Mind you, for the moment, it’s just as the new owner of record of Whole Foods Market — up from ninth a year ago — and doesn’t reflect other grocery sales, mostly nonperishables, that Amazon has been growing in recent years. But it’s certainly a sign of how things are going to continue to change.
Shortly before the May 2018 issue was completed, it was widely reported that Amazon’s U.S. grocery sales in the first quarter of 2018 rose nearly 50 percent, up to an estimated $650 million, led by coffee, beverages and snacks, according to ecommerce data analyst One Click Retail. Yet while Amazon is the most-shopped online grocer overall, consumers are more often shopping Walmart (the Super 50’s No. 1) online for daily trips, including fresh categories, according to a Coresight Research study.
As we observed in our 85th Annual Report of the Grocery Industry in April 2018, Amazon’s rise up the grocery ranks doesn’t sound the death knell for traditional retailers — only for traditional retailing.
To be sure, progressive grocers had been hard at work changing the way they do business prior to the marriage of Amazon and Whole Foods. Online ordering, click-and-collect, delivery services, scan-and-go platforms, enhanced fresh offerings and compelling in-store experiences are among the many ways that players up and down the Super 50 are making themselves more competitive and relevant to new generations of shoppers.
For some, it has worked. For others, well …

 

FIGHTING BACK

In 2017, 21 companies filed for bankruptcy, a new high, noted Andrew Appel, president and CEO of IRI, at the Chicago-based analytics company’s recent annual summit in Las Vegas. Joining the list in 2018 were two regional grocery retailers, upstate New York’s Tops Marketsand Southeastern Grocers (SEG), based in Jacksonville, Fla.
And while the wedding of Amazon and Whole Foods certainly “set off a bomb in our industry,” as Appel remarked, it wasn’t the sole or even the leading cause of these grocers’ financial challenges: Tops faced a burdensome debt structure, and SEG was continuing to reinvent itself after filing twice previously for bankruptcy since 2005 as it has struggled in a highly competitive and overstored Southeast.
For its part, SEG has been quite busy during its latest reorganization, thinning its store count with sell-offs to other regional players while remodeling many locations and investing in the expansion of its Hispanic banner Fresco y Más in central Florida, plus rolling out a new loyalty program. SEG’s reorganization plan reduced the grocer’s debt by more than $500 million, and after closing 94 stores, the company will continue to operate 580 stores under the Winn-Dixie, Bi-Lo, Harveys and Fresco y Más banners in seven southern states.
Merger and acquisition activity is expected to continue as companies pursue partners that can not only help them more efficiently serve consumers, but also possess competencies in areas that they seek to enhance to be more competitive (like Kroger did in acquiring Harris Teeter, for its click-and-collect prowess, and Roundy’s, to get fresh-savant Mariano’s).

“We predict that legacy consumer and retail companies will fight back in 2018 and seek out adjacent and convergent businesses,” says Bahige El-Rayes, principal at A.T. Kearney and co-author of the Chicago-based global management consulting firm’s “2018 Consumer and Retail M&A Report.” “Winners will be those that understand what consumers prefer and the channels they use, take a holistic view of their industry, and fearlessly pursue innovative, out-of-the-box opportunities.”

One change to next year’s ranking we already know: Houston-based Fiesta Mart (44th) was acquired earlier this year by Bodega Latina Corp. (48th), the California-based subsidiary of Mexican company Grupo Comercial Chedraui S.A.B. DE C.V.  As PG reported in March, the deal will create one of the largest Hispanic-focused supermarket companies in the United States, with 122 stores in California, Arizona, Nevada, New Mexico and Texas, a region where more than half of the fast-growing U.S. Hispanic population lives.