Supermarket News Reporter Neil Stern recently characterized Lidl, the European grocer that is making plans to open stores in the Eastern U.S., as a formidable threat to U.S. supermarkets. Stern cited Lidl's similarities to European counterpart Aldi, and noted Aldi's measured approach to the American market and their ability to adapt their concept to U.S. tastes. Stern believes Lidl will learn from Aldi's approach, while also taking note of Tesco's disastrous experience with Fresh & Easy stores on the west coast.
According to Stern, Lidl's assortment will be heavy on private label products and feature more SKUs than Aldi. Initially, Stern believes Lidl will carry several national brands in order to accelerate consumer acceptance of the format.
Published reports have indicated that Lidl stores may not open until 2018.
Showing posts with label Neil Stern. Show all posts
Showing posts with label Neil Stern. Show all posts
Friday, July 3, 2015
Thursday, June 5, 2014
Competition gaining on Whole Foods as organic and natural markets grow
Whole Foods officials told analysts last month during the company's earnings conference call to expect profits to be under pressure for the next couple years. The company cited growing competition for sales of natural and organic products, and what could be a prolonged period of price investments and internal cost reductions.
"I think it's important to understand that competition has accelerated, there's no question about it," said Co-CEO John Mackey. "We've seen the conventional supermarket companies like Kroger and Wegmans and H-E-B, they certainly have upped their game in natural and organic foods. We've seen new entrants get public money such as Sprouts, Fresh Market, Natural Grocers, and they're expanding more rapidly. Trader Joe's continues to expand."
"We still remain the market leader in this category, I think by a significant margin," he added. "And the market continues to expand, which is why all these guys are jumping into it... I think for a long time Whole Foods had the field to ourselves pretty much. That was nice. But we don't any longer."
It should be noted that Whole Foods is still gaining market share and same-store sales continue to climb. However, their market share gains are at half the rate they used to be, and same-store sales have gone from high single digits to mid-single digits. Wall Street doesn't like that, nor do Whole Foods executives.
Perhaps most disturbing to Whole Foods, although they won't admit it, is Walmart's entrance into the organic food arena. Walmart's buying power and value-pricing may bring lower prices to natural and organic foods overall, and could lead to price competition typically reserved for the conventional supermarkets.
As Analyst Neil Stern of McMillan Doolittle pointed out, "even Aldi has a private label for natural and organic."
Despite these challenges, Mackey pointed out that Whole Foods has a record 114 new stores in its development pipeline and was poised to approach 500 stores by 2017.
Analyst Chuck Grom of Sterne Agee believes a more tepid store development approach is required, and expressed concern over Whole Foods' ability to communicate a lower price image, stating that the company "will need to get very loud with its price message, which would almost certainly lead to lower operating margins."
"I think it's important to understand that competition has accelerated, there's no question about it," said Co-CEO John Mackey. "We've seen the conventional supermarket companies like Kroger and Wegmans and H-E-B, they certainly have upped their game in natural and organic foods. We've seen new entrants get public money such as Sprouts, Fresh Market, Natural Grocers, and they're expanding more rapidly. Trader Joe's continues to expand."
"We still remain the market leader in this category, I think by a significant margin," he added. "And the market continues to expand, which is why all these guys are jumping into it... I think for a long time Whole Foods had the field to ourselves pretty much. That was nice. But we don't any longer."
It should be noted that Whole Foods is still gaining market share and same-store sales continue to climb. However, their market share gains are at half the rate they used to be, and same-store sales have gone from high single digits to mid-single digits. Wall Street doesn't like that, nor do Whole Foods executives.
Perhaps most disturbing to Whole Foods, although they won't admit it, is Walmart's entrance into the organic food arena. Walmart's buying power and value-pricing may bring lower prices to natural and organic foods overall, and could lead to price competition typically reserved for the conventional supermarkets.
As Analyst Neil Stern of McMillan Doolittle pointed out, "even Aldi has a private label for natural and organic."
Despite these challenges, Mackey pointed out that Whole Foods has a record 114 new stores in its development pipeline and was poised to approach 500 stores by 2017.
Analyst Chuck Grom of Sterne Agee believes a more tepid store development approach is required, and expressed concern over Whole Foods' ability to communicate a lower price image, stating that the company "will need to get very loud with its price message, which would almost certainly lead to lower operating margins."
Friday, January 25, 2013
Cerberus to invest in Supervalu, install new leadership
Only a couple weeks after a group led by Cerberus Capital Management agreed to buy five Supervalu grocery chains for $3.3 billion, an investment group led by Cerberus is scheduled to take control of 20-30% of Supervalu and install a new executive leadership group.
According to Neil Stern, a senior partner at McMillanDoolittle, it's a good deal for Supervalu "because it makes it a more viable company in the long run (by turning) the clock back to where it was in 2006, before the Albertsons acquisition, and it will now be clearer how the company is performing."
Once the deal is done, Supervalu will continue to:
In addition, Sam Duncan will become Supervalu's president and chief executive officer. He has previously served in similar capacities at OfficeMax, ShopKo Stores, Fred Meyer and Ralphs Grocery Co.
According to analysts, Supervalu will have to develop a new organizational structure, cut costs, turn Save-A-Lot around and devise a long-term financial plan for the company.
Many believe the company's success will be driven by Save-A-Lot, as traditional grocery stores have more limited growth prospects.
Related story: Supervalu sells Acme and four other brands; Kimco in on the deal
According to Neil Stern, a senior partner at McMillanDoolittle, it's a good deal for Supervalu "because it makes it a more viable company in the long run (by turning) the clock back to where it was in 2006, before the Albertsons acquisition, and it will now be clearer how the company is performing."
Once the deal is done, Supervalu will continue to:
- Operate as a wholesale distributor;
- Own or license the Save-A-Lot chain;
- Own the 184 stores operating as Cub Foods, Shoppers Food & Pharmacy, Farm Fresh, Shop 'n Save and Hornbacher's.
In addition, Sam Duncan will become Supervalu's president and chief executive officer. He has previously served in similar capacities at OfficeMax, ShopKo Stores, Fred Meyer and Ralphs Grocery Co.
According to analysts, Supervalu will have to develop a new organizational structure, cut costs, turn Save-A-Lot around and devise a long-term financial plan for the company.
Many believe the company's success will be driven by Save-A-Lot, as traditional grocery stores have more limited growth prospects.
Related story: Supervalu sells Acme and four other brands; Kimco in on the deal
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