Rite Aid calls off Albertsons deal

The planned merger between Albertsons and Rite Aid was called off earlier this month due to concerns that the drug store chain's investors wouldn't approve the deal. At issue was the $24 billion price, which many of the stockholders and third party advisory firms felt was insufficient.

The deal was originally announced in February and was approved by both companies' boards. As per the plan, Albertsons would get on the New York Stock Exchange through an acquisition of Rite Aid's publicly traded shares.

Albertsons had sought to go public for several years, in part to address high levels of debt. In addition, Albertsons saw the Rite Aid deal as a way to more than double the number of stores it operated, and benefit from the ongoing convergence of the food and wellness fields.

For Rite Aid, its the third time a deal to sell the company has fallen though. A planned acquisition by Walgreens was trimmed back considerably in 2016 by federal regulators, and so was a plan for Fred's to acquire Rite Aid stores that Walgreen's wouldn't buy.

Vote set for Albertsons - Rite Aid deal

Rite Aid has set a special stockholders meeting for August 9 to vote on a proposal to approve its merger with Albertsons, even as some investors are trying to stop the deal.

Rite Aid has repeatedly stated that the deal is in the best interest of its shareholders. However, some investors have been upset that senior Rite Aid executives will be paid retention bonuses even if the deal falls through. Others expressed frustration that Rite Aid isn't getting a higher price, especially as pharmacy managers are an acquisition target and shareholders see value in Rite Aid's pharmacy benefit management company, EnvisionRXOptions, which has been growing rapidly.

The combination of Albertsons and Rite Aid, which operates RediClinic, would create a company with 319 retail health clinics and 4,345 pharmacies. Rite Aid executives expect the combined company to have a differentiated brand in the U.S. that combines "food, health and wellness."

Instacart raises money to fuel expansion, add employees

Instacart announced last month that it received $350 million in financing from Coatue Management, a technology-focused hedge fund, and noted that it has raised more than $1 billion since 2012, with most of it still in the bank.

According to the company, the additional funding will be used to double its employee count, fuel expansion, and invest in new products and services.

Instacart is now used by North America's eight largest grocery retailers - Kroger, Albertsons, Publix, Costco, Ahold Delhaize, H-E-B, Loblaw and Sam's Clubs, not to mention regional grocers like Wegmans.

Supermarkets lead customer experience survey; Wegmans tops all companies

The Temkin Group, a research and consulting firm, said earlier this month that its 2018 Temkin Experience Ratings survey of 10,000 U.S. shoppers revealed that supermarkets were tops in customer experience ratings among 20 industries evaluated.

Supermarkets posted a rating of 78.5%, up from 78.1% in 2017. The industries near the top of the list include retail (74.4%), banks (73.1%), and parcel delivery (71.9%). A score of 80% or above is considered "excellent," 70% or higher is "good," and below 60% is deemed "poor."

Ratings are determined by customer responses in three main categories - success (can you do what you want to do?), effort (how easy is it to work with the company?), and emotion (how do you feel about the interactions?).

Overall, Wegmans turned in the top rating of all 318 companies included in the survey. The Rochester, NY-based food retailer had an overall customer experience rating of 86%. Among supermarkets, H-E-B, the top company in 2017, and Publix tied for second with a score of 83%.

Rounding out the top 10 scores among supermarkets for overall customer experience were Aldi and Wawa (82%), Trader Joe's and ShopRite (81%), Save-A-Lot and Food Lion (80%), Meijer, Kroger, Hy-Vee and Winn-Dixie (79%), Albertsons (78%), Safeway and Piggly Wiggly (77%), Stop and Shop (76%) and Vons (75%).

Rite Aid transfers 1,651 stores to Walgreens

Rite Aid announced last month that it has transferred 1,651 stores to Walgreens. In all, Walgreens is buying 1,932 stores and three distribution centers from Rite Aid for about $4.4 billion in cash. The transfer of the remaining stores to Walgreens will take place this spring.

The remaining 2,500+ Rite Aid stores are being sold to Albertsons in a deal that will leave Rite Aid shareholders with ownership of 28% - 30% of the combined company. The yet-to-be-named combined company will trade publicly on the New York Stock Exchange.

