Wednesday, May 17, 2017

First 20 Lidl stores coming this summer

Lidl revealed this morning that it plans to open 20 stores this summer, with the earliest openings coming in June. The company didn't specify which stores would open next month, but did release a list of the first 20. They are in North Carolina (9), Virginia (9) and South Carolina (2).

All 20 stores will be serviced from Lidl's new distribution centers in Virginia and North Carolina. A distribution center in Maryland is still under construction.

According to Lidl US CEO Brendan Proctor, an additional 80 stores in markets from New Jersey to Georgia will open by the summer of 2018.

"People want a good quality product, they want it at a good price and they don't want to spend all day in a store - they want to get back to living," Proctor said. "That's what our model is about. That's our strength."

When asked about some reported skepticism about Lidl's real estate choices, Proctor deflected the question and touted the company's ability to adapt and the quality of its offerings.

As for the store's product mix, Proctor said they will source about 85% of products from the U.S. EVP and Chief Commercial Officer Boudewijn Tiktak added that around 90% of the selection will be private brand.

All Lidl stores will have bakeries but no service deli or meat departments.

Sunday, May 14, 2017

Aldi reacting to Walmart's efforts to become low price leader

Recent reports say that Aldi is responding to Walmart's aggressive pricing in an effort to remain the nation's overall grocery price leader. Aldi's adoption of a more flexible pricing strategy comes as the company plans to spend $1.6 billion on store remodels (see "Aldi remodeling stores ahead of Lidl openings") and open about 400 new stores by the end of next year.

Aldi says that its remodeling strategy will expand its ability to merchandise more private-label products in certain fast-growing categories, including perishables.

Analysts believe that Aldi's strategy, combined with Walmart's price cuts and Lidl's entrance into the market, will put pressure on traditional food retailers. These analysts suggest that traditional supermarket operators should examine their own lowest tier private label assortments.

According to Jon Hauptman, an analyst with Willard Bishop, having a wide range of economy private labels throughout the store could help retailers enhance their price image.

"It is incredibly important to have a robust assortment of economy or second-tier private label items through the store, so that in those categories in which customers are willing to make a trade-off in order to save some money, that trade-off item is available," Hauptman said.

Walmart is reinvesting in its own Great Value line, according to CEO Doug McMillon. McMillon said in March that the increasing availability of name-brand products online will compress their margins over time, which highlights the need for a strong private label offering.

Aldi's sales in 2016 were about $12.8 billion, up 9.4% from the previous year.

Whole Foods annouces plan to regain sales and reverse stock plunge

Earlier this week Whole Foods announced several major changes in an effort to reverse poor results and a sagging stock price. The changes include new board appointments as well as a plan to slash costs and regain sales and earnings momentum.

Initiatives include the following:

  • Accelerating an affinity loyalty rollout to all U.S. stores
  • Completion of an effort to restructure its purchasing program by the end of 2017
  • Implementation of chain-wide category management by the end of the 2018 fiscal year
  • Cost savings of $300 million by the end of the 2020 fiscal year by standardizing in-store processes and better allocation of labor, support function efficiencies, and supply chain optimization
In addition, the company announced the appointment of five new independent directors to its board, and named former Kohl's executive Keith Manbeck as CFO.

Kroger to debut new convenience store concept

Kroger, the largest traditional grocer in the U.S., announced last week that it has a new convenience store concept called Fresh Eats MKT. A location for the store is planned for Ohio, and Supermarket News reported that the company may rebrand existing convenient stores currently under their Turkey Hill banner.

According to Supermarket News, an Instagram page showed a photo of the new store and a description that said "Putting fresh within reach. Start shopping fresh produce, meat, bakery and dairy beginning May 10."

Sprouts Farmer's Market coming to Philly, South Jersey

Sprouts Farmers Market, an organic and natural foods grocer with 268 stores in 15 states, is reportedly planning on a new store in Philadelphia, PA and Moorestown, NJ. Both stores would represent the first in each state.

The Philadelphia store is planned for Lincoln Square at Broad Street and Washington Avenue in South Philadelphia, a mixed-use development that Kimco is involved in. The Moorestown store would inhabit part of the space in the Moorestown Mall that Macy's recently vacated.

Sprouts expansion to the northeast comes at a time when sales of organic food has been soaring in the U.S. Until recently, Whole Foods has owned most of the organic market in Greater Philadelphia. However, Mom's Organic Market and bFresh have recently entered the market, and several traditional and discount grocery stores - like Aldi and ShopRite - have been increasing their organic and natural foods offerings. Newcomer Lidl is expected to offer a significant variety of organics, as well.

What this all leads to is "a price war of unprecedented proportions," according to Burt Flickinger III, managing director at Strategic Resource Group.

Nationally, Sprouts had reported that they have 63 sites approved for new stores and 43 signed leases "for the coming years."

As reported previously, Albertsons (Acme) is exploring an acquisition of the Sprouts chain.

Weis adding stores, to spend $90M on CapEx

Weis Markets announced at their annual meeting last month that they are planning on one new store for 2017 and seven new stores for 2018, as well as several remodels and two new fuel centers. The company has planned for about $90 million in capital expenditures this year.

In 2016, Weis purchased five Mars Super Market stores and 38 Food Lion locations.  They now operate 204 stores with total annual sales of approximately $3.1 billion.

Sunday, May 7, 2017

Reports say Albertsons looking to acquire Whole Foods

It has been widely reported in the last couple weeks that Albertsons has been exploring a takeover of Whole Foods, which is reportedly exploring the possibility of a sale.

The speculation comes just a couple weeks after Whole Foods investor Jana Partners raised concerns about Whole Foods' management.

Earlier this year there were reports that Albertsons was exploring a takeover of Sprouts Farmers Market. Some analysts have suggested that acquiring a public company might help Albertsons have a successful public offering of its own, which is something the company has attempted to do before.