WASHINGTON -- International consolidation is the future of the food retailing business, said Allan Noddle, a retired member of Royal Ahold's corporate executive board.
He made his remarks here last week to the New York-based Magazine Publishers of America during its Retail Conference.
Noddle, now is based in Omaha, was once president and chief executive officer of Giant of Carlisle, Pa., and executive vice president of parent Royal Ahold in the Netherlands.
The top four supermarket companies in the United States (not including Wal-Mart) are struggling, with Kroger, Albertsons and Safeway all issuing profit warnings and Ahold facing an investigation over accounting irregularities, Noddle said. "This is a very unusual situation in this business."
However, "Consolidation is going to continue. If you are in a 1% [profit-margin] business, the only way you make money is with tremendous sales. A penny on the dollar isn't a lot, but 1 cent on $50 billion is real money. So consolidation will continue because companies are going to have to figure out how to drive those top-line sales in a market that isn't growing," he said.
Noddle predicted there will be just five to six global players in this business in the next three to five years.
Wal-Mart will be one, he said emphatically. "Internationally, Wal-Mart is not as dominant as it is nationally, but they will figure it out."
Among the other candidates is Carrefour of France, which merged with another French retailer, Promodes, shortly after Wal-Mart's acquisition of Asda in the United Kingdom. Of the Asda purchase, Noddle said, to the retail industry in Europe, "It was like the second invasion of Normandy."
Limited-assortment retailer Aldi, based in Germany, is another, he said. Although lacking in selection and store ambience, "Aldi is cheaper than anybody. They are going to be a worldwide player."
Until recently, Ahold would have made this list, but Noddle acknowledged Ahold's troubles. "Our company's future as a free, independent public company is in doubt now, when it wasn't last week."