grocer
Repost from Progressivegrocer.com
Walmart has dropped the $35 minimum order requirement for express delivery. Express delivery promises that customers will receive their merchandise within two hours. We are watching the transformation of retailing.
Onward! There is no retail apocalypse.
Fresh Markets was bought by Apollo in 2016. They have a weak balance sheet with $800M of bonds that require 9.75% interest payments. Back in April, the Fresh Market bonds were selling for less than $0.50, but today they have rocketed up to $1.03 because COVID brought a strong increase in sales. Help me understand what happens to Fresh Market when sales return to pre-COVID levels?
Instacart is planning an IPO. Right now the company is valued at $14B. What an amazing world we live in where you can build a business like Instacart in 5 years! Instacart today partners with more than 500 national, regional and local retailers, for nearly 40,000 stores across more than 5,500 cities. You need stores to make Instacart work - there is no retail apocalypse!
Happy Birthday Publix you are almost 100! We are often excited by the new things in life. But perhaps we're better off to consider the things that have endured well past any reasonable expectation. Last year, in September, Publix Supermarkets celebrated their 90th anniversary. In just 10 years, Publix will be one of the few companies to celebrate 100 years in business. The first Publix store did just $120,000 in sales in 1930.
Today, the company does over $40 billion in sales and has over 1,250 stores. I remember as a kid meeting George Jenkins, Publix's founder, at a store grand opening and was so impressed by his energy and accomplishments. Every new store was a moment to celebrate for the founder. Are you building a company that will last for 100 years? If so, there are many valuable lessons to learn from studying Publix. I recommend finding a copy of the book that was published to celebrate Publixes 75th anniversary which lays out the history of the company and studying it. It'll make you a better businessperson.
Aldi now has over 2,000 US stores, which is the third most grocery stores in the US. Amazon's Whole Foods has 500 stores. Now, Amazon is rolling out Amazon Fresh which is expected to be a game changer for the US grocery marketplace. The largest retailer Walmart has basically stopped adding US stores and is instead focusing is domestic expansion efforts on its e-commerce platform for delivery and curbside pick up. Please watch this two minute video of Walmart's US expansion to get an idea of just how fast Aldi and Amazon can grow their US base - it will blow your mind. New cool things are always coming. There is no retail apocalypse. Simba beats Scar!
In order to complete against larger and better capitalized groups like Walmart, Amazon, Kroger and Aldi, Price Chopper and Tops are merging. Does this merger portend a trend in the grocery sector? Stay tuned, I think it does.
Risk analysis: what if every financially weak big box tenant in the US went out of business? Big box retailers are 80% of the US retail platform. The way they go portends the state of the whole system. Most markets in the US are severed by about 100 big box brands – everything from Walmart to Walgreens.
Today, in each major US market, about 20 of the 100 big box companies are suffering financial stress. Many had problems well before COVID. Back in April of 2020, I realized that these weak tenants accounted for only about 6% of US retail space and, more surprisingly, they accounted for only 3% of the sales. If all the weak box retailers shut down, the remaining 80 retailers could easily absorb their sales.
About two thirds of these weak firms have already filed bankruptcy and most of them have reemerged with a fresh start and only a handful have been liquidated. A few others, like AMC Theaters have raised capital without bankruptcy. The system is very resilient. There is no retail apocalypse. It’s the circle of life – Simba defeats Scar.
What happened? Was it the fall in Albertsons and Kroger’s stock price that scared investors? Or perhaps investors see a post-COVID regression to the mean in grocery chains in which they give back their 20% sales gains in 2022.
