oppenheimer analyst Rupesh Parikh said, noting that the merger would give Kroger national scale. “It would make a much more formidable competitor to other large players like Walmart, Amazon and Target. From a longer-term perspective, employees would be better-positioned; it could mean more job opportunities. Consumers could see lower prices, as Kroger’s historical track record is that they do pass through lower prices. And from a shareholder perspective, this deal could be 15% to 20% earnings accretion by year four and 30%-plus free cash-flow accretion. I think it’s a win-win all around for all key stakeholders.” For Albertsons, the merger deal culminates a “review of potential strategic alternatives” that its board of directors initiated in February. The effort reflected Albertsons’ concern that its business was being undervalued versus those of competitors — including Kroger. Previously owned by an investment group led by private-equity firm Cerberus Capital Management, Albertsons went public in June 2020 following an initial public offering. Cerberus still holds an approximately 29% stake in the retailer. “In my mind, Albertsons was an undervalued company. So we believe Kroger got a good deal here,” said analyst Scott Mushkin, principal of R5 Capital. Sizing up the store geography To help pave the way for Federal Trade Commission and other federal and state regulatory approvals of the merger, Kroger and Albertsons plan to form an Albertsons Cos. subsidiary dubbed SpinCo. This entity would be spun off to Albertsons shareholders immediately before the transaction’s closing and operate as a stand-alone public company. The two retailers would determine which stores would become part of SpinCo. In announcing the merger, they estimated that SpinCo would comprise 100 to 375 stores. Mushkin noted that the merger deal sets a store divestiture ceiling of 650, at which point the companies could re-evaluate the transaction. In a research note, R5 Capital estimated potential store divestitures at 550 for the regulatory green light and said that figure implies that Western divisions likely would be sold. “Is 350 [stores divested] the number? We don’t think so. Basically, we think it’s around 500. That’s still well below 650,” Mushkin said. “And then the question is, are there buyers for divisions or multiple divisions? We think the answer is yes.” Store overlap for Kroger and Albertsons appears heaviest in Southern California, Chicago, the Pacific Northwest, eastern Texas (Dallas and Houston), Denver, Phoenix and the greater Washington, D.C., area, according to BofA’s Ohmes. From the middle of the country moving west, Kroger and Albertsons have significant conflicts in store locations. R5 Capital reported that the proximity of stores between the two retailers jumps when the radius is extended from 1 mile to 3 miles. For example, the report showed that in seven markets, the percentage of Albertsons stores in Chicago with at least one Kroger location increases from 2.79% within 1 mile to 14.53% within 3 miles. The trend is similar in other markets: Denver (30.95% 1 mile, 90.48% 3 miles), Las Vegas (28.57% 1 mile, 95.24% 3 miles), Phoenix (22.08% 1 mile, 89.61% 3 miles), Portland (29.69% 1 mile, 81.25% 3 miles), San Diego (19.72% 1 mile, 76.06% 3 miles) and Seattle (40.78% 1 mile, 87.38% 3 miles). The Kroger Co.’s family of store banners includes Kroger, Ralphs, Dillons, Smith’s, King Soopers, Fry’s, QFC, City Market, Owen’s, Jay C, Pay Less, Baker’s, Gerbes, Harris Teeter, Pick N’ Save, Metro Market, Mariano’s, Fred Meyer, and Food 4 Less/Foods Co., all within 35 states. Albertsons Cos.’ store base includes such banners as Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci’s Food Lovers Market, all across 34 states and the District of Columbia. “The two largest areas in the U.S. where the companies’ stores do not overlap are Northern California and the Northeast,” Coresight Research wrote in a report after the merger announcement. “Albertsons has a significant presence in the Northeast [Acme Markets, Shaw’s, Star Market], while Kroger does not. However, previously, Kroger announced the construction of [Ocado-automated] online customer fulfillment centers in this region, meaning these CFCs (when operational) could cannibalize store sales. Currently, neither Kroger nor Albertsons have stores in Florida. So, while Kroger has plans to launch two CFCs and spoke distribution centers in the state, there is no risk of overlap or cannibalization.” More industry consolidation looming? If the acquisition of Albertsons is approved, Kroger’s