Posted on 10/25/2005 7:44:36 AM PDT by SmithL
Kroger Co.'s rumored plan to purchase Albertson's Inc. - combining the nation's two largest grocery chains - could create a chain large enough to compete and beat industry nemesis Wal-Mart Stores Inc.
Wal-Mart, a discounter, needed just 17 years to build 1,700 Wal-Mart Supercenter stores and become the country's largest seller of groceries. With more Supercenters on the way, traditional grocers such as Kroger have been looking for a way to keep their market share.
"Kroger, for many, many years, before Wal-Mart got in, was the No. 1 grocer in America," said George Whalin of Retail Management Consultants in San Marcos. "They're very good at what they do. They're formidable competitors."
Analysts say Kroger, with 2,525 stores, can hold its own, especially if it bulks up with 2,487 Albertson's stores. Cincinnati-based Kroger, which owns Ralphs Grocery Co., is the nation's biggest pure grocer - with a reputation for strong customer service, something that is a struggle for giant retailers such as Wal-Mart.
Officials with Kroger and Boise-based Albertson's declined to comment Monday on rumors of a bid reported by the Wall Street Journal and the New York Times to be about $10 billion plus the assumption of more than $6.5 billion in debt.
Investors embraced the proposed marriage as traders bid up shares in both companies. Albertson's shares rose $1.19, or 4.95 percent, to $25.25 on the New York Stock Exchange. Kroger shares rose 27 cents and closed at $20.07 on the New York Stock Exchange.
"A merger between Kroger and Albertson's would bump up competition, not only for Wal-Mart but for everybody in the industry," said Michael Banks, owner and partner of Las Vegas-based retail consultant Select Marketing LLC. "That's good for the business and good for customers."
(Excerpt) Read more at sacbee.com ...
Because of its economy of scale, Wal-Mart can drive better bargains with suppliers than most grocers. It plays hard ball very well. For example, when SlimFast refused to cuts its wholesale price, Wal-Mart created its own Equate brand of the same diet shakes. It nearly bankrupted SlimFast. This has been done with contact lense supplies, mouthwash, etc. Either the supplier reduces its profit or Wal-Mart becomes its competitor.
Wal-Mart's stated goal is to become 100% consignment. It will be interesting to see if it succeeds in forcing suppliers into this model.
Customer service, cleanliness, being well stocked with items easy to find, offering those items that might draw people to other stores - that's what our local Publix does, plus they compete well price-wise. I am willing to pay a little more at Publix to avoid standing in line for twenty minutes at Wal-mart while the ice cream melts!
WalMart operates a lot cheaper than their competition. They don't pay union wages nor are they required to pony up all of the union benefit packages. They pass all this savings on to their customers and in the process realize huge market share.
And they still realize only a very small profit, like their competition. That's how it works.
Agree completely.
Frankly, I'll pay a little extra not to have to be assaulted when I walk through the door with the odor of cheap clothing and stale popcorn.
We shop at Market Street, a large grocery store with gourmet cheeses, meats, breads, and a food mall that is as good as many restaurants around here (sushi, sandwiches, pasta, Mexican and Oriental food, etc.). Prices are a bit higher, but my wife (who is a finnicky cook), can find cilantro and all the little acoutrements she needs for her recipes.
They have a killer wine selection, and run 20% case discounts regularly.
Plus, they still insist on bagging groceries and carrying them to your car.
Now we just need them here in NC.
I do find Harris Teeter to provide a better selection than Kroger and their produce seems to be fresher.
something about the name Publix doesn't sound clean to me.
What I don't like about Walmart is that every time I go in there some toothless woman is beating her child in the middle of the main aisle. It's a different woman each time, too - it's like there's a rotating cast of them.
LQ
Albertson's has thirds rate baked goods and produce sections. I much prefer HEB. Even better is HEB Central Market. When I lived in Houston I preferred to shop at Randall's.
"Plus, they still insist on bagging groceries and carrying them to your car."
