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%).

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

Kroger files suit against Lidl over private label concerns

Kroger filed a lawsuit against Lidl last month, claiming that in it's new U.S. stores, Lidl copied its Private Selection private label and was profiting from consumer confusion between the similar-sounding and similar-looking packages. In the lawsuit, Kroger sought a preliminary injunction that would prevent Lidl from selling its Preferred Selection products, as well as monetary damages.

After listening to testimony earlier this week from both parties, a judge ruled that the lawsuit would go to trial early next year, and that in the meantime, Lidl could continue offering its private label products.

In response to the suit, Lidl has argued that other Kroger competitors - including Safeway and Aldi - also incorporate versions of the word "Select" in their brands.

"The packaging, logo, and branding of the Lidl versions of these products - including pasta sauce, jam, ice cream, pizza, and cookies - is often more distinct from the Kroger offering than several of Kroger's other competitors," claimed a Lidl spokesperson.

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.

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.

Plans in place again for Albertsons IPO

Albertsons (Acme, Albertsons, Safeway, Vons, Jewel-Osco et al) filed an amended stock prospectus for an initial public offering late last month in hopes of raising between $1.5 and $2 billion. The company had originally planned to hold the offering in October but called off the IPO due to market volatility.

The prospectus is seeking a sale of 65.3 million shares at a price between $23 and $26 per share, along with an over-allotment of 9.8 million shares. Albertsons says it plans to use the proceeds to pay down debt.

Albertsons is owned by a consortium led by Cerberus Capital Management, and includes real estate companies Kimco Realty, Klaff Realty, Lubert-Adler and Schottenstein Stores. This consortium will indirectly own approximately 83% of Albertsons common stock following the offering.

Albertsons postpones IPO indefinitely

Albertsons, which had been expected to complete its initial public offering last Thursday, announced the day before that the IPO was postponed indefinitely due to recent market volatility. The company had said in a prospectus that it intended to offer 65.3 million shares priced at $23 to $26 per share, with the possibility of selling 9.8 million more shares if demand warranted it.

If all 75 million shares had been sold at the top of the range, the deal would have totaled $1.95 billion.

Albertsons operates about 2,200 stores in 33 states under banners that include Acme, Albertsons, Safeway, Vons, Jewel-Osco, Shaw's and others.

Albertsons set to raise $1.8 billion from IPO

It was reported last week that Albertsons, which operates 2,200 stores in 33 states, including Acme Supermarkets in the Greater Philadelphia Region, expects to raise up to $1.84 billion in its initial public offering. The company has not yet said when the IPO will take place.

Executives plan to change the organizational structure of AB Acquisition LLC and its subsidiaries from an LLC into a corporation known as Albertsons Companies. Once the offering closes, each entity within AB Acquisition will become a wholly-owned subsidiary of the new entity.

The company's January acquisition of Safeway made Albertsons the second largest supermarket chain in America, behind Kroger.

Albertsons files for IPO

Earlier this month, Albertsons, the second-largest traditional supermarket operator in the United States (behind Kroger), filed for an initial public offering. The IPO, which comes only a couple years after an investor group led by Cerberus Capital Management purchased the company from Supervalu, is expected to raise about $100 million.

Albertsons said it plans to use the money to pay down debt and fund other corporate initiatives.

Albertsons currently operates over 2,200 grocery stores in 33 states under banners that include Albertsons, Acme, Safeway, Vons, Jewel-Osco and others.

Last Genuardi's store closes in Audubon

The last operating Genuardi's supermarket, in the Audubon Village Shopping Center in Audubon, PA, closed on May 27. According to a store employee, the lease expired and another operator may take over in the location.

Genuardi's, once a popular chain in the Greater Philadelphia Region, was purchased by Safeway in 2001, and in recent years the stores had been closed or sold, and converted to a Giant or Weis supermarket.

Analyst says Albertsons IPO speculation is premature

The supermarket trade publications have been buzzing with reports about an Albertsons IPO now that the Safeway merger has taken place. However, a Wall Street analyst told Supermarket News last week that the reports are probably premature.

The analyst cited the difference in the two companies' go-to-market strategies, and the fact that Safeway has a loyalty card but Albertsons doesn't.

Despite CNBC stating that "sources with knowledge of the matter" have said Albertsons' holding company has hired bankers in anticipation of an IPO later this year, the analyst believes that "considering an IPO without any idea of how the integration is going or what the business will look like or how well the executives will work together is very premature."

Wegmans tops annual "reputation" survey

Wegmans came out on top in the 16th annual Harris Poll Reputation Quotient study, which ranks companies' perceived reputations. Wegmans was the only company to rank among the top five in each category - social responsibility, emotional appeal, products and services, vision and leadership, financial performance, and workplace environment.

Also on the list:

2. Amazon.com

4. Costco

8. Publix Supermarkets

14. CVS

21. Whole Foods Market

32. Kroger

44. Aldi

54. Walgreens

63. Target

67. Safeway

84. Walmart

FTC approves Safeway - Albertsons merger

On Tuesday the Federal Trade Commission approved the Safeway - Albertsons merger, setting the stage for the deal to close in a matter of days. In order to gain approval, both parties agreed to divest 168 stores in eight states. None of the stores slated for closure are in Pennsylvania or New Jersey.

The combined Safeway - Albertsons company will have approximately 2,200 stores and combined sales of more than $61 billion. Albertsons includes Acme stores in the Greater Philadelphia Market.

Giant to close Upper Gwynedd, PA store

Giant Food announced earlier this week that it would close the Upper Gwynedd, PA location it purchased from Safeway (Genuardi's) in 2012. The associated pharmacy, located less than a mile away in North Wales, will close as well. Both closings are planned for January 24.