market reach via physical stores will grow from 35 states — mostly in an area stretching from the Great Lakes to the South and Mid-Atlantic, with pockets in the Central U.S., Southern California, Texas, the Pacific Northwest and Arizona — to 48 states, bringing the grocer into the Northeast and New England while filling out markets in California, Texas, Arizona, the central and upper Midwest and the Pacific Northwest. That national footprint, besides pressuring existing supermarket players in those market areas, would boost efficiencies of scale and negotiating leverage with CPG suppliers, enabling Kroger to better compete on price with non-supermarket rivals like Walmart, Amazon, Target and Costco, plus discounters like Aldi (now in 38 states), industry observers said. Kroger’s consumer reach also would grow substantially through the addition of Albertsons. Currently, Kroger serves about 64 million households annually, and that number would jump to 85 million with the merger. “For example, with retail media, this allows their advertisers to reach markets that Kroger is not in today,” said Parikh. “So, for example, Kroger doesn’t have a Boston presence. If Proctor & Gamble came to Kroger and wanted to reach consumers in that market, they couldn’t today. But with this combination, now they can reach consumers in the Northeast as well.” Having Albertsons in the mix, too, would likely fortify Kroger’s efforts to extend its online reach. Under a 4.5-year-old partnership with U.K. e-grocery specialist Ocado Group, Kroger plans to roll out about 20 large, automated CFCs across the U.S. So far, 17 CFCs have been announced, and six are open. Eleven of 12 announced supporting spoke sites, automated by Ocado, are also operational. Importantly, the CFCs and spokes will give Kroger entry to markets where it now lacks stores, including Florida, Oklahoma, northeastern Ohio and Pennsylvania, and the Northeast. The addition of Albertsons’ online customers would raise the probability of success for the Ocado network. In some markets, the Ocado CFCs will enable Kroger to serve customers where it lacks brick-and-mortar stores. “If Ocado continues to work out well and you have a national footprint, then theoretically you can have more density with these facilities,” explained Parikh. “You can have Kroger’s and Albertsons’ volume in the same geographies going into these centers, and they can ramp up faster.” Such marketplace power could spur other large supermarket players to act with M&A deals of their own, if the Kroger-Albertsons merger does indeed go through, industry observers and analysts said. With a wider swath of territory from coast to coast, the combined company would present a much bigger competitive challenge to operators like Ahold Delhaize USA (East Coast), Publix (Southeast), H-E-B (Texas), Hy-Vee (Midwest) and Wakefern/ShopRite (Northeast, Mid-Atlantic), Wegmans (Northeast, Mid-Atlantic), Giant Eagle (Rust Belt, Mid-Atlantic), Southeastern Grocers (Southeast) and WinCo Foods (West). Along with those larger players possibly seeking acquisitions, smaller supermarket retailers also could potentially join together in mergers à la Price Chopper/Market 32 and Tops Friendly Markets (forming Northeast Grocery Inc.) and Raley’s and Bashas’ (forming The Raley’s Cos.). “We’ve been thinking that we’d see more consolidation in the food retail space for some time now. We thought it would be larger grocery chains swiping up local or regional chains. I didn’t think we’d see national grocery companies like this merge,” Sundaram said. “But I certainly think we’ll see more of the larger grocery chains acquiring some of the smaller ones and independents. One of the biggest reasons is that these smaller grocery chains and independents don’t necessarily have the scale to compete with the larger ones — especially in e-commerce, which is now more important than ever in food retail. It’s really hard to make online grocery profitable. Even the larger companies are struggling to make that profitable.” The SpinCo company to be formed under the Kroger-Albertsons transaction also might present an acquisition opportunity for a regional or smaller supermarket operator, depending which stores become part of that entity. Mushkin pointed to the Kroger-Albertsons store overlap in the West. “If you wanted to become a regional grocer on the West Coast and that was your aim, or if you didn’t have any West Coast exposure and you wanted some, you could make that happen,” he said. Regulatory outlook Kroger and Albertsons said they expect the merger transaction to close