Albertsons and Rite Aid announce merger; new company to have $83 billion in sales

Albertsons and Rite Aid announced yesterday that the companies plan to merge into a new publicly traded entity with an estimated $83 billion in annual sales. It is expected that the deal will close during the second half of the calendar year.

Here are some of the details of the planned merger:

• Albertsons' private food label products will be sold in Rite Aid stores, and most Albertsons pharmacies will be rebranded as Rite Aid.
• The new company will operate about 4,900 locations, 4,350 pharmacy counters and 320 clinics across 38 states and Washington D.C. It will service more than 40 million customers per week.
• The name of the company has not been determined, but it will have dual headquarters - Albertsons' current home in Boise, ID, and Rite Aid's current home in Camp Hill, PA.
• Rite Aid's John Standley will become CEO of the combined company, and Albertsons' Bob Miller will serve as Chairman.
• The company says it is too soon to determine if any overlapping stores will close. In the Greater Philadelphia market, both Albertsons (Acme Markets) and Rite Aid have a strong presence.
• According to Burt Flickinger III, managing director at the Strategic Research Group, "(Rite Aid) will get Albertsons distribution power and they both have good distribution centers. It is a strategic triumph for Albertsons, and whereas Kroger is selling off assets like convenience stores, Albertsons is profitably growing and making strategic acquisitions."
• In exchange for every 10 shares of Rite Aid common stock, Rite Aid shareholders will have the right to elect to receive either one share of Albertsons Companies stock plus $1.83 in cash, or 1.079 shares of Albertsons Companies stock. Depending on the result of the election, Rite Aid shareholders will own a 28% - 30% stake in the combined company.
• Walgreens and Rite Aid planned to merge last year, but the deal encountered resistance from the FTC and fell apart. Shortly thereafter, Walgreens agreed to acquire 1,932 Rite Aid stores and select distribution centers. According to Bloomberg, the newly formed company will have fewer pharmacy counters than Rite Aid did before it agreed to sell the stores to Walgreens. 

Albertsons to purchase meal-kit company Plated

Albertsons announced recently that it plans to acquire New York-based meal-kit company Plated, which has annual sales of over $100 million, according to a story in Supermarket News.

The deal will allow Plated, which will operate as a wholly-owned subsidiary of Albertsons, to operate well beyond its subscription model with new distribution points, including Albertsons locations. Albertsons claims to have 35 million customers per week at its stores, which include 19 banners across 35 states (including Acme in the Greater Philadelphia Region).

Albertsons CEO Bob Miller said Plated would provide the company with a more personalized and versatile shopping experience.

Plated offers customers pre-portioned ingredient packages that can be used to prepare easy meals at home. The company was founded in 2012 and was featured on the television show "Shark Tank" a few years later, where it gained investment funding from one of the "sharks."

Seven grocers in top 30 U.S. private companies

Forbes published its 33rd annual ranking of America's largest private companies, and seven grocers landed in the top 30. (Cargill topped the overall list, with $109.7 billion in sales, followed by Koch Industries).

Albertsons, with several banners including Albertsons, Safeway and Acme, is third on the overall list and the top grocer, with $59.7 billion in sales and 273,000 employees.

Also on the list:

#7: Publix Super Markets
#10: C&S Wholesale Grocers
#12: HE Butt Grocery (H-E-B)
#16: Meijer
#25: Southeastern Grocer (Bi-Lo, Harveys, Winn-Dixie)
#27: Hy-Vee

Aldi to spend billions in new store growth

Aldi announced earlier this month that it would invest $3.4 billion to expand to 2,500 locations in the U.S. by the end of 2022. Currently Aldi has 1,600 locations and is in the midst of a $3 billion expansion effort to have 2,000 stores by the end of 2018.

If they reach 2,500 stores, Aldi would be the third largest grocery chain in the country. They would surpass Albertsons and trail only Walmart and Kroger.

A related but separate initiative was announced earlier this year to invest $1.6 billion in 1,300 store renovations.

Aldi's large capital investment comes at a time when they and American newcomer Lidl are touting themselves as trendy, less expensive alternatives to traditional grocery stores.