They do this at the Publix where I live. The inner snob in me LOVES that Publix (no riff-raff there...), then I realize that economically I AM riff-raff, and head over to Kroger. I would go to Wal-Mart but 1) It is a most unpleasant experience every time and 2) I get .10 off every gallon of gas per $100 I spend at Kroger. When I add my gas costs to groceries, it's cheaper overall to go to Kroger instead of Wal-Mart + non-discounted gas.
I have seen the warehouseing and shipping facility for Safeway just north of Berkley, Calif. It is HUGE -- and it is only one of theirs.
It is difficult to believe that the portion of Wal-Mart that is devoted to groceries is bigger than the largest dedicated grocery chains. I don't see how that economies of scale for Chinese clothes or Malaysian tools can make a difference in the cost of fresh lettuce. Somehow, Wal-Mart is doing something different and it is making much more than a few pennies difference in cost.
that's untrue. You wait in Publix, too.
You wait in TomThumb. In fact, you wait longer in TomThumb and Publix.
they are not any cleaner or dirtier than Wal-Mart.
Most of the time, (90%) I can check out my groceries in 5 minutes. You go to new refreshed grocery stores and everything looks fancy but they have one checker and those self-checkout computer where you have to scan items over and over and finally the computer self-checkout person has to help you with their card. I think these computers often takes longer to check out. In Publix, TomThumb, Kroger, or Albertson, you wait just as much as Wal-Mart, if not longer. Wal-Mart has... at any given time has more checkers then any of those stores combined. do you know Wal-Mart has all of their registers opened during weekends. That's like 30 registers open. Other stores, during their best peek time, they might have 7 open. But usually they don't because for whatever reason, they like unmanned registers and they like the emptied look. Wal-Mart has more opened registers then any of those grocery stores.
I used to dislike Wal-Mart but compare to others, Wal-Mart is better. Better price, better selections, more selections, faster checkouts, better products... just better.
You are telling me average Publix's customer service is better than average Wal-Mart. That's false assumption and conclusion.
They have the largest/best meat counter around. Everything from duck tongues to pig uterus to those teeny-tiny white fish. Fresh galangal root, kaffir lime leaves – you want it, they have it.
They have at least two dozen live fish tanks with fish, crabs, lobster… you pick out your fish and they’ll net it, clean it – AND FRY IT right there while you wait.
Second greatest store on earth (only located in Irvine, from what I can tell) is Wholesome Choice. They’re mostly Middle Eastern but have some Asian stuff.
They’ve got a good bakery with all sorts of fresh baked Middle Eastern bread that is dee-licious. They also have an “international foods” cafeteria section with gyros, Indian food, Persian food… I don’t know what any of it is, but it’s ALL delicious too.
They have the greatest breakfast burrito, meticulously prepared by a cute little latina – eggs, ham or turkey, cheese, and French fries (ran out of hash browns that day), all rolled up in some Middle Eastern thin-bread of some sort about two feet square. $3.99 and can feed three or four people. Mmm.
Plus they have a cake/confections area with the fanciest cakes and candies you’ve ever seen.
Kroger – blah!
I'm surprised no one has mentioned WinCo. I don't know how big they are but believe me, they by far have the best prices over Publix, Safeway, Roths and Wal*Mart. My first trip into a WinCo in Salem, Oregon blew me away.
I'd been going to Safeway, Publix and Roths prior to WinCo. Never went back to them even though WinCo was a further 10 miles away.
Wal*Mart still hasn't figured out how to sell groceries without being a pain in the arss for the customer. Never have, never will.
Wal-Mart has the best technology in the world. Its supply-chain features RFID tagging, which tracks down to the pallet level.
IOW, Wal-Mart knows where every single item in its inventory is at every single step of the logistics process, including when it's being put on the shelf.
Wal-Mart's clout is so strong that it can literally dictate to a supplier like Proctor and Gamble what prices it will pay for items. Now, Wal-Mart's business is so valuable that P&G actually packages the products it sells to WM in a different process from all other grocers so it can make a profit.
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