Giant purchased 16 area stores from Safeway in 2012. At 33,000 square feet, the Upper Gwynedd store is one of the smallest in the Giant chain. According to the company, all employees will be offered positions at nearby stores.

Grocery dominates Top 100 Retailers list

The National Retail Federation released its Top 100 U.S. Retailers list, with Walmart on top with $334 billion in sales, about three-and-a-half times the sales of runner-up Kroger.

As a merchandise segment, grocery continues to prove that it's a driving force. According to the study, eight of the nation's 10 largest retailers drive a significant portion of store traffic with groceries. In total, 37 of the Top 100 retailers include groceries in their merchandise mix, and more than 20 can be classified as supermarkets.

Here are the top 10:

Walmart - $334 billion
Kroger - $94 billion
Costco - $75 billion
Target - $71 billion
The Home Depot - $70 billion
Walgreens - $68 billion
CVS Caremark - $66 billion
Lowe's - $52 billion
Amazon.com - $44 billion
Safeway - $38 billion

Other food retailers on the list include the following:

13: Publix - $29 billion
17: Ahold USA - $26 billion
21: Albertsons - $19 billion
23: Delhaize America - $19 billion
25: Dollar General - $17.5 billion
28: Wakefern/ShopRite - $14 billion
29: BJ's Wholesale - $13 billion
32: Whole Foods Market - $12.5 billion
37: Supervalu - $11 billion
38: Aldi - $11 billion
40: Family Dollar - $10 billion
50: Trader Joe's - $8 billion
62: Wegmans - $7 billion

Safeway reveals that Kroger would have paid more than Cerberus

According to a Wall Street Journal story citing Safeway's proxy statement, Kroger was willing to pay more for Safeway than Cerberus Capital Management did, but concerns over antitrust risk caused Safeway to make a deal with the private equity firm.

The story reports that Kroger first contacted Safeway in February about buying all or part of the company. Company executives met shortly thereafter, where antitrust issues dominated the conversation. A Kroger-Safeway deal would have combined the two largest U.S. grocery chains by market share, according to Euromonitor.

When Safeway signed a deal with Cerberus in early March, Safeway still allowed Kroger to continue its due diligence during a three-week "go-shop" window. Kroger reportedly contacted 26 potential buyers of Safeway stores that would most likely need to be sold to avoid antitrust problems. Eventually Kroger bowed out.

The Safeway proxy statement also showed that in January, Cerberus suggested that Safeway buy Albertson's - which Cerberus owns - in a leveraged capitalization. The deal would have required Safeway to pay a one-time dividend to its shareholders and issue new shares to Cerberus, thereby resulting in the private equity firm owning about half of Safeway with an option to buy more. Safeway didn't consider the idea.

In the final deal, Cerberus and Albertson's are contributing $1.25 billion in cash and borrowing the remaining $8.15 billion. The Wall Street Journal calls it one of the smallest equity checks - about 14% of the deal's value - since the financial crisis

Supermarkets among top retail chains in the world

A report published by Deloitte Touche Tohmatsu and Stores Magazine last month claims that 32 of the 100 largest retail chains in the world are supermarket chains. And in the U.S., 20% of the retail chains on the top 100 list are supermarkets. The list includes the following grocery chains:

Kroger - #5
Safeway - #24 (prior to the sale of the company's Canadian unit and closing of the Dominick's chain)
Delhaize - #33
Supervalu - #35
Publix - #36
H-E-B - #51
Whole Foods - #91

Also of note:
Walmart - #1
Tesco - #2
Costco - #3
Target - #10
Dollar General - #56
BJ's Wholesale Clubs - #88

Cerberus to merge Albertsons with Safeway in $9 billion deal

AB Acquisition, an investor group led by Cerberus Capital Management, agreed to purchase Safeway yesterday for $9 billion, or $40 per share. The transaction is expected to close by the end of the year.

Cerberus plans to fund the acquisition, which is being called an Albertsons - Safeway merger, with debt financing of about $7.6 billion and contributions from partners and co-investors.

According to Supermarket News, the merger will create a company with more than 2,400 stores, 27 distribution facilities, 20 manufacturing plants and over 250,000 employees. No store closures are anticipated for now, although experts believe "divestitures" may be possible since the companies overlap in certain markets, particularly along the West Coast.

Safeway CEO Robert Edwards will become CEO of the combined company.

Combined sales for Safeway and Albertsons in 2013 totaled nearly $60 billion.

Report says Kroger may be disrupting Safeway-Cerberus deal

3/7/14 Update: Cerberus to merge Albertsons with Safeway in $9 billion deal

In contrast to my post on Tuesday that said Kroger may work with Cerberus to take some Safeway stores the private equity firm might not want if they were to buy Safeway (Kroger could be a player in Safeway sale), a story in The Wall Street Journal online yesterday reported that Cerberus' efforts to purchase Safeway have been complicated by Kroger's involvement.

According to the story, Cerberus, which last year purchased Supervalu's Albertsons and Acme chains, among others, had been hoping to make a deal for Safeway this week. However, Kroger, the largest supermarket chain in the country, is now considering a bid on its own for all or part of Safeway. Cerberus is still seen as the most likely buyer, as Kroger could face antitrust issues in areas where the two companies compete.

The Wall Street Journal reports that Cerberus is offering to pay about $40 per share for Safeway, which would make the deal worth approximately $9 billion.

Cerberus and Kroger recently competed for Harris Teeter Supermarkets, and Kroger emerged victorious, paying $2.4 billion for the chain.

Safeway currently operates more than 1,300 stores in the West, Southwest, Rocky Mountain and Mid-Atlantic regions. In the last two years, the company sold or closed all but one of its Genuardi's stores. Last year it sold its Canadian division and closed or sold its 72 Dominick's stores in Chicago.