Eight US companies make "world's fastest growing retailers" list

Recently 24/7 Wall St. analyzed data from the National Retail Federation and released a "World's 25 Fastest Growing Retailers" list. Eight U.S.-based retailers made the cut, three of which are grocers.

Here are the eight American companies on the list:

• Albertsons Companies (5-year annual growth: 74.1%)
• Sprouts Farmers Market (47.4%)
• Southeastern Grocers - BI-LO, Harveys, Winn-Dixie, Fresco y Mas (34.6%)
• Apple/Apple Retail Stores (23.4%)
• NIKE/Direct-to-Consumer (22.3%)
• Ulta (22.1%)
• Dollar Tree (21.4%)
• Amazon (20.8%)

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.

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.

Albertsons in talks to acquire Sprouts

It was reported last week that Albertsons is considering a deal to acquire Sprouts Farmers Markets, and an industry source told me that he thought the likelihood of such a deal was 50-50.

Sprouts, based in Phoenix, is the largest farmers' market-style food retailer in the country. It operates more than 250 stores in 15 states, not including Pennsylvania, where a Philadelphia store is planned. There are no stores currently in New Jersey either, and it has been rumored that the company is looking for a site in South Jersey.

According to reports, Sprouts has plans to open 32 stores this year, following 36 new stores last year and 27 in 2015.

Jefferies Anlyst Chris Mandeville said last week that "the logic of a deal makes sense in our view," but added that it would be very expensive.

Albertsons, which is owned by Cerberus Capital, acquired Safeway and Supervalu in recent years. Reports said that the company was in talks to acquire Price Chopper late last year, but the deal never happened.

Walmart, Kroger and Costco top list of 75 food sellers in US and Canada

Supermarket News released its annual list of the Top 75 Retailers and Wholesalers. The list ranks the largest sellers of food (by revenue) to be consumed at home in the United States and Canada.

Here are some bulleted highlights that I have copied word-for-word from Supermarket News. I would suggest visiting their website for the complete study.

• Natural and organic foods are still growing, but the retail beneficiaries aren't necessarily who they used to be;
• Formats serving low-income shoppers - while still some of the industry's fastest growers due to unit growth - have seen their sales in disarray as their shoppers deal with reductions to federal food benefit programs and rising costs for housing and health care, while a slowly improving economy may be lifting some of their shoppers out of the channel; and
• While Internet retailing remained a relatively small share of the pie, it became the subject of outsized ambitions by some of the industry's leading players, and a serious threat from digital natives like Amazon, which at year-end announced plans for a leap into the physical food retailing world. Initiatives to add click-and-collect shopping capabilities speak to a trend among food retailers to improve the convenience of their offerings to shoppers, and drive more sales from existing units, sources said.
• All this occurred while a nearly unprecedented stretch of deflating prices triggered chaos throughout the supply chain - an event analysts say could dampen sales at least through the first half of 2017.

Here are the top 10 retailers and wholesalers, plus other notable companies on the list.

1.  Walmart

2.  Kroger

3.  Costco

4.  Albertsons

5.  Ahold Delhaize

6.  Loblaw Cos.

7.  Publix

8.  Target

9.  C&S Wholesale Grocers

10. Walgreens

Also:

12. CVS

15. Dollar General

16. Supervalu

16. Wakefern

19. 7-Eleven

20. Trader Joe's

21. Aldi

22. Dollar Tree

26. BJ's Wholesale Club

30. Rite Aid

30. Wegmans

44. Weis Markets

54. Grocery Outlet

56. The Fresh Market

61. Amazon

Three Wakefern members were listed as separate entities on the list, including Saker ShopRite (56), Village Super Market (61), and Inserra Supermarkets (69).

Albertsons - Price Chopper deal called off

According to a Supermarket News report in late January, Albertsons has dropped its pursuit of Price Chopper, which is headquartered in upstate New York. It had been reported in late 2016 that Albertsons was in "advanced talks" to purchase the supermarket chain for about $1 billion.

It is likely that Price Chopper will continue to seek avenues for new investment, but a strategic acquisition is now unlikely, according to a Supermarket News source.

Strategic Resource Group's Burt Flickinger anticipates that the 135-store chain would seek alternative means of financing such as sale-leasebacks or a family investment in partnership with private equity.

