The Flickinger Files - Part 1: Grading 2016's Super 50 Contenders
Editor's Note: During a 12-month expedition that spawned dramatic ripples across the mighty supermarket seas, this year’s annual Super 50 ranking of the nation’s leading food retailers is punctuated by a swift undercurrent of mergers, acquisitions, spinoffs and wider expansion nets that are collectively redefining the ecosystem. With this the case, PG editors broke down this year's Super 50 analysis into five “oceans,” each consisting of common characteristics akin to each — some of which swim in more than one sea:
At the Helm: Larger legacy retailers that have weathered many a storm over the years, with strategic growth, innovation and a commitment to the customer experience
Rising Tide: Owning a strong presence in their various market areas, these grocers, through a savvy mix of tried-and-true approaches, are well grounded and willing to take risks with new concepts to forge ahead
Beyond the Mainstream: Grocers owning the natural and organic category, or swallowing an ever larger portion of it, through persistent stewardship and faithful execution
Changing Course: These retailers have redefined themselves, or are in the process of endeavoring to do so, as a way of better navigating the changing demands of a dynamic marketplace
Steady as They Go: Regional players with true staying power, dedicated to their core customers and local communities
To add color this year’s annual countdown of the nation’s leading food retailers, PG once again turned to leading retail food industry expert Burt P. Flickinger III, managing director of New York-based Strategic Resource Group (SRG), to grade each of the Super 50 contenders, in a two-part 2016 installment of The Flickinger Files.
As the first of a series, Flickinger's assessment of the various food retailers on our list draws on his personal and professional opinions and years of research.
By Burt P. Flickinger III
PG 2016 Super 50: At the Helm
(Grading on a Scale of A+ to F-)
Kroger: A+ Excellent leadership, succession planning, acquisition strategy, innovation, and success with four leading retail formats in every category and subcategory on a 360-degree basis.
Albertsons-Safeway: Grade: A Successful conversions of bankrupt A&P, Super Fresh, Pathmark, Food Emporium, and other stores while combining two large companies
Wakefern/ShopRite Grade: A+ Its owner/operator groups win much of the time versus Wegmans, with more competitive prices and support for key causes in their key communities. (Wegmans' philanthropic focus is primarily its hometown of Rochester, N.Y.).
Publix: Grade: B+ Publix CEO Todd Jones will bring the company back to the top within a few years, after his predecessors were uncharacteristically somewhat complacent while comfortably harvesting the gains from the respective bankruptcies of major market competitors, including Winn -Dixie, Bi-Lo, and Bruno’s. While Jones’ dynamic leadership is transforming his good Publix team, it is better for Publix that Wegmans has not moved further south form 2011-15 to take Publix on store-to-store in the first few states.
Wegmans: Grade A Bob Wegman Sr., Danny, Colleen, Nicole, and all of the company's professional, fourth-generation leaders deserve tremendous credit for repeatedly winning Fortune's Best Places to Work award. Cap ex and staffing may be a challenge for the future, as Wegmans invested a reported $40 million in a new suburban Buffalo superstore on Transit Road, including adjacencies. Self-scan and more part-time people in highly crowded stores may be more of a concern as new Aldi, Costco and soon Lidl stores are poised to do extremely well with Wegmans shoppers. Also, unbalanced assortments, including regional brand incongruencies, frustrate shoppers, some of whom switch to the competition.
H-E-B: Grade A- The heroic effort of H-E-B to win versus Walmart for 20-plus years is extraordinary. H-E-B has not been as quick to capitalize on competitive vacuums as it historically has been, just as a huge investment on MBAs using Sabermetrics has not worked well for the Boston Red Sox in recent years. H-E-B may be taking too much of a retail risk with platoons of Stanford-Harvard MBAs overanalyzing data, while missing immediate opportunities that the Aggies from Texas A&M and other colleges would have capitalized on – from having more “blue-collar” in-store experience and intuitive, innate intelligence to go with an unstoppable wall-to-wall work ethic.
2016 PG Super 50: Rising Tide
Giant Eagle: Grade: A Giant Eagle is building one of the best combinations of family and professional leadership to gain sales and share with dynamic inventiveness and rock-solid retail operations with inspired merchandising.
Hy-Vee Grade: A+ Like Gen. Patton’s 3rd Army in Europe, Hy-Vee is taking sales and market share at record rates in the central and north central states. Hy-Vee’s marketing and merchandising in sports, community and own label is some of the best worldwide.
K-VA-T/Food City: Grade A- Steve Smith’s dynamic leadership in adding 29 stores acquired at a good value from Southeastern Grocers, as well as the company's tremendous innovation, should lead K-VA-T to record results.
Meijer Grade A- Meijer is expanding further into the north central states. On soft lines, its local focus is superior to Target, while Meijer continues to win with fresh.
Smart & Final: Grade: A After years of going ‘sideways,” new leadership has brought format and fresh-focused dynamics to Smart & Final, with impressive retail results. Its stock performance for the most two years is one of the best in retail.
WinCo Foods: Grade A+ The best single-format retailer in the United States. While WinCo operates in many high-cost markets with lagging overall employment and disposable income, it raises the quality and standard of living for all families and shoppers in the Western region. Buoyed by the company's ESOP, WinCo's thousands of in-store employee-owners can beat any food retailer in its “home” markets, as well as “on the road” as the grocer accelerates it expansion into contiguous markets.
Up next: Changing Course, Beyond the Mainstream and Steady as They Go. Stay tuned!