United Natural Foods inks deal with Safeway
PROVIDENCE, R.I. — A food distributor has penned a three-year agreement with a supermarket chain to provide customers with nonproprietary natural, organic and specialty products.
United Natural Foods said it will assume distribution to all of Safeway’s banners, effective this October. The company said it is expecting a brief transition period from Safeway’s current distributors.
"We are pleased to establish a distribution relationship with Safeway and are excited about the opportunities this agreement provides," United Natural Foods SVP national distribution Sean Griffin said. "Our ability to continue to gain market share reflects the ongoing efforts by all of our associates to service our customers’ needs, and further strengthens our position as the nation’s leading distributor of natural, organic and specialty products. We are in the process of finalizing a transition plan with Safeway in order to provide them with excellent service levels and support, while ensuring there are no disruptions to any of our existing customers."
Commenting on the agreement, Safeway’s merchandising president Kelly Griffith said the retailer is looking forward to the new partnership, which will "provide the variety of specialty, natural, organic and regionally relevant products that will meet our customers’ needs."
Bottom Dollar Food making its way to greater Pittsburgh, Youngstown, Ohio, markets
SALISBURY, N.C. — Discount grocery chain Bottom Dollar Food announced plans to enter the greater Pittsburgh and Youngstown, Ohio, markets.
The expansion includes 14 stores that will open in 2012 and is said to create more than 600 jobs.
The banner, which is owned by Delhaize America, has grown to 47 stores in North Carolina, Virginia, Maryland, New Jersey and Pennsylvania. In addition to its expansion in Pittsburgh and Youngstown, Ohio, Bottom Dollar Food also remains focused on expanding in the greater Philadelphia market, which currently encompasses 17 stores in the state of Pennsylvania and two stores in New Jersey.
"We look forward to serving the greater Pittsburgh and Youngstown, Ohio, communities by providing consumers with unbelievably low prices on groceries," said Bottom Dollar Food president Meg Ham. "Customers will find Bottom Dollar Food unique because we carry private brands and the national brands that matter most, and offer a meaningful, efficient assortment of fresh produce, meat and other products. Additionally, we provide our customers an energetic and lighthearted shopping experience."
What Walmart’s rumored acquisition would mean for Rite Aid’s West Coast operations
WHAT IT MEANS AND WHY IT’S IMPORTANT — If the rumors that surfaced last week about Walmart eyeing Rite Aid for a possible buyout turn out to be true, it would be one of the biggest stories of the year: Walmart would acquire the country’s third-largest drug store chain and more than double its U.S. store count.
(THE NEWS: Report: Walmart may be eyeing Rite Aid. For the full story, click here)
But the rumors — which so far, neither chain has commented on — raise at least one big question: What would Walmart do with 4,700 stores whose average size is 12,400 sq. ft., notwithstanding the good chance that the Federal Trade Commission would require it to give up many of them due to market overlap?
While known for its big-box stores, Walmart lately has expanded on the small-format front as well, notably with Walmart Express stores, which have an average size of 15,000 sq. ft. and at their largest are 30,000 sq. ft. Many of Rite Aid’s stores on the West Coast, some of which are as large as 20,000 sq. ft., could accommodate the format, and perhaps its 14,000-sq. ft. stores could as well; but its East Coast stores, which average about 11,000 sq. ft. and often are less than 10,000 sq. ft. would be too small to be anything except drug stores.
Other issues call the rumors’ veracity into question as well.
For years, analysts have suggested that Rite Aid sell off its West Coast stores, but while expressing openness to doing so if the right offer came along, it has basically said no. Despite they’re not performing as well as their East Coast counterparts, the stores represent a big part of Rite Aid’s business, and selling them would mean abandoning an important region of the country.
Another issue is the company’s efforts to spur organic growth — particularly, the Wellness+ loyalty card program and such store segmentation efforts as the new Wellness store format — which have taken place under the leadership of president and CEO John Standley and chairman Mary Sammons. Standley was part of Sammons’ original recovery team at Rite Aid, and he engineered the recovery at Pathmark before that chain’s acquisition by A&P, but Rite Aid’s growth efforts don’t look like those of a company getting ready to put itself up for sale. This includes a new Wellness store in Newport Beach, Calif., which indicates a continued commitment to its West Coast business, not to mention a $300 million capital expenditure budget that includes $127 million for store remodels and merchandising initiatives and plans to remodel about 500 stores in fiscal year 2012.