The fierce battle for U.S. grocery sales claimed some more victims in 2005, as two of the nation's largest operators of traditional supermarkets - and a few smaller ones - said they had had enough.
its headquarters in Jacksonville, Fla.
But Winn-Dixie's asset sales turned out to be more like a bin full of discontinued items compared with the industry's biggest Labor Day sale ever, when Albertsons on Sept. 2 said it was putting itself on the auction block. Bids for the nation's second-largest supermarket operator, which has more than 1,800 locations, plus another 700 drug stores, were due earlier this month, and the company was expected to make an announcement about the sale within the next few weeks.
In the meantime, a handful of other supermarket operators and wholesalers also said they were throwing in the towel and putting themselves up for sale or seeking other strategic alternatives, including Fresh Brands, Sheboygan, Wis.; Marsh Supermarkets, Indianapolis; and Associated Wholesale Grocers, Seattle.
The news wasn't all bad, however. A&P, Montvale, N.J., and rival Pathmark Stores, Carteret, N.J., both of which had been struggling in a highly competitive New York metro market, received a new lease on life in 2005. Veteran supermarket dealmaker Yucaipa Cos. made an investment in Pathmark, and A&P sold off its Canadian division, fueling speculation about the reshaping of the industry in the nation's most populous region.
Several companies in the industry displayed evidence that they had found effective strategies for success. Kroger this month reported relatively strong sales growth in its most recent quarter, indicating that its strategy of cost-cutting and maintaining a competitive high-low pricing program can drive sales and profits.
Safeway, in the midst of a massive remodeling program to convert its stores to a "lifestyle" format featuring an emphasis on fresh and prepared foods, reported sales gains from the process, although profits are currently being held back by the investment required of the new layout.
For operators along the Gulf Coast of Mississippi and Louisiana, the biggest story of the year - Hurricane Katrina - roared in from the Atlantic with 147 mph winds and a devastating surge of water. While some operators were able to quickly reopen, others saw their stores completely destroyed. Those with stores in the areas just outside the impact zone tallied big increases in sales from displaced residents.
As usual, the industry came to the rescue and raised more than $100 million in relief, according to Food Marketing Institute.
