LAS VEGAS -- Consolidation often leads chain operators to lose their focus on serving consumers, Sam Duncan, president of Ralphs Grocery Co., the southern California division of Kroger Co., Cincinnati, said here last week.
Speaking as part of a panel at the Western Food Industry Exposition, sponsored by the California Grocers Association, Duncan said, "We're in such a merger frenzy and there's so much pressure to grow, grow, grow that our world has become part of a financial structure instead of a grocery structure. Our business is being run by financial analysts instead of [by people] worrying about tomorrow's customer, and it concerns me that we're losing focus with the person that really supports us, the customer."
Duncan also said the loss of focus opens a window of opportunity for independent operators "to become the neighborhood store and to possibly identify with customers faster than the larger chains can.
"As companies merge, we're chasing a lot of things right now -- chasing a lot of synergies, chasing a lot of name changes. In the Albertson's merger with American Stores, for example, Albertson's had to divest something like 140 stores, which takes an awful lot away from your focus. And as Ralphs moves into northern California [at some of those divested Albertson's stores] it's taking the focus away from our basic business and it's really hard to draw everyone back, which represents a tremendous opportunity for independents today," he said.
Ken Macey, chairman of Macey's, Sandy, Utah, agreed with Duncan. Macey said consolidation provides independents with new opportunities. "Mergers give smaller independents the nervous jitters, but they also provide a great opportunity. In Utah we feel some companies have taken their eye off the ball, which gives the independent the chance to really do something with consumers because we are so flexible."
Macey also suggested that independents may need to make strategic alliances or mergers of their own, "and perhaps we will need to be more interdependent, which is very hard for us, but that may be something we have to do to remain strong."
Macey's eight-store chain was acquired earlier this month by Associated Food Stores, Salt Lake City, a wholesale co-op that moved into retail this year and now operates a total of 13 supermarkets in Utah and Nevada.
Industry speculation that only four or five retailers will be left after consolidation, with no room for independents, "are fighting words for any independent," Macey said. "We think there will always be a place for us if we know our strengths and build on them. Independents are like guerilla fighters -- we'll always be around."
Duncan and Macey spoke on a panel that also included Al Plamann, chairman and chief executive officer of Unified Western Grocers, Los Angeles, the successor company to Certified Grocers of California, Los Angeles, and United Grocers, Portland, Ore. The panel was moderated by Michael J. Sansolo, senior vice president for education, industry relations and research for the Food Marketing Institute, Washington.