Full Circle
Closing a year-long review of the past 90 years, PG ends its recap of the past decade with a look at mergers, bankruptcies and new formats.
Early on in the first decade of the 21st century, grocery industry consolidation was moving in a new direction, with strong, small operators becoming prime takeover targets.
This was a 360-degree turn from the megamergers of the 1990s, a trend due in part to a combination of lower stock prices, higher interest rates and tougher antitrust enforcement.
In fact, in 2000, the Federal Trade Commission (FTC) forced Albertsons to divest 145 stores in connection with its mid-1999 acquisition of American Stores. And Ahold dropped a planned S1.75 billion acquisition of Pathmark in 1999, citing prolonged FTC scrutiny, and instead proposed to buy U.S. Foodservice for S3.6 billion the following year. Later in 2000, the global retailer eliminated its Edwards banner, folding the brand into its Stop & Shop division.
Kroger also felt FTC pressure when it had to back down from buying 74 Winn-Dixie stores in Texas and Oklahoma.
The decade saw two of the Philadelphia area's largest independent chains wiped off the scene. In 2000, Safeway acquired Genuardi's Family Markets. Then in 2006, Ahold's Carlisle, Pa.-based Giant Food Stores division acquired Clemens Markets.
Meanwhile, the country's No. 2 wholesaler, Fleming Cos., said in 2000 it would sell its conventional supermarkets. The company was looking to unload its remaining 161 co-owned stores to focus on its price-impact Food 4 Less units. In 2003, Fleming filed for reorganization under Chapter 11 and ended up joining forces with Core-Mark.
Winn-Dixie's woes during the decade included a 2004 class action alleging mismanagement by top executives. By the following year, the company had implemented a major strategic restructuring that jettisoned some stores, distribution centers, manufacturing plants and staffers.
Also in 2005, Ahold sold Bi-Lo/Bruno's to Lone Star Funds, which spun off Bruno's and Food World stores into a separate company in 2007, and then put the 230-store Bi-Lo chain up for sale. In 2011, Bi-Lo, which had gone through Chapter 11 bankruptcy, revealed it was merging with Winn-Dixie.
Albertsons acquired Shaw's Supermarkets and Star Markets in 2004 to establish a New England presence.
Whole Foods Market enhanced its footprint in 2007 by purchasing its former rival, Wild Oats, for $565 million, while A&P bought Path-mark for $1.3 billion.
Toward the end of the decade, Southeast family-owned grocer Ukrop's succumbed to industry pressure and exited the business. Ahold's Giant-Carlisle division purchased the stores to expand its presence in Virginia.
Meanwhile, Bashas' Inc. filed for Chapter 11 bankruptcy protection, citing the weak economy, increased competition and an ongoing legal fight with the UFCW union. The company emerged from bankruptcy protection in 2010.
New Formats
As traditional grocers struggled to keep up with the likes of Walmart in one corner, and Whole Foods and Trader Joe's in the other, many experimented with alternative formats.
Publix opened a gasoline/c-store format, Pix, in early 2001 in Tampa, Fla., and then went on to test a Hispanic format, Publix Sabor, as well as a more upscale banner highlighting organic and natural foods, Publix GreenWise.
Likewise, Giant Eagle opened the upscale Market District format, as well as GetGo c-stores with gasoline, and Giant Eagle Express, a smaller-foot-print store focused on convenience and fresh food.
Food Lion launched Bloom in 2004 and a year later, Bottom Dollar, a low-price banner. Its parent company, Delhaize, rebranded Florida's Kash n' Karry as the more upscale Sweetbay Supermarket. Albertsons opened a separate operating division, Extreme Inc., to oversee its new price-impact banner, Super Saver.
Kroger launched the Kroger Marketplace, a one-stop shopping format featuring general merchandise and a bigger assortment of food items in 100,000 square feet. In a similar move, H-E-B premiered HE-B Plus, featuring nonfoods and services alongside signature grocery offerings. Safeway rolled out the Lifestyle format, featuring its popular O organics line.
British supermarket giant Tesco decided to test its retailing prowess across the pond by launching the Fresh & Easy format in 2007.
Some retailers chose to test new concept ideas on a smaller scale, featuring alternative departments in their stores. Dollar aisles became a popular craze, while organic and natural foods were often housed in their own standalone sections.