Albertsons on the verge of purchasing Price Chopper

Reports earlier this week state that Albertsons (Acme, Shaw's, Safeway, etc.) is "on the verge" of acquiring Price Chopper, the leading supermarket by market share in the Albany, Schenectady and Glens Falls, NY markets. Price Chopper also has strong market share in Binghamton, NY, Utica, NY, Pittsfield, MA, Worcester, MA and Burlington, VT.

For the better part of this year, Price Chopper has been seeking financial partners to help transform its 135 stores to their new Market 32 format.

Reuters has reported that the price tag would be approximately $1 billion and would not include Price Chopper's real estate assets. Supermarket News estimated that Price Chopper's 2015 sales were $3.7 billion.

The purchase by Albertsons would fill the gap between its Pennsylvania-based Acme and Massachusetts-based Shaw's brands.

Not that it's relevant, but... I grew up in Price Chopper country and my first job was as a stock boy for one of the Clifton Park, NY stores. As an employee, I was mediocre at best (it's safe to say that price labels didn't always make it onto the products at the bottom of the freezer!).

Albertsons' IPO plans at a standstill

Albertsons' IPO plans have been halted again, this time due to price deflation that has affected sales and earnings across the supermarket industry. Albertsons (Acme, Albertsons, Safeway, Vons and several others) originally proposed a public offering a year ago, but postponed it when Walmart's announcement about earnings pressure prompted an industry-wide drop in valuations.

Analysts are not optimistic that Albertsons will be able to achieve an IPO at the valuations contemplated last fall, when price deflation wasn't an issue and consumers were not as cautious as they seem to be now.

Lidl's next US target is Texas

German discount grocer Lidl, which is well on its way to opening about 100 stores on the East Coast in 2018, confirmed last Friday to Supermarket News that it also plans to expand into Texas. The move is seen as confirmation that the company is targeting competitive grocery markets, as Houston and Dallas are among the most crowded and price competitive in the country, and already include the three largest U.S. grocers - Walmart, Kroger and Albertsons.

Lidl isn't the first discount grocer to move into Texas, as Aldi has opened nearly 100 stores there since 2010, and says it plans to open hundreds more.  Both Lidl and Aldi prefer to locate close to leading traditional supermarkets where they can enjoy a price advantage.

The two companies are anything but strangers, as they compete worldwide for discount grocery market share.

Albertsons banners - including Acme - to expand e-commerce

On the heels of a recent analyst report recommending that food retailers slow their e-commerce efforts, MyWebGrocer announced that several Albertsons banners - including Acme - plan to add "click-and-collect" and delivery service on its platform. Albertsons has used MyWebGrocer's software since 2012 for online shopping lists and circulars.

A report released earlier this month by Tabs Analytics reported that just 4.5% of all shoppers are using the Internet to buy groceries six or more times per year, and concluded that "consumers have turned their backs on buying groceries online."

Related story: Study concludes that food retailers should focus on families, not e-commerce or millennials

Acme performance improving thanks to new playbook

Prior to Albertsons takeover of Acme in 2013, same-store sales at the one-time Greater Philadelphia market leader were negative in 27 of the previous 28 quarters. Today, thanks in large part to the parent company's "operating playbook," Acme is performing better than it has in years.

According to a Supermarket News story last week, new leadership immediately boosted store standards, customer service and community involvement. In addition, it empowered local buyers to make buying and merchandising decisions, and added "aggressive muscle" to price and promotions.

These efforts paid off quickly. And recently, Acme aggressively pursued stores left vacant by the A&P bankruptcy filing. In all, they bought 73 former A&P, Pathmark and SuperFresh stores for $293 million. The purchase returned Acme to the Northern New Jersey, New York and Connecticut market.

The company's "operating playbook" was applied to the purchased stores, and customers are seeing the results. One Acme shopper told Supermarket News that "customer service is now a major priority, and the store has become the cleanest grocery store I've ever shopped in."

Industry expert Bob Gorland of Matthew P. Casey & Associates believes Acme is a healthier company than it used to be. In addition, he pointed out that they are doing things they weren't doing a few years ago, like remodeling more stores and adding beer cafes.