Albertsons’ Surprise Success One of 2013’s Top Stories

One of the most widely anticipated developments heading into 2013 a year ago was the pending sale of Albertsons and its sister banners.

Popular supposition at that time was that Supervalu would be acquired and broken up into pieces, most likely with massive store closures, and the piecemeal divestiture of some chains and groups of stores to other operators.

In fact, the Albertsons saga did turn out to be one of the biggest stories of the year — but for just the opposite reason.

Rather than Supervalu and Albertsons dissolving into pieces, the two companies actually returned to look very much like they did in 2005 before Supervalu acquired most of Albertsons’ holdings. As a result, the reunited Albertsons — run by longtime Albertsons executive Robert Miller as chief executive officer and a group of former Albertsons executives he brought back to the company — is now said to be performing well.

That might explain why one of the most-read articles posted on SN’s website in 2013 was an extended interview with Miller, in which he described his vision to keep the company together. Even though the article was only posted in November, it was the second most popular article of the year, ranking only behind an article about Costco’s expansion plans that was posted back in May.

Robert Miller

Perhaps the popularity of the Albertsons article was related to the unexpected nature of Albertsons’ strategy. Miller had earned a lot of money for private equity firm Cerberus and its partners by shedding about 400 or so of the Albertsons stores it had previously acquired — notably through sales to Save Mart in Northern California and to Publix Super Markets in Florida — but since then he has also earned a reputation as an operator.

But Miller told SN the investors “learned that if you run good grocery stores, you can generate a lot of cash.”

With a strong customer focus that delivers quality and value, Albertsons is making a comeback. In the article, Miller told SN that all eight Albertsons division are profitable, with same-store sales improving.

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“It’s all a matter of execution, and Albertsons executes really well, so the stores it operates — including some of the ones it acquired earlier this year — are doing well,” Neil Stern, senior partner at McMillanDoolittle, Chicago, told SN in the article, in which he conceded that “most industry people were wrong” about Albertsons’ fate a year ago.

At a time when nontraditional operators are growing faster than ever — Aldi has ramped up its expansion plans in the U.S., for example, and chains like Sprouts Farmers Market and Natural Grocers by Vitamin Cottage are opening stores at a rapid clip — the success of Albertsons makes a strong statement for the ongoing potential for the traditional supermarket, at least by those operators with the know-how to deliver what their customers are looking for.

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