THE FRIDAY 5: The Collapse of Foxtrot and Dom’s; Kroger, Albertsons Sweeten Merger Deal
Welcome to The Friday 5, Progressive Grocer’s weekly roundup of the top news and trends in the food retail industry. Each Friday, we’ll take a look at the stories that are most important to our readers and also keep tabs on the trends that are poised to impact grocers.
1. Saying Goodbye to Foxtrot and Dom’s
Breaking news of the closure of both Foxtrot Market and Dom’s Kitchen & Market rightfully rocked the grocery industry this week. Just months after the merger of the two companies, they are closing all of their locations in and around Chicago, Dallas, Austin and Washington, D.C. Dom's and Foxtrot investors were reportedly informed Tuesday morning that the two retailers’ parent company Outfox Hospitality will be shutting down.
"It is with a heavy heart that we must inform you of a difficult decision we have had to make. After much consideration and evaluation, we regret to announce that Foxtrot and Dom’s Kitchen & Market will be closing their doors starting on April 23, 2024," read a notice to customers posted to the Dom's website and on Foxtrot’s social media. "The closure affects two Dom’s stores and 33 Foxtrots across Chicago, Austin, Dallas, DC areas. We explored many avenues to continue the business but found no viable option despite good faith and exhaustive efforts."
The abrupt closure of those stores has left both employees and suppliers in a lurch. Reports have surfaced that Foxtrot was going to miss its sales goal for 2023 by about $35 million, and many speculate that its too-ambitious plans for expansion, lack of foot traffic and high labor and production costs all led to its demise.
2. Kroger, Albertsons Come Up With a New Plan
As scrutiny about their merger has intensified, The Kroger Co. and Albertsons Cos. are adding 166 more stores to the list of locations to be sold to C&S Wholesale Grocers. With this update, 579 stores will be spun off to C&S, and new to that arrangement is the Haggen banner, which would become part of C&S.
The updated plan also includes increased distribution capacity through a combination of different and larger facilities, along with expanded transition services agreements and the transfer of one dairy facility to support C&S. Additionally, the corporate and office infrastructure provided to C&S will be expanded.
According to Kroger Chairman and CEO Rodney McMullen, the amended divestiture deal reflects the concerns voiced by regulators such as the Federal Trade Commission, which filed suit in February to block the merger, while also further ensuring that no stores will close as a result of the merger and that all front-line employees will remain employed.
3. Grocers Offering New Perks for Price-Sensitive Customers
Readers were interested in news about grocers that are keeping an eye toward price sensitivity, including Amazon, which this week rolled out a new grocery delivery subscription benefit for Prime members and EBT customers in more than 3,500 cities and towns across the United States. At $9.99 per month for Prime members, the subscription offers unlimited grocery delivery on orders over $35 from Amazon Fresh, Whole Foods Market, and a variety of local grocery and specialty retailers on Amazon.com. Customers with a registered EBT card can get the same grocery subscription benefits without a Prime membership for just $4.99 per month.
Giant Food, meanwhile, is lowering prices on hundreds of products across its Giant, Nature's Promise, Taste of Inspirations, Smart Living, Always My Baby, Companion and CareOne own brands. The grocer is also expanding its Flexible Rewards loyalty program to help customers earn two times the points for every dollar spent on more than 12,000 of its private brand items.
For its part, Wakefern co-op member Zallie Family Markets and its Zallie Community Foundation have unveiled the Good Food Bucks initiative with the aim of tackling nutrition insecurity among SNAP EBT customers. Good Food Bucks, a New Jersey nutrition incentive program administered by urban farming and gardening organization City Green Inc., doubles the value of produce purchases for shoppers who use SNAP by giving them a matching coupon every time they buy fruits and vegetables at participating grocery stores.
4. Walmart Becomes Latest Retailer to Rethink Self-Checkout
In line with recent trends among grocery retailers, news broke this week that Walmart is rethinking its self-checkout strategy. One of the company’s locations in St. Louis, Mo., and another in Cleveland, Ohio, will see their self-checkout kiosks removed in favor of adding more traditional checkout options, according to reports. Walmart removed self-checkout kiosks from three of its locations in New Mexico in October, citing a desire to provide its customers with the best shopping experience possible.
Several other food retailers have begun retooling self-checkout amid a time of unprecedented shrink caused by theft, among other issues. Last month, Target rolled out Express Self-Checkout, which is limited to 10 items or fewer, at most of its nearly 2,000 stores nationwide. Other retailers that have recently made changes to their self-checkout strategy include Dollar General and Schnuck Markets Inc.
5. Dispatches from the Lone Star State
News from Texas-based grocers was popular among PG readers this week, including H-E-B’s land purchase for nearly 500 acres in the city of Hempstead. The San Antonio-based food retailer has plans to build a distribution campus that will be developed in multiple phases.
In 2024 alone, the company opened its fifth store in the DFW Metroplex, debuted stores in the San Antonio and Houston areas, and broke ground on new locations in Prosper, Dallas and Melissa.
Additionally, Emmer & Rye Hospitality Group’s Pullman Market, billed as the largest culinary market in the Southwest, opened to the public in San Antonio’s bustling Pearl district this week. The market offers a specialty grocer featuring Texas-based produce and goods from more than 150 suppliers throughout the state, in addition to a whole-animal butcher, a sourdough bakery, five quick-service eateries, and more.
