Albertsons, Rite Aid terminate merger
Albertsons and Rite Aid on Wednesday evening announced that they had mutually decided to terminate the proposed merger of the Boise, Idaho-based grocery retailer and the Camp Hill, Pa.-based retail pharmacy chain. The termination came a day before Rite Aid was set to hold a special shareholders meeting at which the company has been urging its shareholders to vote in favor of the merger.
“Albertsons believes that the strategic rationale of the Rite Aid combination was compelling, including the $375 million of cost synergies and $3.6 billion of identified revenue opportunities,” Albertsons said. “We disagree with the conclusion of certain Rite Aid stockholders and third-party advisory firms that although they acknowledged the strategic logic of the combination, did not believe that Albertsons was offering sufficient merger consideration to Rite Aid stockholders.”
In the lead-up to the shareholders vote, CNBC reported that Glass Lewis and Institutions Shareholder services — two advisory firms for investors — came out against the merger, citing the offered price as the main sticking point, as they both backed the rationale for the acquisition, according to CNBC.
Albertsons said that in consulting with its board, it was “unwilling to change the terms of the merger.” Moving forward, the company said it would be focused on the future following the completion of its integration with Safeway. Efforts include building up its store-brand offerings and bolstering its e-commerce platform, which it said posted 108% year-over-year growth in the first quarter of 2018.
Rite Aid chairman and CEO John Standley said that despite believing in the merits of the merger, it had listened to its stockholders and has committed to moving forward as a standalone company.
“We remain focused on leveraging our network of conveniently located retail pharmacies, our EnvisionRxOptions PBM and our trusted brand of health and wellness offerings,” Standley said. “We will continue building momentum for key areas of our business like our innovative Wellness store format, highly successful customer loyalty program and expanded pharmacy service offerings, as we also enhance our omni-channel and own brand offerings to strengthen our competitive position and create long-term value for stockholders.”
Rite Aid also noted that its board was weighing governance changes, which it said would be undertaken alongside engagement with shareholders. It said that it would hold the company’s annual shareholders meeting on Oct. 30 at 8:30 a.m. at a location that is yet to be determined.
Neither Albertsons nor Rite Aid is responsible for any payments to one another under the merger terms, the companies said.
Report: Inventory management is a key factor in store efficiency
Inventory management has emerged as a key factor for operational efficiency within physical stores — and there is almost no room for error in today’s omnichannel marketplace.
That’s one of the findings of a new report from ABI Research, which said that as stores strive to perfect how they serve customers and integrate various shopping and delivery channels, being able to accurately count, control and predict available inventory will become a basic operational requirement.
“Stores which have limited intelligence on the location and quantity of stock at the individual item level cannot expect to adequately serve their customers or successfully execute a competitive omnichannel retail strategy,” said Nick Finill, senior analyst at ABI Research.
The good news is that with computer vision use cases maturing, artificial Intelligence tools becoming more powerful, and RFID technology demonstrating major ROI, retailers are now able to approach 100% inventory accuracy — enabling a transformation of the industry.
For many retailers using traditional inventory counting methods in the apparel, fashion, and soft goods sector, inventory accuracy can drop to around 65%, resulting in a poor experience for shoppers and lost sales, according to the report. Using RFID technology, these retailers can reach near-perfect inventory intelligence at more regular intervals, leading to improved customer satisfaction, reduced shrinkage, and improved sales velocity. In most cases, fashion retailers employing RFID can increase annual revenues by at least 3%.
RFID deployments in the fashion retail sector have demonstrated clear ROI for retailers deploying the technology at scale. ABI Research calculates that an apparel store with annual sales of just under $6 million can realistically achieve a 44% ROI within the first year, with returns increasing to over 200% in the third year.
“The resurgence of RFID as a powerful inventory management tool in fashion retail has been driven by rapidly falling costs and demand for greater end-to-end insight in retail operations,” said Finill. “However, RFID will fail to transform the entire retail market due to its limited viability outside of soft goods and fashion verticals.”
In shelf-based retail environments such as grocery stores, 20 hours of labor per week is spent on average by associates performing stock counts. The automation of these processes, using computer vision, robotics, and AI, promises to save labor costs for retailers, in addition to improving the customer experience and driving sales.
The emergence of easily integrated, cloud-based managed service models has played a major role in the transformation of inventory management. Diverse SaaS inventory solutions offered by disruptors such as Infor, Nedap, Scandit, and BossaNova are helping retailers digitize and automate the entire in-store inventory lifecycle without the need for major capital expenditure, according to ABI.
“In order to remain competitive with e-commerce retailers and other brick-and-mortar rivals, physical stores will soon be adopting IoT and AI-enabled inventory tools as the standard, rather than the exception,” Finill concluded.
These findings are from ABI Research’s Transforming In-Store Inventory Management report.
Amazon unveils curbside grocery pickup at Whole Foods
Amazon just made a big move in the grocery deliver battle.
On Wednesday, Aug. 8, the online giant launched grocery pickup, a service that enables Prime members to pick up their order at a local Whole Foods Market store within an hour — without leaving their car. The program is currently offered in Sacramento and Virginia Beach. More cities will be added throughout 2018.
Prime members place their order via the Prime Now app and choose the pickup option at checkout. Customers use the app to alert their local store that they are on their way, and associates begin preparing the order. Upon arriving at the store, customers park in a reserved pickup spot, and a Prime Now shopper will place groceries into their car within minutes.
Customers can choose free pickup within an hour on orders of $35. A $4.99 fee applies to orders ready within 30 minutes.
“Amazon, synonymous with home delivery, is leveraging its grocery brick-and-mortar investment as it battles for a greater share of wallet,” said Sylvain Perrier, president and CEO of Mercatus, a provider digital grocery solutions.
Curbside delivery is another option Amazon is using to get groceries into shoppers’ hands faster. The online giant also offers free two-hour deliveries from Whole Foods stores in 24 cities.
The curbside service also takes a swipe at rivals Walmart and Target, as well as supermarket operators, including Kroger, Publix and H-E-B, which also offer drive-up grocery pickup options.
“Not only at Amazon and Whole Foods, but among grocery retailers in general, there’s a great deal of experimentation going on to see what sticks with consumers,” added Mercatus’ Perrier. “What’s becoming clear is there’s no one path to retaining customer loyalty. To compete today, grocers need to offer a selection of services and fulfillment options that cater to a variety of shopper preferences.”