Large American supermarket merger

Large American supermarket merger

Private equity fund Cerberus has bought American supermarket company Safeway for 6.8 billion euro, which results in a new large American supermarket giant, together with Cerberus's other subsidiary Albertsons. The new group may create some challenges for Ahold.

New supermarket behemoth

According to the latest ranking from Supermarket News Safeway is America’s fifth food retailer with an estimated 27 billion euro turnover and 1406 stores. Albertsons is ranked 10th, with an estimated 16.7 billion euro turnover and 1103 stores.

 

Benelux chains Ahold USA and Delhaize USA are ranked 8th and 14th, with estimated turnovers of 19.5 billion euro (in 765 stores) and 14 billion euro (in 1512 stores): both chains are at a proper distance compared to the new supermarket behemoth Safeway/Albertsons. When these two combine their turnover, it is estimated to be fifth on the list, with 43.5 billion euro.

 

No store closures, but cost-saving measures

The question is what a financial investor with a huge stake in the supermarket branch will do, as these non-strategic investors usually reorganize and clean up companies and sell them in 5 years’ time.

 

Cerberus states this new merger will create a company with 250,000 employees in 2,400 stores, 27 distribution centres and 20 production locations, but there will be no store closures. “Substantial cost savings” could happen, but they will lead to investments in price promotions and store remodels and refurbishments.

 

Limited impact on Ahold

According to analysts at the Rabobank, the impact on Ahold’s position in the American market should remain limited: there is still plenty of room for Ahold to expand into, despite the fact that Safeway is also active in the Northeastern United States.

 

Disappointing results have resulted in Ahold USA focusing on getting its organization in check and to build its online features, instead of trying to take over other chains and stores. It passed on Harris Teeter’s take-over last year, despite a firm interest in the chain.

 

Kroger, with an estimated 71.9 billion euro turnover and 3527 stores, is the second largest food retailer in the United States and it is on the prowl again for new take-overs. Apparently, it is interested in stores in Safeway’s range of stores, particularly those stores the new owners probably do not really want to keep.

Questions or comments? Please feel free to contact the editors


Amazon prepares own sports clothing collection

17/10/2017

Amazon is allegedly planning its own collections of sports clothing, having contacted manufacturers working for chains like Gap and Uniqlo. These are currently only producing small numbers of clothing for testing purposes.

H&M invests in old clothing recycling

12/10/2017

Swedish H&M has acquired a minority stake in Re:newcell, which targets the recycling of old clothing in order to ensure a more sustainable fashion industry.

Uniqlo's profit more than doubled

12/10/2017

In the past fiscal year, Japanese Uniqlo more than doubled its profit on the back of a 4 % turnover increase. The fashion chain forecasts international sales to soon outgrow those of Japan.

Gucci also halts fur production

12/10/2017

Fashion brand Gucci will no longer use fur in its clothing and accessories, as CEO Marco Bizzarri promised during his Kering Award for sustainable fashion acceptance speech for the London College of Fashion.

Fashion platform About You launches in the Netherlands and Belgium

11/10/2017

German fashion web shop About You, the second largest online European fashion retailer, officially launched in Belgium and the Netherlands following an unofficial launch in the Netherlands some time ago.

Luxury group LVMH exceeds third quarter expectations

10/10/2017

French luxury group LVMH has surpassed turnover expectations in the first three months of its fiscal year. Louis Vuitton and Christian Dior’s parent company managed a 12 % like-for-like turnover growth, to 30.1 billion euro.

Back to top