Grocery Retailing Trends

While the food business continues to be a bright spot in the economy, not all grocers are doing equally well.

SuperValu, the #5 American grocery retailer, reported stiff losses of $2.9bn on net sales of $44.6bn for its fiscal year ending February 28th. Year-to-date net cash flow from operating activities was $1.5bn, compared with $1.7bn previously. SuperValu purchased most of the Albertson’s chain in 2006 for $17bn, and subsequently undertook an extensive remodeling and modernization program on over 200 stores. The Albertson’s deal vaulted the Eden Prairie, MN-based firm to the third-largest grocery chain in number of stores with 2,510 supermarkets and 792 c-stores. In addition to the Albertson’s brand, SuperValu already owned the Acme, Bristol Farms, Jewel-Osco, Shaw’s Supermarkets and Star Markets chains. That makes Supervalu the second-biggest grocer behind Kroger.

In contrast, the Penn Traffic Co., owner and operator of the P&C, Quality and BiLo supermarket chains in the Northeast, reported revenues of $872.3MM, up modestly from $896MM in the previous fiscal year. The firm accounted for the improved numbers through a reduction in the number of its stores, and blamed the soft improvement on lower volume and traffic.

One bright spot in retailing is the growth of online selling. Frozen food marketer Schwan’s has stumbled at brick & mortar retailing (saved largely by their frozen pizza lines), but it’s online business is booming. Sales to online visits (called “conversions”) from its website reached 50.5% in March according to Nielsen Online Mega View. The next-closest conversion rate was 27% by floral marketer FTD.com. Consumers spent an average of $75 online for food during the month, with the highest category spend at $252 (event & movie tickets). The other categories included Computer Hardware ($188.76), Automotive ($121.39), Consumer Electronics ($120.86), Child/Baby Care ($78.34), Sporting Goods & Outdoor Activities ($75.36), Home & Garden ($75.13), Office Supplies ($75.08) and Computer Software ($65.69). The sites tracked had a least 500K unique visitors.

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