in early 2024, pending regulatory approval and other customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act. Grocery industry observers and analysts, though, have said the process could take up to two years. In addition to the planned creation of SpinCo for store divestitures, Kroger has taken a number of actions that improve its regulatory prospects for the deal. For example, the company said in announcing the merger that, post-close, it would invest $500 million to lower grocery prices, $1.3 billion to upgrade Albertsons Cos. stores and $1 billion to raise worker wages and benefits. Following recent virtual meetings between Oppenheimer and Kroger management, Parikh emphasized that the supermarket giant has done its homework. “Clearly, there’s overlap in certain markets — the Pacific Northwest, Southern California, Chicago, Denver,” he said. “But Kroger and Albertsons and their shareholders have done a lot of work on this. They’ve hired the lawyers to look at the deal. And we were with Kroger management; they are highly confident of this deal getting the regulatory approvals.” A fly in the ointment could be political and labor opposition to the merger, especially in an environment where high inflation has elevated food prices and grocery workers continue to battle challenges since the pandemic. Just days after the deal’s announcement, U.S. Sens. Amy Klobuchar (D., Minn.), chair of the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights, and ranking member Mike Lee (R., Utah) said their subcommittee will convene a panel in November to address the Kroger-Albertsons transaction. At press time, the hearing hadn’t yet been scheduled. United Food and Commercial Workers and lawmakers also have come out against the merger, contending that a combination of two huge players would squeeze smaller competitors, raise grocery prices, lead to job cuts and reduce union workers’ leverage at the bargaining table. Albertsons’ planned $4 billion special dividend has also been a lightning rod for criticism from politicians, labor, and state attorneys general, who say the payment could hamper Albertsons and shouldn’t be on the table until a full antitrust review of the merger is completed. The Kroger-Albertsons deal also presents a litmus test for the Biden administration, which has espoused a stronger consumer-protection stance in terms of mergers-and-acquisitions oversight. And in a letter to the FTC, Klobuchar and other lawmakers urged the FTC to exercise more scrutiny in its market-by-market analysis of a potential Kroger-Albertsons combination than the commission did in reviewing the 2015 Albertsons-Safeway merger. “The Federal Trade Commission under the current administration has publicly articulated a more pro-consumer, stronger oversight posture,” Christine Bartholomew, a State University of New York at Buffalo law professor and antitrust scholar, said in commentary on the Kroger-Albertsons agreement. “Its position on this merger will be the first real test of whether the FTC plans to align its words and regulatory actions.” CFRA, based on research by its Washington Analysis policy team, gives a 75% chance that the FTC will block the Kroger-Albertsons merger, Sundaram reported. “Probably the next big question is, if they do go and block the merger, will Kroger-Albertsons try to keep fighting and appealing it or will they just walk away?” he said. “But the big reason why we think there’s a 75% chance the FTC will block the merger is the current FTC Chair Lina Khan. She’s recently expressed concerns about the impact of grocery store mergers.” However, R5 Capital sees a path for the deal to get done, citing concentrated overlap in key markets, the likelihood of potential buyers for stores or divisions, and the opportunity for organized labor (both Kroger and Albertsons are union shops) to play “a very constructive role in helping come to a suitable agreement with a buyer, Kroger and the government.” “We look at it a bit differently. In our minds, there’s a path to getting this done probably much more quickly than is realized,” Mushkin said. “If Kroger is realistic and said, ‘OK, let’s go to the union, let’s get a buyer or two lined up, and let’s go to the FTC together, hand in hand, and say here’s the plan and this is why it’s good for consumers,’” he explained, “then I think you can get it through pretty quickly.” Source: Supermarket News #usa #kroger #albertsons #merge #aldi #smartdiscount #discountfoodretail #discounter #discount #foodretail #retail #drc #discountretailconsulting #retailconsulting #consulting #consultancy