Report says supermarket share loss will slow

A report issued last week by Moody's Investors Service predicts that the rate at which supermarkets have been losing share to alternative formats in the last 10 years will slow. According to the report, sales-building strategies by leading grocers such as Kroger, Wegmans, Safeway, Whole Foods and others will successfully attract customers.

However, "the performance gap between efficient operators who evolve with the changing competitive landscape... and those that don't will widen," according to a Moody's analyst. (In other words, Giant and ShopRite will continue to grow at the expense of other traditional supermarkets in Greater Philadelphia that have been struggling.)

The report says that supermarkets' share of food eaten at home in 2010 was 64.5% compared to 72.1% in 2000. Big box stores like Costco and Walmart, as well as dollar stores and discount supermarkets (Aldi, Bottom Dollar, Save-A-Lot) are largely to blame for the share loss.

Privatization of liquor sales would create opportunity for supermarkets

According to multiple reports, PA House Majority Leader Mike Turzai has introduced a bill that would result in the auctioning off of the state's 600 liquor stores and the sale of additional liquor licenses. A debate is raging among State House leaders over Turzai's bill (HB 11) and whether or not it makes financial sense.

According to Turzai, auctioning licenses could generate $2 billion for the state, which would auction 750 licenses to grocery stores and big box retailers, and leave 600 licenses for independent operators. Despite the license revenue, Turzai says his overall plan would be revenue neutral. With a privatized system, the state would not benefit from liquor sales, of course. Revenue would come in the form of license fees and gallonage taxes.

Pennsylvania and Utah are the only states that fully control alcohol sales, and more than half of U.S. states impose a gallonage tax on liquor and/or wine.

Not surprisingly, the union that represents liquor store employees opposes the plan, as it believes many union members would lose their jobs.

As for the affect on consumers, some legislators are saying Turzai's plan would result in higher prices. Turzai disagrees, and also thinks his plan would improve the customer experience in terms of selection and convenience.

In the end, it may be a moot point. Senate President Joe Scarnati, who pointed out that the state did not intend for the PLCB to be run like a business, would rather reform the current system than privatize it. Many of his colleagues seem to agree.