As much of the food distribution industry gathered in Chicago over the weekend for the five big trade events, there's no better time to take a look at the almost unprecedented amount of change that's sweeping the industry, and at ways to wring advantage from that.
Before we get to implications of the new era, though, let's look at the shows that are drawing the big crowds to McCormick Place this week. The major draw, of course, is the annual Food Marketing Institute show. This year, as last, that event is joined by the United Produce convention, All Things Organic, Fancy Food Show and U.S. Food Export Showcase.
Now, more about the degree of change in the industry: Just to select one element of change, who would have thought last year at this time that there was much likelihood that a consortium of investment firms and retailers, lead by Supervalu, would agree to acquire and divvy up Albertsons? The very fact that a retailer of Albertsons' mass would agree to be bought and apportioned out shows in stark relief the amount of change in the air now. Apart from what that will mean to Albertsons itself, the biggest change will be seen at Supervalu. After the deal closes, which is expected next month, Supervalu will move from a company with annual sales of about $20 billion to one with sales of about $44 billion. Incidentally, Jeff Noddle, Supervalu chairman and chief executive officer, is also FMI chairman.
What's going on with Albertsons and Supervalu is far from all that's happening at large-scale companies. One currently reorganizing under bankruptcy and shedding assets is Winn-Dixie. One going through internal recapitalizations is A&P. It's happening at smaller companies too. More recently, Marsh Supermarkets agreed to be acquired by an investment firm. Indeed, the list of food retailers that have stated or intimated a willingness to sell entirely or piecemeal is too long to cite. In short, the industry is poised to change in ways that are sure to involve a massive reallocation of retailing assets. Some of those will end up in the hands of other food distribution companies, many others not.
At the end of the day, then, how will this reallocation of retailing assets across the industry, or removed from the industry, change food distribution? That question is the theme of this week's issue of SN.
As the news feature referenced on the front page discusses, it's likely that redeployed stores will be folded both into conventional operators and into speciality operators, many of which could be independents.
The theme of adapting to change is also picked up in other sections of SN. The logo inset into this column identifies each element of the series. Here's a quick rundown: The Nonfood Strategies section looks at retailers fine-tuning nonfood offerings; Fresh Market analyzes niche marketing; Center Store looks at the benefit of trading-partner cooperation; and Technology & Logistics sees price and promotion optimization as a way to better revenues and margins.