Whole Foods taking a small bite out of Trader Joe's traffic

In the past year, Whole Foods has increased foot traffic at the expense of Trader Joe's, Walgreen's and Dollar Tree, according to Sense360, a California-based company that tracks location data from millions of smartphone users. The data covers Whole Foods locations that are within a mile of competing stores.

In addition, the number of shoppers who visited a Whole Foods at least six times in the past year increased to 11 percent in August as compared to 9 percent a year earlier, according to surveys by consumer products research company Tabs Analytics.

As for the competition for grocery dollars between Amazon / Whole Foods and Walmart, a former Amazon executive said that Amazon is "willing to experiment and be totally misunderstood for long periods of time. Walmart is built to deliver pallets to 4,000 stores and Amazon is built to deliver packages to millions of homes. Who do you want to bet on: the pallet people or the package people?"

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.

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. 

Fred's to buy 865 stores from Walgreen's and Rite Aid

Walgreen's and Rite Aid announced earlier this week that they have agreed to sell 865 stores to Fred's for $950 million in order to alleviate any antitrust concerns related to their pending merger. Kroger had been rumored as the leading candidate to purchase the stores.

Currently Fred's has 581 stores, most of which are in the Southeast. Although the locations of the 856 stores won't be revealed until the Federal Trade Commission approves the merger between Walgreen's and Rite Aid, the two companies said the stores to be sold would be located in the South, as well as the East and West coasts. If the deal goes through, Fred's would become the third largest drugstore chain in the U.S.

Kroger may look to buy part of Rite Aid portfolio

The Cincinnati Business Courier reported on Monday that Kroger could be a prime bidder for some Rite Aid or Walgreens drug stores that will need to be sold when the two companies complete their merger later this year. Kroger was rumored to be interested in purchasing Rite Aid before the chain reached a deal with Walgreens.

Industry experts say that about 500 of Rite Aid's 4,600 stores will need to be sold.

Kroger, the nation's largest operator of traditional supermarkets, is also the nation's fifth largest pharmacy operator with 2,200 in-store locations. Leon Loewenstine, an investment strategist with RiverPoint Capital Management, believes such a deal would only make sense if Kroger planned to keep running any acquired drug stores, where they could keep using the chain's customer loyalty cards. Loewenstine compared the idea to Kroger's launch of stand-alone gas stations, which supplement their gas stations at Kroger supermarket locations.

"It would be a new venture, a new avenue of growth for the company," said Loewenstine. "They could compete with Walgreens and CVS. If anybody can do it, it would be Kroger."

Walgreens to cut 200 U.S. stores

Walgreens Boots Alliance Inc. reported earlier this month that it plans to close 200 drug stores in the U.S. as part of an overall plan to cut $500 million in costs. The cost cutting plan also includes a corporate reorganization.

The merger between Walgreens and Alliance Boots, operator of the U.K. chain Boots as well as a large drug distribution business, was completed late last year. Although the companies decided to keep the headquarters in the U.S., it's clear that the European leadership team is in charge.

In discussing Walgreens, Walgreens Boots CEO Stefano Pessina said, "Some parts are better than expected, while others have room for improvement."

Additional changes planned for Walgreens include cutting back on promotions that cut too deeply into profit margins, and streamlining the company's information technology department and systems.

Dollar General tops Walmart in pricing survey

Dollar General topped Kantar Retail's annual opening price point survey for the second year in a row, narrowly beating Walmart. The survey "determines how select retailers meet the grocery and consumables needs of shoppers looking for the lowest shelf prices."

According to Kantar, Dollar General's total basket was 12 cents less than Walmart's. On the other hand, Target's basket was 48% more than Dollar General's, which put the mega retailer in last place, just ahead of Aldi.

Walgreen's was left out of the survey this year, as Kantar said their opening price point was not competitive. The data was collected in southern New Hampshire and northern Massachusetts.

ShopRite, with $1.7 billion in sales, leads Philly market in 2011

Last Friday the Philadelphia Business Journal published the list of top companies in Philadelphia's eight-county area selling groceries, health- and beauty-care products, general merchandise and tobacco products, as compiled by the Food Trade News. Here's the list:

1. ShopRite - 43 stores with sales of $1.7 billion
2. Acme - 69; $1.57 billion
3. Giant - 47; $1.53 billion
4. Wawa - 280; $1.44 billion
5. Rite Aid - 252; $884.1 million
6. A&P (Super Fresh, Pathmark) - 40; $850.8 million
7. Wal-Mart - 37; $831.1
8. CVS - 187; $817 million
9. Genuardi's - 28; $733.7 million
10. Target - 29; $534.3 million
11. Walgreens - 90; $480.9 million
12. BJ's Wholesale Club - 12; $413.9 million
13. Wegmans - 6; $371 million
14. Save-A-Lot - 34; $258 million
15. Sam's Club - 7; $238.2 million
16. Thriftway / Shop n Bag - 21; $230.5 million
17. Redner's Warehouse Markets - 10; $222.7 million
18. KMart - 29; $210.9 million
19. 7-Eleven - 179; $201.3 million
20. Whole Foods - 8; $191.6 million

It's interesting to note that the three major drug stores had 529 stores in 2011. The 10 supermarkets totaled 276 stores (from Wegmans with 6 to Acme with 69).

Here's a link to the original compiler: Food Trade News

Number of dollar stores surpasses number of drugstores in the U.S.

A new report from Colliers International says the U.S. now has more dollar stores than drugstores. The four big national dollar store chains - Dollar General, Dollar Tree, Family Dollar and 99 Cents Only - have approximately 21,500 locations. The three big drugstore chains - Walgreens, CVS and Rite Aid - have approximately 19,700 locations.

According to the report, the recession led consumers to dollar stores instead of drugstores and supermarkets. In addition, dollar stores are often willing to go in small markets, where a big supermarket or drug store (which often has "onerous real estate requirements") may not be willing to go.

The Colliers report says all four dollar store chains are expected to continue adding stores throughout 2012.