Will Rite Aid be of much benefit to Albertsons?
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.
After its Rite Aid mega-merger is completed later this year, Albertsons will have a whopping 4,900-plus locations nationwide, serving more than 40 million customers per week.
The merger will provide a much more significant presence in the increasingly important health and wellness space, possibly creating a one-stop shop for all things health-related, according to industry observers. Rite Aid’s locations also offer opportunities to expand Albertsons’ strong lineup of private labels, most of which originated with its Safeway acquisition, such as O Organics.
The nation’s second-largest supermarket chain earns praise for several unique initiatives in the past few months, including its new marketing service, Albertsons Performance Media, that leverages POS data, and extending its digital marketplace to enable niche brands through vendor drop-shipments.
Yet a core problem is that Albertsons banners are all positioned the same way: mainstream, run-of-the-mill supermarkets for middle-income consumers.
Don Stuart, managing partner at Cadent Consulting, said, “It’s banners typically lack the local appeal of a Wegmans, HEB or Big Y,” a real problem in an increasingly competitive marketplace where differentiation is key — especially in the absence of Aldi-type prices, Publix-style customer service or the unique assortment of a Trader Joe’s.
Another concern is that Albertsons’ private-equity ownership may be under-investing in stores.
Stated Neil Saunders, managing director of retail at GlobalData, “The Rite Aid deal itself signals that management is more focused on making acquisitions than it is in investing in and revamping its core business. In my view, that’s a mistake.”
He adds, “The grocery world is about to get a whole lot tougher, and just being good enough will no longer be enough. In my view, Albertsons has a lot of work to do if it is to succeed.”
Some are hopeful that Jim Donald, the former president and CEO of Starbucks and Haggen who was hired as president and COO in March, can elevate Albertsons.
“Donald has a track record for turning around ailing businesses and experience in industries where the consumer is truly a priority,” states Phil Chang of retailPhil. “Hopefully, he can bring that focus to Albertsons, which seems to be lost in the science of retailing rather than trying to create the magic that truly makes shoppers happy.”
- Frozen & Refrigerated Buyer May 2018
- Albertsons launches an online marketplace for small CPG brands – RetailWire
- Albertsons and Rite Aid combine to create food, health and wellness giant – RetailWire
- Albertsons buys its way into the meal kit business with Plated acquisition – RetailWire
DISCUSSION QUESTIONS: Will Albertsons’ position be helped more by the addition of Rite Aid, private label expansion, further differentiation among banners or other taken by management? How would you assess Albertsons’ strengths and weaknesses?